CS 540P Distribution of Discounted Settlements

06/99 Revised 09/23/09 Training Completed 10/09   

42 U.S.C 657 and 654b, R527-330


Federal law, 42 U.S.C 654b and 657 and administrative rule, R527-330 dictate how the Office of Recovery Services/Child Support Services (ORS/CSS) must distribute and disburse payments. 


R527-330-1. Posting Priority of Payments Received.

“The Office of Recovery Services shall determine to which debt payment will be credited in instances where the obligor has more than one case, and the obligor has not expressed his intention. 


For Child Support Services cases, if the obligor expresses intent, the payment shall be credited to the case indicated. When the obligor has not expressed his intention, the Office of Recovery Services/Child Support Services (ORS/CSS) shall pro-rate payments, other than payments received from the Federal tax refund intercept program, among all of the obligor's current support obligations. Once the current support obligations have been met, a payment shall be split equally among all of the obligor's child support cases with arrears. 


A payment credited to a case with arrears shall be applied to the oldest debt, and arrears owed to the family shall be paid before arrears owed to the State according to the priority specified in 42 U.S.C Sec. 657.”


To meet these requirements, ORSIS has been programmed to automatically distribute payments appropriately.  The distribution rules for discounted settlement are slightly different than other support payments.  Accounting posts a discounted settlement payment with an override to the case number(s) which should be included in the approved settlement posting instruction. 


Discounted settlement payments are posted and applied only to those debt(s) coded for settlements.  When the case is coded for a discounted settlement ORSIS automatically distributes the payment as follows:


1.       Level 1 - Current Support:  When a settlement payment is received/receipted in the State Disbursement Unit (SDU), it is applied first to unpaid current support owing on the case(s). 


2.       Level 2 - Arrears Debts Coded with a Settlement Amount:  After current support has been paid, ORSIS identifies all arrears debts within the case coded for a discounted settlement.  Settlement payments distribute to the oldest debt in the following debt group priority up to the SETTLEMENT AMOUNT:

a.       NADC (Non-IV-A) arrears debts;

b.      DCNS (day-care non-State paid) arrears debts;

c.       MNMC (non-IV-A medical) arrears debts;

d.      COND (Non-IV-A conditionally assigned) arrears debts;

e.      FSCN (Non-IV-A foster care);

f.        YCOR (Youth Corrections);

g.       FDHS (DHS Custody);

h.      CSUP (Child Support – Child in Care);

i.         PARM (Parent Responsibility Medical – State Hospital);

j.        PARS (Parental Responsibility – State);

k.       TEMP (temporarily assigned) arrears debts;

l.         AFDC (IV-A) arrears debts;

m.    MDMC (IV-A medical support) arrears debts;

n.      DCST (day care-State paid) arrears debts;

o.      FSCA (IV-E Foster Care);

p.      YCOA (IV-E Youth Corrections); UDAA (Non-IV-A unassigned during assistance) arrears debts

q.      FEES;

r.        FSMN (Non-IV-E Foster Care Medical);

s.       YCMN (Youth Corrections Medical); and,

t.        FSMA (IV-E Foster Care Medical).


Any money remaining after paying current support and the arrears debts coded for settlement show up on the Funds Remaining Report.