[Federal Register Volume 63, Number 127 (Thursday, July 2, 1998)]
[Rules and Regulations]
[Pages 36185-36190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17652]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Part 303
RIN 0970-AB67
Child Support Enforcement Program; Quarterly Wage and
Unemployment Compensations Claims Reporting to the National Directory
of New Hires
AGENCY: Office of Child Support Enforcement (OCSE), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule implements section 453A(g)(2)(B) of the Social
Security Act (the Act), as added by section 313(b) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)
and amended by section 5533 of Public Law 105-33, section 303(h) of the
Act, in part, as amended by section 316(g) of PRWORA, and section
3304(a)(16) of the Internal Revenue Code of 1986, as amended by section
316(g) of PRWORA. These provisions require certain State entities to
furnish quarterly wage and unemployment compensation data to the
National Directory of New Hires or to the Secretary of Health and Human
Services. A Notice of Proposed Rulemaking was published in the Federal
Register on October 7, 1997 (62 FR 52306).
EFFECTIVE DATE: The final rule is effective August 3, 1998.
FOR FURTHER INFORMATION CONTACT: Anne Benson, Policy Branch, OCSE (202)
401-1467, e-mail: abenson@acf.dhhs.gov. Deaf and hearing-impaired
individuals may call the federal Dual Party Relay Service at 1-800-877-
8339 between 8:00 a.m. and 7:00 p.m. Eastern time.
SUPPLEMENTARY INFORMATION:
Statutory Authority
This regulation is published under the authority of section
453A(g)(2)(B) of the Social Security Act (the Act), 42 U.S.C.
653A(g)(2)(B), as added by section 313(b) of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(PRWORA), Pub. L. 104-193 and amended by section 5533 of Public Law
105-33; section 303(h) of the Act, in part, 42 U.S.C. 503(h), as
amended by section 316(g) of PRWORA; and section 3304(a)(16) of the
Internal Revenue Code of 1986, 26 U.S.C. 3304(a)(16), as amended by
section 316(g) of PRWORA.
This regulation is also issued under the authority granted to the
Secretary of Health and Human Services (Secretary) by section 1102 of
the Act, 42 U.S.C. 1302. Section 1102 of the Act authorizes the
Secretary to publish regulations that may be necessary for the
efficient administration of the functions for which she is responsible
under the Act.
Section 453A(g)(2)(B) of the Act requires the State Directory of
New Hires to furnish, on a quarterly basis, data concerning the wages
and unemployment compensation paid to individuals to the National
Directory of New Hires. Pursuant to section 453A(g)(2)(B) of the Act,
the Secretary of the Department of Health and Human Services is
required to publish regulations to identify the dates, format, and data
elements necessary for the State Directory of New Hires to furnish the
quarterly wage and unemployment compensation data to the National
Directory of New Hires.
Section 3304(a)(16) of the Internal Revenue Code of 1986 contains
requirements that must be included in State Unemployment Compensation
laws for employers in the State to receive Federal Unemployment Tax
credits. Section 316(g) of Public Law 104-193 amended section
3304(a)(16) of the Internal Revenue Code of 1986 to provide that the
wage and unemployment compensation information contained in the records
of the State agency administering that program shall be furnished to
the Secretary of Health and Human Services, in accordance with
regulations promulgated by the Secretary, as may be necessary for the
purposes of the National Directory of New Hires under section 453(i)(1)
of the Act. The Secretary will maintain the quarterly wage and
unemployment compensation data reported pursuant to section 3304(a)(16)
in the National Directory of New Hires (NDNH), which is established
pursuant to section 453 of the Act.
Section 303(h)(1)(A) of the Act, as amended by section 316(g) of
Public Law 104-193, requires the State agency charged with the
administration of the unemployment compensation program, on a
reimbursable basis, to disclose quarterly, to the Secretary of Health
and Human Services, wage and claim information, as required pursuant to
section 453(i)(1) of the Act, that is contained in the records of such
agency. As is the case with information reported pursuant to section
3304(a)(16) of the Internal Revenue Code of 1986, the Secretary will
maintain any quarterly wage and unemployment compensation data reported
pursuant to section 303(h) of the Act in the NDNH. Section 303(h)(3)(A)
of the Act defines `wage information' as ``information regarding wages
paid to an individual, the social security account number of such
individual, and the name, address, State, and the Federal employer
identification number of the employer paying such wages to such
individual.'' Section 303(h)(3)(B) defines `claim information' as
``information regarding whether an individual is receiving, has
received, or has made application for, unemployment compensation, the
amount of any such compensation being received (or to be received by
such individual), and the individual's current (or most recent) home
address.'' Title III of the Act, Grants to States for Unemployment
Compensation Administration, is directly administered by the Department
of Labor. We are referencing section 303(h)(1)(A) of the Act because
this provision references information required pursuant to section
453(i)(1) of the Act. Section 453(i)(1) is administered by the
Department of Health and Human Services, and the information that is
required pursuant to that section (which in turn references information
supplied pursuant to section 453A(g)(2)) is established in this rule.
The Secretary also adopted the definitions included in section 303(h)
in the rule in order to enable the implementation of the provisions in
an integrated and complementary manner.
Background
The Federal Parent Locator Service (FPLS) is a computerized network
established pursuant to section 453 of the Act, 42 U.S.C. 653, through
which States may request information from Federal and State agencies to
find noncustodial parents and/or their employers for purposes of
establishing paternity and securing support. The
[[Page 36186]]
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
requires the Secretary to develop an expanded FPLS to improve States'
ability to locate child support obligors and to establish and enforce
child support orders, as well as for other specified purposes in Title
IV-D of the Act. The Office of Child Support Enforcement (OCSE), within
the Administration for Children and Families (ACF), is charged with the
task of developing, implementing, and maintaining the expanded FPLS.
The expanded FPLS is housed in the Social Security Administration's
National Computer Center, because locating the expanded FPLS there
provides the most efficient and cost-effective mechanism for developing
the expanded FPLS, as well as ensuring state-of-the-art standards for
system security and confidentiality of the data.
The expanded FPLS includes the National Directory of New Hires and
a Federal Case Registry (operational no later than October 1, 1998),
and maintains the capability to seek information from existing FPLS
data sources, including, but not limited to, the Internal Revenue
Service, Social Security Administration, Department of Defense, and
Department of Veterans Affairs. The expanded FPLS will perform regular
cross matches between the National Directory of New Hires and the
Federal Case Registry. With these new FPLS resources, the interstate
matching of child support obligors and employment, earnings, and
benefits data will flow more efficiently and quickly between States.
The NDNH will contain three types of information. First, the NDNH
maintains employment data on newly-hired employees (new hire reporting)
submitted by State Directories of New Hires pursuant to section
453A(g)(2)(A) of the Act, and by federal agencies pursuant to section
453A(b)(1)(C) of the Act. Second, the NDNH will maintain quarterly wage
information on individual employees received pursuant to sections
453A(g)(2)(B) and 303(h) of the Act, and section 3304(a)(16) of the
Internal Revenue Code of 1986, as well as quarterly wage information on
federal employees received pursuant to 453(n) of the Act. Third, the
NDNH will maintain unemployment compensation claims data received
pursuant to sections 453A(g)(2)(B) and 303(h) of the Act, and section
3304(a)(16) of the Internal Revenue Code of 1986. States will be
required to transmit new hire, quarterly wage and unemployment
compensation claims data electronically to the NDNH.
The purpose of the NDNH is to develop a repository of information
on newly-hired employees, and on the earnings and unemployment
compensation claims data of employees. The purpose of including
quarterly wage and unemployment compensation claims data in the NDNH is
to provide States with the ability to quickly locate information on the
address of, employment of, and unemployment compensation being paid to,
parents with child support obligations who are residing or working in
other States. States seek to locate these parents and their employers
to either establish or enforce a child support order. Quarterly wage
and unemployment compensation claims data will provide information on
continuously employed and unemployed individuals who would not be
located solely by new hire reporting.
Most States have been matching their quarterly wage and
unemployment compensation claims data against their respective State
child support caseloads since the 1980's. In addition, since 1990 the
Federal Parent Locator Service has conducted cross-matches between
State child support locate requests and State Employment Security
Agencies, although such matches are currently limited to 250,000 cases
per State per bi-weekly cross-match. The information generated from
cross-matches between quarterly wage, claims and child support data,
both at the State level and in the more limited FPLS context, has
proven extremely beneficial for the location of child support obligors
and their wages. The inclusion of quarterly wage and unemployment
compensations claims data in the NDNH will allow for a substantially
higher volume of interstate cross-matching than is currently possible.
The Federal Case Registry will be a national registry of
individuals involved in child support cases, constructed from abstracts
of child support case and order information that State Case Registries
will transmit to the Federal Case Registry. The expanded FPLS, through
a matching process between NDNH and the Federal Case Registry, will be
able to automatically provide States with information on address,
employment, and unemployment compensation claims data on parents owing
child support. The expanded FPLS will also alert States to other States
that have registered the same individual.
In an effort to be responsive to the President's Memorandum of
March 4, 1995 to heads of Departments and Agencies which announced a
government-wide Regulatory Reinvention Initiative to reduce or
eliminate burdens on States, other governmental agencies or the private
sector, OCSE formed an FPLS workgroup which held three meetings between
September, 1996 and March, 1997. The purpose of the FPLS workgroup is
to provide consultation regarding the design, development, and
regulatory requirements for the expanded FPLS. This group is comprised
of representatives from State Child Support Agencies, State Employment
Security Agencies, the Federal Office of Child Support Enforcement, the
U.S. Department of Labor, the Social Security Administration, the
Interstate Conference of State Employment Security Agencies, employer
groups, payroll associations, and other interested individuals. The
workgroup members provided information regarding quarterly wage and
unemployment compensation claims reporting which was considered in
developing these regulations.
Description of Regulatory Provisions
This rule implements the three new statutory wage and unemployment
compensation claims reporting requirements by adding a new section, 45
CFR 303.108, ``Quarterly Wage and Unemployment Compensations Claims
Reporting to the National Directory of New Hires,'' to existing rules
governing the child support enforcement program under Title IV-D of the
Act. Although there are three separate reporting provisions, the
information required to be reported is substantially the same for all
three. Therefore, OCSE addresses the Secretary's responsibilities under
all three provisions by a single regulation which permits the quarterly
wage and unemployment compensation data required to be furnished under
the three provisions to be supplied in a single, quarterly submission.
Further, OCSE will consider the reporting requirements to have been
satisfied if any one of the required reporting entities submits the
information in accordance with the provisions of the regulation. OCSE
intends to leave the decision as to which entity will report up to the
individual States. Accordingly, the regulation refers to the ``State''
as the entity that must transmit data to the NDNH. However, if data is
not reported as required under the proposed regulation, OCSE will hold
the State Title IV-D agency accountable for the failure of the State
Directory of New Hires to report as required under section
453A(g)(2)(B). Section 454(28) of the Act, as added by section 313(a)
of PRWORA, added a new State plan requirement for Title IV-D agencies
to operate a State Directory of New Hires
[[Page 36187]]
in accordance with section 453A of the Act. The failure to report as
required pursuant to section 303(h) of the Act or section 3304(a)(16)
of the Internal Revenue Code of 1986 may also result in actions being
taken by the Secretary of Labor.
45 CFR 303.108(a) contains definitions designed to clarify
quarterly wage and unemployment compensation claims reporting.
Paragraph (a)(1) defines ``Reporting period'' as the time elapsed
during a calendar quarter, e.g. January-March, April-June, July-
September, October-December. ``Wage information'' is defined in
paragraph (a)(2) as: (1) The name of the employee; (2) the employee's
social security number; (3) aggregate wages of the employee during the
reporting period; and (4) the name and address (and optionally, any
second address for wage withholding purposes) and Federal employer
identification number of the employer reporting wages. In the event
that an individual is working more than one job, the State must
transmit separate quarterly records containing the ``wage information''
for each job an individual has held. The information being included as
wage information is the minimal amount of data needed to meet the
purposes of the NDNH. OCSE is requesting data on the names of employees
in order to meet the requirements of section 453(j)(1) of the Act, 42
U.S.C. 653(j)(1). Section 453(j)(1) requires the Secretary of Health
and Human Services to transmit the information in the NDNH to the
Social Security Administration to verify the accuracy of the name,
social security number, and birth date of each individual.
``Unemployment compensation or claim information'' is defined in
paragraph (a)(3) as: (1) Whether an individual is receiving, has
received or has applied for unemployment compensation; (2) the
individual's name and current (or most recent) home address; (3) the
individual's social security number; and (4) the aggregate gross amount
of compensation the claimant received during the reporting quarter.
Paragraph (b) of 45 CFR 303.108 contains the requirements for
quarterly wage and unemployment compensation claims reporting. Under
paragraph (b), the State is required to disclose quarterly, to the
National Directory of New Hires, wage and claim information, as defined
in paragraph (a), that is collected pursuant to a State's unemployment
compensation program referenced in Title III of the Act or pursuant to
section 1137 of the Act. OCSE does not require the collection or
reporting of any additional wage information for purposes of the NDNH
beyond that which is currently being collected. Wage and unemployment
claim information is currently reported to agencies administering
unemployment compensation laws under title III of the Act or to other
agencies pursuant to section 1137(a) of the Act as part of the income
and eligibility verification program, so paragraph (b) does not impose
an additional information requirement. OCSE is also aware that some
States' compensation records either do not include employee names or
record only a partial set of the letters in the employee's name.
Similarly, OCSE is aware that State unemployment compensation laws do
not require all employers to report information. In the regulation, the
State is only required to supply wage information which is already
contained in the records of the State. Therefore, in the case of
employee names or wages, a State is required to send us as much
information on employee names or wages as exists in the unemployment
compensation records, or in the records maintained for purposes of
section 1137 of the Act if the information is maintained by another
agency. The reference to section 1137 has been included to cover those
situations where States have alternate data collection systems to make
it clear that the data in such alternate systems is covered by the
regulation.
Similarly, the State is only required to supply claim information
which is already contained in the records of the State agency
administering the unemployment compensation program or the records
maintained for purposes of section 1137 of the Act. There is no
requirement imposed to collect additional claim information for
purposes of the NDNH. In addition, the State is only required to
furnish the NDNH with claim information that is processed
electronically. OCSE believes that it is neither feasible nor cost
effective to require that States transmit claims data for those
relatively few benefit programs which are processed manually. State
Employment Security Agencies and the Department of Labor have indicated
that manually processed claims comprise a very small portion of total
claims. We understand that the unemployment compensation programs being
administered by States cover any compensation payable under State
unemployment compensation law (including amounts payable in accordance
with agreements under any Federal unemployment compensation law) and
extended benefits, unemployment compensation for Federal employees,
unemployment compensation for ex-servicemen, trade readjustment
allowances, and disaster unemployment assistance.
45 CFR 303.108(c) sets the time frames for quarterly wage and
claims reporting. The State is required to report wage information for
the reporting period no later than the end of the fourth month
following the reporting period. States will be required to begin
reporting on the first reporting date occurring after the final rule
becomes effective. However, the NDNH will accept earlier reports,
beginning with those for the July-September 1997 reporting period and
States are encouraged to begin submitting reports as early as possible.
Currently, State laws generally allow employers one month following the
reporting period to report quarterly wages to the State agency
administering the unemployment compensation program. We believe that
the time frame for States to report wage information to the Secretary
for the purposes of the NDNH will ensure that States have adequate time
to enter, edit, and transmit wage information to the Secretary. Given
the necessity and importance of maintaining accurate wage data in the
NDNH, the schedule for reporting allows States ample time to work with
employers to correct inaccurate wage reports and to submit complete and
comprehensive wage information on employees within a State.
The State is required to report claim information for the reporting
period no later than the end of the first month following the end of
the reporting period. The State is required to begin the reporting of
claim information on the first reporting date occurring after the final
rule becomes effective. However, the NDNH will accept earlier reports,
beginning with those for the October-December 1997 reporting period and
States are encouraged to begin submitting reports as early as possible.
We believe that a shorter time frame for submitting claim information,
as opposed to wage information, is appropriate because the State agency
charged with administering the unemployment compensation program
maintains this data on an ongoing basis. Also, as noted above, the
collection of wage information lags behind the collection of claim
information because of the time required to ensure that wage
information submitted is accurate.
In order to ensure the effective implementation of the NDNH, the
Secretary planned a staggered schedule for initial data submissions to
the NDNH. The reporting of new hire data began on October 1, 1997, to
be
[[Page 36188]]
followed by initial quarterly wage and claims information submissions
on January 31, 1998 or the first reporting date after the final rule
becomes effective. For this reason, the Secretary will allow that the
earliest claims information be submitted for the period beginning
October-December, 1997, rather than July-September, 1997.
45 CFR 303.108(d) provides that the Secretary will establish
standardized formats for reporting quarterly wage and claim information
and that the States will be required to adhere to such formats for
reporting purposes. The formats identify the data elements,
descriptions and tape specifications for reporting quarterly wage and
claim information. These formats were published in the Federal Register
for comment on July 25, 1997 (62 FR 40092).
Response to Comments
In response to the Notice of Proposed Rulemaking published October
7, 1997, in the Federal Register (62 FR 52306) we received thirteen
comments from six commenters, representing State IV-D agencies, State
Employment Security Agencies/State Departments of Labor and one Federal
Agency. The comments and our responses are as follows:
1. Comment: One commenter stated that, under 45 CFR 303.108(b),
there are large programming costs associated with submission of
quarterly wage and unemployment insurance claim data because the
information, while available in the State Department of Labor's
records, is not all in one place or in the required formats for
submission to the National Directory of New Hires. The commenter stated
that the costs for the extraction, formatting and transmission of the
data are not reimbursable from Unemployment Compensation grant money.
Their recommendation is that there be reimbursement for all legitimate
costs based on actual costs, not an arbitrary figure. Another commenter
believes that this is an unfunded mandate because states are required
to submit information ``electronically.'' They believe that there is no
provision for the costs associated with electronic submission.
Response: Section 453(g) of the Act states that ``The Secretary may
reimburse Federal and State agencies for the costs incurred by such
entities in furnishing information requested by the Secretary under
this section in an amount which the Secretary determines to be
reasonable payment for the information exchange (which amount shall not
include payment for the costs of obtaining, compiling, or maintaining
the information).'' OCSE is requesting that States submit an itemized
list of projected costs for extraction and transmission of the required
data. These will consist of both initial costs for programming and
ongoing costs for transmission. OCSE will then be able to respond
specifically to requests for reimbursement, and is planning to
reimburse States for reasonable direct costs for extraction, formatting
and transmission. OCSE has also offered on-site technical assistance to
complete the required programming, and has provided skeleton code
programs to all the States in order to assist with the programming
changes.
2. Comment: One commenter stated that the source for estimates of
the burden on the States is not clearly presented and that the impact
on the States in terms of hours spent is ``grossly underestimated.''
The commenter stated that their start up burden is underestimated and
that the annual reporting estimate ``will not begin to cover the time
necessary.'' They also said they have spent a great deal of time
reviewing materials sent out by OCSE. A second commenter also took
issue with the burden time estimates and pointed out that any time
spent diverts resources from Year 2000 projects.
Response: The time estimates in the Rule are based on industry
practices and on information from the Social Security Administration.
Detailed estimates were presented in the Paperwork Reduction Act
package approved as of November 26, 1997 (OMB control number 0970-
0166.) There are burdens for start-up programming, but OCSE has tried
to do everything possible to minimize these burdens; for instance by
providing on-site technical assistance if requested and by providing
on-going technical support by telephone, as well as skeleton code
programs to assist with programming changes. The burden estimates are
based on the assumption that once the program is in place, extraction
and transmission of the data can be done on an almost entirely
automated basis, requiring little or no human intervention. Materials
sent out by OCSE were meant to reduce the burden on the states by
answering commonly asked questions, giving further explanations of
program requirements, and providing technical information and
assistance.
3. Comment: The commenter states that there is ambiguity in the
first paragraph of the Description of Regulatory Provisions. They
indicate that the phrase ``the three new statutory reporting
requirements'' might be interpreted to refer to New Hire, Quarterly
Wage and Unemployment Insurance. The commenter then points out that the
rule only defines reporting requirements with respect to Quarterly Wage
and Unemployment Insurance. The commenter's recommendation is that it
be made more clear that this rule does not address New Hire reporting
requirements. They also suggest that the Rule ought to indicate where
New Hire reporting provisions are located.
Response: The phrase ``the three new statutory reporting
requirements'' refers to the code sections cited in the first paragraph
under Statutory Authority, all of which relate to Quarterly Wage and
Unemployment Insurance reporting. It is understandable that this
reference may be confusing, so we have added semi-colons between the
three cites in that section. We have also revised the phrase to read
``the three new statutory wage and unemployment claims reporting
requirements''. It is also made clear within the body of the commentary
that Quarterly Wage and Unemployment Insurance reporting are the areas
covered by the rule. As this rule relates only to Quarterly Wage and
Unemployment Insurance, it is not appropriate to give a reference to a
third program in the body of the rule.
4. Comment: Two commenters stated that, while it is clear from the
description section, the rule itself is not sufficiently clear that the
State is not required to collect additional information to fulfill the
requirements of the rule. One commenter also wished to point out that
OCSE does not have the authority to propose collection of additional
information by State Employment Security Agencies. The recommendation
is that the rule be clarified.
Response: We believe that 303.108(b) makes it clear that the States
are to report information ``that is collected pursuant to a State's
unemployment compensation program.'' The rule does not call for a State
to collect any additional information.
5. Comment: One commenter noted the differences in time frames
between quarterly wage information and unemployment insurance
information (four months after the end of the reporting quarter and one
month after the end of the reporting quarter, respectively). The
commenter stated that it is their understanding that this time does not
imply that the States must undertake any new processing effort. A
second commenter believes that four months is too long to allow for
submission, and that the data will be stale after that amount of time.
Response: The key considerations in determining the time period for
reporting quarterly wages were accuracy
[[Page 36189]]
and timeliness. Currently, State laws generally allow employers one
month following the reporting period to report quarterly wages to the
State agency administering the unemployment compensation program. The
time period for reporting quarterly wages was determined so that States
would have adequate time to input, extract, format and edit the
information. Given the necessity and importance of maintaining accurate
wage data in the NDNH, the schedule for reporting ensures that States
have time to work with employers to correct inaccurate wage reports and
to submit complete and comprehensive wage information on employees
within a State. In response to the one comment that the time period is
too long, it is important to remember that quarterly wage information
exists for individuals who have been employed at the same job for a
period of time. New hire reporting will provide States with data on
newly-employed individuals within approximately a month or less from
the date of hire (exact time depends on State law).
6. Comment: One commenter pointed out that while the State
Departments of Labor are responsible for collecting and reporting this
data, the child support agency is held accountable if the Department of
Labor does not comply. The commenter pointed out that this may be
beyond their control.
Response: Both agencies will be held accountable for failure to
comply. The child support agency will be held accountable through the
State Plan process. Under section 454(28) of the Act, the State Plan
must provide for the operation of a State Directory of New Hires
(SDNH). Section 453A(g)(2)(b) requires the SDNH to transmit quarterly
wage and unemployment insurance information to the NDNH. Thus, the
child support statute directly places the responsibility for reporting
the necessary information on the SDNH. Failure to report could result
in disapproval of the State Plan, and put federal funding of the State
program at risk.
Similarly, section 3304(a)(16) of the Internal Revenue Code of 1986
contains requirements that must be included in State Unemployment
Compensation laws for employers in the State to receive Federal
Unemployment Tax credits. Section 316(g) of Public Law 104-193 amended
section 3304(a)(16) of the Internal Revenue Code of 1986 to provide
that the wage and unemployment compensation information contained in
the records of the State agency administering that program shall be
furnished to the Secretary of Health and Human Services, in accordance
with regulations promulgated by the Secretary, as may be necessary for
the purposes of the NDNH under section 453(i)(1) of the Act. Thus, the
State Employment Security Agency may lose its certification by the
Secretary of Labor for failure to submit the required information.
The provision of quarterly wage and unemployment insurance
information to the NDNH is anticipated to be a cooperative effort
between two agencies; in some States the information will be provided
by one agency and submitted by another. Both agencies will by held
accountable.
7. Comment: One commenter pointed out that the rule does not
address the fundamental issues of confidentiality and security of the
data to be provided.
Response: Under section 453A(g)(2)(B) the Secretary of the
Department of Health and Human Services is required to identify the
dates, format, and data elements necessary for quarterly wage and
unemployment compensation data. In coordination with the President's
Regulatory Reinvention Initiative, OCSE's intent is only to regulate
where required by statute, thus reducing the regulatory burden on
states; therefore the rule only covers the required areas. However,
OCSE is committed to the confidentiality and security of data under
this program, and is required to guarantee its ``integrity and
security'' under section 453(m) of the Act. Our security approach
covers policies and procedures, computer and data transmission systems,
physical access, and the integrity of the staff who have access to the
data or systems.
Only authorized persons, as defined in Federal law, may request
access to information in the NDNH. (See sections 453 and 463 of the
Act.) In accordance with section 453(b)(2) of the Act, the security
plan for the NDNH incorporates specific safeguards to prevent the
disclosure of information in cases where domestic violence is indicated
and disclosure could be harmful to the parent or child, or where
disclosure would contravene national policy or security interests, or
to protect the confidentiality of census data.
The NDNH is physically housed at the Social Security
Administration's (SSA) National Computer Center (NCC) in Baltimore, MD.
SSA takes extensive measures to ensure the physical and electronic
security of its data processing facilities. SSA uses state of the art
technology to restrict physical and electronic access to information,
limiting it to personnel specifically authorized by OCSE and SSA and to
specific functions. New Hire, Quarterly Wage and Unemployment Insurance
data are transmitted to the NDNH via several methods, including SSA's
leased-line CONNECT:Direct network and transportable electronic media,
such as cartridge tapes. While the measures vary according to the
transmission method, OCSE and SSA have taken specific steps to ensure
the security of data during transmission, including a clear chain of
custody and secure locked storage for physical media.
The NCC is regularly reviewed and monitored by outside security
auditors who report any concerns, violations or breaches in security to
SSA's Security Officer. Staff who have access to sensitive data are
assigned security level designations. In addition, all staff associated
with the NDNH are required to undergo background checks. Staff sign
non-disclosure agreements, and are subject to fines and imprisonment
for misuse of data. (See 5 U.S.C. sec 552a(i) and 18 USC sec 1905.)
States are required by law to implement safeguards that are similar
to those at SSA and OCSE under section 454A(d) of the Act. These are
designed to protect the privacy rights of individuals, and prevent the
unauthorized disclosure of information. State agencies and systems are
audited, reviewed, or certified by a variety of Federal agencies
including the Internal Revenue Service, Department of Labor, DHHS'
Office of State Systems, and SSA. SSA and NDNH security plans fully
document the approach summarized here.
8. Comment: One commenter stated that the rule fails to address the
right to privacy of individuals whose information is to be disclosed,
especially privacy of social security numbers.
Response: OCSE recognizes that the right to privacy is of the
utmost importance, not only in regards to social security numbers, but
for all the information that is to be reported to the expanded Federal
Parent Locator Service. For that reason access to the information in
the database is very strictly limited (see section 453(m) of the Act.)
While it would be optimal if social security numbers did not need to be
disclosed, it would not be possible to obtain the necessary accuracy of
data without social security numbers. This is especially true because
some States do not collect the individual's name at all for quarterly
wage, so a social security number is the only identifier for the
individual. The number is absolutely essential for the program to
function, and every precaution is being taken to
[[Page 36190]]
be sure that the information is kept confidential.
9. Comment: One commenter stated that the definitions given are
inconsistent with existing income eligibility and verification system
data element definitions, and that any rules should be issued jointly
with the Federal Department of Labor in order to ensure consistency.
Response: The definitions, while worded slightly differently and in
slightly different order, are consistent with the definitions under the
Income Eligibility Verification System. Any differences have more to do
with the required reporting period than any difference in intent. If
anything, the definitions given in this rule are more specific. For
instance, this rule asks for ``aggregate gross amount of compensation
the claimant received during the reporting quarter'' rather than ``the
amount of compensation the individual is receiving or entitled to
receive.'' Under 453A(g)(2)(B) of the Act, the Secretary of the
Department of Health and Human Services is required to issue the rule.
Paperwork Reduction Act of 1995
Sections 453A(g)(2)(B) and 303(h) of the Act and section
3304(a)(16) of the Internal Revenue Code of 1986 contain information
collection requirements. As required by the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)), this request for approval of a new
information collection has been approved by Office of Management and
Budget as of November 26, 1997 under OMB control number 0970-0166.
Because all quarterly wage and unemployment compensation claims
data will be reported from the State to the NDNH electronically and
will be limited to data already being collected, the burden on the
States will be minimal. The average burden per response is estimated to
be 2 minutes (.03 hours). States may also have a one-time initial
start-up burden of two weeks (80 hours) for reprogramming their systems
to comply with Federal reporting requirements. The total annual
reporting and recordkeeping burden that will result from the collection
of information is estimated to be 7.13 hours.
Regulatory Flexibility Analysis
The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the
Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not
result in a significant impact on a substantial number of small
entities. The primary impact is on State governments. State governments
are not considered small entities under the Act.
Executive Order 12866
Executive Order 12866 requires that regulations be reviewed to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. The rule
implements the statutory provisions by specifying the wage and
unemployment compensation claims information that must be reported to
the Secretary of Health and Human Services.
Unfunded Mandates Act
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that a covered agency prepare a budgetary impact statement before
promulgating a rule that includes any Federal mandate that may result
in the expenditure by state, local, and Tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any one
year.
The Department has determined that this rule would not impose a
mandate that will result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of more than
$100 million in any one year.
List of Subjects in 45 CFR Part 303
Child support, Grant programs/social programs, Reporting and
recordkeeping requirements.
(Catalog of Federal Domestic Assistance Programs No. 93.563, Child
Support Enforcement Program)
Dated: March 18, 1998.
Olivia A. Golden,
Assistant Secretary for Children and Families.
Approved: April 28, 1998.
Donna E. Shalala,
Secretary, Department of Health Human Services.
For the reasons discussed above, title 45 CFR Chapter III is
amended as follows:
PART 303--STANDARDS FOR PROGRAM OPERATIONS
1. The authority citation of Part 303 continues to read as follows:
Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667,
1302, 1396a(a)(25), 1396(d)(2), 1396b(o), 1396b(p) and 1396(k).
2. A new Sec. 303.108 is added to read as follows:
Sec. 303.108 Quarterly wage and unemployment compensation claims
reporting to the National Directory of New Hires.
(a) What definitions apply to quarterly wage and unemployment
compensation claims reporting? When used in this section:
(1) Reporting period means time elapsed during a calendar quarter,
e.g. January-March, April-June, July-September, October-December.
(2) Wage information means:
(i) The name of the employee;
(ii) The social security number of the employee;
(iii) The aggregate wages of the employee during the reporting
period; and
(iv) The name, address (and optionally, any second address for wage
withholding purposes), and Federal employer identification number of an
employer reporting wages.
(3) Unemployment compensation or claim information means:
(i) Whether an individual is receiving, has received or has applied
for unemployment compensation;
(ii) The individual's name and current (or most recent) home
address;
(iii) The individual's social security number; and
(iv) The aggregate gross amount of compensation the claimant
received during the reporting quarter.
(b) What data must be transmitted to the National Directory of New
Hires?
The State shall disclose quarterly, to the National Directory of
New Hires, wage and claim information as defined in paragraph (a) of
this section that is collected pursuant to a State's unemployment
compensation program referenced in Title III of the Act or pursuant to
section 1137 of the Act.
(c) What time frames apply for reporting quarterly wage and
unemployment compensation claims data?
The State shall report wage information for the reporting period no
later than the end of the fourth month following the reporting period.
The State shall report claim information for the reporting period no
later than the end of the first month following the reporting period.
(d) What reporting formats will be used for reporting data?
The State must use standardized formats established by the
Secretary of Health and Human Services for reporting wage and claim
information.
[FR Doc. 98-17652 Filed 7-1-98; 8:45 am]
BILLING CODE 4184-01-P
