1. Undistributed Collections: What challenges do we face? CSDA 2 nd Annual Training Conference & Expo Anaheim, CA September 19, 2007

2. Today’s Presenters Elizabeth Morgan, Center for Support of Families Larry Satter, CA DCSS Diann Fithian, CA DCSS Avi DeTurenne, Los Angeles LCSA Laura Roth, El Dorado LCSA

3. UDC: The Picture at the National Level From FFY 2001 to FFY 2004, levels of UDC steadily declined In FFY 2001, net UDC was $738 million For FFY 2006, net UDC was reported as $485 million, a 37% decrease from FFY 2001.

5. UDC Pending Distribution Received within past 2 business days Tax Offset holds Future Support Pending Legal Dispute Transfer to Other Agency

6. UDC “Unresolved” Unidentified Collections Pending Locate Uncashed or Stale-Dated Inaccurate/Missing Information Other Collections Undistributed

7. UDC Unresolved Federal government began tracking beginning with FFY 2005 FFY 2005 UDC Unresolved: $200.7 million, or 40.4% of net UDC FFY 2006 UDC Unresolved: $191.1 million, or 39.4% of net UDC

8. Net UDC FY 2005 and FY 2006 for States with Top Six Caseloads

9. Percentage of Unresolved UDC FY 2005 and FY 2006 for States with Top Six Caseloads

10. California Quarterly UDC by Category

11. California Annual UDC by Category

12. OCSE 34a and Schedule UDC Preparation (Current) Current Process Consortia systems upload collections, disbursements and UDC to CADS LCSA director approves monthly CADS reports (Not required for transitioned LCSAs) CADS validates data between CS34, CS35 and Schedule UDC reports DCSS uploads CADS data to CSE CSE combines transitioned LCSAs, Non IV-D and CADS data DCSS produces OCSE 34A and Schedule UDC reports within CSE DCSS performs additional validations with by reviewing the CSE audit extract file

13. OCSE 34a and Schedule UDC Preparation (Future) Future Process CSE will contain all collections, disbursements and UDC data CSE will validate data between CS34, CS35 and Schedule UDC reports DCSS produces OCSE 34A and Schedule UDC reports within CSE DCSS performs additional validations with by reviewing the CSE audit extract file LCSAs will have access to CS34 and CS35 data within CSE

14. Escheatment (Local Process) LCSAs are encouraged to escheat pre-SDU UDC that meet the requirements in CSS letter (04-22) and local policy/procedures. An emphasis shall be placed on escheating UDC that will not convert to CSE (e.g., CASES LGE or “X” data). LCSAs who cannot escheat these types of UDC prior to conversion must perform the following: –CASES counties: Prior to CSE conversion, must create manual receipts (a.k.a. “R” receipts), using the guidelines provided to the conversion managers by Mary Clesi. –ARS counties: A procedure to address UDC that is not in the ARS application is not available. Please work with conversion manger to resolve any outstanding issues DCSS will transfer funds to LCSAs to complete the escheatment process, if necessary Note: It is important to escheat and/or ensure these funds convert to CSE. If valid UDC does not transfer to CSE, financial reports will not be accurate!

15. Escheatment (State Process) A process to escheat funds at the State level is currently under development. It is anticipated that the State escheatment process will utilize the State Controller’s Unclaimed Property Fund and supporting processes. DCSS will utilize CSE to manage the escheatment process. Changes to CSE may be necessary in order to comply with recent changes to the Unclaimed Property Law Additional information on the State escheatment process will be relayed in a future CSS letter

16. UDC Task Force DCSS has been working with the CSDA Finance Committee to establish a task force to monitor UDC issues.

17. Resolve issues related to Non IV-D cases and/or cases with a combination of Non IV-D and IV-D. Unit started 1/1/07 Consists of 9 staff members No enforcement actions Non public ph# 916-845-7747 Email address: CFWD@ftb.ca.gov CFW - Ds

18. Flow of requests to the CFW-D CFW-D State DCSS Call Center SDU CFW-L (County Requests)

19. What We Do Research and resolve escalated customer service financial inquiries Adjust statewide collections Research and release designated suspended collections Manage Non IV-D disbursements Maintain Non IV-D participant information Manage Non IV-D receivables

20. How to minimize UDCs Educate remitters (employers) If Non IV-D case – advise to put case number on check If IV-D case – advise to put participant number on check Ensure cases have complete information If submitting a request to allocate payment always verify CP address exists and current wage assignment is entered in CSE If requesting a duplicate Non IVD case be closed IV-D case has all the needed information Must have current valid IV-D wage assignment

21. UDC Challenges Employers not responding Employers not providing correct information with payments Case information not current Converted UDCs from counties Increasing communication between CFWDs and CFWLs –Our goal is to prevent or resolve UDCs as efficiently as possible!

22. Why payments go on hold Collection Hold vs. Distribution Hold CDRT – Collection and Distribution Research Team Organized along the structure of the State UDC Report Reduction Strategies LCSA Level: Root Causes and Reduction Strategies

23. State UDC Hold Categories Collections From Tax Offsets Being Held for Up to Six Months Collections Received and Being Held for Future Support Collections Being Held Pending the Resolution of Legal Disputes Collections Being Held Pending Transfer to Other State or Federal Agency Unidentified Collections Collections Being Held Pending the Location of the Custodial or Non-Custodial Parent Collections Disbursed but Uncashed and Stale-Dated Collections With Inaccurate or Missing Information Other Collections Remaining Undistributed

24. Collections From Tax Offsets Being Held for Up to Six Months Distribution Holds Injured Spouse Collection Holds Overage of Injured Spouse Claim IRS intercepts Collections Received and Being Held for Future Support Collection Holds Future Payment Voluntary Payment

25. Collections Being Held Pending the Resolution of Legal Disputes Collection Holds AP Files Bankruptcy Financial Dispute FTB Intercept Court Ordered Impound IRS Intercept Legal Dispute Current Spouse Filed Tax Protest Trust Fund Hold UIFSA Responding Case Writ Distribution Holds Dispute Pending Legal

26. Collections Being Held Pending Transfer to Other State or Federal Agency System Processed Unidentified Collections Collection Holds Court Order Required

27. Collections Being Held Pending the Location of the Custodial or Non-Custodial Parent Collection Holds Account(s) Closed AP Address Unknown AP Return Arrears Paid In Full Misidentified (MID) Overpayment System Hold Warrant Cancelled Distribution Holds CP Address Unknown Agency Disbursement Method Unknown Manual Distribution Hold CP Request Overdisbursement KinGap Stop Payment Return Receipt DPSS Return Warrant Cancelled

28. Collections Disbursed but Uncashed / Stale- Dated Collection Holds Uncashed / Stale-Dated Collections With Inaccurate or Missing Information Collection Holds Inaccurate / Missing Information Other Collections Remaining Undistributed Collection Holds Collection Date Required Bad Check Recovery

29. THREE-PRONGED REDUCTION STRATEGY CLEAR IMMEDIATE PRIORITY HOLDS –Priority Hold Codes –Cases brought to our attention through CP/NCP calls, complaints to OMBUDS, State Hearing cases –Dollar amounts over $5,000 or repeating payments REVIEW HOLD DATES TO CLEAR BACKLOG –Review oldest holds and determine if they can be resolved –Follow up on referrals to divisions for operational work PREVENT UNNECESSARY HOLDS –Supervisor Approval –End dates on holds

30. Conversion Preparation Work pre-SDU stale-dated checks prior to conversion! Understand procedures for releasing money in CASES – and do it!

31. UDC and CSE UDC will most likely increase after an LCSA transitions IRS hold times Refund hold times DCT & held payments Automatic system refunds

32. Your comments & questions