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SUMMARY
The Office of the Auditor General has conducted a special
audit of the Department of Economic Security (Department), Division of Child
Support Enforcement (Division), pursuant to Laws 2006, Ch. 209, §3. This law
requires our Office to assess the Division’s performance in eight specific areas
in relation to child support payments. This audit was conducted under the
authority vested in the Auditor General by Arizona Revised Statutes (A.R.S.)
§41-1279.03.
Background
The Division administers the federally mandated child support
enforcement program. This program, outlined in Title IV-D of the Social Security
Act of 1975, is known as the IV-D program. Although the Division administers the
State's IV-D program, in each county, either the Division or the county
attorney's office provides the program services, such as establishing or
enforcing child support orders. In 11 counties, the Division provides services
in conjunction with the Attorney General's Office.1 In the remaining
four counties the county attorneys’ offices, referred to as IV-D partners,
provide services.2
In Arizona, individuals who want help from the State to
establish or enforce child support orders can apply for and receive IV-D program
services for a minimal fee.3 Also, when a custodial parent is
receiving Title IV-A public assistance monies, his/her information is
automatically sent to the Division for the purpose of establishing and enforcing
child support payments.4 By enforcing child support orders, the
Division and its IV-D partners work to prevent, reduce, or eliminate families'
need for Title IV-A public assistance monies. According to the Division, as of
September 30, 2007, the IV-D program had 214,771 cases involving 257,725
children. A case consists of a custodial parent, a noncustodial parent, and
those parents’ children.5 Other child support cases for individuals
who have not applied for the State's IV-D program services are known as non-IV-D
cases. The local clerks of court provide varying service for these cases.
State and federal laws require that a state disbursement unit
centrally process payments for all Arizona child support cases including the
IV-D cases handled by the Division and its IV-D partners, and the non-IV-D cases
handled by the 15 clerks of court. The Division has hired a contractor to
perform the centralized payment processing function, but the Division also
processes a small number of payments. According to division data, during fiscal
year 2007, the contractor processed over 2 million IV-D payments totaling
approximately $289 million, and nearly 1.1 million non- IV-D payments totaling
approximately $327 million. During that same period, the Division processed
approximately 182,000 payments for both IV-D and non-IV-D cases totaling nearly
$68 million, primarily related to certain enforcement methods, such as
intercepts of federal and state tax refunds and unemployment benefits.
Division should track court
order processing times
(see pages 9 through 13)
Most division and IV-D partner offices reported processing
court orders within 5 days after receiving them; however, it is not possible to
verify processing times because the Division does not specifically track this
information. Timely court order processing is important because it is a
necessary first step for enforcing court orders and correctly distributing child
support payments. Once the Division or its IV-D partners receive the court order
or minute entry, staff enter the information into ATLAS, the Division’s case
management system.6 This process is known as “setting up the debt.”
Once debt setup is completed, child support payments can be processed and
automated collection actions can be initiated, such as notices being sent to the
noncustodial parent informing them that certain enforcement actions will be
taken if payments are not made.
To ensure that its processing is as timely as possible, the
Division needs to ensure that its IV-D partner and division field offices
establish processing goals, collect information to measure the extent to which
these goals are met, and report this information to division management. The
Division also needs to ensure that its offices can receive notification of the
court order as quickly as possible so that processing can begin. According to
division management, the amount of time it takes to receive a copy of the order
or minute entry varies from county to county. However, one county, Pima County,
has implemented a step to speed up the process by notifying the Division through
ATLAS when a court order has been signed for a IV-D case. Because the Division’s
Pima County office found this process helpful for ensuring it receives court
order information in a timely manner, the Division should work with other county
clerks of court to determine if using a similar process would be beneficial.
Most child support payments accurately processed,
but Division should strengthen procedures
(see pages 15 through 21)
The Division’s contractor accurately processes child support
payments, but the Division also processes some payments itself, and these
payments need to be better safeguarded. The Division’s payment-processing
contractor, which handles 95 percent of child support payments, has a system in
place that allows it to meet the contractually required 99.7 percent
payment-processing accuracy rate and ensure that payments are protected from
loss or theft. For example, new staff train for 6 weeks, a quality assurance
specialist reviews certain payments, such as payments over $2,500, to ensure
accurate processing, and contractor management reviews video footage from video
cameras installed in the payment-processing room. Further, the contractor’s
payment-processing activities undergo reviews from the Division and the
Department. For example, according to division management, it reviews a sample
of about 420 to 430 processed payments quarterly to assess whether the
contractor is meeting the 99.7 percent payment-processing accuracy rate. From
January 2000 through June 2006, the Division found that the contractor failed to
meet its goal only twice, and both times by less than 1 percent.
Auditors also tested a sample of the 5 percent of payments
that the Division processed and found no accuracy problems, but a review of the
Division’s internal controls showed a need for additional actions to reduce the
potential for loss or theft. For example, one person is responsible for opening
the mail that contains the paper checks that it manually processes, but the
State Accounting Manual stipulates that mail containing cash receipts, which
includes checks, should be opened by two employees. Adding an additional person
may not be the most practical way to address this issue, in part because of the
cost. Instead, the Division should continue to work on reducing the number of
paper checks it must process and, if possible, eliminate them entirely. The
Division can take steps to receive more payments electronically, such as
continuing to work with the Department of Revenue to address technical issues so
that it can electronically receive child support payments obtained through state
tax intercepts. The Division could also have its payment-processing contractor
receive and process the payments that the Division receives as paper checks.
Division needs more effective means to
capture payment error information
(see pages 23 through 25)
The Division has established a unit to research and correct
possible payment-posting errors, but it has no efficient way to determine how
many payments are being misdirected. A posting error occurs when incorrect
information about a child support payment is entered into ATLAS. For example,
the noncustodial parent or employer might provide an incorrect case number when
submitting a payment, or a data entry error could be made. A misdirected
payment, a type of posting error, results when a child support payment is made
and posted to the wrong case in ATLAS, and thus subsequently sent to the wrong
custodial parent. Using a database containing payment error information from
July 1, 2005 through May 31, 2006, the Division estimated that about 5,800 of
the nearly 3 million payments processed during this period had payment posting
errors—an error rate of 0.2 percent.
Auditors could not readily verify the completeness or
accuracy of the data that the Division used to calculate the above error rates
because the database was no longer available as of November 2006, and the
Division’s primary remaining mechanism for storing payment-posting error
information is its hard-copy files. Although the Division also uses another
database to track the errors it receives, this database does not contain the
details necessary to fully assess and track how many errors there are and why
they occurred. To provide more definitive information about these errors on an
ongoing basis, the Division needs a more effective means for capturing and
reporting payment-posting error information, such as the type of error, who made
it (e.g., noncustodial parent, employer, or division or contractor staff if they
made a keying error), the reason for the error, and how it was corrected.
Division needs to improve process for
making changes to payees
(see pages 27 through 30)
The Division uses ATLAS to make two key changes relating to
payees—the amount and the payee. To ensure accuracy, the Division should improve
its processes for changing the payee. The Division has several processes in
place to help ensure that child support amount changes are accurately made and
reflected in ATLAS. The court must authorize any change to the court-ordered
child support amount. Once the Division has received the modified court order,
staff enter modified child support court-order information into ATLAS so that
the Division can begin collecting and enforcing the new amount. Entering
modified court-order information may require staff to recalculate the amount of
child support owed if the court order is retroactive. To ensure that modified
amounts are accurate in ATLAS, the Division provides staff training and reviews
staff work, and the Division reported that it requires that all changes to child
support amounts be reviewed by a supervisor or a qualified debt worker who has
passed a test in order to approve payment adjustments.
The Division needs to improve its processes for ensuring that
changes to the payee are accurately made in ATLAS. The Division has statutory
authority to redirect child support payments from the custodial parent to a
caretaker and can also redirect payments to private collection agencies. The
Division uses a specific screen in ATLAS to make payee changes. According to May
2007 division-reported data, approximately 430 of its 167,000 enforcement cases
were using this screen to redirect received payments. Auditors’ review of 33
judgmentally selected cases identified two cases in which payments were
redirected to the wrong person and four cases where child support payments were
not redirected to a private collection agency as requested. The Division should
enhance its process by continuing its efforts to improve policies and
procedures, and establishing and implementing an effective review and oversight
process.
Division should better explain collection
methods to noncustodial parents
(see pages 31 through 38)
The Division’s processes for helping ensure that enforcement
actions are applied appropriately appear adequate, but it can more effectively
communicate with noncustodial parents the reasons for its actions. State and
federal laws and regulations provide the Division with 16 different methods for
collecting child support payments and specify the criteria that cases must meet
before the Division is authorized to apply them. Thirteen of the 16 enforcement
methods are automated and triggered by the length of time that has passed since
a payment was received and/or the past-due child support amount that is
contained in ATLAS. For example, if the noncustodial parent owes at least $50 in
unpaid child support, ATLAS will automatically generate a letter informing the
noncustodial parent that his or her state tax refund may be intercepted. Three
enforcement methods require manual intervention by caseworkers: limited income
withholding, worker’s compensation offset, and license suspension. For example,
if a noncustodial parent owes at least 2 months of unpaid child support, a
caseworker will review the case details and may refer the case to court to
request that the court suspend the noncustodial parent’s professional license.
To ensure that both the automated and manual methods used to
enforce child support and collect past-due support are appropriately carried
out, the Division has established processes in the following four categories:
guidance/oversight, quality reviews, internal audits, and administrative
reviews. For example, as a part of its monthly quality reviews, five randomly
selected cases per caseworker are reviewed to ensure that the information that
caseworkers entered into ATLAS, such as the court-ordered amount of child
support, matches the paper case file. Accurate information is critical for
ensuring that both automated and manual enforcement processes are being carried
out appropriately.
Although the Division has established various processes to
help ensure enforcement actions are appropriately applied, it can more
effectively communicate with noncustodial parents the reasons for its actions.
Auditors found problems with both the letters sent to noncustodial parents about
individual enforcement methods and those communicating the results of an
administrative review. An administrative review is a process whereby a
noncustodial parent can request the Division to review the appropriateness of
the enforcement method(s) being used on his or her case. Both types of letters
would benefit from revisions that could be undertaken as part of the Governor’s
Plain Talk Initiative. This initiative was developed to improve state government
by decreasing confusion and red tape for the public. Although not all of the
letters that auditors reviewed have been revised according to this initiative,
the Department’s Plain Talk Initiative workgroup has already revised 25 division
documents, including some enforcement letters.
Processes over demand letters
minimize risk of error
(see pages 39 through 42)
The Auditor General’s Office is making no recommendations in
this area because the Division has processes in place, such as training and
supervisory oversight, that appear to reasonably minimize the risk that demand
letters will go out in error or with erroneous information. In fiscal year 2006,
the Division mailed out about 5,000 demand letters for past-due child support
payments. Auditors’ review of more than 60 of these letters found that none were
sent in error or contained erroneous information. Auditors’ review of data used
to compile another 107 demand letters sent to bad-check writers found three
errors (such as an incorrect address), but none were sent to someone who had not
written such a check.
Division should further enhance the ease
with which information is available
(see pages 43 through 46)
The Division should further improve the ease with which
information is made available to the public, as well as its assessment of
customer satisfaction with its offices. Various individuals and groups,
including noncustodial and custodial parents, obtain child support information
from the Division through three mechanisms: (1) the Division’s Web site, (2) the
customer service unit, and (3) the Division’s and its IV-D partners’ offices.
Although these three mechanisms collectively provide access to general and
case-specific information, auditors identified some ways to improve these
mechanisms. For example, access to information on the Web site could be improved
by better organizing the information on its home page. Also, the Division can
ensure that customers visiting offices are provided a comment card.
Equipment and other mechanisms used to communicate
between agencies appear sufficient
(see pages 47 through 50)
The equipment and other mechanisms that the Division uses to
communicate between agencies appear to meet its needs. The Division communicates
child support information to a wide range of internal and external groups,
including its 20 division and IV-D partner offices, the Department’s Division of
Benefits and Medical Eligibility, and other states’ IV-D child support
enforcement agencies. The Division uses both equipment, such as personal
computers, and other mechanisms, such as a main software application, to store,
process, and communicate child support information with other agencies. ATLAS is
the Division’s primary mechanism. Other mechanisms used include e-mail and
QUICK, which is a new federal and state collaborative project that allows child
support caseworkers to initiate real-time requests for child support payment
information from another state.
The equipment and other mechanisms that the Division uses to
communicate with other agencies appear to be meeting its needs. For example,
although the Division acknowledges that ATLAS is an older application, ATLAS was
fully certified by the U.S. Department of Health and Human Services for meeting
federal system requirements in both 1999 and 2003, and is the second newest
application at the Department. Auditors received no complaints regarding ATLAS’
availability; however, industry standards indicate that monitoring system
performance, including system availability, should occur. Therefore, the
Department’s Division of Technology Services should ensure it has a mechanism
for capturing information on the dates and times ATLAS is not available to staff
and use this information to address any availability issues that occur.
1 According to
the Division, as of October 1, 2007, it began providing services in Cochise
County. Previously, it contracted with a private company to provide services in
this county.
2 These four
counties are Gila, La Paz, Navajo, and Pinal.
3 Effective
October 1, 2007, in accordance with the federal Deficit Reduction Act of 2005,
the Division began charging the custodial parent a $25 annual fee for those
cases that have never received Title IV-A public assistance monies and for which
the State has collected at least $500 in child support.
4 According to
state and federal laws, when a custodial parent applies for public assistance
through the Title IV-A program, Temporary Assistance for Needy Families, his/her
information is referred to the IV-D child support program.
5 The term
"custodial parent" is used throughout this report to include custodial parents
and other custodial persons. According to division management, most cases have a
custodial parent; however, there has been an increase in the number of cases
where another person such as a grandparent has custody of the child(ren).
6 A minute
entry is a written record of the judge’s order from the bench or after a
hearing, usually not signed.
Read full report in Acrobat PDF format
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