FY 09/10 Premise

1. FY 09/10 Premise Revenue Stabilization Funding

2. Proposal • DCSS is proposing the investment of additional funding to Local Child Support Agencies (LCSAs) in order to provide for revenue stabilization.

3. Background • Funding for LCSA basic administrative expenses has been held at the $714 million level from 2003‑04 to 2007-08, with the exception of two one-time funding increases. • Augmentation of $2.2 million ($760,000 General Fund)] in 2005‑06 for SDU Implementation and • Augmentation of $12 million ($4.1 million General Fund) in 2006‑07 for LCSA performance improvement.

4. Background • For FY 08/09, funding for LCSA basic administrative expenses were reduced by $12.6 million due to the transfer of funds to state operations for the Central Print and Mail contract with the Department of General Services.

5. Background • From 2002‑03 to 2007‑08, case work staff declined by 517 positions, from 5,020 to 4,503 positions or 10.3 percent (refer to Chart 1)[1] • Total LCSA staffing levels during this period declined by 1,935 positions, from 10,217 to 8,282 or 23.4 percent (refer to Chart 2). [1] Case work staff includes permanent and temporary caseworkers, caseworker supervisors, casework support staff and permanent and temporary investigators.

6. Department of Child Support ServicesChart 1 LCSA Case Work Staffing Levels and Changes in Child Support Collection Growth Rates

7. Department of Child Support ServicesChart 2 LCSA Total Staffing Levels and Changes in Child Support Collection Growth Rates

8. Background • From 2002‑03 to 2007‑08, the rate of collection growth, exclusive of one-time economic stimulus collections, changed from 3.7 percent in 2002‑03 to -1.8 percent in 2007-08 (refer to Chart 3).

9. Department of Child Support ServicesChart 3 LCSA Case Work and Total Staffing Levels and Changes in Child Support Collection Growth Rates

10. Discussion • As staff and equipment costs continue to rise, and LCSA allocations continue to be held flat, LCSAs will need to make additional reductions to LCSA staffing levels. • Using the 2008‑09 Consumer Price index of 2.7 percent, the DCSS estimates that LCSAs would need to reduce 259 staff, which includes 182 case work staff, due to local inflationary costs. The estimated cost of these staff is $18.7 million ($6.4 million General Fund). • This reduction in case work staff would result in an estimated decline in collections of $84.7 million ($6.7 million General Fund).

11. Department of Child Support ServicesChart 4Predicted Collections Growth Rate if Staffing Levels Did Not Change

12. Department of Child Support ServicesChart 5Projected Collections Increase Due to Caseworker Retention

13. Other Benefits • Securing child support for non-assistance cases can avoid reliance on Cal-WORKS and Medi-Cal • A study by the Urban Institute concluded that the $1.3 billion in child support paid directly to families in California during the SFY 2000-01 State fiscal year resulted in $113 million in avoided Cal-WORKs costs and $14 million in Medi-Cal costs. This represents $0.098 in savings for each additional dollar of support collected for non-assistance cases. • A reduction in caseworker staff would result in an estimated loss of $70.2 million in child support paid directly to families – potentially resulting in an increase of $6.1 million in Cal-WORKS costs and $800,000 in Medi-Cal costs (a GF cost of $2.6 million).

14. Discussion • Case work staff collections productivity has increased over the period of 2002‑03 to 2007‑08. • In 2002­03, the marginal collections per caseworker was $255,110 and in 2006-07 the marginal collection per case work staff was $465,251. • The difference is an increase of $210,141 in collections per caseworker or 82 percent over this time period.