Analysis of Proposed Increase in State Funding for Local Child Support Agencies - The 2019-20 Budget

 
 
Analysis of Proposed Increase in State Funding for Local Child Support Agencies - The 2019-20 Budget
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, 2019
2019-20 BUDGET

                 L E G I S L AT I V E A N A LY S T ’ S O F F I C E
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     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

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         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.

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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

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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.

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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

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      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

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     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

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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.

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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                                                                                                                            9
2019-20 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 E
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     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                                                                                                                                 11
2019-20 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 E
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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                                                                                                    13
2019-20 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 E
2019-20 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                                                                                                                                      15
2019-20 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 E
2019-20 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

www.lao.ca.gov                                                                                          17
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