Summary of Report 96-054

Report #: 96-054

Overall Conclusion

The Office of the Attorney General (OAG) has made and documented a good-faith first effort to estimate the extent to which child support enforcement offsets welfare costs; however, of the $498 million cost avoidance reported by the OAG's current methodology, we can attest to $330.7 million, using reasonable criteria. Estimated cost avoidance could have legitimately risen to $501.7 million had the OAG considered Food Stamps and non-AFDC cases in its calculations. Further refinements in the methodology used could raise future cost avoidance well beyond the $498 million presently reported. Subsequent reports should more fully reveal both the methodology used and program costs. Before expanding its cost avoidance estimation effort, the OAG should confer with key stakeholders to better determine the information most needed and its intended uses.

Key Facts and Findings

The OAG estimates a $498 million welfare cost avoidance during fiscal year 1994 as a result of child support enforcement. If cost avoidance is limited to welfare cases which show offsetting child support collections or to non-paying child support cases which leave the AFDC rolls for failure to cooperate with the OAG, the amount generated by the OAG's methodology is closer to $330.7 million. A principle source of this difference is the need to refine the criteria under which closed cases are counted toward cost avoidance.

The current estimation methodology does not explore cost avoidance reasonably arising from other possible sources. For example, had the OAG tracked reductions in Food Stamp benefits and non-AFDC cases in which child support collections occur, it could have accrued an additional $171 million in cost avoidance. Further expansion of the scope of the methodology to examine reductions in both Medicaid service use and other welfare programs could raise future cost avoidance above that presently reported. However, to avoid future overestimation of cost avoidance, care should also be taken to gather more precise data on why and for how long a given case leaves and stays off welfare.

Applicable legislation intends that the OAG report on program costs and benefits. However, cost data are generally absent from the latest report. Other information which would enhance the usefulness of future reports includes data on the relative state and federal shares of cost avoidance and a full explanation of the cost avoidance methodology.

Reasonable controls exist over the integrity of the data used in welfare cost avoidance calculations. Development of such controls should continue as the OAG expands its cost avoidance methodology.

The Office of the Attorney General generally agrees with the report recommendations and has taken steps toward implementation.

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