Review of Undistributable Child Support Collections in Mississippi From October 1, 1998, Through June 30, 2006

Executive Summary

From October 1998 through June 2006, the State did not report any program income from undistributable child support collections. During that period, $927,000 ($612,000 Federal share) met the State's definition of abandoned property and should have been reported as program income. However, the State did not consider undistributable child support collections to be State funds and therefore considered them exempt from Mississippi's abandoned property laws. Because the State failed to recognize that child support funds are subject to State abandoned property laws and had not developed or implemented policies and procedures to identify and report such collections as abandoned property, an additional $2.3 million in undistributed child support collections that were outstanding but did not yet meet the State's definition of abandoned property may never be reported as program income.

The State also did not recognize or report program income totaling $95,000 ($63,000 Federal share) from interest earned on child support collections because it did not have adequate policies and procedures to comply with Federal reporting requirements.

We recommended that the State transfer to the State treasurer and report as program income the balance of undistributable child support collections in accordance with Federal and State requirements, recognize and report program income totaling $95,000 ($63,000 Federal share) for interest earned on child support collections,; ensure compliance with State laws regarding abandoned property, develop and implement policies and procedures to recognize and report as program income the interest earned on child support collections, and recognize and report program income from collections that have become eligible for abandonment and from interest earned on collections subsequent to our audit period. The State did not specifically address our recommendations.