Child Support How 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

Presentation Overview Guidelines in the United States History Model Elements Models of Choice State Authority / governance Research Findings Current Issues and Concerns NPRM – possible impacts/influences New trends / next steps Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

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

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

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 Rebuttal Presumption True useless Confronted & proved otherwise Allows for defaults to stand “Innocent until proven guilty” Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

History Basic Mandatory Components Must 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 Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Three Models Percent of Income Income shares Melson Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Models Percent of Income Model Calculates the child support payment as a percentage of the obligor parent’s income alone. Percent of obligor income model exhibits considerable variation Arise from the definition of income and the percentages applied to that income Significant variation in 10 States currently using Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Models Income Shares Model What 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 Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Models Principles of Income Share Guidelines: Parents should share the financial responsibility of their children Child should share in lifestyle afforded by each parent Not discourage share physical custody Be gender neutral Be mindful that all children of a parent have a right to a percentage of that parent’s income Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Models Principles of Income Share Guidelines (cont’d): Children of divorced and never-married parents should not be treated differently Not indirectly create economic disincentives to re-marry or work About 21 States initially adopted prototype Income Shares guidelines, today about 37 States use Income Shares Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

- Provided as an example of the variations Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Example of Melson Formula Melson Model More complicated version of Income Shares Provides a primary support allowance a self support and an adjustment (SOLA) 3 States use this model Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

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

State Usage of Guidelines Models Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Studies of the Cost of Raising Children Basic need studies Key to the guidelines were: Understanding 1) the cost of raising children 2) How families spend – at various points – at various levels of income 3) How different are single parent families? Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

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

Income and Expenditures Components Self disclosed Wage / reported / employed Low income / Disability Expenditures / Estimators Assessment Methodology – economists don’t agree Engel 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 Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

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

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

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

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 Parenting time Texas - 50% possession Sliding scales Overnights Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

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

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

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

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

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

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 - Over the last 5-7 years - Improvements in collections and support slowed - Availability of data provides better opportunity to analyze why Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Research for Right Sizing Eldrend and TaKayesu (2010, 2012) California Despite Differences in: CP & NCP Income Number of Children Per Family Type of Welfare Case (Current, Former, Never) Court Action (Default, Stipulation, Court) Guideline Deviation Size of County Visitation Percentage Child Age They found - Nexus @ 18%-20% - Factual information more effective Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Initial Findings Factual Income Leads To Consistent Child Support Payments Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

This chart shows the impact of educational differences in the ability to pay Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

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

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

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

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

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

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

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

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

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

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

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) Arrears among all cases nationally: $116 billion, 30 states with arrears over a billion in arrears Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

Summary of Proposed RPRM Changes Relevant to Guidelines Alisha Griffin, Director, California Department of Child Support Services November 10, 2015

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

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

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

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

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

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

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

Thank you Questions ? Alisha Griffin, Director, California Department of Child Support Services November 10, 2015