“Rolling Up” Electronic Payments Delivers Cost Savings to California

By: Nicole Darracq, CA DCSS

In October of 2017, the California Department of Child Support Services (CA DCSS) implemented “roll-ups,” a new process of handling electronic disbursements – direct deposit payments and Electronic Payment Card (EPC) payments – that resulted in significant cost savings of over $13,000 on the very first day and over $166,000 as of November 15th. So, what’s a roll-up?  And how does it happen?

As part of the International Payments project that was implemented to prepare for the U.S. ratification of the Hague Convention, CA DCSS staff have been designing the ability for the Child Support Enforcement (CSE) system to process disbursements to families in foreign countries.  Since all foreign transactions must be converted into various currencies and can incur multiple transaction fees, it became clear that the current process for handling electronic disbursements needed to be reviewed.  To understand why, a little history on the process is helpful.

When a collection is received in CSE, the total amount received is separated into smaller amounts that each satisfy a different order, informally called “buckets”.  For example, a payment on one case might be separated into a child support bucket, a medical support bucket, a spousal support bucket, an arrears bucket, and so on.  If a paying parent has more than one case, the payment might need to be separated into four or eight or even more buckets, to accurately track the fulfilment of that parent’s obligation.  In the days of paper checks, all the separate amounts were then “rolled up” back into a single total, to enable a single check to be sent to the person receiving support.

Once direct deposit and EPCs entered the scene, disbursements were not rolled-up and the payee received multiple deposits that added up to the amount of the support received in any given day.  With the potential for far more international disbursements on the horizon, the DCSS team recognized that these multiple deposits meant multiple international transaction fees, and while they were addressing that issue, they committed to having the fix apply to every electronic disbursement in the entire system (checks are still processed traditionally). Another plus of streamlining the process was to make deposit records simpler for recipients, and those who wish to track the distribution of the funds can still do so via their account on Customer Connect.

Lourdes Rosario led the Technology Services Division team that designed the solution that would instruct CSE to “roll-up” separated disbursements back into a single disbursement, without any loss of record-keeping ability or problems with the math involved.

“I want to applaud the staff who did the very difficult task of designing this solution – Maria Grado and Nelson Orellana – and the many others involved in the development and testing process.  Without them we couldn’t have made this happen,” says Lourdes.

After testing and retesting the process, on Monday October 23rd the new CSE functionality went live.  Reports from the first day tracked 15,910 electronic disbursements associated with more than one bucket.  Processed the old way, these disbursements would have accounted for 36,759 separate transactions with an average per-transaction cost of 65 cents. The largest “roll-up” that day was 34 separate disbursements rolled up into one transaction.  It’s easy to see why this improvement will have a tremendous impact on processing costs.

The next step is to begin utilizing a bank protocol called CTX, now available in CSE, that will allow for the roll up of California’s electronic disbursements to other states.  When international disbursements increase, the savings will be even more impressive.  Congratulations to Lourdes and the TSD team for a terrific effort, which is already delivering on DCSS’ commitment to provide optimal value to the taxpayers of California.