CSDA Membership Meeting May 2012

Performance Incentives Modified in 1998 by Child Support Performance Incentive Act (CSPIA) Based on a State’s performance on 5 performance measures “Collections Base” is the foundation of all calculations Aid Case Collections (Current and Former) doubled, plus never-assisted Limited Pool of money nationwide (about $500M annual) Competition against other states

Incentive Calculations Complicated formula using ranges A state earns incentives for each PM, assuming they pass DRA. Incentive is zero if performance below minimum threshold. PM 1 and 2, minimum is 40%, maximum is 80%. Performance above 80% gets no additional incentive.

Table E If the Cost-Effectiveness Performance Level Is: At Least:But Less Than: The Applicable Percentage Is: % % % % % % % %

“Maximizing” Incentives is Good? If we increase Collections Base by $180 Million (5%) ($180M Non-wel, or $90 M Current or Former) Let’s assume a 10:1 return on investment (We spend $18 Million to receive $180 M) California might receive $1.9 million more in incentives(If other states stay the same)

“Maximizing” Incentives is Good? If we increase Cost Effectiveness 5%, or $0.12: $806,000 more incentive Increase Current Support 5%, or 2.8 points: $322,000 more incentive Increase Arrears Collection by 5%, or 3 points: $241,000 more incentive Support Orders or Paternity by 5%: Zero more incentives. Yup, Zero.

Can a State pass incentives down to a County? New York: 60% passed on, by County’s collections (as % of state) Wisconsin: Weighted Fed Incentive formula Pennsylvania: Weighted, based on expenditures Minnesota: All passed through, based on PM 2-5 Ohio: By Fed Incentive share, with adjustments Michigan: 50% passed through, based on federal formula

What if California did this? California receives about $38 M/year in incentives. Assumption: Incentive money put into local allocation in proportion to all local allocation. To allocate according to performance, that $38M would first have to be backed out of existing allocations.

Step One: What share of the State incentives will be passed through? States can choose to pass through 100% ( Minnesota, Wisconsin), 50-60% (New York, Michigan) or Zero (California)

Step Two: Back out the incentive dollars (Assume 100% pass-through) County A receives 3.6% of statewide allocation County A would begin by reducing allocation by 3.6%, or $1.4 M/year. County B receives 0.7% of statewide allocation County B would reduce by $252,000/year

Step Three: Choose an allocation method Full Incentives Model? Advantage: Currently-higher-performing LCSA’s Based on Collections? Advantage: ‘Wealthier’ counties, where average order and collections per case are higher Weighted Collections? Advantage: High welfare caseloads Add in Customer Service Metrics?

County A: Share of State Allocation: 3.6% Share of State Collections: 3.4% Base allocation: $25,735,000 Back out state distribution: ($ 1,368,000) New base allocation: $24,367,000

Full Federal Incentives Model: Incentive: $1,391,000 Net Change: $23,717 Collections Model Incentive: $ 1,292,000 Net Change: ( $ 75,756) Weighted Collections Model Incentive: $1,311,000 Net Change: ( $ 56,756)

County B: Share of State Allocation: 0.4% Share of State Collection: 0.4% Base Allocation: $ 2,842,000 State Distribution: ($ 151,000) New Base Allocation: $ 2,691,000

Full Federal Incentives Model: Incentive: $ 170,602 Net Change: $19,534 Collections Model Incentive: $ 152,000 Net Change: $ 932 Weighted Collections Model Incentive: $ 163,400 Net Change: $ 12,332

Ranges of Impact: Full Federal Increase: San Bernardino: $ 803,000 San Diego: $ 548,000 Fresno: $ 508,000 Riverside: $ 415,000 Decrease: Santa Clara: $ 395,000 Santa Cruz $ 210,000 Yolo: $ 199,000 San Francisco: $ 184,000

Ranges of Impact: Collections: Increase: San Bernardino: $ 709,000 San Diego: $ 598,000 Riverside: $ 441,000 Fresno: $ 221,000 Decrease: Santa Clara: $ 368,000 Sonoma: $ 255,000 Tulare: $ 219,000 Butte: $ 200,000

Ranges of Impact: Weighted Collections: Increase: San Bernardino: $ 659,000 San Diego: $ 445,000 Fresno: $ 426,000 Riverside: $ 395,000 Decrease: Santa Clara: $ 373,000 Sonoma: $ 270,000 Ventura: $ 223,000 San Francisco: $ 191,000

Ranges of Impact: Orange and Los Angeles: Increase: Orange: $142,000 (Collections) Los Angeles: $ 250,000 (Weighted Collections) Decrease: Orange: $151,000 (Weighted Collections) Los Angeles: $ 107,000 (Incentives)

Questions?