May 2016 CGHSFOA CONFERENCE Child Support ACCOUNTING Kathy Edwards, Lori English, Mike Auran

Session Plan To review the different areas where child support collections and fees affect county Business Offices (BO), discuss incentives, the Child Support Pass Through (SB 15-012) and answer any other questions.

Child Support Payments All collections must be processed on ACSES, even if it is cash is paid to the county Only child support collections on ACSES; SS benefits are NOT child support payments Collections allocated to a balance due under the noncustodial parent’s court order; current support, arrears, or costs

Child Support Payments Distributed against UPA (unreimbursed public assistance) or UMP (unreimbursed maintenance payments) UPA or UMP is not a balance due Disbursed to custodial party (CP), other state OR EOM transfer to CFMS Upload to CBMS or Trails

Notification CFMS distributes to CBMS & Trails Federal requirements that CSS notify other divisions of payments ACSES uploads to CFMS during end of month processing Amounts paid to current support, arrears, excess over UPA or UMP CFMS distributes to CBMS & Trails The uploads occur during month end. ACSES IS reporting correctly…talk to your program people about how Trails & CBMS is using the data ACSES sends them. There are places in the other systems that display what ACSES has reported.

Reporting IVA & NIVA reported on the FM150 IVE & NIVE totals reported on the FM150; detail on the FM155 “Manual” collections reported on the AM360 report Money reconciled & transferred to county via MM627 report Back to the previous slide….these are allocations to specific balances, from collections entered into ACSES during Month 1.

Manual Ledgers ACSES cannot process all child support payments Specific Amount Medical (SAM) Spousal only (if child support arrears still due) Multiple current counties with Foster Care involvement Child support paid to FSR, deposited in FSR bank account FSR sends checks to the county 7

Manual Ledgers Need internal process BO notify CSS of a check for child support A log, copy of the check, email CSS needs to know the case & amount County enters on the OTC area on ACSES County disburses from county bank account

Elements of the MM-627, Funds Transfer Report

Line 3 “Total non-AFDC intercept cert fee – program income” (reimburses costs) Non-TANF cases only $25 certification fee withheld from the first IRS intercept received each processing year NCP received credit for full payment Paid to county or prorated among counties receiving the intercepted payment Entered into CFMS at a statewide level. Feds get their share 66 – 34%, cause it’s counted as program income. 10

Line 3A Total IRS / ADO admin service Fee Charged by Federal Office to intercept a federal payment (retirement, vendor payments, farm payments) One fee per offset State charges counties: Prorated to counties receiving the intercepted payment Different from the IRS certification fee recovered. How do counties get this information? We do all the calcs for them & it’s reported in the settlement.

Line 4 Administrative costs collected: Court ordered costs that were repaid to the CSE Unit: paternity tests (DNA) service of process fees attorney's costs Considered program income On the FM150 report Costs that are recovered, usually from the NCP but can be CP, are used to reimburse the county for costs they incur initially. Child support payments are allocated to costs according to ACSES distribution hierarchy. Program income – reported to feds & they get their 66% back. 12

Line 5 Over-the-counter settlement: Child support payments receipted by the county Internal process to let CSS know CSS bookkeeper enters payment info into ACSES through the OTC (over the counter) menu BO needs to let CSS know – internal process, log, email, copy of check, etc, with identifying information. Cash goes into county bank account. CSS needs the information to enter the payment into ACSES, to be tracked in a batch. Batches should be closed & sent daily because of CSS’s 2 day disbursement rule. When county releases batch, the money goes from the county bank account to the FSR bank account. When the money is then disbursed to the CP, the money can go from the FSR bank account to the CP. Into county suspense, for county to batch allocate 13

Line 5 County deposits the batch into county bank account County CSS releases batch on ACSES to FSR FSR uploads to ACSES suspense Payments allocate to an amount due on the ledger Some don’t do

MM627 - Line 5 County receives notification of: Non-Sufficient Funds (NSF) Account Closed Stop Payment County CSS contacts state CSS with information IV-D must notify the State FSR Financial Specialist so the payment will be backed out with the correct reason code Send a fax request for a payment back out with name, FSR account # and other information along with a copy of the returned check (fax # 303-866-4377). Journal entries based on what’s on the AM212. this is all state liability - we give counties their cash back to make them whole, & then we get the cash back & into the state bank account. 15

Lines 6 & 7 Pre-FSR adjustments FSR implemented in 1993 Don’t see anything on these lines

Line 8A Disbursement sent in error Incorrect payment amount FA/County Erroneous Disbursements Any non-custodial parent (NCP) or CP paid disbursement that is later backed out of ACSES. CP erroneous disbursement found on AM212 NCP erroneous disbursement found on AM623 Disbursement sent in error Incorrect payment amount NSF, account closed or stop payment Amended refunds Information is on AM 212 & AM 623 – BO should journal this information. AM212 is CP & AM623 is NCP 17

Line 8B County/State Erroneous Disbursements May be due from: Custodial party Other state State or County liability Primary responsibility for collecting resides with the enforcing county BO journal entry from AM212 & AM623 State does not collect unfunded disbursements, even state liability. Determined by the adjustment reason code used to back out the payment CP or other state unfunded disbursements are not on the NCP’s ledger, because NCP doesn’t owe. They are tracked differently & have to be recovered separately. We have a system to automatic withhold a small percent of the CP’s next payments to go to the unfunded disbursement balance. 18

Line 9 Net IV-D transfer – totals of lines 1 to 8B

Line 10 IV-A (AFDC) Retained Collections Child support collections retained and shared by county, state, and federal governments Due to assignment of rights while CP receives TANF Explain assignment of rights 20

Line 10 Retained IVA collections: Federal share – 50% (50.72%) County share – 20% State share – 30% (29.28%) Up to half to General Fund Per Vol 6, at least half to counties as incentives (more like 90%) Federal share is reported to feds on CSE forms, matches up with Accounting forms. Settled the same as state/county settle at eom. County share is put into IVA line, to counties, in DHS budget. State share is split – 15% to General Fund Other 15% is Half State Share Incentives, to counties quarterly. About $372,000 used for State operations out of $3.75 - $4.0 million

Line 11A IV-E (Foster Care) Retained Collections: Collections retained and shared by county, state, and federal governments Child support assigned Reimburses IV-E expenditures Foster Care Fee vs. Child Support on FM-155 FM150 = Maintenance vs. ump CSS says Foster Care Fees, CW says Parental Fees 22

MM627 - Line 11B Excess over Maintenance Monthly child support collected is in excess of the monthly Foster Care maintenance amount Current child support, not arrears, distributes to monthly maintenance Excess over maintenance are payments made to current support that exceed the amount of maintenance posted for that month. Sometimes, maintenance didn’t post but case is still act IVE. Payments sent to Trails, BO must look for other costs for this child(ren) to reimburse. Vol 6.803.2 23

MM627 – Line 11B Excess over Unreimbursed Maintenance Payments (UMP) Arrears payments collected are in excess of the total UMP balance Arrears payments, not current support, distribute to UMP These are child support payments made that are in excess of the UMP balance. Arrears payments reimburse the total UMP balance. Federal regs are very specific about what can be posted as maintenance and what can be reimbursed by child support collections. 24

Line 11B IV-E Foster Care Excess Payments County share is 100% Excess amounts shall be deposited into a trust account for the child’s future needs Dear Director letter dated June 1, 2013 If no other costs, BO set up separate acct to track. See Dear Director letter dated June 1, 2013, which has information. CSE is NOT & cannot be involved in setting up any trust account with this money. Reference Volume 6 (6.803.2) 25

Reclassify IV-E Excess Costs Excess maintenance and/or UMP payments that are in a trust fund can be reclassified to IV-E maintenance costs Happens infrequently Explain benefits of having more IVE expenditures. Sandy E for questions on how to do it.

Line 11C Non IV-E (Foster Care) Retained Collections Child support collections retained by counties Used to reimburse Non IV-E expenditures Child support assigned ACSES does not track NIVE Expenditures, like it does IV-E Maintenance, because NIVE isn’t federally mandated. NIVE placement costs are tracked by Child Welfare systems. 27

Line 11C Child’s cost of care tracked in Trails All support forwarded to Trails Not separated into current support or arrears There are no federal regulations concerning what can be reimbursed by child support on a NIVE child.

MM627 – Lines 12, 12A, 12B Line 12 is the net funds transfer, the sum of the negative and positive cash transfers Line 12A is the amount of the warrant that goes to the county – now CFMS Line 12B is an amount due to the state Ignore

Tracking the MM627 to CFMS

If Positive = State owes County If Negative = County owes State Under what CFMS Program/Function codes will I find the above information? Line 3 CFMS P/F C825.8000 Line 10 CFMS P/F C990.8500 Line 3A CFMS P/F C830.8000 Line 11A CFMS P/F E750.1235 Line 4 CFMS P/F C845.8005 Line 11B CFMS P/F E997.1236 Line 5 CFMS P/F C840.8900 Line 11C CFMS P/F X475.1237 Line 8A&B CFMS P/F C835.8900 If Positive = State owes County If Negative = County owes State

Total Non-AFDC Intercept Certification Fee Line 3 MM627 CFMS C825.8000 Entered via ADI upload by Program Accountant

Total IRS/ADO Admin Service Fee Line 3A MM627 CFMS C830.8000 Entered via ADI upload by Program Accountant

Total Administrative Costs Line 4 MM627 CFMS C845.8005 Entered via ADI upload by Program Accountant

Over-The-Counter Settlement Line 5 MM627 CFMS C840.8900 Entered via ADI upload by Program Accountant

FA/County Erroneous Disbursements Net Line 8A/B MM627 CFMS C835.8900 Entered via ADI upload by Program Accountant

IV-A Retained Collections Line 10 MM627 CFMS C990.8500 ACSES to CFMS interface

Foster Care (IV-E) Retained Line 11A MM627 CFMS E750.1235 ACSES to CFMS interface ACSES to CFMS

Foster Care (IV-E) Excess Payments Line 11B MM627 CFMS E997.1236 ACSES to CFMS interface ACSES to CFMS If you need/want to reclass these, contact settlement accounting

Foster Care (NON-IV-E) Payments Line 11C MM627 CFMS X475.1237 ACSES to CFMS interface ACSES to CFMS

Incentives State Incentives Federal Incentives Federal Incentives are put back into the program. Accounting forces this entry by reclassifying from 9100.8000 to C995.8000, using accounts 61110 or 61910.

DRA Fee The NIVA service fee - FY 07 Once $500 has been disbursed to the CP, she/he owes a $25 fee Taken from the next child support payment after $500 Implemented as part of the DRA, Deficit Reduction Act. Effective FY 07, 10/1/07. Based on FFY not CY ANNUAL?????

DRA fee Reported to feds annually Program income – 66% to feds, 34% to counties Part of CFMS settlement Cash kept in state bank account until reported to feds At FY eoy, we create a report which goes to state accounting, to be entered into CFMS. Part of CFMS settlement, counties see the fees we’ve collected. Counties see the net, not the details. About $500,000 to feds annually & $275,000 to counties. On the state total page of MM627, not county pages. CFMS: C985 8300; debit is 11320 & credit is 43710

NIVA application Fee A $20.00 fee received from non-public assistance applicants (NIVA) before child CSE services can be provided IV-D documents fees paid in ACSES All fees must go to the BO for deposit, along with back-up documentation Again, internal processes to ensure that both divisions have all the information. 44

Waived Application Fee If the fee is waived for the CP, the county must pay the $20.00 fee IV-D provide documentation of waived fees to the BO BO enters fees directly into CFMS Considered program income to county County decision when to waive fees. Print screen or log for waived fees to give to BO Back up documentation can include detail found on the AM360 52A screens 46

IV-A & IV-E Receivables Business Office needs monthly total to record on county financial statements as Accounts Receivable Responsibility belongs to current county Journal entry to adjust to the AM165 report Discuss current and enforcing county. Whichever county is current will receive the report. AM 165 report. 48

Child Support Incentives Quarterly Monitoring Report (QMR) sent to County Directors and IV-D Administrators Report totals forwarded to State Accounting State Accounting uploads totals into CFMS on a quarterly basis Usually completed about 6 wks after the quarter closes. Quarter ending June is an estimate in order to close the State Fiscal Year; all others should balance. Once the actual incentives are calculated for the June quarter, an adjusting entry is made into CFMS. 50

Incentives State Incentives Federal Incentives Federal Incentives are put back into the program. Accounting forces this entry by reclassifying from 9100.8000 to C995.8000, using accounts 61110 or 61910.

Child Support Pass Through Senate Bill 15-012 Allows all Current support (MSO) for TANF clients collected to be paid to the Custodial Parent (CP) County 20% share and portion of State share paid to counties will be backfilled with State GF dollars, making counties whole. If funds not appropriated for a given year, pass though is not done. Usually completed about 6 wks after the quarter closes. Quarter ending June is an estimate in order to close the State Fiscal Year; all others should balance. Once the actual incentives are calculated for the June quarter, an adjusting entry is made into CFMS. 52

Questions? Kathleen.edwards@state.co.us 303-866-4582 (CSS Financial) Tammy.judd@state.co.us 303-866-4502 (ACSES specific) Michael.auran@state.co.us 303-866-3183