For fiscal year 2002, OCSE reported over 16 million child support cases  and collections of more than $20 billion. One method for collecting child  support is intercepting federal tax refunds. Initially the Internal Revenue Service  (IRS), an agency within the Department of the Treasury, OCSE, and the  state agencies operated the program. Now, all state agencies,  OCSE, IRS, and FMS play a role in the program. This delay may not exceed 6 months. State agencies had  different interpretations of what comprised undistributed collections and  some state agencies reported data that were found to be unreliable  throughout this time period. Types of Collections Reported as Undistributed Differed

Although OCSE reported that the amount of undistributed collections for  fiscal year 1999 was $545 million and $657 million for fiscal year 2002,  OCSE also reported and our survey results indicated that state agencies  varied in the types of collections they reported as undistributed. Some State Agencies Reported Inaccurate Amounts of Undistributed Collections

In addition to differences in the types of undistributed collections that  state agencies reported, 4 state agencies reported data accuracy problems  in 2002 and 2003 that were found to be overestimates. Federal Law, Some State Policies, and Inaccurate, or Missing Information Delayed or Prevented Distribution of Certain Collections

The underlying causes for nearly all undistributed collections were federal  law, state policies, as well as inaccurate or missing information. While state agencies are  generally required to distribute collections in 2 days, federal law allows  state agencies to hold collections from joint tax refunds for up to 180 days. In addition, state agencies had policies on whether or not they held child  support collections received before they were due. Many State Agencies Reported Holding More than $1 Million from Joint Tax Refunds and Several Hundred Thousand Dollars in Other Types of Undistributed Collections

In response to our survey, 32 state agencies provided dollar amounts for  undistributed collections from joint tax refunds. The median value  reported for these collections was $1.8 million. State Agencies Analyzed and Monitored Undistributed Collections

To help reduce their undistributed collections, officials from 5 of 6 state  agencies we visited stated that they devoted resources to better  understanding these collections. Resolving Missing Information and Invalid Addresses

Officials from all of the state agencies we visited highlighted the  importance of dedicating staff to researching collections involving missing  information. Automated processes to receive and distributed collections can help  reduce undistributed collections. OCSE Has Assisted States’ Efforts to Reduce Undistributed Collections, but the Department of the Treasury Has Not Provided Information That Would Help States Distribute Collections from Some Joint Tax Refunds Sooner

OCSE has provided some assistance to help state agencies reduce their  undistributed collections. Conclusion

Receipt of child support is critical for many custodial parents and their  children. We recommend that the Secretary of Health and Human Services direct  the Commissioner of OCSE to  review undistributed collections data from state agencies periodically in  conjunction with one of the other routine reviews to help improve the  accuracy of the data and   work closely with the Department of the Treasury to identify a cost- effective approach for obtaining information on “injured spouse” claims in  order to enable collections from some joint tax refunds to reach families  sooner.
Why GAO Did This Study

Congress established the child support enforcement program in 1975 to ensure that parents financially supported their children. State agencies administer the program and the Office of Child Support Enforcement (OCSE) in the Department of Health and Human Services oversees it. In 2002, state agencies collected over $20 billion in child support, but $657 million in collections from 2002 and previous years were undistributed--funds that were delayed or never reached families. One method used to collect child support, intercepting federal tax refunds, involves all state agencies, OCSE, and two Department of the Treasury agencies--the Internal Revenue Service (IRS) and the Financial Management Service (FMS). GAO was asked to address (1) how the total amount of undistributed collections changed over the years, (2) the causes of undistributed collections, (3) states' efforts to reduce these funds, and (4) OCSE's efforts to assist states. GAO analyzed OCSE data, administered a survey, visited 6 state agencies and interviewed officials.

What GAO Found

OCSE reported that the amount of undistributed collections for fiscal year 1999 was $545 million and $657 million for fiscal year 2002; however, these amounts may not be accurate. State agencies had different interpretations of what comprised undistributed collections and data reported by several state agencies were found to be unreliable throughout this time period. OCSE revised the reporting form, but data accuracy concerns remain, in part, because OCSE does not have a process to ensure the accuracy of undistributed collections data. Federal law, some state policies, and inaccurate or missing information were the underlying causes of nearly all types of undistributed collections. State agencies determined how long they held collections from joint tax refunds and if they held collections received before they were due. Federal law allows collections intercepted from joint tax refunds to be held for up to 180 days and in response to GAO's survey, 34 state agencies reported holding them for 180 days. Missing or inaccurate information, such as invalid addresses, also leads to undistributed collections. Based on state agencies' survey responses, GAO determined the median value of the undistributed collections from joint tax refunds was about $1.8 million and the median value of four other types of undistributed collections exceeded $350,000. State agencies GAO visited took steps to better understand and reduce undistributed collections. Of the 6 state agencies visited, 5 had analyzed their undistributed collections cases, 4 adopted performance goals, and officials from all 6 state agencies stressed the importance of researching collections that were missing information. In addition, officials stated that using automated processes to receive and distribute collections helped reduce the number of collections with missing or inaccurate information. OCSE has provided some assistance to help state agencies reduce their undistributed collections. However, the Department of the Treasury has not provided OCSE information that would allow state agencies to distribute collections from joint tax refunds to families sooner. Further, OCSE's efforts to obtain this information have been minimal.