INFORMATION TECHNOLOGY/Automating child support collection

For 90 Arkansas families, waiting a week or more for a monthly child support check to arrive is a worry of the past. They now receive a direct payment within 72 hours of the deduction transaction, thanks to a new child support software solution.

Little Rock, Ark., has become the first city in the state to use the Electronic Payment Interchange and conversion system (EPIc) to process monthly child support payments deducted from employee paychecks.

The city withholds child support payments from the payroll accounts of 90 of its employees — an involved process that used to take a week but is now completed in less than four days.

Using the software, payments are electronically transmitted from the city’s payroll account to its bank and then to the state Office of Child Support Enforcement’s bank.

The child support agency then direct-deposits the payments into the personal bank account of the custodial parents. In addition to getting child support payments into the hands of the supporting parents quicker, the electronic payment system reduces processing costs for both the state and the employers.

For years, employers would withhold the determined amount from payroll, cut a separate check and mail it to the state office. Once received, the agency staff would manually enter the payment data and send the check to the supporting parent. The process was expensive and overloaded the staff with inefficient paperwork.

The technology allows Little Rock to save approximately 80 percent overall, reducing costs from $1 per transaction to 20 cents per transaction.

The system was easily integrated with the city’s existing payroll software and was installed with little effort. This saved time and money, since employees did not need extensive technology training.

“Previously, the payroll office staff would manually prepare a spreadsheet of all child support withholdings, including the names of employees and the amounts they owe,” says Little Rock Payroll Manager Myron Barnes. “We would then have to prepare a check for the cumulative total and send it to the state. Now, the payments and all supporting information can be transferred electronically, freeing up the staff to do other important tasks.”

Reliability and security, especially with such sensitive matters as payroll, were important concerns for the city when considering the move to a paperless system. Find a system that would create safe, standardized transactions using the Automated Clearing House (ACH) network was the main priority.

ACH transactions are the most efficient and secure means of electronic funds transfer because they process quickly and are accepted at virtually every bank.

In addition, the actual cost of an ACH item is considerably lower than the cost of a check or wire transfer, saving the employer and the state additional money. The Little Rock software system was designed to interface with the ACH network.

The child support software solution is making its way across the country. The pilot program began with the Denver-based Colorado Family Support Registry, which processes roughly half the state’s child support payments. Arkansas is the second state to implement the system, with Hawaii, New York and California expected to begin in the next few months.

New York City handles 450,000 garnishments a month, and Los Angeles County processes 120,000 garnishments a month, so the need for efficient systems is evident. Additionally, federal law will soon require all states to automate their systems for collecting overdue child support payments, so conversion now may save headaches later.

The author is vice president of marketing, Bottomline Technologies, Portsmouth, N.H.