Title IV False and Misleading Information that is on social media
2/17/2024
The states do not make money on the reimbursements. They get reimbursements for money they have spent collecting child support.
States receive a maximum of 57 cents per dollar spent on the administrative costs which is a loss of 43 cents per dollar spent. States that do not meet the guidelines completely can have that amount per dollar reduced.
I have reports for Ohio and the federal reports that can be found here:
Federal Child Support Reports
The amount they receive has nothing to do with the amount they collect.
These myths have been going on for years and come from those who have never read Title IV and how it works.
Federal Incentives
It is well past time for everyone to understand how Federal Incentives and Child Support work. For years it has been claimed, FALSELY, that child support was high and done that way to increase the amount of money that states received and that the states their funds based on the amount that they collect.
The real amount
they MAKE (implying a profit) from federal incentives is ZERO!
This myth has gone on for years and is one of the biggest ever told because
people do not understand federal incentives and what the incentives pay for and
are based on. The Federal Incentives pay the states a portion of their cost
towards the administrative costs of running the child support program.
Percentages differ slightly from state to state but they are generally a little
over 50% percent.
I will use Ohio's numbers on child support.
Ohio spent $575 Million on administrative costs to collect
child support; they received $278 Million in Federal incentives. That is
a LOSS of $197 Million. The total amount collected was $3.2
Billion in child support that either went directly to the other party in a
pass-thru order or towards the reimbursement of TANF funds.
Common sense shows they made no money through federal incentives.
I am going to back this will Nebraska Numbers.
Total CS Collected and Distributed - $200,318,373
Totals collected through Wage withholding - $124,565,727
Incentive payments – $4,651,764
Approximate amount spent to collect by the state - $10,025,353
Cost-effectiveness for NE - $3.90 which means that they can only collect 80% of the total available pool made available by the Federal government.
Maximum allowable % of the federal pool – 57% (NE actual is 46.4%)
The following is from the US GAO report that explains expenditure and reimbursement. (The original reimbursement rate was 66% and was then reduced to 58% max)
Total CS Collected and Distributed - $200,318,373
Totals collected through Wage withholding - $124,565,727
Incentive payments – $4,651,764
Approximate amount spent to collect by the state - $10,025,353
Cost-effectiveness for NE - $3.90 which means that they can only collect 80% of the total available pool made available by the Federal government.
Maximum allowable % of the federal pool – 58% (NE actual is 46.4%)
The following is from the US GAO report that explains expenditure and reimbursement. (The original reimbursement rate was 66% and was then reduced to 57% max)
The general CSE federal matching rate is 66%. This means that for every dollar that a state spends on its CSE program, the federal government will reimburse the state 66 cents. So if the state spends $1 on its program, the federal share of that expenditure is 66 cents and the state share of that expenditure is 34 cents. The algebraic formula for this relationship is represented by .66/.34=x/1. Thereby, if the state share of the expenditure is $1, the federal share is $1.94 (i.e., the federal share is 1.94 times the state share), and the total expenditure by the state is $2.94 ($1+$1.94). Similarly, if the state share of expenditures amounted solely to the incentive payment of $504 million, the federal share would amount to 1.94 times that amount, or $978 million, translating into $1.482 billion in CSE expenditures/funding.
Now anyone still wants to tell me that the state is making money off child support? They are losing 43 cents on every dollar they spend.
These numbers are from the most current Federal Child Support Report dated as of 2014. I have to use the actual numbers from 2012 rather than 2013 because the latter is not complete.
http://www.acf.hhs.gov/programs/css/resource/fy2013-preliminary-report
Poundage fees are not associated with federal incentives and are a state issue, Ohio recently admitted that this was a tax. The small fee that is added is based on the amount of the child support order and is designed to recover costs associated with the collection and distribution of child support.
You cannot change a system of law if you do not understand it completely. Understanding it takes a complete and thorough reading of existing laws and policies.
Addition False Statements Made About Federal Incentives
Do the states make a profit on these incentives?
No, they do not. They are reimbursed for administrative costs only that are associated with the collection of child support. They receive a maximum of 57 cents for every $1.00 they spend if they meet all federal guidelines. The amount per dollar can be reduced if they do not meet the guidelines.
Is there an increased incentive for denying equal custody?
No, there is only a clause for establishing paternity.
Where does the funding come from for these incentives?
While many falsely claim that the funding comes from Social Security nothing could be further from the truth. The funds come from a pool created from the General Fund.
What was the purpose of the federal government’s involvement in doing this?
The original purpose of the Federal involvement was to recover the high cost of TANF (welfare) costs.
Do the states get a matching amount of the amount of child support they collect?
No, they do not and we challenge anyone to show wear any state gets that in their State Budget.
FYI – For Ohio that would be $3 Billion and that would have to show in the state budget.
Is there a custody clause in Title IV?
No, again. A paternity establishment clause yes.
The incentives have nothing to do with custody orders, or paternity establishment, yes.
In 25+ years I have yet to have a legislator ask how equal custody legislation with affect the state’s reimbursements.
Below is Title IV in its entirety.
Ohio Guideline Review Reports
Ohio, like all states is required to review support tables and law every 4 years.
Below are the available reports.
2013
We did submit a report to the 2013 Guidelines Committee