What Child Support Methodologies/Guidelines are in use and what will work?

In order to formulate a future plan of action it is best to understand the current child support methodologies that are in place and why they don’t work and are creating the child support contraversy we have today.  The current guidelines that are out in world that we will analyze are (Page 60):

  1. The simple percent-of-obligor-income guideline. Currently in use by 13 states.
  2. Income Shares. Developed and marketed by Policy Studies Inc., currently in use by 33 states.
  3. U.S. Department of Agriculture (USDA) child cost table based guidelines. Currently not in use by any state.
  4. Cost Shares. Currently not in use by any state. (Interestingly almost identical to a proposal I made this year to the Friend of the Court Advisory Board).                If all the states have adopted 2 of the above named methodologies than why are there such adverse effects in child support cases? Of course, as I said before, the key finding is these 2 methodologies create a substantially higher standard of living for the custodial parent. Let’s analyze how these methodologies work so we can understand why this is happening.                The income Shares guideline came with 2 models. The original was based on the work of Thomas Espenshack and Ernest Engel and the other model based on David Betson and Erwin Rosenbarth, now advocated by Policy Studies Inc. “These methods were originally developed more than a century ago to answer a very specific type of question: how much income is needed for different family types (varying the number of adults and children) to have the same standard of living? For example, these studies would attempt to quantify how much income a two-parent one-child family needed to have the same standard of living as a two-adult household. While these measures were never intended to estimate child costs that is precisely the purpose for which they are now used.” Based on this model, why is it though that when a once two-adult and one-child household splits to a one-adult and one-child household each with a custodial parent and non-custodial parent and the custodial parent remarries to become a two-adult and one-child household again that the child support is NOT adjusted for the additional income that is potentially equal to or greater than the original two-adult and one-child household? Additionally, the Betsen-Rosenbarth compares changes in levels of household spending on adult goods to estimate child costs. This overestimation is three-fold:
  5.                 The Percent –Obligor-income guideline (Wisconsin style will be analyzed) was developed for welfare case applications by the Institute for Research on Poverty at the University of Wisconsin at Madison. An individual by the last name Van der Gaag defined child costs as “based on income equivalence concepts rather than on direct expenditures for a child.” This model that is explained does not reflect extensive parenting time, therefore, negates any off-set for more than just an afternoon. However, the low-income percentage used made actual child expenditures take up most, if not all the support paid, ideally not causing a raise in the custodial parent’s income. Please note, this model was only intended to recover as much of the state’s welfare payments made to single custodial parents, not to be a continually used guideline for child support payments. Additionally, there was an income threshold for this guideline.
  1. The use of intact families to estimate child costs.
  2. The use of indirect estimating techniques with household food consumption as a target definition in the old Engel estimator version and the adult goods share of consumption as target definition in the newer version.
  3. The failure to recognize that tax benefits associated with the children offset some of these costs.                Furthermore, the Epenshade-Engel methodology was based on food expenditure and consumption. This is than modified to become ‘income equivalence’ not a measure of actual money spent on the child items.
  4.                 Finally, some good news. Because of all the above issues and overestimation with the current methodologies several states are beginning to consider using the USDA child cost estimates. Unfortunately, this only partially addresses the flaws. This leads to the guideline that is based on the USDA’s estimates of parental expenditures on children. The methodology is two parts (page 69):
  1. The estimation process used by the USDA to generate the table in Expenditures on Children by Families.
  2. Adjustments to the USDA expenditure table to determine the Shred Responsibility cost tables.                Finally (and my favorite), the Cost Shared Guideline is a developed prototype support guide that makes the following calculations (page 72):
  1. Use an average of both parents’ incomes to specify the standard of living of the children and the basic costs of the children living in a single-parent household. The basic table has child costs for a single-parent household according to gross income. Basic child costs exclude childcare and education expenses which are treated as ‘add-ons’.
  2. Add other non-basic expenses when appropriate.
  3. Deduct from total child costs the tax benefit that the custodial parent receives that is solely attributable to having custody of the children.
  4. Allocate the net child cost obligation (net of tax benefits) between the two parents in the proportion to each parent’s ability to support the children, as measured by each parent’s share of combined after-tax income that is above a self-support level.
  5. Treat each parent as being equally entitled to reimbursement from the other parent for their share of the child costs incurred while in the first parent’s care.
  6. The Cost Shares award is limited at a 133 per cent of poverty threshold. No award can push the obligor below this level.              Though this change does still make the custodial parent’s living standard 1/3 higher in cases where the custodial parent’s income is or is not higher than the non-custodial parent, any level of addition/subtraction from one parent to the other will do that. This is still closer to fair on all accounts and will ensure that the non-custodial parent is not living in their parent’s basement unable to support themselves and their children due to their child support obligation.

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