New York had the nation's second-highest balance of undistributed child support collections (UDC), totaling approximately $59 million at the end of federal fiscal year 2016, according to an audit released today by State Comptroller Thomas P. DiNapoli. Although the state Office of Temporary and Disability Assistance (OTDA), which oversees New York's child support program, has made some improvements to the way funds are distributed, DiNapoli's auditors identified a number of problems that need correcting.

"Child support payments are languishing in government coffers. This is a persistent problem in New York that needs to be fixed," said DiNapoli. "These delays hurt the families and children that need this money. It's important for state officials to work closely with local social services districts to quickly resolve these issues."

OTDA is responsible for monitoring the efforts of 58 local social services district offices (districts) which collect and disburse child support funds. When funds have not been distributed for more than four months, the law requires districts to determine why and undertake "diligent efforts" to locate the payee (e.g., the custodial parent).

When funds remain undistributed for two years or more, the district is required to report this to family court. If the court determines the district made appropriate efforts to locate the payee, it can order the money to be returned to the payer or deposited with the county treasurer or, in New York City, the commissioner of Finance. Funds that remain with a county treasurer or the commissioner of Finance for more than three years are required to be turned over as abandoned property to the Comptroller's Office of Unclaimed Funds.

As of Dec. 31, 2016, auditors found that approximately $6 million in child support collections had not been distributed by districts for three years or more, comprising 12 percent of the state's total UDC. In the most egregious cases, auditors found that Nassau County had a 38 year old account, while Rockland and Albany counties had accounts aged 37 years and 35 years, respectively.

For a majority of districts (50 of 58), the average UDC account age was two years or less. For six districts, (Erie, Hamilton, Nassau, Otsego, Yates, and Warren), the average age of a UDC account was three to four years, and in two districts (Albany and Oneida) accounts averaged five years.

For the three-year period ended Dec. 31, 2016, only five counties – Nassau, New York City, Oneida, Suffolk, and Wyoming – turned over UDC to the Comptroller's Office of Unclaimed Funds, as required.

The audit revealed:

• Although OTDA tracks the overall age of UDC accounts by county, the office provides little guidance to aid districts in establishing processes for properly turning over UDC; and
• Despite OTDA requirements, 26 districts had less than 20 percent of their UDC accounts properly coded as of Dec. 31, 2016. The codes indicate the reason why the funds cannot be disbursed and can be used to help monitor, assess, identify and process UDC later on.

DiNapoli's audit commended OTDA for improvements made to its child support distribution processes at the state and local levels, including increasing electronically disbursed payments via direct deposit and debit cards.

Disbursing funds electronically lessens the likelihood that funds will be returned due to an outdated address or stale-dated check. Currently, 95 percent of payments are made electronically. Further, enhanced procedures have been implemented that require call center operators to verify addresses and immediately update case records with any changes.

System enhancements have also been implemented to streamline and simplify the process of issuing refunds to noncustodial parents, and additional guidance has been distributed to districts to address specific issues, such as when a party related to a child support case is deceased.

DiNapoli recommended OTDA:

• Develop specific policies and guidelines to help districts reduce UDC balances, including: providing clear and measurable guidance for what constitutes diligent efforts and measurable guidelines for the districts to meet this definition; establishing an expected time frame for when districts should petition Family Court regarding UDC; and developing uniform procedural steps that the districts can use to initiate the escheatment process;
• Expand current outreach efforts to include all districts. In addition to explaining procedures, identify best practices statewide for reducing UDC and initiating the escheatment process; and
• Develop additional guidance to help districts improve their current processes for reducing UDC and initiating the escheatment process, to include information on best practices and how to use the available tools.

OTDA officials disagreed with the audit's recommendations. Their full response is included in the audit report, which can be found at: http://osc.state.ny.us/audits/allaudits/093018/sga-2018-17s17.pdf

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