Analysis of Proposed Increase in State Funding for Local Child Support Agencies - The 2019-20 Budget
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The 2019-20 Budget:
Analysis of Proposed Increase in State
Funding for Local Child Support Agencies
GABRIEL PETEK
L E G I S L AT I V E A N A LY S T
MARCH 26, 20192019-20 BUDGET
L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
Executive Summary
Legislature Directed the Department of Child Support Services (DCSS) to Identify
Operational Efficiencies and Refinements to Budget Methodology by July 1, 2019. During
the 2018-19 budget deliberations, funding for the 49 local child support agencies (LCSAs)
became an issue of concern for the Legislature. Specifically, current state funding levels for
LCSAs are not based on any particular rationale and likely hinder the state’s goal of ensuring
consistent child support services across the state. The 2018-19 budget included an ongoing
General Fund augmentation of $3 million (an increase of about 1 percent) to be shared among
some LCSAs. The state provided this funding to address a concern that flat funding levels over
time have made it difficult for some LCSAs to carry out core child support services. Looking
ahead, the budget also required DCSS to produce a report that identifies program-wide
operational efficiencies and refinements to the methodology that is used to provide funding to the
LCSAs. That report is expected to be completed by July 1, 2019.
Governor’s Proposal. Longstanding differences in funding across LCSAs raise the
concern that some LCSAs may not have sufficient resources to perform core child support
tasks, while others may have more than enough funding. In light of this concern, as part of
the 2019-20 budget proposal, the Governor proposes a new budgeting methodology that
would incrementally increase General Fund support for LCSAs identified by the proposal as
“underfunded.” Specifically, the proposed budgeting methodology calculates new baseline
program costs for each LCSA and compares these costs to their current funding levels. Based on
this comparison, the administration identified 21 LCSAs with funding levels below the calculated
baseline costs. Over three years, the Governor proposes to increase total funding for these
LCSAs by $57 million General Fund (the amount that is needed to increase funding in each of
the 21 LCSAs from current levels to the level calculated as their baseline cost under the new
methodology), while maintaining funding levels for LCSAs above the calculated baseline costs.
The proposal also includes performance-based funding for LCSAs that demonstrate increased
collections and collections per case that will be distributed following the allocation of the initial
$57 million (in 2022-23). Overall, the administration estimates that total collections will eventually
increase by $347 million (15 percent) as a result of increasing state funding levels.
Governor’s Proposal Premature and Raises Significant Policy Questions and Concerns.
In our assessment, the administration’s proposal is premature in several ways and raises
significant policy questions and concerns:
• Proposed New Budget Methodology Premature at This Time. The Legislature directed
DCSS and the LCSAs to identify operational efficiencies that would make the state’s child
support program more cost-effective and efficient. The department has not yet identified
these opportunities or built them into its proposed budgeting methodology. In our view, it
is premature to request additional state funds without fulfilling the Legislature’s directive to
also identify cost-savings measures. In addition, the federal government recently issued new
policy guidance on child support program operations. Updating state practices in the next
few years to comply with this guidance could result in changes to LCSA operations and
www.lao.ca.gov 12019-20 BUDGET
funding needs. As such, it is premature to institute a new budgeting methodology prior to
updating state law to align with the new federal guidance.
• Governor’s Proposal Raises Significant Policy Questions and Concerns. The
administration has not proposed statutory language to codify the intent of the budget
proposal or outline how the budgeting methodology will be used in future years. As a
result, legislative oversight and accountability related to the use and impact of proposed
new state funding are limited. Lastly, the proposal does not fully consider the possibility
of, and trade-offs associated with, reducing the proposed state funding augmentation
needed to meet baseline program costs in some LCSAs by first “right-sizing” funding levels
for all LCSAs. Right-sizing funding for all LCSAs would mean redirecting excess funding
from 28 LCSAs with more than enough funding to meet baseline costs to the remaining 21
LCSAs identified as not having enough funds to meet calculated baseline costs.
LAO Recommendation. We recommend that the Legislature withhold action on the current
proposal until the administration submits (1) the statutorily required report identifying state and
local operational efficiencies and (2) a proposal to refine the current budget methodology based
on the finding of the report, as previously directed by the Legislature. Regarding the development
of a totally new, wide-ranging budget methodology, as opposed to refinements, we suggest that
the Legislature wait until after the state has updated its program to align with federal guidance
before instituting a new methodology. Finally, given that the funding for LCSAs has remained
flat for many years, if the Legislature wishes to consider providing some funding to counties
to provide some fiscal relief while the state updates its program, one option would be for it to
provide an inflation adjustment for all LCSAs in 2019-20.
2 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
INTRODUCTION
The primary purpose of the state’s child support augmentation. Looking ahead, the budget
program is to collect child support payments also required DCSS to produce a report that
from noncustodial parents and distribute those identifies program-wide operational efficiencies
payments to custodial parents and their children. and refinements to the methodology that is used
At the county level, Local Child Support Agencies to provide funding to the LCSAs. That report is
(LCSAs), overseen by the state Department of Child expected to be completed by July 1, 2019.
Support Services (DCSS), collect and distribute In this report, we provide background on the
child support payments. In order to collect and current child support program. We then describe
distribute child support payments, LCSAs locate and assess the Governor’s 2019-20 proposal to
noncustodial parents, certify paternity, establish create a new budgeting methodology that would
child support orders, and enforce the payment of increase funding for certain LCSAs by nearly
child support orders. $60 million General Fund. We recommend that the
During the 2018-19 budget deliberations, Legislature withhold action on the funding proposal
LCSA funding became an issue of concern for until the administration submits the statutorily
the Legislature. As a result, the 2018-19 Budget required report identifying potential state and local
Act provided certain LCSAs with a small budget operational efficiencies.
BACKGROUND
What Is Child Support? Under state law, State Child Support Program Collects Child
parents share an equal financial responsibility Support From Noncustodial Parents. The primary
for the support of their children. Generally, when purpose of California’s child support program is to
parents do not live together, such as divorced or (1) establish child support orders, (2) collect child
never-married parents, one parent often assumes support payments from noncustodial parents, and
primary custodial responsibilities to care for the (3) distribute collected child support to custodial
child. In these cases, the noncustodial parent— parents and their children. Currently, 49 LCSAs
that is, the parent who does not have primary carry out these tasks at the local level. These tasks
custody of the child—makes monthly child support include locating absent parents; certifying paternity;
payments to the custodial parent. The amount establishing, enforcing, and modifying child support
of child support that a noncustodial parent is orders; and collecting and distributing payments.
obligated to provide is known as the child support (We discuss these steps in more detail later in
order. this section.) In federal fiscal year (FFY) 2017-18,
Child Support Orders Can Be Established the state’s child support program collected and
Privately or Through the State’s Program. In distributed about $2.4 billion on behalf of 1.2 million
general, individuals can establish a legally binding child support cases.
child support order in one of two ways. First, a Federal Government Requires States to
child support order can be established privately Collect Child Support on Behalf of CalWORKs
through a private attorney or as a result of divorce Parents. Federal law requires states to collect
proceedings. Secondly, the government can child support for all custodial parents who receive
establish child support orders through the state’s cash grants under the Temporary Assistance for
child support program (although final authority for Needy Families program—known in California as
setting the amount of the child support order rests the California Work Opportunity and Responsibility
with the court system). to Kids (CalWORKs) program. CalWORKs provides
cash assistance, job training, and social services
www.lao.ca.gov 32019-20 BUDGET
to very low-income families with children. The vast associated with CalWORKs benefits. However,
majority of CalWORKs families have little or no not all of these child support payments go to the
income, and most CalWORKs families are headed government—federal law allows states to “pass
by a single parent. Under federal law, states must through” up to the first $100 in child support
also offer the same child support services to other per month to the custodial parent. In California,
families, or “non-CalWORKs” families, but only if CalWORKs families keep the first $50 in monthly
they request the services. child support collected on their behalf, while
More Than Three-Quarters of Child Support the remainder is distributed to the state, county,
Cases Are Current or Former CalWORKs Cases. and federal governments. In 2017-18, the state
Figure 1 displays all cases within the state’s child collected $410 million in child support on behalf
support program by case type: current CalWORKs, of former and current CalWORKs families. Of this
former CalWORKs, and non-CalWORKs. As a result amount, $368 million was collected as CalWORKs
of the requirement that CalWORKs families enroll in recoupment that was used to reimburse the
the child support program and the option that other state ($168 million), counties ($23 million), and
families enroll, more than three-quarters of child federal ($176 million) governments. In most cases,
support cases are current or former CalWORKs counties use their recoupment dollars for general
recipients. (Privately established child support county purposes and not specifically to augment
orders are not included. These orders would only funding for their LCSA. Of the remaining amount,
become state cases if the custodial parent requests $12 million was passed through to CalWORKs
services to enforce and collect the order.) families.
Child Support Collected for CalWORKs Child Support Services Are Funded Primarily
Parents Is Used to Offset Cost of CalWORKs by the State and Federal Government. The
Benefits. When a custodial parent applies for federal government pays two-thirds of the costs
CalWORKs, federal law requires them to sign over of child support services and the state pays
the majority of their child support payments to the remaining one-third. There is no cap on
the state. These payments—often referred to as the amount of federal funds the state can draw
recoupment dollars—are distributed to the state down with regards to the child support program.
and federal governments (counties also receive LCSAs primarily rely on the state General Fund
a small portion) to reimburse some of their costs to draw down federal funds. While the state does
not require counties to have a share of cost in
Figure 1 administering the program, counties may voluntarily
provide local funds to draw down additional federal
Most Child Support Cases Are funds. (A few counties provide some county general
Current or Former CalWORKs Cases fund dollars to their LCSA.) Total funding for the
Federal Fiscal Year 2017-18
state child support program is estimated to be
$1 billion in 2018-19. The majority of these funds—
about $770 million—are allocated to LCSAs to
administer child support services.
Non-CalWORKs Cost Pressures Primarily Driven by Caseload
23%
and Local Factors. Costs to administer child
support services depend primarily on the number
Former
CalWORKs of child support cases each LCSA has, locally
Current
CalWORKs
58% negotiated salaries and benefits for employees,
19% local costs of doing business, and how LCSAs
choose to structure their operations. Again,
though many local decisions influence LCSA cost
pressures, counties have no mandatory share of
costs under the current financing structure.
4 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
The Structure of California’s solely responsible for determining how much
Child Support Program money to spend on their child support programs.
This local funding was then matched with federal
As noted above, the federal government requires funds and state and federal incentive funding.
states to provide child support services. In general, Under the reforms, DCSS assumed responsibility
though, federal law allows states to operate their for determining program expenditure levels and
systems as they see fit. In the following section, allocating state funds among local agencies. With
we outline how California’s child support program the reforms, the state also intended to develop a
is structured, including the major roles and new budgeting methodology to be used to fund the
responsibilities for the state, the LCSAs, and the newly established LCSAs. At the time, the amount
courts (where child support orders are ultimately of funding dedicated to child support enforcement
established and modified). varied significantly across the counties and was
State Restructured Child Support System in not based on the amount of funds needed to meet
1999. Prior to 1999, the child support program state program priorities. Instead, county funding
was administered at the local level by county levels depended on how much each county DA
district attorneys (DAs), with state oversight by the dedicated to the program. However, while attempts
Department of Social Services (DSS). In an effort were made to allocate state funds differently once
to improve program performance and increase the program was overseen by DCSS, the state
the consistency of child support enforcement ultimately chose to allocate funds to LCSAs largely
across the state, the Legislature passed a reform based on the funding level in each county prior to
package of bills in 1999 that aimed to restructure 1999—which was the same as the amount the local
the organization, administration, and funding of DAs had been spending. Since that time, the state
the program. First, the oversight of child support has provided very limited budget augmentations—
enforcement was transferred from DSS to a new one in 2009-10 (specifically, $6.4 million General
stand-alone department, DCSS. Second, child Fund to maintain caseworkers) and one in 2018-19
support operations in each county were transferred (specifically, $3 million General Fund for a subset of
from the county DA’s office to newly created LCSAs with lower staffing levels).
LCSAs. With these changes, the state intended State DCSS’ Roles and Responsibilities.
to shift control of the child support program away Below, we describe DCSS’ major oversight and
from locally elected law enforcement officials (the leadership responsibilities.
DA) and toward a state-appointed child support
administrator (the Director of DCSS). The reforms • Program Oversight. DCSS oversees local
gave DCSS a greater oversight role than had been child support operations by performing
carried out by DSS, in part, to ensure that child such activities as monitoring and auditing
support services were provided consistently across LCSA spending, issuing policy guidance
counties. (At the time, there was wide variation about how to implement new state or
in how counties established and enforced child federal laws that affect child support, and
support orders.) To address this issue, the new collecting performance data from the LCSAs
state department was tasked with identifying and and submitting the results to the federal
encouraging consistent best practices across the government. Additionally, the 1999 child
counties. support reforms require DCSS to encourage
State Reforms Brought Some Funding efficient operations in an effort to maximize
Changes, but Preexisting County Variation performance, including cost-effectiveness.
Continued. Additionally, the 1999 reforms intended Cost-effectiveness is measured as average
to make several changes to the budgeting practices collections for each dollar spent to operate
of the child support program. Prior to 1999, local child support services.
child support budgets were neither reviewed nor • Policy Leadership and Technical
approved by the state, meaning counties were Assistance. The state is expected to set a
www.lao.ca.gov 52019-20 BUDGET
policy vision for the child support program. LCSA’s Roles and Responsibilities. Although
To meet this expectation, DCSS prepares the state oversees and manages the statewide
a strategic plan every five years in which IT system, most child support activities are
it identifies new priorities and proposes carried out at the local level. The main steps that
policy changes to further those priorities. LCSAs and local courts perform are the following:
The plan, for example, identifies key (1) locate noncustodial parents, (2) certify paternity,
performance priorities. One key priority is to (3) establish and modify child support orders,
increase cost-effectiveness from its current and (4) collect payments (either through voluntary
level—$2.50 collected for each $1 spent—to payments or various enforcement actions). Below,
$3.00. In addition to identifying major priorities we provide a brief explanation of the role LCSAs
and highlighting strategies to achieve those play in some of these key steps in establishing and
priorities, the state is expected to provide enforcing a child support order.
individualized technical assistance to LCSAs.
• Calculate Preliminary Child Support Order.
• Statewide Information Technology (IT)
When child support begins, LCSAs calculate
Database Management. Federal law
a proposed amount of child support and
requires that the state operate a single child
send it to the noncustodial parent for review.
support IT system. Each LCSA has access
At this time, the noncustodial parent may
to the statewide child support enforcement
provide additional information to be used
IT system, known as the Child Support
when the LCSA calculates the proposed child
Enforcement system, through which LCSA
support obligation. This calculation of the
staff manage their child support caseload,
order is based on statutorily established state
track payments and overdue child support,
guidelines that dictate the factors to include in
and initiate enforcement actions when needed.
the determination of the child support order.
DCSS maintains the system’s functionality
These factors include such things as wages,
and ensures that LCSAs have uninterrupted
the amount of time the child spends with each
access to their caseload management and
parent, disability benefits, and the costs of
enforcement tools. The state also maintains
raising other children in the household.
the statewide disbursement unit, through
• Establish Final Order in Court. LCSAs
which child support payments collected by
present the proposed amount of the child
LCSAs are sent to noncustodial parents or
support order to a child support judge, or
recouped by the state, as occurs when child
court commissioner, for approval. Here,
support is collected on behalf of CalWORKs
parents have the opportunity to provide the
parents.
court commissioner with additional information
• Some Statewide Child Support
that may not have been included in the LCSA’s
Enforcement Activities. Although most
guideline calculation. In establishing the final
enforcement functions are performed at
order, court commissioners may deviate from
the local level, as discussed below, the
the proposed amount and issue a different
state nevertheless carries out some key
child support amount. Additionally, a child
enforcement activities in conjunction with
support order could be set at zero, referred
LCSAs. For instance, DCSS operates the
to as a “zero-order”, if the noncustodial
automated system that collects child support
parent has little income, or no ability to earn
payments via automatic payroll deductions
income, such as in cases where the parent is
(known as income withholding orders).
incarcerated, involuntarily institutionalized, or
Additionally, on behalf of all LCSAs, DCSS
disabled.
recently instituted a statewide system of
• Collecting and Enforcing Child Support
payment kiosks, at which noncustodial
Orders. Once a child support order has been
parents may make child support payments.
established, LCSAs collect payments on
6 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
behalf of the custodial parent. As shown in court cases, interpreting state and federal child
Figure 2, most collections are automatically support laws, and setting child support orders.
collected through income withholdings that At the local level, a court hearing overseen by a
are deducted from payroll. If the noncustodial commissioner is required in order to (1) establish
parent does not pay or pays less than the the child support order; (2) increase, decrease,
amount ordered, LCSAs seek past due or otherwise modify an existing order, such as
payments—known as arrears—through increasing an order when the noncustodial parent
enforcement actions, such as bank levies or obtains a higher-paying job; and (3) close a child
driver’s license suspension. support case.
At the state level, the Judicial Council of
Some LCSAs Have Capacity to Provide
California, the policymaking body of the state’s
Services to Others. In addition to their normal
court system, receives funding from DCSS to
functions, some LCSAs offer services to other
oversee the county child support courts. In
LCSAs, referred to as “shared services”. For
addition to this role, the Judicial Council reviews
example, some LCSAs operate regional call
the statewide statutory formula for calculating
centers that answer calls from customers in
child support payments—referred to as the
multiple counties throughout the state. Additionally,
guideline calculator—every four years to identify
some LCSAs operate “centers of excellence”
recommended revisions. In developing its
in which they take on uncommon and complex
recommendations, the Judicial Council is required
child support cases from other LCSAs. For
to consult with DCSS and other stakeholders. (We
example, an LCSA that has developed a particular
note that legislative action would be needed to
expertise in collecting child support from workers’
adopt any of the recommended revisions.)
compensation benefits may take on cases with
workers’ compensation claims
from other LCSAs. Usually these Figure 2
types of agreements are worked
Most Child Support Collections
out between the LCSAs involved.
Come From Automatic Income Withholding
In some cases, one LCSA may
Distribution of Collections by Source, Federal Fiscal Year 2017-18
pay the other LCSA for services,
and in other cases one LCSA may Unemployment Benefits 2%
perform the services at no charge. Other States 4% Other Countries 0.03%
Local Courts and State Tax Refunds 7%
Judicial Council Roles and
Responsibilities. As mentioned,
child support commissioners
have the final authority to set the
amount of the child support order.
Although LCSA staff attempt to Payment Kiosks and
collect the relevant information Other Sources 18%
to determine a proposed
Income Witholding 70%
order amount, these amounts
ultimately must be presented
to, and approved by, a court
commissioner. (Commissioners
may approve the child support
order as proposed by the LCSA
or make changes to the proposed
amount.) Commissioners
specialize in hearing child support
www.lao.ca.gov 72019-20 BUDGET
Measuring Performance in under the federal measurements. In general, the
Child Support state practice indicators focus more on customer
service—for example, by tracking the amount of
Federal Performance Measures. The federal time LCSAs take to establish an order and begin
government requires states to track and report to collect child support—and payment reliability—
performance data for five performance measures. for example, by measuring the share of custodial
They are: (1) paternity establishment, (2) percent parents who receive at least 75 percent of the
of cases with a child support order, (3) percentage amount owed. Although DCSS implemented the
of total current child support that is paid, state practice indicators, state funding for LCSAs
(4) percentage of total past due child support does not depend on how well LCSAs perform on
that is collected, and (5) cost-effectiveness. these indicators. Instead, the state and LCSAs
Figure 3 describes each performance measure use the indicators to evaluate their operations and
and compares how California ranks relative to practices in order to make improvements.
other states. As shown in the figure, California
performs at or above the national average for each Recent and Upcoming Developments
performance measure except cost-effectiveness, on
State Increased Funding for LCSAs by
which the state scores near the bottom. In addition
$3 Million General Fund. The 2018-19 budget
to measuring statewide performance, the state
included a $3 million ongoing General Fund
also collects performance data for each LCSA. The
augmentation (an increase of about 1 percent
federal government provides incentive funds to
statewide) to be shared among some LCSAs. The
states based on their performance on the federal
state provided this funding to address a concern
measures relative to other states. The state’s
that flat funding levels over time have made it
performance is dependent on how well LCSAs do
difficult for some LCSAs to carry out core child
on the federal performance measures.
support services.
State Practice Indicators. In addition to the
Legislature Directed DCSS to Identify
federal performance measures, as part of its
Operational Efficiencies and Refinements
most recent strategic plan, the state identified
to Budget Methodology by July 1, 2019.
several additional performance measures. These
Budget-related legislation approved as part
measures, known as the state practice indicators,
of the 2018-19 Budget Act required DCSS, in
measure other LCSA outcomes that do not fall
collaboration with the Child Support Directors
Figure 3
Federal Performance Measures
Federal Fiscal Year 2017-18
U.S. Overall
Measure Description Performance Average Ranka
Paternity Establishment Measures the share of children born out-of-wedlock for whom 94% 94% 13
Percentageb paternity has been established.
Percent of Cases With a Number of cases with a support order compared to total number 91 87 12
Child Support Order of cases.
Current Collections The amount of current child support payments collected compared 67 65 16
Performance to the total amount of current child support owed.
Arrearage Collections The number of cases with collections on arrears compared to the 66 64 15
Performance total number of cases that owe arrearages.
Cost-Effectiveness The ratio of total collections to total program costs. $2.52 $5.15 51
Performance
a Rank out of 54 entities, including the 50 states plus Washington, D.C., Guam, Puerto Rico, and the Virgin Islands.
b States may choose between two formulas to calculate the paternity establishment measurement. As such, California’s rank (13) is out of states that selected the same formula and not all
states.
8 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
Association of California, to “[identify] programwide child support programs, issued guidance to place
operational efficiencies and further refinements a greater emphasis on establishing orders based
to the budget methodology for the child support on the noncustodial parent’s ability to pay, with
program, as needed.” In this context, budget the goal of establishing more reliable, consistently
methodology refers to the process by which the paid child support payments. Specifically, states
state determines what level of funding to allocate to must update their practices to ensure that each
LCSAs. The Legislature required the department to child support order is “based on the noncustodial
submit a report describing the identified operational parent’s earnings, income, and other evidence of
efficiencies and recommended refinements to the ability to pay.” Figure 4 summarizes the new federal
budget methodology by July 1, 2019. guidance. While the state is already in compliance
State to Implement New Federal Rules in with some components of the federal rule, updating
the Next Few Years. In 2016, the federal Office of state practices in the next few years to comply
Child Support Enforcement, which oversees state with the outstanding portions could result in major
changes to LCSA operations and funding needs.
Figure 4
Recent Federal Guidance Prioritizes Ability to Pay and Reliability
Major Features of the Federal Final Rule, December 2016
99Set accurate child support obligations based on the noncustodial parent’s ability to pay.
99Increase reliable, on-time payments to families.
99Move nonpaying cases to paying status.
99Increase the number of noncustodial parents supporting their children.
99Improve child support collection rates.
99Reduce the accumulation of unpaid and uncollectible child support debt.
99Incorporate technology and evidence-based standards that support good customer service and cost-effective
management practices.
Source: Overview of Federal Final Rule, “Flexibility, Efficiency, and Modernization in Child Support Enforcement Programs.”
GOVERNOR’S PROPOSAL
As part of the 2019-20 budget, the Governor costs for each LCSA is based on newly developed
proposes a new budgeting methodology that would estimated costs for various program components,
incrementally increase General Fund support for including staffing and associated overhead. The
LCSAs by a total of $57.2 million on an ongoing proposal also includes performance-based funding
basis. The augmentation would ramp up over for LCSAs that demonstrate increased collections
three years and be provided to LCSAs identified and collections per case that will be distributed
by the proposal as not having enough funding to following the allocation of the initial $57.2 million
meet newly calculated baseline program costs. (in 2022-23). Below, we provide a high-level
The administration’s estimate of baseline program explanation of the Governor’s funding proposal.
www.lao.ca.gov 92019-20 BUDGET
Incrementally Increases Total General Fund methodology, an LCSA should receive
Support by $57.2 Million Ongoing. The state enough funding to maintain a staffing ratio
is expected to provide $246.5 million General of 187 child support cases to one full-time
Fund ($764.7 million total funds) to LCSAs equivalent (FTE) employee. The administration
in 2018-19 to administer the child support reached this ratio by dividing total caseload
program. The budget proposes a new budgeting by the estimated number of FTE employees
methodology that would ultimately increase total (hereafter referred to as employees) needed
General Fund by $57.2 million ($168.5 million statewide to locally administer the child
total funds), or 23 percent. As shown in Figure 5, support program in 2019-20. Figure 7 shows
this funding would ramp up over the next three the total number of employees needed (6,195
years. The amount of General Fund will increase FTE employees statewide) by position and
by $19.1 million each year for the first three years, the different methods used to calculate this
reaching a total increase of $57.2 million General number. For example, the administration
Fund by 2021-22. Beginning in 2022-23, up to determined the total number of employees
$5.1 million in additional General Fund ($15 million needed for child support establishment by
total funds) will be provided to
certain LCSAs that have increased Figure 5
their child support collections.
Governor’s 2019-20 Proposal
Budgeting Methodology Would Ramp Up Over Several Yearsa
Calculates Baseline Program State General Fund (in Millions)
Costs. The administration’s
$350
proposal begins with the
assertion that some LCSAs 300 Governor's 2019-20 Proposal
+$57 Million
are “underfunded” compared by 2021-22
250
to other LCSAs. To determine Current Funding
which LCSAs are underfunded, 200
the administration created a 150
new calculation of the baseline
100
costs of the program. As shown
in Figure 6, this baseline cost 50
estimate takes into account three
major factors—(1) target staffing 2018-19 2019-20 2020-21 2021-22 2022-23
levels, (2) associated overhead, Fiscal Year
and (3) call centers. Overall, a Additional General Fund will be provided to local child support agencies that demonstrate
total statewide baseline program improved performance beginning in 2022-23.
costs for LCSAs are estimated
to be $286 million General
Fund ($842 million total funds) Figure 6
in 2019-20. Below, we explain
Calculated Baseline State Costs
how the proposed budgeting
methodology calculates costs
Per Governor’s Proposal
for each major component of the
2019-20, General Fund (In Millions)
baseline cost calculation. Budgeted Item Costs
Target staffing levels (187 cases per employee) $226.4
• Target Staffing Level Costs.
Associated overhead 49.4
One major component of the
Call centers 10.5
baseline program cost is the Total General Fund Costs $286.2
target staffing level. Under Detail does not add due to rounding.
the proposed budgeting
10 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
surveying 15 LCSAs (referred to as the “time is, to the extent that the costs for an LCSA to
study”) on how long it takes to complete manage its own calls exceeds the budgeted
required tasks when establishing an order. For amount, the LCSA will either need to absorb
the remaining positions, the administration did those costs or direct their calls to another
not conduct a time study. Instead, it generally (more cost-effective) call center. Call center
based target staffing levels on current average costs are calculated to total $10.5 million
staffing levels among the surveyed LCSAs. General Fund ($30.7 million total funds)
The budgeting methodology applies the statewide in 2019-20.
target staffing ratio (187 cases-per-employee)
Funding Levels for 21 LCSAs Increased to
to each LCSA’s caseload and estimated
Equal Calculated Baseline Program Costs.
2019-20 local salary and benefit costs to
The proposed budgeting methodology calculates
determine staffing costs. Total staffing costs
baseline program costs for each LCSA by summing
are calculated to be $226.4 million General
staffing, call center, and overhead costs. Based
Fund ($665.8 million total funds) in 2019-20.
on this amount, the administration identified 21 (of
• Associated Overhead Costs. For purposes
the 49) LCSAs with funding levels below the
of the budgeting methodology, overhead
calculated baseline costs. Over three years, the
includes rent, facility operation costs,
Governor proposes to increase total funding for
direct service contract costs, and other
these LCSAs by $57.2 million General Fund. This
indirect costs. (All salary and benefit
is the amount that is needed to increase funding
costs are captured in the staffing cost
in each of the 21 LCSAs from current levels to
estimate.) Overhead costs
are calculated to total
Figure 7
$49.4 million General Fund
($145.2 million total funds) Calculated Number of Statewide
statewide in 2019-20. This is Employees by Position and Methodology
based on the average share
of total administrative costs
Supervisors, Managers,
currently spent on overhead and Administrators Case Opening and Establishment Employees
across all LCSAs. 1,396 employees, 427 employees, based on how long it takes
based on the ratio of caseworkers to complete required tasks in the
• Call Center Costs. Currently, supervisors, managers, 15 sampled LCSAs
and administrators to all staff
LCSAs either answer calls
through their own call
centers or direct these calls
to call centers operated by
other LCSAs. The proposed 6,195 Enforcement Employees
Employees 2,506 employees,
budgeting methodology based on the average
Statewide
creates a standard cost = case-per-enforcement employee
187 cases- ratio in the 5 LCSAs with the
formula for all calls based on highest collections out of the
per-employee
a standard call per employee 15 sampled LCSAs
ratio—6,030 calls a year to
one employee—and a fixed
cost per call—$15 per call. Clerical, Training,
and Financial Employees
By developing a standard 1,635 employees,
based on statewide and sample
cost formula for calls, it is cases-per-clerical/training/financial Attorneys
232 employees, based on the average
the administration’s intent to employee ratio
case-per-attorney ratio in the 15 sampled LCSAs
encourage LCSAs to elect
the most cost-effective way
LCSAs = Local Child Support Agencies.
to manage their calls. That
www.lao.ca.gov 112019-20 BUDGET
the level calculated for baseline cost under the relative to the amount the administration calculated
new methodology. For nearly all of the 21 LCSAs, as needed to meet baseline program costs—not
the additional funding is primarily intended to including performance-based funding. Over time,
cover staffing costs in order to achieve the in these 28 counties, as operating costs increase
187 cases-per-employee staffing ratio. As shown due to inflation and increased staffing costs, the
in Figure 8, for some LCSAs, relative to 2018-19 caseload to staffing ratios will likely move closer
state funding levels, the total funding increase is to 187 cases for each employee. This is because
modest (less than 5 percent), while for others the as employees leave the LCSA due to attrition, the
increase is significant (greater than 50 percent). LCSA may not have enough funding to hire a new
LCSAs Can Also Receive Performance-Based employee—effectively increasing the number of
Funding. In addition to receiving sufficient funds to cases the remaining employees are handling.
meet baseline program costs, LCSAs are eligible to Administration Expects to Increase
receive performance-based funding. The budgeting Collections by 15 Percent Statewide. The
methodology makes available a total of $15 million administration estimates that total collections will
($5.1 million General Fund) to reward LCSAs that eventually increase by $347 million (15 percent) as
have increased total child support collections a result of increasing funding levels for 21 LCSAs.
and collections per case. The administration Of this amount, $65.7 million is estimated to be
would determine which LCSAs would receive increased recoupment collections—and therefore
performance-based funding and
allocate the funds accordingly in Figure 8
2022-23 (after the $57.2 million
has been allocated). It is unclear
Some LCSAs Would Receive
More State Funding Under Proposal
how often the administration would
Percent Increase in General Fund After Three Year Ramp Up
recalculate LCSA performance
for purposes of allocating Fresno 77%
performance-based funding and San Bernardino 62
San Joaquin 62
which LCSAs will be eligible Kern 61
to receive performance-based Riverside 46
funding. Sacramento 43
Los Angeles 37
Allows LCSAs With Current Glenn 28
Funding Levels Above Madera 26
Calculated Program Costs to Imperial 25
Stanislaus 20
Keep Excess Funds. Similar to
Alameda 17
how the budgeting methodology Contra Costa 15
identified LCSAs that do not have Ventura 8
Placer 8
enough funding to meet calculated
San Diego 7
baseline costs, it also identified Merceda 7
LCSAs with current funding levels Monterey 6
above calculated baseline costs. Kings 3
Solano 3
The Governor proposes to allow Less Than 1 Percent
Tehama
these 28 LCSAs to keep the
10 20 30 40 50 60 70 80 90%
excess funds. By allowing the
Percent Increase
28 LCSAs to continue to operate
within their existing allocations, a While Merced is a part of a regional LCSA with Mariposa, the funding augmentation is to cover
program costs associated with Merced cases specifically.
by the third year, the Governor’s
Note: This figure reflects the percent increase in state funding. Due to the federal
proposal effectively overfunds the match, we would note that total funding for these LCSAs would increase by a similar amount.
child support program statewide
LCSAs = Local Child Support Agencies.
by $17.5 million General Fund
12 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
benefit the General Fund. The administration salary and benefit increases to existing staff. It is
assumes the increase in collections will largely be our understanding that the department intends to
the result of LCSAs hiring more staff (to meet the review and assess the budgeting methodology in
target staffing ratio of 187 cases-per-employee). future years. The administration, however, has not
Specifically, it is expected that by hiring more put forth language to codify the intent of the budget
staff, LCSAs will be able to provide a higher level proposal or outline how the budgeting methodology
of service and conduct more case management will be used in future years. Fundamentally, the
and enforcement activities, resulting in an increase proposed budgeting methodology is based on
in the number of paying child support cases. current circumstances—including caseloads and
The administration expects that this increase in costs—and it is unclear whether and how the
collections likely will not fully materialize in the near methodology would adjust to reflect changing
term, given that it will take LCSAs time to hire new circumstances over time. For example, without
staff and make program changes. language, it is unclear what will happen if, in
Unclear How Budgeting Methodology Will Be future years, additional LCSAs are identified
Used in Future Years. The administration expects as having more than 187 cases-per-employee.
that LCSAs will use the additional funding on items Similarly, it is unclear what will happen if, in
included in the new budgeting methodology (staffing future years, LCSAs that receive funding under
levels, associated overhead, and call centers). this proposal nevertheless have more than
The administration’s expectation notwithstanding, 187 cases-per-employee because they used new
LCSAs could use these funds for other purposes— funding for purposes other than hiring new staff.
for instance, for marketing and outreach, to Finally, it is unclear how the administration will track
purchase or lease new facilities, or to provide whether LCSAs used the funds for their intended
purpose, per the budgeting methodology.
LAO ANALYSIS
LAO Bottom Line. Longstanding differences funding levels is not based on any particular
in funding across LCSAs raise the concern that rationale and likely hinders the state’s goal
some LCSAs may not have sufficient resources of ensuring consistent child support services
to perform core child support tasks, while others across the state. Notwithstanding variation in
may have more than enough funding. In light of funding levels, funding on a per-case basis
this concern, the administration’s proposal to has increased significantly for most LCSAs
update the methodology is an encouraging sign. in recent years due to declining caseloads
In our assessment, though, the administration’s (including more than one-half of LCSAs that
proposal is premature in several ways and raises would receive new funds under this proposal).
significant policy questions and concerns. Below, Due to these factors, it is difficult to assess
we summarize each of these concepts. which LCSAs need new funding and which
can carry out their core functions within their
• Existing Funding Structure Raises
current resources.
Concerns. Current state funding for local
• Proposed New Budget Methodology
child support services is largely based on
Premature at This Time. The proposal is
the amount that was spent, by each county
premature for various reasons. The Legislature
DA, to collect and enforce child support
directed DCSS and the LCSAs to identify
payments prior to 1999. These amounts
operational efficiencies that would make the
varied significantly across the counties; and,
program more cost-effective and efficient.
as such, these differences continue today.
Operational efficiencies have the potential
To our knowledge, wide variation in LCSA
to reduce budgetary pressure, thereby
www.lao.ca.gov 132019-20 BUDGET
minimizing, at least in part, the need for Existing Funding Structure
additional state funding. The department Raises Concerns
has not yet identified these opportunities
or built them into its proposed budgeting As discussed earlier, current state funding for
methodology. In our view, it is premature LCSAs is largely based on the amount spent for
to request additional state funds without these purposes by each county’s DA prior to 1999.
fulfilling the Legislature’s directive to also These amounts varied significantly across the
identify cost-savings measures. In addition, counties; and, as such, these differences continue
updating child support services to align today. Figure 9 shows 2018-19 funding levels
them with new federal rules could result in per child support case in each LCSA. It shows
significant changes to how LCSAs carry out that many LCSAs receive more than $1,000 per
their key functions. As such, it is premature to case to carry out child support activities, whereas
institute a new budgeting methodology—one others receive less than $500 per case. In our
that reinforces longstanding state law and view, fundamental differences in the amount of
practices—prior to updating state law to align funding LCSAs receive to provide child support
with new federal rules. services are cause for concern. This is because
these differences, to our knowledge, are an artifact
• Governor’s Proposal Raises Significant
of pre-reform funding levels and operations and
Policy Questions and Concerns. The
do not appear to further any state policy goal or
proposal raises a number of questions and
objective. On the contrary, large differences in
concerns. First, the budget methodology seeks
available resources across the LCSAs conflicts with
to improve performance by increasing LCSA
the state’s goal of ensuring statewide consistency
funding and staffing levels, yet there is
in child support services.
evidence that other factors—such as caseload
makeup and operational decisions—may also Funding Per Case Has Increased for the
be significant drivers of performance. Second, Vast Majority of LCSAs, Despite Relatively Flat
absent language that provides a framework for Funding Over Time . . . State and federal funding
the budget methodology going forward, for LCSAs has remained relatively flat since 2000.
legislative oversight and accountability is Due to inflation over this period, however, LCSAs
limited. Lastly, the proposal does not go far now have fewer real resources at their disposal to
enough to encourage other best practices and operate child support today than they had in 2000.
does not fully consider the possibility At the same time, though, the number of child
of, and trade-offs associated with, reducing support cases statewide declined by 28 percent,
the proposed state funding augmentation from more than 1.6 million in 2009-10 to an
needed to meet baseline program costs in estimated 1.2 million cases in 2018-19. As a result,
some LCSAs by first “right-sizing” funding the vast majority of LCSAs have greater resources
levels for all LCSAs. Right-sizing funding for all today—on an inflation-adjusted, funding-per-case
LCSAs would mean redirecting excess funding basis—than they did in 2009-10. On average, LCSA
from 28 LCSAs to the remaining 21 LCSAs funding-per-case has increased by 14 percent
identified as not having enough funds to meet since 2009-10. Funding-per-case increased by a
calculated program costs. larger amount (18 percent), on average, in LCSAs
with excess funding under the Governor’s proposal
In the sections that follow, we provide our full and by a smaller amount (9 percent), on average,
analysis of the Governor’s proposed increase in in LCSAs identified as underfunded. We note that a
state funding for LCSAs. portion of the decline in the caseload over this time
period could be attributable to some LCSAs taking
proactive steps to close certain cases that were
deemed “inactive” and unlikely to pay child support.
For LCSAs, managing inactive cases likely requires
14 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
Figure 9
Wide Variation in Funding Per Case Raises Concerns
Funding Per Child Support Case, 2018-19
Marin
Sierra/Nevada
San Mateo
Napa
Eastern Sierra
San Luis Obispo
Santa Cruz/San Benito
Sonoma
Santa Clara
San Francisco
Mariposa
Ventura
Colusa
Plumas
Yuba
Lake
Siskiyou/Modoc
Central Sierra
Humboldt/Trinity
Del Norte
El Dorado
Butte
Placer
Orange
Alameda
Mendocino
Yolo
Santa Barbara
Solano
Monterey
Contra Costa
San Diego
Shasta
Tulare
Lassen
Sutter
Merced
Average - All LCSAs
Los Angeles
Stanislaus
Tehama
Glenn
Kings
Sacramento
Madera
Kern
Imperial
San Joaquin
Riverside
Fresno
San Bernardino
200 400 600 800 1,000 1,200 1,400 $1,600
Figure displays federal funds and state General Funds, but does not include optional county funds that some LCSAs receive from their
county or the corresponding federal match.
LCSAs = Local Child Support Agencies.
www.lao.ca.gov 152019-20 BUDGET
less time and fewer resources than other cases, so by July 1, 2019 that identifies state and LCSA
closing some of them may not have had the effect operational efficiencies that could be pursued to
of substantially reducing LCSA workload. On the reduce LCSA budgetary pressure. Identifying and
other hand, some of the reduction could actually enacting operational efficiencies could reduce costs
be attributable to less people seeking assistance and therefore allow LCSAs to focus staff resources
through the LCSAs, which would represent a on other priorities. Freeing up staff resources for
meaningful reduction in workload over this period. other priorities would have the same effect on
It is unclear how much of the caseload decline LCSA operations as providing LCSAs more state
(and associated increase in funding-per-case) is funding. In this way, reducing costs would help
attributable to either of these factors. minimize the need for additional state General Fund
. . . But Remained Flat or Decreased support for LCSAs. For this reason, in our view,
in Almost Half of the LCSAs Identified as operational efficiencies should be pursued as the
Underfunded in the Governor’s Proposal. state considers how best to update the budget
As discussed above, inflation-adjusted methodology for LCSAs. The Governor’s proposal,
funding-per-case increased by 9 percent, on however, does not identify significant operational
average, in LCSAs identified as underfunded. efficiencies at the state or local level and therefore
However, there is wide variation in funding-per-case does not fulfill this legislative directive.
among these LCSAs. Specifically, funding-per-case Proposal Is Premature as It Does Not Account
has stayed the same or declined since 2009-10 for for Forthcoming Changes. The current proposal
almost half of the LCSAs that would receive new is based on existing operations and practices. In
funds. This could be due to local operational costs this way, the proposal represents a recommitment
rising at a faster rate than declines in caseload. to existing practices. However, as noted earlier
Additionally, as previously discussed, this may be and summarized in Figure 3 on page 8, the
due to differences in how LCSAs manage their federal government recently issued new child
caseloads, such as not proactively closing inactive support regulations—through the federal rule—
cases, or more people seeking services. that generally place a greater emphasis on setting
Overall, Existing Funding Structure and orders on actual earnings in order to collect more
Recent Caseload Dynamics Complicate reliable child support payments. The new rules may
Assessment. Due to the concerns raised by the result in a major operational shift for the state’s
existing funding structure and caseload dynamics— child support system. Implementing these updates
that is, the divergence among LCSAs in how to the state’s program may require significant
funding-per-case has changed in recent years—it state leadership and legislative involvement and
is difficult to assess which LCSAs need additional could result in a restructuring of how counties
funding to carry out their core functions and which operate child support services. As it relates to the
can do so within their current resources. Relatedly, administration’s budgeting proposal, these changes
due to this difficulty in assessing funding needs likely would affect LCSA workload, the associated
across LCSAs, we question whether it is possible time it takes to complete certain tasks, and
to anticipate, with any certainty, how much LCSA ultimately the calculated staffing target. Therefore,
performance and overall collections will improve as the budget methodology now being proposed is
a result of receiving additional funding. premature, given the potential for wide-ranging
changes that could occur in the next few years
New Budget Methodology as the state updates its child support program to
Premature at This Time comply with the federal requirements.
Proposal Is Premature as It Does Not Fulfill Raises Significant
Directive to Identify Ways to Reduce Costs.
Policy Questions and Concerns
As described earlier, 2018-19 budget-related
legislation required DCSS, in collaboration with The Governor’s proposal raises questions
the LCSAs, to submit a report to the Legislature and concerns about the following topics: (1) the
16 L E G I S L AT I V E A N A LY S T ’ S O F F I C E2019-20 BUDGET
relationship between funding and performance, as a result of the Governor’s proposal will fully
(2) legislative oversight and accountability over materialize and if increased funding will have the
the budgeting methodology, (3) encouraging biggest impact on performance relative to changes
streamlined operations, and (4) the trade-offs that could be made to other performance drivers.
associated with shifting excess funding from Proposal Lacks Formal Oversight and
28 LCSAs to the remaining 21 LCSAs identified Accountability Mechanisms. Relative to the
as not having sufficient funds to meet calculated longstanding budget methodology, the new
program costs. Below, we discuss these issues in budgeting methodology is a more technically
detail. complex way to calculate LCSA funding levels. The
Proposal Does Not Address Other Factors administration, however, is not proposing language
That Affect Performance. The Governor’s to codify the new budgeting methodology and
proposal assumes that new funding will result specify how it will be used in future years. The
in improved performance, mainly in the form of lack of language raises concerns about oversight
significant increases in collections. Based on our and accountability. Specifically, it is unclear how
conversations with LCSAs, funding was identified the administration will monitor and hold LCSAs
as only one of many drivers of performance, along accountable for improving performance and
with program structure, caseload makeup, and appropriately spending the funds. Below, we
local economic conditions. Performance across describe these concerns in more detail.
LCSAs has generally improved over the past five
• LCSAs Not Required to Demonstrate
years, even though state funding has remained
Improved Performance. In the past, when
relatively flat. Additionally, as shown in Figure 10
state funding levels were increased for child
(see next page), the top performing LCSAs include
support, DCSS was required to report on
some of the 21 LCSAs identified by the new
the impact funding had on performance. The
budgeting methodology as not having enough
Governor’s proposal does not require LCSAs
funding to cover calculated baseline program costs.
to demonstrate improved performance as a
Specifically, four of the top ten counties with the
result of funding. Thus, the funding proposal
highest collections per case are LCSAs identified by
does not include a way for the state to hold
the administration as not having enough funding to
LCSAs accountable for making improvements.
meet their calculated baseline costs. Moreover, five
of the ten counties that have the lowest collections • LCSAs May Use Funds Flexibly, Including
per case are LCSAs identified as having more for Purposes Outside the Budgeting
than enough funding to cover calculated baseline Methodology. In the past, the Legislature has
program costs. A similar mixed relationship required DCSS to utilize augmentations to
between funding and performance is evident across state funds for staffing purposes and report
other performance measures, including percent of on the impact of that staffing on performance.
cases receiving over 75 percent of the child support The new budgeting methodology provides
order and percent of cases that receive a payment additional state funds to LCSAs with current
every month in FFY 2017-18. funding levels below calculated baseline
program costs. It is our understanding
Overall, funding is not the sole driver of LCSA
that the majority of the proposed funding
performance. Additionally, in cases where LCSA
is intended for LCSAs to hire additional
performance has remained low, the administration
staff and eventually reach the staffing level
has not offered adequate evidence that flat funding
target identified by the administration. Yet,
is the primary cause. Despite this lack of evidence,
LCSAs are not required to use funds for any
we acknowledge that additional funding may—in
specific purpose or report how the funds
some cases—be necessary in order for LCSAs to
were ultimately spent. While expenditures
improve performance. However, the proposal does
on nonstaff items may be appropriate in
not consider alternative ways in which performance
some cases—and could lead to improved
could be improved. Without this analysis, it is
collections—there is no formal way for
unclear whether the improvements to performance
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