child support how much is appropriate? us guidelines and the shifting paradigm to right sizing...

Child SupportHow Much is Appropriate?

US Guidelines and the Shifting Paradigm to Right Sizing Orders

Alisha Griffin, Director, California Department of Child Support Services

November 10, 2015

Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Presentation Overview• Guidelines in the United States

HistoryModel ElementsModels of ChoiceState Authority / governance

• Research Findings• Current Issues and Concerns• NPRM – possible impacts/influences• New trends / next steps


Goals of Order Establishment

• Set realistic orders based on real income• Increase obligor participation in order

establishment• Reduce or eliminate setting retroactive

support• Modify orders promptly when appropriate


UNITED STATES GUIDELINES


History

• First appeared in 1975 in Illinois and Maine• 1984 Federal requirement for all states to adopt

advisory child support guidelines by 1987• 1988 federal mandated “rebuttable

presumption” be added into every State’s child support guidelines

• Must be reviewed every four (4) years – Quadrennial Reviews


HistoryBasic Mandatory ComponentsMust have one set of guidelines to be

used by all decision makers (IV-D & non-IV-D cases)

Take into consideration all earnings and income of the noncustodial parent

Must be based on specific descriptive and numeric criteria

Provide for the child’s health care needs


Three Models

• Percent of Income• Income shares• Melson


Models

• Percent of Income ModelCalculates the child support payment as a

percentage of the obligor parent’s income alone.Percent of obligor income model exhibits

considerable variationArise from the definition of income and the

percentages applied to that income• Significant variation in 10 States currently using


Models

• Income Shares ModelWhat portion of shared/pooled expenses belongs

to the children, and what portion belongs to the adults.

Comparing what childless households spend versus what households with children spend at every income level

“Estimators” to determine the cost of children.37 States use this model


Models

• Principles of Income Share Guidelines:Parents should share the financial responsibility

of their childrenChild should share in lifestyle afforded by each

parentNot discourage share physical custodyBe gender neutralBe mindful that all children of a parent have a

right to a percentage of that parent’s income


Models

Principles of Income Share Guidelines (cont’d):Children of divorced and never-married parents

should not be treated differentlyNot indirectly create economic disincentives to

re-marry or workAbout 21 States initially adopted prototype

Income Shares guidelines, today about 37 States use Income Shares


Example of Melson Formula

• Melson ModelMore complicated version of Income SharesProvides a primary support allowance a self

support and an adjustment (SOLA)3 States use this model


State Usage of Guidelines Models


Studies of the Cost of Raising Children• Basic need studies


Income and Expenditures Components

• Income Self disclosed Wage / reported / employed Low income / Disability

•Expenditures / Estimators Assessment Methodology – economists don’t agree

o Engelo Betson

• CEX is the most detailed and best available source of national data on household expenditures upon which economists generally rely to determine what families are spending on children. Number of children Multiple fathers Regional variations


Estimators • Engel Estimator

Used budget surveys Conclude that as a family’s size increased (assuming constant family income), the percentage of the family’s

expenditures devoted to food increased As a family’s income increased (holding family size constants), the percentage of the family’s expenditures

devoted to food decreased Percentage of a family’s total expenditures that was devoted to food was a good criterion for evaluating well

being

• Rothbarth Estimator Assess children’s impact on their parents’ consumption Level of “excess income” available to them once necessary expenditures on all family members had been

made Excess income to include luxuries such as alcohol, tobacco, and entertainment, and savings

• CNPP Estimator Develops economic estimates for the major categories of child-rearing expenditures (i.e., housing, food,

transportation, clothing, health care, child care and education, and miscellaneous child-rearing expenditures) Allocates the expenses Does not use a marginal cost method that measure child-rearing expenditures as the difference in expense

between equivalent couples with and without children Examines direct parental expenses on children through age 17


Research and Limitations

• Many researchers have done work on child support collectability and arrears growth

• Limitations due to :- Data- Use of large government databases – Employment Department or census data against child support databases – not

linked person-to-circumstances.


Reasons that State Guidelines Amounts Differ

• Economic basis, interpretation of the economic study & guidelines model

• Year in which basic formula/schedule was last updated• State adjusts for its relatively high/low income (e.g. NJ’s

adjusts for its high income, AL adjusts for its low income)• Consideration of federal and state income taxes

- tax year considered• Inclusion/exclusion of the child’s healthcare costs and

child care expenses in the basic formula/schedule


Reasons that State Guidelines Amounts Differ

• Consideration of parenting-time expenses in basic schedule/formula

• Low-income adjustment formula• Extrapolations to higher incomes• Assumptions about how much disposable

income is spent and saved


Related Research


Research that Makes the Case for Right Sizing Orders

• Dr. Elaine Sorenson, Urban Institute, (2007)- Looked at 9 States – Non-Compliance of a current support order is another

major factor in arrears growth– Majority of arrears owed by a small percentage of obligors– 11% of obligors owed 54% of the arrears– Of those obligors, ¾ had had no reported income, or

income less than $10,000 per year– Interest on arrears, where interest was applied, is

responsible for a large portion of arrears growth


Research for Right Sizing• Eldrend and TaKayesu (2010, 2012) California

– Despite Differences in:o CP & NCP Incomeo Number of Children Per Familyo Type of Welfare Case (Current, Former, Never)o Court Action (Default, Stipulation, Court)o Guideline Deviationo Size of Countyo Visitation Percentage o Child Age


Initial Findings• Factual Income Leads To Consistent Child Support Payments


Concerns and Issues• Child’s Financial and Non-Financial Well-Being

Support received, consistent and regular payments Parent-child contact / parenting time Automatic Adjustment/COLA

• Complex Families Multiple orders & Families Kinship care & foster care Changes in family construct Split case – one party is both CP and NCP

• Fairness & Equity Timesharing adjustments Other adjustments (childcare expenses, healthcare, etc.) Parents with disparate incomes Compromise programs Self support reserve Actual vs Imputed Income


Proposed Federal Rules Changes

Fed. Register , v. 79 No. 221 p.68580. http://www.gpo.gov/fdsys/pkg/FR-2014-11-17/pdf/2014-26822.pdf

•Impetus Research findsthat setting support obligations beyond the ability of

obligors to meet them results in unpaid arrears Research findsthat high arrearages reduce formal earnings of

noncustodial parents and the payment of child support to economically disadvantaged families

Accumulation of arrears is associated with incarceration St atisticsfrom state-enforced child support cases(FY2013)

o Arrears among all cases nationally: $116 billion, 30 states with arrears over a billion in arrears

http://www.gpo.gov/fdsys/pkg/FR-2014-11-17/pdf/2014-26822.pdf


Summary of Proposed RPRM Changes Relevant to Guidelines


In Summary• Guidelines are valuable but very complex and

often do not reflect the flexibility needed• Experience has been a valuable teacher– Automation of enforcement tools is beneficial– One size and methodology of application has

limitations– While support is a parents responsibility it should not

dis-encentivized by policy and practices that are not reasonable

– Engaging with families in meeting their responsibilities pays off for children


Thank you

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