1. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Withholding Timing on Ordered Support Jeff Ball Project Manager, Colo. Springs, CO

2. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Timing of Withholding on Paid Support Accounting  Two topics to discuss from the local office perspective that have an impact on the way we account for paid support:  Weekly and bi-weekly pay cycles  Employers who remit earlier than the month in which the current support is due

3. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Ordered Support  From a local office view, how do pay cycles impact our numbers?  Current support is usually ordered in a monthly amount, while most pay periods are weekly or bi-weekly  Certain months of the year have 5 weekly or 3 bi-weekly paydays  When withholding is based on a 26- or 52- week pay schedule, monthly amounts owed can be underpaid or overpaid

4. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support  Colorado has a formula it uses that includes the category of “other” to ensure that the full amount owed is paid each month in 26/52 pay cycle situations Definitions:  MSO = Monthly Support Obligation = Current Support  MAD = Monthly Arrearage Due = Arrears Payback (set usually by caseworker, with a default amount of 20% of MSO)  MPD = Monthly Payment Due = MSO + MAD To find out how much “other” is needed:  MPD ÷ 2 x 26 ÷ 12 – MSO = the additional amount to add in a bi-weekly case  MPD ÷ 4 x 52 ÷ 12 – MSO = the additional amount to add in weekly case Recalculating MPD using “other”:  “other” + MPD x 12 ÷ 26 x 2 = MPD (bi-weekly)  “other” + MPD x 12 ÷ 52 x 4 = MPD (weekly)

5. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina How to Achieve Full Payments JanFebMarAprMayJunJulAugSepOctNovDec Old Method 4 pay periods 45454454454 Paid $184.61 $230.77$184.61$230.77$184.61 $230.77$184.61 $230.77$184.61 JanFebMarAprMayJunJulAugSepOctNovDec New Method 4 pay periods 45454454454 Paid $200 $250$200$250$200 $250$200 $250$200 Old method: Current = $180 w/ arrears payback of $20 = $200 due monthly New method: Current = $180 w/ arrears payback of $20 plus $16.67 other = $216.67 due monthly Each method results in an overpayment in the same month, but there is no delinquency for not fully paying the amount ordered under the new method. Example thanks to Mike Erickson, CO DCS.

6. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Full Payments  Current support is 100% paid  Arrears payback due is 100% paid  Small additional amount of arrears paid  NCP is in compliance in all traditional “underpayment” months  Family benefits from extra payment months as well  Query: Does your state policy allow additional payments on the IWO w/o court approval?

7. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pre-pay on Current Support  When current support is withheld before the first day of the month in which the support is due, many systems treat it as a pre-pay (if no arrearages owed) or credit it as an arrearage payment  By OCSE rule, the date of receipt determines if it is current support (unless payment is received in a different month from the month in which withheld)  In many systems, manual holds and allocations are necessary to have it counted as current support  If not held, payment will be applied to any arrearages; if no arrearage, either pre-pay or returned to NCP

8. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pre-pay on Current Support  Many payers, including DFAS, pre-pay if they are a monthly or semi- monthly withholder, if the first of the month falls on a weekend or holiday. This gives the family the pay check before instead of after the 1 st or 15 th /16 th of the month.  However, child support will consider the sums withheld for child support as a payment made in the prepay month; if there are arrears in the case or current support still remaining in the month of the prepay, many systems will automatically allocate the payment to the prepay month’s current support and the balance to the arrears.  Some states may allow manual holds to be placed on prepays to determine the appropriate month to be considered the receipt month for distribution purposes.  This leaves the subsequent month’s current support unpaid, resulting in many customer service issues and lower current support collections

9. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support  El Paso County, CO – more federal employees per 1,000 population than any other metro area (Tidewater VA #2, DC #3)  Current support went from 53.2% in Jan 2013 to 60.8% in Jan 2014 – a 14.3% increase in current support percentage, representing $450,000 more in overall collections, a 13.7% overall increase – only major difference was how we accounted for DFAS payments  Approximately 1,500 cases were credited w/ current support as was intended, saving staff time, phone calls, consternation among those with clearances, etc.

10. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support  Federal collections distribution rule 45 CFR §302.51(a)(1)  “The State plan shall provide… [except for tax offset and Never-TANF annual $25 fee] amounts collected… shall be treated first as payment on the required support obligation for the month in which the support was collected and if any amounts are collected which are in excess of such amount, these excess amounts shall be treated as amounts which represent payment on the required support obligation for previous months.”

11. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support 45 CFR §302.51(a)(4)(i),(ii)  (i)“…[E]xcept with respect to [tax offset]… and except as specified under paragraph (a)(4)(ii) of this section, with respect to amounts collected and distributed under title IV-D of the Act, the date of collection for distribution purposes in all IV-D cases is the date of receipt in the [SDU].”  (ii) “If current support is withheld by an employer in the month when due, and received by the State in a month other than the month when due, the date of withholding may be deemed to be the date of collection.

12. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support 45 CFR §302.51(a)(4)(iii)  (iii) “When the date of collection pursuant to this subparagraph is deemed to be the date the wage or other income was withheld, and the employer fails to report the date of withholding, the IV-D agency must reconstruct that date by contacting the employer or comparing actual amounts collected with the pay schedule specified in the court or administrative order.”

13. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support 45 CFR §302.51(b) the amount shall be applied to such future months.  (b) “If an amount collected as support represents payment on the required support obligation for future months, the amount shall be applied to such future months. However, no such amounts shall be applied to future months unless amounts have been collected which fully satisfy the support obligation assigned under [TANF] for the current month and all past months.” WHAT DOES IT ALL MEAN?

14. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support If current support is owed in month 1:  and support is received in month 1 by the SDU, it is distributed first as month 1 current support  and support is withheld in month 1 but received in month 2, it is distributed first as month 1 current support (CSE agency to determine date of withholding) If current support is owed in month 2:  and support is collected in month 1 by the SDU, but represents payment for future months, it is applied to month 2 and other future months (except in TANF cases)  Many state systems, including Colorado’s, do not automatically consider payments withheld or received in a month earlier than the intended month of payment as future payments

15. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support So what’s the problem?  Many state systems do not automatically consider payments withheld or received in a month earlier than the intended month of payment as future payments, resulting in missed current support.  These early payments are treated as arrears payments if the NCP owes arrears, or are automatically held as prepay, requiring manual intervention, and even after release, may not be credited to the appropriate month as current support

16. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support The Cert Guide:  From the OCSE State System Certification Guide (2009 ed.), F-5(e) page 89  “…the State may use the date of receipt as the date of collection for collections made through income withholding. If the State uses the date of receipt for all collections, the system is only required to recompute distribution with respect to unidentified payments when identifying information is received in a later month.”

17. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support  Colorado: Family Support Registry (SDU) vendor’s application identifies and processes the 7 DFAS files. When DFAS sends a 2nd payment within the last 5 days of the month, the in-bound ACH file is uniquely identified. The file is processed, but the detail transactions are held, forwarded on the receipt file on the first payment processing date of the next month. payment file – day received DFAS payment Within last 5 days of month’s end ACSES disbursed SDU receipt file – 1 st day of month Info thanks to Lexie Barath – CO DCS

18. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support  By using the date received of the data file, rather than the earlier date the payment file was received:  CO’s system (ACSES) can treat the payments as current support for distribution purposes, which then matches the intent of the payment as a future support payment  We avoid much manual work, possible incorrect categorization of the payment, and customer service issues

19. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support  Possible other approaches to discuss for future debates:  Child support calculated as an annual obligation, continued to be withheld by pay cycle  Allow for payments to be treated as current support as “intended” through evidence of amount withheld and the timing of the withholding  Employers withhold on a monthly or semi-monthly schedule, even if they pay weekly or bi-weekly, by skipping the withholding during the extra pay period in a 3 or 5 pay month (some ERs already do this for health insurance premiums, dues, etc.)

20. ERICSA 51 st Annual Training Conference & Exposition ▪ May 18 – 22 ▪ Sheraton Greensboro ▪ Greensboro, North Carolina Impact of Pay Cycles on Current Support Thanks Jeff Ball – jball@ywcss.com or 719.208.8288jball@ywcss.com