Transcript Follow the Boardwalk to Effective Arrears Forgiveness Strategies

Arrears
______ Management
_________
Know When to Hold
… and Know When to Fold.
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What would you rather have?
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Strategy 1 – Avoid Arrearages
Avoid Unrealistic Orders
Defaults
Presumed Income
Nominal Orders
Step Orders
Unmodified orders
Strategy 2 – Compromise Debt
Debt Compromise
Interest and fees
Accord and Satisfaction
How much to accept?
Repayment Period
1-3 years
3-5 years
5-10 years
10+ years
Acceptable Settlement
80% of arrears
75% of arrears
60% of arrears
50% of arrears
Factors indicating a higher settlement amount:
Non-custodial parent has ready cash;
The arrearage is less than $1,000;
IRS and state tax refund offsets are likely.
Factors indicating a lower settlement amount:
Non-custodial parent has little or no work history;
IRS and state tax refunds are unlikely (self-employed);
Non-custodial parent has no income per 1099 list;
Non-custodial parent is in poor health;
Non-custodial parent has new dependents;
Non-custodial parent has little potential for future payments;
Non-custodial parent’s only source of borrowing is relatives;
Case is arrears only and enforcement limitation has lapsed.
Managing Expectations
Whereabouts of Non-Custodial Parent
Income of Non-Custodial Parent
Known In State
Salaried Steady Employment
Some Income or
Assets Known,
Self Employed
No Income or Assets
Known,
Self
Employed
Drug/Alcohol/
Unemployed/ Under
the Table Income
No Idea
Known UnknownUnknownOut of State Moves Often No Idea
Very high likelihood of
payment; 1st Payment within
weeks
Medium Likelihood of
Payment; 1st Payment in
Months
Low Likelihood of
Payment; 1st Payment in
Years or Never
Strategy 3 – Close Case
Case Closure
See factors for lower settlements
Appendix
Prevention*
Early Intervention
Debt Compromise
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Carefully consider the use of
Retroactive Orders. Retroactive
support orders results in less support
collected.
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Regular use of review and
adjustment process.
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NPA arrears compromise must be
approved by CP (including SSF cases).
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Use Imputed Income orders
minimally. Imputed income is
ineffective in generating payments.
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Educate NCPs on their right to
modify and assist if requested.
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Negotiation of PA arrears is acceptable
by VT OCS and OCSE.
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Minimum Orders exhibit low
payment compliance. Utilize $0
obligations as appropriate.
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Target NCPs in need of
modifications (unemployed,
incarcerated, etc.).
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Use PEAKS reports to determine
target cases.
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Use Realistic Obligations.
Unrealistic obligations result in
reduced collections.

Contact NCPs when no
payment is received.
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Debt compromise may be a factor to
negotiate current support being paid.
(Example: 6-months of current support
paid and $X or arrears are
compromised.)
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Parents should be drawn toward the
reality of income-based orders.

Work with NCP upon child's
emancipation to repay any
remaining debt.

If targeting cases to quickly work debt
compromise, pick PA arrears-only first
and then current support cases.

Simplified modification.
Arrears Forgiveness in
Pennsylvania
An Ace in the Arrears
Management Deck
May 25, 2011
John Graham, Director
Westmoreland County DRS
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Pa. R.C.P. 1910.19(f)
Amended Pennsylvania Rules of Civil Procedure
Court given administrative power to modify or
terminate financial obligations
Effective May 19, 2006
Explanatory Comment
County-specific implementation
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Factors for Application
Order no longer able to be enforced under
State law
Obligor is unable to pay
 Has no known income or assets
 No reasonable prospect that will be able to pay in
foreseeable future
Common types of cases
 Obligor incarcerated
 Obligor disabled
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Implementation – Case Identification
Identification of cases
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Automated system alerts
CP or NCP reporting
Enforcement action
State reports
Introduced in 2009
 Performance Improvement Module (PIM)
 Automated Case Closure/Order Modification
(ACC/OM)
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Implementation – Case Identification
Checklist to assure court the DRS
recommendation was sound
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Due Process Provisions
60-day advance notification
Ability for CP/State to contest
 Conference/hearing to resolve contest
NCP required to report changes
 Case reviewed upon NCP having employment,
income, or assets
NCP fraud or misrepresentation
 Prior order/arrears may be reinstated
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Monitoring the Non-Financial Obligation
Routine periodic review
Notification upon any of the following:
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Incarceration updates
NDNH and SDNH hits
FIDM information
CSLN matches
Receipt of SSA or SSI benefits
State reports
 Cases with active NFOBs
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Other Cards in Play
Encourage obligor participation
 Appointment reminder calls
 Child Support Web site
o IVR and Customer Service Units
 Allow telephone testimony
 Extend the helping hand:
o Amnesty programs
o Employment and training
o Reentry efforts
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Other Cards in Play
Avoid Build-Up of Arrears – Intervene Early
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Complete genetic testing at initial conference
Notify NCP to be prepared to pay at conference
Provide NCP with temporary payment coupon
Phone reminder following conference
Prompt enforcement action
Maintain same payment for
faster arrears payoff
 Leverage automated tools to
efficiently manage cases/resources
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Other Cards in Play
Establish a realistic, enforceable order
 Prior to proceeding
o Obtain income/asset information
 Focus on present ability to pay
 If EC appropriate
o Comply with Pa. R.C.P. analysis
 Establish default order as last resort
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When and How to Up the Ante?
Contempt or modification?
 Maximize administrative and judicial modification
options to keep order realistic/enforceable
Coercive enforcement
 Contempt
 Sentencing Order
 Payment Plan
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Results
Federal
Fiscal Year
Outstanding
Arrears
Total
Collections
Collections
Sent to
Other States
% Collection % Collection
on Current on Arrears
2005
2.11 billion
1.57 billion
47.1 million
74.39
73.50
2009
1.26 billion
1.62 billion
50.5 million
81.31
81.78
2010
1.13 billion
1.57 billion
49.5 million
83.24
83.14
Note: Highest total collections were in 2008 at 1.67 billion.
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Results
Federal
Fiscal Year
Open Cases
Cases with
Arrears Due
Arrears-only
Cases
Full-time
Equivalent
Staff
2005
558,944
480,731
87,924
2683
2009
461,196
369,705
54,120
2860
2010
439,530
340,894
51,163
2849
Note: Highest full-time equivalent staff was in 2008 at 3,036.
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Come to the Table with a Full Deck
A multi-faceted approach to arrears
management is the only way to win this game!
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Follow the Boardwalk -to Effective Arrears
Forgiveness Strategies
May 2011
Nancy Thoma Groetken
Regional Program Manager
Federal Office of Child Support Enforcement
[email protected]
(816) 426-2270
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The Chips are Stacked
At the end of FY 2010, the amount of child
support debt owed nationally is $110 Billion,
up 2.4% from FY 2009
Arrears are up about 31% over the last 10
years from $84 billion in FY 2000
Collections decreased in 2009 for the first
time in OCSE history, but in 2010 are up
slightly -- $26.6 billion collected in FY 2010
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The Chips are Stacked
Debt management has become an integral
part of child support programs.
In 2007, the Office of the Inspector General
for the U.S. Department of Health and Human
Services found that child support agencies in
20 states operate fully implemented or pilot
state debt compromise programs, and another
23 states settle state debt on a case-by-case
basis.
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The Chips are Stacked
Debt management projects have had varying degrees
of success. Some have shown that reducing debt
owed to the state can unburden noncustodial
parents who have accumulated it far above their
ability to pay.
 Findings from a University of Wisconsin Institute of
Research on Poverty (IRP) evaluation of one debt
leveraging program— designed to help noncustodial
parents reduce large support debts and increase
their support payments— suggest considerable
promise for this approach.
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The Chips are Stacked
The Urban Institute conducted a series of studies in
12 states, which found that most child support debt
is owed by low-income noncustodial parents.
Emerging research from the University of Wisconsin
IRP suggests that higher arrears substantially reduce
formal earnings for noncustodial parents that
struggle with maintaining jobs—and consequently
reduce child support payments for their families.
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Debt Compromise
Programs:
Best Practices
& Child Support
Outcomes
Center for Policy
Research
is in the Game
In 2008, the Center for Policy Research of Denver
(CPR), CO, proposed to conduct a project to help
states and local jurisdictions reduce delinquencies by
developing and/or revising arrears compromise
policies , implementing them, and assessing their
impact.
OCSE awarded a SIP grant to Center for Policy
Research (CPR) July 2008 through June 2011
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The Rules of the Game
 Project included identifying states with arrears
compromise programs that were interested in:
 identifying best practices,
 revising or expanding their program, and/or
 evaluating their program
Debt Compromise
Programs:
Best Practices
& Child Support
Outcomes
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The Players
 California COAP
 Illinois Project Clean
Slate
 Maryland PIP
 Minnesota SHLIF
 Hennepin CO, MN
 Ramsey CO, MN
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New Mexico Fresh Start
North Dakota
Vermont Project AIM
Washington DC Fresh
Start
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The Rules of the Game …
CPR started by gathering information from all
of the projects on:
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criteria for case eligibility,
debt compromise terms,
staffing and training,
corrective actions for those who fail to comply,
and
 program evaluation.
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The Rules of the Game…
Information was compiled and published in a
format that allowed for ease in comparison
and contrast across the sites.
A two-day meeting was held in June 2009:
 shared the information with participants from all
of the sites,
 gathered their recommendations on best
practices, and
 determined how to proceed to gather empirical
information on program outcomes
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The Players Meet
Representatives from several sites identified debt
compromise best practices and discussed features of
the different programs
 Items discussed included:
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–
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–
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Program Goals
Scope & Sources of
Program Authority
Target Populations
Recruiting, Screening,
Enrolling
–
–
–
–
Types of Arrears Forgiven
Communicating about
the Program
Structuring Forgiveness
Program Staffing &
Monitoring
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Learn from the Players – Best
Practices in Program Design
 FIRST: Clarify program goals
 Goals will help you decide eligibility criteria, recruitment, and the scope of the
program
 Consider different programs for different populations
 One-time payments versus regular, on-going payments
 Adopt a uniform approach, but allow for flexibility
 Uniform programs treat everyone equally and are easier to explain; flexibility
allows programs to respond to obligors on a case-by-case basis
 Establish realistic expectations
 Don’t aim to generate big revenue for the state
 Establish simple rules, procedures, and ledger adjustments
 Find a legislative champion
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Learn from the Players - Best
Practices for Project Procedures
Use a variety of methods to identify suitable cases
 Automated system, CBOs, worker nominations, word-ofmouth referrals, general publicity
Maximize administrative procedures
 Agreements must be approved fast using administrative
procedures
Enhance automated systems to track cases
 Create system-generated alerts rather than relying on
manual monitoring techniques
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Learn from the Players - Best
Practices for Project Procedures
 Develop a simplified method of modifying orders
 Having obligors modify their orders before they enroll in a program
may help them be successful in making payments
 Suspend compromise agreements when circumstances
change, and give obligors additional chances
 Build in mechanisms from obligors to rehabilitate if they miss a
payment, and allow the agreements to suspend if an obligor loses
his/her job
 Reduce or eliminate interest charges
 Interest charges are typically seen as a “negative” that contributes to
the generation of arrears. However, the forgiveness of interest can be
used as a payment incentive
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Learn from the Players - Best
Practices for Working with Others
 Consult with advocacy groups
 Fatherhood groups, reentry programs, financial literacy, and legal
services can help with project design and recruitment
 Involve the court constructively
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Judges can assist with program recruitment at specialized dockets
 Develop effective partnerships with workforce programs
 Employment is critical to the success of programs that tie forgiveness to future
payments. Relationships with employment programs should be pursued.
 Consider contacting custodial parents about arrears owed
them
 Programs that outreach to CPs say they are pleased to get some form
of payment.
 Some CPs have voluntarily forgiven arrears owed to them, further
unburdening NCPs and facilitating improved co-parenting and father
involvement
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Learn From the Players – MOST IMPORTANTLY…
 Everyone agrees, preventing arrears by
getting orders right in the first place is
the absolute best practice!
 Setting orders based on the actual income
of the parent, acting early when a payment
is missed and adjusting orders timely when
appropriate all contribute to managing
arrears.
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More about the Players….
California: Compromise of Arrears Program (COAP)
is a statewide, statutory settlement program that
targets arrears-only and current-support cases with
uncollectible state debt of $501 or more.
Illinois: Project Clean Slate is a legislative incentive
program that targets noncustodial parents with any
amount of state-owed debt, who can document that
debt accrued while they were formerly incarcerated,
disabled, or under- or unemployed.
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More about the Players….
 Maryland: Child Support Payment Incentive Program
(PIP) is a legislative incentive program that targets
noncustodial parents who have state debt with gross
income below 225% of the federal poverty level.
 Minnesota: Strategies to Help Low Income Families
(SHLF), an arrears management approach in Hennepin
County, and also in Ramsey County are part of a
statewide, statutory effort to encourage county child
support agencies to prevent and address arrears. The
two counties operate settlement programs and workers
have discretion to target arrears-only and currentsupport cases with TANF arrears with factors that limit
the NCP’s ability to pay.
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More about the Players...
New Mexico: Fresh Start/Arrears
Management Program is a statewide
legislative settlement program that targets
cases with emancipated dependents, which
only owe state arrears with balances of $1,000
or more.
North Dakota: A statewide debt write-off
policy permits compromise of interest on
assigned arrears and any interest on
unassigned arrears accrued after July 1, 2005.
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More about the Players…
Vermont: Project Aim (Account Intervention and
Management) targets noncustodial parents who
have not made any payments in 12 months and
accepts a reduced amount in exchange for a lumpsum payment or regular payments of arrears over
time.
Washington, D.C.: Fresh Start Program for
Noncustodial Parents targets cases with child
support arrears exceeding $1,000, with no voluntary
payments in the last 36 months, and with automatic
eligibility for noncustodial parents who were
incarcerated when any arrears accrued.
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Important Meeting Results…
 Several of the participating sites reported making
revisions in their debt compromise programs as a
result of the CPR meeting in June 2009.
Several asked for help in activities aimed at making
the programs more visible to the child support
population.
Sites offering debt compromise in exchange for
payment of current support also were interested in
learning more about NCPs who succeed in the
program, and the payment behaviors associated with
program participation.
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What is the Next Hand to be Played?
Results and outcomes are what we really want
Evaluation goal: identify program features
associated with strong outcomes
CPR is working with five project sites to gather
data:
- California
- Illinois
- Maryland
- Minnesota
- Washington D.C.
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A look at the next card
CPR developed a standardized data gathering tool to
use across the sites
Data being collected includes:
o information about the participants, the details of their
participation,
o the terms of their arrears compromise agreement,
o and their pre- and post-agreement payment history.
Analysis will determine the effectiveness and results
from the various approaches on different types of
cases and participants with varying circumstances
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A Look at the Next Card…
The results of the CPR work will fill in some of
the information gaps on what works and why
with supporting empirical evidence. It will
supplement and enhance what others have
already studied, including the OIG study.
It will provide the first empirical look at the
characteristics of obligors who participate in
these programs, and detailed information on
their payment performance and compliance.
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A Look at the Next Card…
The data will include the source of each
payment - voluntary, wage withholding,
unemployment benefits, other involuntary –
to yield information on changes in
employment status which may affect payment
compliance.
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For More Information Now
To get more information go to the OCSE PAID
Workplace under Research/Grants and
Reports sub-folder labeled Debt Compromise
Program: Best Practices and Child Support
Outcomes.
Included there is a copy of the Conference
Summary and a variety of materials gathered
by CPR from 14 other state and local debt
compromise programs.
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More information is Coming
The final report is not yet ready and data
gathering is still going on in one or two of the
sites.
As results are available, expect to hear more
in upcoming conferences, meetings or
conference calls.
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Follow the Boardwalk -to Effective Arrears Forgiveness
Strategies
QUESTIONS?
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