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 child support orders. In FY1999, the CSE caseload was 17.3 million families; by FY2010, it had dropped to 15.9 million families. Third, states collect child support on behalf of families receiving TANF to reimburse themselves (and the federal government) for the cost of TANF cash payments to the family. Pursuant to P.L. 109-171 . Financing Issues

Some policymakers view the federal reimbursement of state CSE expenditures as too high. On the other hand, state budgets (in aggregate) were positively affected by the CSE program for the first 24 years of the program, in the sense that the income generated by the CSE program for the state (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 foster care families) exceeded CSE program costs. The increasing federal "losses" on the CSE program and the switch from "gain" to "loss" for the state governments are in part attributable to the decline in the AFDC/TANF caseload. Child Support Financing and Welfare Costs

An alternative analysis of the revenue gains and losses of the CSE program takes into account the consideration that child support collections retained by the federal government and states are offsets to expenditures on TANF cash benefits, rather than offsets to CSE programs. The share of AFDC/TANF cash expenditures reimbursed by child support collections grew consistently during the period from FY1994 through FY2002, when CSE collections for welfare families remained relatively stable, while cash welfare payments decreased dramatically, from $22.7 billion in FY1994 to $9.4 billion in FY2002. Between FY2002 and FY2010, AFDC/TANF cash expenditures fluctuated up and down. In FY1994, retained child support collections for welfare families as a percentage of total cash welfare expenditures was 11%; by FY2010, it was about 18%, after reaching a high point of nearly 31% in FY2002 (see Figure 5 ). In FY2010, the CSE program collected $4.88 in child support payments (from noncustodial parents) for every dollar spent on the program. The CSE program used to be unique in that it was a social welfare program that added money to state treasuries, this is no longer the case, with the exception of a handful of states. State CSE programs are now in the position of having to compete with all other state interests in obtaining funds from the general treasury or county treasuries. The Deficit Reduction Act of 2005 ( P.L. 109-171 ) made changes to the CSE program that have resulted in less federal financial support to state CSE programs. 104-193 required states to pay the federal government the federal government's share of TANF collections.
The Deficit Reduction Act of 2005 (P.L. 109-171) made changes to the Child Support Enforcement (CSE) program that will result in less federal financial support to state CSE programs. The CSE program serves families that are recipients of the Temporary Assistance for Needy Families (TANF) program and non-recipient families. It provides seven major services: parent location, paternity establishment, establishment of child support orders, review and modification of support orders, collection of child support payments, distribution of support payments, and establishment and enforcement of medical child support orders. In FY2010, the CSE system handled 15.9 million cases, of which 86% (13.7 million) were non-TANF cases. In FY2010, the CSE program expenditures amounted to nearly $5.8 billion and the program collected $4.88 in child support payments (from noncustodial parents) for every dollar spent on the program.
The federal government bears the majority of CSE program expenditures and provides incentive payments to the states for success in meeting CSE goals. Most child support collections for TANF families are kept by the federal government and states to reimburse themselves for the cost of providing TANF cash payments to those families. Collections for non-TANF families generally are paid to the families (via the state CSE disbursement unit).
Some policymakers are concerned that the federal government's role in financing CSE is too high, and contend that the states should pay a greater share of the program's costs. Comparing CSE expenditures with the income generated by retained collections for TANF families, the federal government has lost money each year since 1979 (the FY2009 "loss" to the federal government was $2.9 billion). Although in the past the income generated by the CSE program for states (in the aggregate) exceeded their expenses, this no longer holds true (the FY2009 "loss" to states was $718 million). The increasing federal "losses" on the CSE program and the switch from "gain" to "loss" for the state governments is in part attributable to the decline in the TANF caseload.
An alternative analysis views retained child support collections as reimbursement for a portion of cash welfare expenditures for families with children, rather than as "income" to the state. The share of AFDC/TANF cash expenditures reimbursed by child support collections grew consistently during the period from FY1994 through FY2002, when CSE collections for welfare families remained relatively stable, while cash welfare payments decreased dramatically, from $22.7 billion in FY1994 to $9.4 billion in FY2002. Between FY2002 and FY2010, AFDC/TANF cash expenditures fluctuated up and down. In FY1994, retained child support collections for welfare families as a percentage of total cash welfare expenditures was 11%; by FY2010, it was about 18% (after reaching a high point of nearly 31% in FY2002).
The change in the composition of the CSE caseload, together with changes made pursuant to P.L. 109-171, are expected to result in state CSE programs having to compete with all other state interests in obtaining funds from the general treasury or county treasuries. This is a dramatic departure from the past, when the CSE program was unique among social welfare programs in that it added money to state treasuries.