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Journal Issue: Children and Divorce Volume 4 Number 1 Spring/Summer 1994

Child Support Orders: A Perspective on Reform
Irwin Garfinkel Marygold S. Melli John G. Robertson

Issues in Developing Child Support Guidelines

A variety of issues with regard to child support guidelines are currently in debate. Some of these issues are discussed below.

Including Actual Child Care Costs in Awards

Child care is a major expense for a single parent, and it is directly related to the child. Most of the income shares jurisdictions and 8 of the 17 percentage of income states prorate the cost of child care between the parents and add the noncustodial parent's share to the basic child support payment.23,24 For example, if the child care cost for the year equaled $6,000, the noncustodial parent's income equaled $50,000, and the custodial parent's income equaled $25,000, the noncustodial parent's child support obligation would increase by two-thirds of $6,000, or by $4,000.

Basing the child support obligation upon actual child care expenditures is akin to the traditional method of relying upon individual budgets for establishing child support awards. It does not follow from and indeed may be counter to the income sharing philosophy that underlies both guidelines. Child care expenditures depend primarily upon how many hours the custodial parent works. Higher child care expenditures are, therefore, associated with higher income. Thus, when the percentage of income guideline is used, prorating child care obligations leads to the anomalous result that support payment increases with custodial parent income.

On the other hand, because the income shares guideline counts custodial parent income in the determination of the noncustodial child support obligation, it is difficult to ignore the child care expenses incurred to earn that income. Indeed, under the income shares standard the prorating of child care expenditures tends to offset the effects of counting custodial parents' income. This offsetting effect helps account for the observation of practitioners and experts that, for the vast majority of cases, the percentage of income formula (which subsumes child care costs within the formula) and the income shares formula produce very similar results.25 But including child care expenditures as well as custodial parent income substantially complicates the calculation of support owed and, as discussed below, makes updating of support awards more difficult.

Issues Regarding Health Care

States address the issues of medical care in their child support guidelines in a variety of ways. Most income shares states include extraordinary medical expenditures26 as an add-on to the basic child support award and thus prorate them between the parents.27 Some percentage of income states also allow the court to prorate extraordinary medical expenses between parents;28 others provide that such expenses are a basis for varying the amount of award;29 still others require the court to assign responsibility for medical expenses to one of the parents.30

Some states also include provision for medical insurance in their child support guidelines. A common practice is to require that the noncustodial parent provide medical insurance when available through an employer or other group at reasonable cost.

For several reasons, none of these approaches is satisfactory. It is certainly better to have extraordinary medical expenses shared between the custodial and noncustodial parent than to have the custodial parent bear the entire cost. But, often sharing the burden between the custodial and noncustodial parent handicaps both and does not satisfactorily deal with the problem. The real issue is our nation's failure to institute a national health insurance system. The child support system will not be able to resolve this social problem.

So too the practice of ordering noncustodial parents to provide medical insurance for their children creates substantial complications for the noncustodial parent. Adding someone to a medical insurance policy in the United States normally shifts this burden to the employer and to an insurance company. It is one thing to ask an employer to provide a relatively inexpensive service for child support in the form of immediate withholding. But shifting an employee from a single policy to a family policy can cost that employer several thousand dollars per year. This can change the marginal decision as to whether to employ the noncustodial father and at what level to compensate. Research has shown that, while orders are being written that include medical insurance, it is much more difficult to have the child placed on the policy.31 As it was with extraordinary medical expense, child support is being asked to make up for the failure to have an adequate national health plan.

Including Costs of Higher Education in Awards

The obligation to pay child support usually ends when the child reaches the age of majority. For most states, that age is now 18, reduced from 21, where it had been for most of U.S. history.32 Termination of child support at 18 has meant that, for most youngsters, noncustodial parent support ended before the child had completed high school. Some states have extended the support obligation to a period beyond 18 during which the child is completing high school. Other states have given the courts discretion to order support in these circumstances.33 Many states have not addressed the problem at all. On balance, we suggest that states should be encouraged to adopt legislation extending support for the period during which the child is in high school at least to age 19, which is the age by which most students have completed the course.34

Support for a college education is more problematic because parents in two-parent families are not required by law to provide support at that level and often do not, or feel they cannot do so.35 Although most states have not addressed the issue of support for college education, a few have authorized courts in their discretion to order support for postsecondary education. Public policy is moving to a requirement that, at least, courts have this discretion.36

An alternative approach, supported by some public policymakers, is to treat post-high school education as a right and continue the child support order until the child has the opportunity to complete four years of postsecondary education or until the child's 22nd birthday if the young person is in a full-time school and is meeting the requirements of that school.37 In this type of situation, because the child is now 18, direct payments from the noncustodial parent to the child and the child's college could substitute for payments to the custodial parent.

Treatment of Remarriage and Multiple Support Obligations

In this day of divorce and remarriage, child support issues often involve multiple families.38 One frequently occurring problem is that of the noncustodial parent who remarries and has another family. Should that parent's obligation to the children of the first family be reduced in response to the financial burden of the second family? In principle, all children should be treated equally, but there is a long-standing tradition in American law of giving preference to the first family.39 The rationale for that preference is that the support-paying parent and new spouse begin another family with full knowledge of the obligation owed the children of the first marriage. Neither the first family nor the public has a part in the noncustodial parent's decision to start a new family, so why should either party bear the costs? Unfortunately, the children of the second marriage also have no part in the decision, and they may suffer from the obligation to the other children.

The problem poses difficult choices, and a few states have begun to reexamine the issue. One approach, known as the second family first doctrine, calculates child support for the children in the subsequent family and deducts that from the payer's income before calculating a modification for the first family.40 Some states try to protect the expectation of children in the first family to continue to receive the support on which they had been counting by deducting the second family child support from the payer's income only if the modification would result in an increase for the first children.41

A closely related problem arises when the remarriage of the noncustodial parent ends and the issue is setting a child support payment for the children of the second family to be paid by a parent who is already paying child support. Again, most jurisdictions follow the first family preference, leaving that support award intact and reducing available income for the second support award by the amount of the first award.42 The effect is to give the children of the first marriage the full benefit of the noncustodial parent's unreduced income while reducing the income base for the children of the second marriage. As before, the principle of adult responsibility takes precedence over the principle of treating all children equally.

A more unusual situation—but one that is occurring more frequently—involves the noncustodial mother who remarries, has more children, and stays home to care for those children. Should she be relieved of her child support obligation because she is no longer earning income? Courts have had varying reactions to this type of problem. Some courts refuse to impute any earning capacity to a "nurturing mother."43 Others calculate a child support award based on the parent's earnings prior to the decision to stay home.44 The rationale of the courts who insist on a child support payment in these cases is that the mother has a duty to all her children, not just those in her current family.

The Effect of Dual Residence on Child Support Obligations

Joint legal custody, where both the custodial and noncustodial parent share the legal responsibility for making important decisions regarding their children's lives, has spread quickly and is now the norm in some states.45 Joint legal custody has no implications for the amount of child support to be paid.

Joint physical custody means that the child lives a substantial proportion of time with both parents. This arrangement is much less common than joint legal custody, but it has important implications for the amount of the child support obligation.

Shared parenting implies not only caring for the child but sharing expenses as well. Where the child spends half time with each parent, it can be assumed that each parent incurs equal out-of-pocket expenditures for the child. Therefore, if parental incomes are equal, each parent's child support obligation should be equal, which is to say that the net obligation of each should be zero. If parental incomes are not equal, an adjustment in child support should be made because the costs to each parent are the same. This adjustment is calculated for each parent based on the sole custody percentage. The child support payment is the difference between the two, payable to the lower-income parent.

Joint physical custody is complicated, however, because often children do not live with both parents equal amounts of time. In those cases, the time may vary from near equal time to little more than "normal visitation."46 The issue in this type of case is how to reduce the child support to reflect the unequal sharing of child-raising costs. Two questions must be resolved to determine the reduction. The first is the point at which a reduction may begin. This point, that is, the amount of time that a child should be with a lesser-time parent before a reduction in child support is made, has come to be known as the threshold. Determining the threshold constitutes the first step in developing a formula for support reduction. Most states that have addressed the issue of a threshold have tied it to the amount of normal visitation on the assumption that the basic child support order takes visitation-connected expenses into consideration. However, most states do not provide for any reduction in child support until the time sharing is well above normal visitation—30% to 35% of the time.47

The second question that must be addressed is how the reduction is to be made. The most commonly used approach operates on the theory that each parent owes child support to the other parent based on that parent's income and the amount of time the child is cared for by the other parent. This approach appears, at first impression, to be fair, but the manner in which it has been implemented in many states makes it unfair. In many states, there is no reduction at 30% shared time, but at 35% shared time, there is a 35% reduction.48 This approach creates what has come to be called the "cliff effect." It results in hardship to the primary custodian who does not experience that much reduction in expenses. If there is no reduction at 30%, a 35% reduction for 5% more time is a great loss to the primary custodian.

Another approach—and one that we favor—is to reduce the payments only for the amount of shared time over the threshold. Properly handled, this approach will reduce payments to zero at equally shared time if incomes are equal but does so gradually.49

Updating Child Support Orders

One of the most common causes of inadequacy in child support awards is that their value erodes over time with inflation. In the past, a custodial parent was required to petition for modification to update the award and to retain the real value of the original order. But modification of child support is discouraged by the court system.

For example, the Uniform Marriage and Divorce Act suggests a modification "only upon a showing of changed circumstances so substantial and continuing as to make the terms unconscionable."50 The rationale for discouraging modifications under the old system of individualized determinations of child support awards was that the time costs of modification seriously overburdened the courts. Every update was the equivalent of rehearing the case. If the average child support case has a 10-year-obligation life, annual modification or updating under the old system would increase the burden on the courts tenfold. Furthermore, the requirement that the custodial parent seek modification of the order necessitated expenditures for attorneys' fees and increased tensions between the parties.

Now that numerical guidelines govern the setting of awards, it is easier to justify a procedure for periodic review based on changes in parental income and initiated by the child support system, not by the parent. As noted above, the Family Support Act (FSA) of 1988 requires child support enforcement agencies to review the awards of all AFDC cases every three years and all non-AFDC IV-D cases where either parent requests a review. Although there are no data on the national percentages of cases that are being reviewed and modified, results from five demonstration projects conducted in Colorado, Delaware, Florida, Illinois, and Oregon suggest that little updating of awards is taking place.51 Of all cases reviewed, only about 20% of the orders in AFDC cases were modified, and the proportion was about half that for non-AFDC cases. Furthermore, it took approximately 200 days to complete the review and modification process.52

Thus, unless the FSA updating provisions are strengthened, either legislatively or administratively, they are likely to lead to only a modest increase in updating.53 Even with remedial legislation, however, updating fixed dollar orders is likely to remain cumbersome and expensive.

In principle, the most efficient system for keeping child support orders current in terms of the income of the noncustodial parent is the use of the percentage of income guideline with the support order expressed as a percentage of income, for example, 17% for one child or 25% for two children. The child support agency notifies the noncustodial parent's employer of the percentage of income to be withheld and forwarded to the agency. As the income of the noncustodial parent increases (or decreases) over time, the child support withheld and paid changes automatically as well. (If the child ages out or custody changes, of course, the percentage will need to be adjusted.) The only additional action the child support agency must take is to verify the income tax returns of the noncustodial parent each year to ascertain if he or she has received additional earned or unearned income. Unfortunately, most percentage of income jurisdictions express orders in fixed dollar terms rather than as a percentage of income. Experience in Wisconsin indicates that payments increase substantially—by 50% within two to three years—if orders are percentage based rather than fixed.54

Automatic updating is not possible under the income shares guideline because orders cannot be expressed in percentage terms. Under income shares, the percentage of income owed depends not only on the number of children owed support, but also on the income of the noncustodial parent, the income of the custodial parent, and child care and extraordinary medical care expenditures. All of these factors are likely to change from year to year and even within years.

Updating the income shares standard is feasible but is likely to be substantially more costly than updating the percentage of income standard when the latter is used to express orders in percentage terms. Each year the child support agency must collect income tax returns from both parents, as well data on child care and extraordinary medical care costs from the custodial parent. A method for verifying the latter will have to be developed. The records of the two parents must be linked and a determination made on whether a different percentage of income should be applied to the new total. Then the child support agency must notify the employer, the custodial parent, and the noncustodial parent of the new obligation. The extra administrative burdens imposed by the income shares guideline will discourage updating. In view of the importance of updating to the adequacy of child support awards, the automatic updating achieved by utilizing the percentage of income standard to express orders in percentage terms is especially attractive.

Special Treatment for Poor Noncustodial Parents

On the whole, noncustodial parents are not particularly poor. In 1983 the mean income for all noncustodial fathers was $19,346, only 14% less than the average income of all men 25 to 64 years old, $22,482.55 Yet, there are a lot of poor noncustodial fathers. The incomes of non-white noncustodial fathers are half those of white counterparts. Among whites, divorced and remarried fathers have nearly three times the income of never-married fathers; among nonwhites the ratio is greater than three to one.

How much poor noncustodial parents should pay is an important and complex issue. The argument for a lower child support sharing rate for poor noncustodial parents is the same as the argument for a progressive rather than a regressive income tax: the poor are less able to pay. While 17% of income is a substantial burden for a middle-income noncustodial parent, for a poor noncustodial parent, it can be truly oppressive.

The argument against a lower child support sharing rate for poor parents is also strong. First, when poor parents live with their children, they spend at least as great a percentage of their income on their children as nonpoor parents do.56 Second, equity argues that the share of income devoted to the child should be similar for poor custodial and poor noncustodial parents. Third, lowering the rate for the poor results in lower child support payments to custodial parents and their children or in higher taxes.