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SUMMARY
The Office of the Auditor General
has conducted a performance audit of the Arizona Department of Economic
Security (Department), Division of Child Support Enforcement (Division).
This audit was completed pursuant to the provisions of Laws 1996, Chapter
290, which requires the Office of the Auditor General to review the
Division’s customer service operations, privatization efforts, debt
calculation errors, Arizona Tracking and Location Automated System
operations, and effectiveness of Division operations.
This report is the second in a two-part series and focuses on the Division’s
effectiveness and automated system.
The Division administers the
federally mandated child support enforcement program. In Arizona,
individuals receiving public assistance monies are automatically referred
to the program. In addition, individuals not receiving public assistance
monies can apply for and receive program services at no cost. These
services include locating noncustodial parents, establishing paternity,
and placing income withholding orders on noncustodial parents’ paychecks
to ensure that child support is paid. The program collected and
distributed $184 million during fiscal year 1999 for its approximately
268,000 cases. The program has received several awards for its
accomplishments including the Governor’s Spirit of Excellence award for
successfully centralizing child support payment processing.
Program Effectiveness
Improving,
But Additional Enhancements Needed
(See pages 15 through 20)
Over the past few years, the program has
increased both the amount of child support collected and the number of
families receiving support on a regular basis. Between fiscal years 1994 and
1999 the program doubled its annual distributed collections, collecting $184
million during fiscal year 1999. The program has also increased the
percentage of regular payers and the percentage of cases receiving at least
one payment during the year.
Despite these improvements, about 40
percent of the program’s support-ordered cases still receive no child
support. For example, during fiscal year 1999 about 46,000 families received
none of the $112 million in support owed to them. Because of the significant
percentage of nonpayers, the program may fail to maximize the federal
incentive monies that it uses to help support the program’s cost. The
federal government generally pays 66 percent of the program’s expenditures
and also provides states with incentive money when their programs achieve
certain levels of performance. During fiscal year 1999, the program received
an estimated $3.9 million in federal incentive monies.
Program Needs to Improve Its
Paternity Establishment Performance
(See pages 21 through 31)
The program needs to enhance its
performance in establishing paternity for the children in its caseload.
While establishing paternity, which is identifying a child’s legal father,
is a critical first step in the child support process for many of the
program’s cases, the program has not been very successful in this area.
Although the program needs to establish paternity for more than 100,000
children in any year, during fiscal years 1997 to 1999 the program
established paternity for less than 10 percent of the children needing it.
Further, when the program does establish paternity, the procedure often
takes several months or even years. For example, the median time for the
program to establish paternity during fiscal years 1997 to 1999 was 18
months.
Establishing paternity can often be
difficult because the mother may not know the location of the alleged father
and the program must try and locate him to inform him of the program’s
intent to establish paternity. However, if the program’s performance does
not improve, it may fail to maximize the federal incentive dollars it uses
to support the program. Historically, about 6 to 7 percent of the program’s
revenue came from these incentive dollars. To help improve its performance,
the program should take a variety of actions, including working with program
stakeholders to determine the feasibility of seeking additional
administrative authority to establish paternity; continuing to close cases
according to federal closure criteria; and examining and redistributing
caseloads more equally among its caseworkers.
Program Needs to Continue to
Improve its Performance in
Establishing Child Support Orders
(See pages 33 through 39)
Similar to the paternity establishment area, the
program needs to improve its performance in establishing support orders. A
support order is the court document that outlines the monthly dollar amount
of child support the noncustodial parent must pay. However, the program
establishes support orders for only 16 percent of the cases that need them
at the beginning of each year. In addition, during fiscal years 1997 to 1999
the median amount of time the program took to establish a support order was
about 16 months. Nevertheless, the program is increasing the number of
support-ordered cases in its caseload each year and should be eligible for
at least some of the federal incentive monies available for this area.
The program should work with its stakeholders to
assess the feasibility of seeking authority to administratively establish
support orders. Depending on the type of administrative authority granted to
the program, the program could establish support orders without court
involvement. Because the State has established child support guidelines, the
program has clear directions for what things should be considered when
calculating the monthly dollar amount of child support due or any past-due
amounts. In addition, the program should continue to close cases according
to federal closure criteria.
Collection Enforcement Actions Can
Be Targeted to Increase Effectiveness
(See pages 41 through 49)
The program has a variety of
strategies it can use to enforce payment of a child support order. The
program has authority to implement many of these strategies
administratively, but some of them, such as license suspension, require
judicial involvement. However, most enforcement actions can be started
automatically by the program’s computer system. The program has found
income withholdings and tax offsets to be two of its most effective
enforcement techniques.
Although the program has a variety of enforcement
strategies available, the program needs to explore additional strategies
directed to nonpayers. Many of the enforcement strategies, such as income
withholdings, are designed for individuals with the resources to pay. Yet,
research suggests that many of the noncustodial parents who do not pay have
limited ability to pay based on their income and education levels, and
intermittent employment. Therefore, similar to efforts underway in other
states, the program should consider sorting cases based on the ability to
pay. Sorting cases would allow the program to direct its enforcement efforts
to those who have the resources to pay, while referrals to job readiness and
training services can be provided to those noncustodial parents who are
unemployed or otherwise lack the ability to pay.
In addition, the program should consider some
approaches for reducing its large past-due child support balance, much of
which may be uncollectible. For example, some states have policies that
prevent the build up of large past-due balances for low-income noncustodial
parents, or policies that allow the state to forgive a portion of the
past-due balances owed to the state if the noncustodial parent successfully
completes a work or training program. However, forgiveness policies do not
address the past hardships endured by the custodial parent and children
because of the nonpayment of child support.
Program Has Successfully Established
Statewide Automated System
(See pages 51 through 53)
The program has effectively developed
and implemented a statewide automated system known as the Arizona Tracking
and Location Automated System (ATLAS). ATLAS records comprehensive
information about the program’s cases and supports the program’s major
case management functions including locate, paternity and support order
establishment, debt calculation, financial management, and payment
disbursement. Arizona has consistently been one of the first states to seek
and receive federal certification of its system. In addition, the program
has instituted an effective system of controls for helping ensure access to
the system is limited to appropriate users and that data is accurately
entered and maintained on the system.
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