Child Support Enforcement DISTRIBUTION/DISBURSEMENT

DISTRIBUTION – DEFICIT REDUCTION ACT OF 2005 (DRA)

GENERAL INFORMATION

This topic contains information on the following subjects:

1. An overview of the distribution changes that resulted from the Deficit Reduction Act of 2005 (DRA);

2. The arrearage categories defined by DRA;

3. DRA's effect on how support is distributed based on case type;

4. DRA's effect on how the distribution of support is prioritized.



DISTRIBUTION CHANGES OVERVIEW – DRA (DEFICIT REDUCTION ACT OF 2005)

The Deficit Reduction Act of 2005 (DRA), Public Law 109-171, revises the assignment of support rights and distribution requirements. It limits the assignment of support rights to the State to the amount of support that accrues during the period when a family receives assistance, not to exceed the cumulative amount of unreimbursed assistance. The definition and calculation of URPA (Unreimbursed Public Assistance) remain the same, except that DRA rules of distribution have changed the effect that the URPA balance has on the distribution of support.

In an effort to distribute more support to the family, North Carolina discontinued assignments for pre-assistance arrearages in accordance with DRA. Under DRA, child support arrearages that accrue when a client is not receiving Public Assistance are no longer assigned to the State while the client is receiving Public Assistance. Those Non-Public Assistance arrearages that are owed to the client remain payable to that client.



ARREARAGE CATEGORIES DEFINED - DRA

Under the Deficit Reduction Act of 2005 (DRA), Non-Public Assistance (NPA) arrearages are not assigned to the State (or rolled over to a subaccount that is payable to the State) when a client starts to receive:

• Temporary Assistance for Needy Families (TANF);
• Work First Family Assistance (WFFA); or
• Work First Benefits (WFB).

These are collectively referred to as "TANF".

However, caseworkers might need to create or update several of the subaccounts as defined by PRWORA when entering specific financial information in ACTS. Some PRWORA subaccounts that contain past due support owed to the client (TEMP, UNDA, UNPA, COND) still appear in ACTS. For more information, see Arrearage Categories Defined – PRWORA.

ACTS uses the following extension (subaccount) types:

1. PERMANENTLY ASSIGNED ARREARS (AFDC/IVE or TANF) - These are arrearages that accumulate while a client receives Public Assistance (PA); they are paid to the State.

2. NEVER ASSIGNED ARREARS (NPA) – These are Non-Public Assistance (NPA) arrearages that are paid to the client.

3. UNASSIGNED PRE-ASSISTANCE ARREARS (UNPA) - These are arrearages that accrue for a child support order prior to IV-A or IV-D involvement. UNPAA arrearages are paid to the client.

4. CONDITIONALLY ASSIGNED ARREARS (COND) - These are arrearages that are rolled to this type of subaccount from an existing Temporarily Assigned Arrears (TEMP) subaccount when the case type changes from "AFDC" to "NPA" or "MAO.



SUPPORT DISTRIBUTION BASED ON CASE TYPE - DRA

AFDC CASE TYPES (TANF/WFFA/WFB Recipients) –

Clients assign their rights to receive child support to the State as a condition of TANF eligibility. All current support that is collected while the client is receiving Public Assistance is paid to the State, until the URPA balance equals $0.00. The support collected in excess of the URPA balance is paid to the client.

The frequency amount on arrearages is payable to the subaccount to which the frequency amount is assigned. All collected support that exceeds the URPA balance is paid according to the distribution hierarchy. Disbursements to the State occur at the end of the month. Disbursements to the client can occur during the month or, under certain circumstances, at the end of the month.

NPA CASES (That Never Received TANF) –

Clients receive all current support and arrearages.

NPA CASES (That Were Previously TANF) –

Clients receive all current support and the arrearages up to the "Never Assigned Arrears" (NPA) balance. All paid support is distributed according to the distribution hierarchy, regardless of the URPA balance.

For more information on PRWORA support distribution based on case type, see Support Distribution Based on Case Type – PRWORA.



DISTRIBUTION PRIORITY - DRA

Child support collections under DRA follow the same distribution hierarchy as under PRWORA. First, child support collections satisfy current support (CSUP). After CSUP is paid, any remaining money is distributed to arrearage subaccounts with a frequency amount attached. Unadjudicated arrearages are paid before adjudicated arrearages within each subaccount type. As each subaccount's arrearage balance is paid off, the remaining payment amount due is applied to the next appropriate subaccount balance. Child support that is collected for cases with no frequency amount due on arrearages is distributed according to the same distribution hierarchy.

The following table shows the order in which arrearage categories are satisfied:

ARREARAGE CATEGORY

Never Assigned Arrears (NPA)

Unassigned Pre-Assistance Arrears (UNPA)

Conditionally Assigned Arrears (COND)

Temporarily Assigned Arrears (TEMP)

Permanently Assigned Arrears (AFDC/TANF)

Unassigned During Assistance Arrears (UNDA)

Permanently Assigned Arrears (IV-E)

State Foster Home Fund Arrears (SFHF)

Medical Arrears (MEDI)

Out-of-State Arrears (OSTA)

Legal Fees (AFLG)

Parental Kidnap Fees (AFKD)

Paternity (Genetic) Tests (AFBT)

IRS Interest (AFII)

Credit Card Fees (AFCC)

Not Sufficient Funds Fees (AFNF)

For more information, see Rules of Distribution Used by ACTS.