ANALYSIS - NEW MASS CHILD SUPPORT GUIDELINES

I read this on line and it is very compelling regarding Child support issues. It was a independent analysis of The 2006 child support orders and has more substance when arguing the amount of child support you pay and receive..

ANALYSIS - NEW MASS CHILD SUPPORT GUIDELINES
BY DAVID B. WEDEN, III, CFA

This analysis has been prepared to summarize new changes to the Massachusetts child support guidelines, and provide some related analysis. The formula
will be effective February 15, 2002.
Please note that the changes to the guidelines do not, in and of themselves, constitute a "change in circumstances" justifying a modification to a child support order.
The author of this report is a financial professional, not an attorney. Legal advice should be sought from an attorney. However, The author is available for consulting work on child support guidelines, and in formulating appropriate child support orders where the guidelines do not apply, or when they produce an inappropriate result.
 

Basis of Formula
The formula used since 1987 has no documented economic basis, which for some has
undermined its credibility. As the 2001 review consisted of incremental changes to the
existing formula, there is still no documented economic basis for the guideline formula.
In December, the Massachusetts Bar publicly called for an in-depth review of the
guidelines. The MBA says the formula has serious flaws and that no assumption should
be made that the current formula produces an appropriate result.
However, due to the timing of the MBA's submission, the CJAM was unable to consider their
recommendations.

Changes
As noted, the new formula is basically the old formula, with minor
changes, summarized as follows:
1. Raised the minimum for low-income payers from $50 to $80 per month.
2. Raised the income thresholds from 75/100 to 100/135
3. Changed age adjustments from +10% at age 7 and +15% at 13, to +10%
at age 13.
4. Eliminated the so-called "cliff effect", where higher percentages
would apply retroactively to first dollar of income.
5. Reduced top percentage for one-child cases from 27% to 25%.
6. CP disregard increased to $20,000 from $15,000
In most cases non-custodial parents will pay less under the new
guidelines, albeit to varying degrees. In the 18 scenarios attached to this summary, only
one saw an increase (1%) from the old guidelines.
The greatest reduction was for an NCP earning $30K paying support to
a CP earning $15K for one child (age 10), where the presumptive order went down by
26%. For an NCP earning $90K and paying a CP earning $45K and supporting three
children (age 5), their payment actually went up a little.
The single change that had the greatest impact on presumptive awards
was a correction made to the way percentages are phased in for increasingly higher
levels of income. The court found what they referred to as a "cliff effect" in the old
formula, in which small increases in income resulted in large increases in support
obligations. Percentages in both the new and old child support formulas increase as non-custodial
parent income increases, similar to a graduated income tax table (which defies the
findings of all studies on child costs as well as USDA statistics more later). In the new
formula, higher percentages will only be applied to incremental income, rather than
apply the higher percentages retroactively to the first dollar of income. It took
fifteen years, but this was a good catch by the court.
As a result, the effective percentage of non-custodial parent income
that is reflected in basic orders is a blended rate, applying different percentages to
different income levels.
The chart below compares the old and new effective percentages for
varying levels of NCP income:
Reductions were also driven by the change in adjustments to basic orders associated with
ages of children covered by the formula. The old formula required that the basic order for
child support be adjusted upwards by 10% when a child turned 7, and then by another 5%
(total of 15%) when the child turns 13. The new formula has one adjustment, an increase
of 10% when the child turns 13. Thus, there is no longer an adjustment for children
 

Mass CSG Percentages to NCP Income (one child cases)
25%
27% 27% 27%
22% 23% 24% 24%
0%
5%
10%
15%
20%
25%
30%
35%
$25,000 $50,000 $75,000 $100,000
Old CSG Percent New CSG Percent between the ages of 7 and 13, and the adjustment has been decreased for cases covering
children 13 or older.
The greatest impact of these changes will be for parents in modest income ranges ($30,000 to $50,000; non-custodial parent) with one child between the ages of 7 and 13.
Cases involving 2 or more children, especially where children are 13 or older, will see minimal change.

Low Income Segment
As noted in the executive summary released by the court, percentages
applied to NCP gross income for middle and upper income cases were reduced. However,
percentages and minimums were increased for very low-income cases. While the
amount of the change in dollars is relatively small, the percentage increase in
orders for NCPs earning $10,400 or less will be large. The percentages applied to NCP income
for one child are illustrated in the chart below.
It should be noted that support orders for low-income cases in
Massachusetts were very low when compared to orders in other states, and when compared with
USDA cost estimates. It should also be noted that many experts feel that child
support orders for extremely low-income payers may be unrealistic. Many low-income
payers do not have resources to support themselves without the help of public
assistance, even in intact family situations.
It is the opinion of this author that a great deal of work needs to
be done in this area. Child support enforcement in the US was built on the public outrage
in the 1980's that many children were living on public assistance, while parent's child
support obligations were not enforced. After two decades of building enforcement
infrastructure, with Mass CSG Percentages of NCP Gross Income (One Child)
15%
27%
21%
25%
10%
15%
20%
25%
30%
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
 

Weekly Gross Income
CSG Percent
Old
New
support formulas and elaborate penalties (jail, car-boots, restriction of trade licenses, auto
licenses, and passports, etc), collecting child support from extremely low-income parents
remains very challenging. When dealing with low-income segments, some have replaced
the term "deadbeat" with "dead-broke", in an apparent expression of the futility of the
situation.
Therefore, it is possible that child support arrearages in Massachusetts may increase in
the low-income segment as a result of the guideline change.
 

Income Disregard and Thresholds Increased
The court also adopted (partially) two recommendations pushed for by
the Women's Bar Association, Greater Boston Legal Services, Massachusetts Council on
Family Mediation, and the Boston Bar Association. First, the income
thresholds under which the formula applies were increased from $75,000 to $100,000 for NCP
income, and from $100,000 to $135,000 for NCP and CP income combined. Second, the
custodial parent disregard was increased from $15,000 to $20,000.
If you have read other writings by this author, you will recall that I disagree with these
changes on the grounds that there is no economic basis for disregarding a portion of one
parent's income in computing child support, and increasing the thresholds further
expands the formula's use to cases where the formula produces its most aberrant results.

Rational Spending Patterns Still Not Reflected
An aspect of the formula that remains noticeably out of step with other states (and in
defiance of studies on child costs) are the increasing percentages applied to higher levels
of parental income.
The United States Department of Agriculture estimates family expenditures on children
each year, and publishes updates in the spring. In each update, and
for all regions of the US, the USDA has found that as families earn higher levels of income,
they spend a decreasing share of that income on their children. Every economist
who has examined child-rearing costs has found this same pattern, and virtually all
states reflect this pattern in their child support guideline formulas. Connecticut goes so far as
to include the following statement in their child support guidelines handbook:
"Economic evidence establishes that the proportion of household
income spent on children declines as household income increases. This spending
pattern exists because families at higher income levels do not have to devote
most or all of their incomes to perceived necessities. Rather, they can allocate
some proportion of income to savings and other non-consumption
expenditures, as well as discretionary adult goods."
 

Contrary to empirical evidence, the Massachusetts child support
guidelines reflect the opposite as income rises, child support orders increase as a
percent of non-custodial parent income on both pre-tax and after-tax basis. This is clearly
wrong, and has become even more pronounced in the new formula.
Thus, orders for high
income NCPs are extremely high when compared to orders in other states and USDA
statistics.
Under the new formula, a non-custodial parent earning $95,000 will
pay almost 40% more than what the USDA says it costs an intact family to support a
10-year-old child for one year. Further, the Mass guidelines put responsibility for the
entire support amount on the non-custodial parent, if the custodial parent is earning $20,000
or less.
Another controversial aspect of the formula concerns the underlying principles on which
the formula is supposedly based. For example, underlying principles state that a child
should enjoy the same "standard of living" as if the family had remained intact. While
this may leave an appealing first impression, it is simply not possible given the financial
realities when one household becomes two.
Another principle is "to encourage joint parental responsibility for child support in
proportion to, or as a percentage of income". However, this is not compatible with the
concept of the custodial parent income disregard included the Mass formula. The
disregard alters the true proportionate weights of NCP and CP incomes, and amounts to
putting one's "thumb on the scale" when determining how much each parent contributes
to supporting their children.
Development of a reasonable formula will require underlying principles that are
consistent with rational family spending patterns on children. The empirical evidence is
conclusive - families spend a decreasing share of their income on children as income
rises, and it will always cost more to maintain two households than one household.
 

Health Insurance Clarified Language
The language that governs the credit offered NCPs for providing
health coverage was clarified, but is still open to interpretation. The old language
allowed NCPs to have credited to their support order an amount reflecting the cost of
health coverage for children.
However, this did not reflect the way health insurance is actually
purchased. Typically, plan options provide for singular coverage, so-called one-plus-one
coverage (for partners with no children), and family coverage, regardless of family size.
The new health coverage credit tries to address this by limiting the credit to the
incremental cost of health coverage associated with the children covered by the child support
award.
However, there are still at least two issues that are unresolved:
Is the incremental cost referring to the incremental cost at the time of family break
up, or the incremental cost related to current household members (ie, stepfamilies)? If subsequent children are involved, which children
account for the incremental cost of health coverage?
If there is no incremental cost of health coverage, then the formula is essentially
ascribing no value to the provision of health coverage. This conflicts philosophically with other areas of the guideline formula, which
avoid the determination of costs borne by CPs and NCPs.
 

Conclusions
Changes to the guidelines were incremental modifications to the
existing formula, which has been in place since 1987. Thus certain controversial aspects of
the formula remain.
However, the court made substantial changes, compared to those in the 1993 and 1997
reviews.
The changes had upward and downward affects on presumptive orders.
However, generally the effect was to decrease awards slightly.
 

Contact Information
David Weden can be reached at blackfoot100@hotmail.com or 508-785-2862.


NCP Gross $ 30,000 $ 60,000 $ 90,000 NCP Gross $ 30,000 $ 60,000 $
90,000 NCP Gross $ 30,000 $ 60,000 $ 90,000
CP Gross $ - $ - $ - CP Gross $ - $ - $ - CP Gross $ - $ - $ -
New 6,619 13,934 21,434 New 6,619 13,934 21,434 New 7,281 15,327
23,577
Old 8,100 16,200 24,300 Old 8,910 17,820 26,730 Old 9,315 18,630
27,945
Change $ (1,481) (2,266) (2,866) Change $ (2,291) (3,886) (5,296)
Change $ (2,034) (3,303) (4,368)
Change % -18% -14% -12% Change % -26% -22% -20% Change % -22% -18% -
16%
NCP Gross $ 30,000 $ 60,000 $ 90,000 NCP Gross $ 30,000 $ 60,000 $
90,000 NCP Gross $ 30,000 $ 60,000 $ 90,000
CP Gross $ - $ - $ - CP Gross $ - $ - $ - CP Gross $ - $ - $ -
New 7,807 16,648 25,648 New 7,807 16,648 25,648 New 8,588 18,313
28,213
Old 9,000 18,000 27,000 Old 9,900 19,800 29,700 Old 10,350 20,700
31,050
Change $ (1,193) (1,352) (1,352) Change $ (2,093) (3,152) (4,052)
Change $ (1,762) (2,387) (2,837)
Change % -13% -8% -5% Change % -21% -16% -14% Change % -17% -12% -9%
NCP Gross $ 30,000 $ 60,000 $ 90,000 NCP Gross $ 30,000 $ 60,000 $
90,000 NCP Gross $ 30,000 $ 60,000 $ 90,000
CP Gross $ - $ - $ - CP Gross $ - $ - $ - CP Gross $ - $ - $ -
New 8,738 18,474 28,374 New 8,738 18,474 28,374 New 9,612 20,321
31,211
Old 9,900 19,800 29,700 Old 10,890 21,780 32,670 Old 11,385 22,770
34,155
Change $ (1,162) (1,326) (1,326) Change $ (2,152) (3,306) (4,296)
Change $ (1,773) (2,449) (2,944)
Change % -12% -7% -4% Change % -20% -15% -13% Change % -16% -11% -9%
NCP Gross $ 30,000 $ 60,000 $ 90,000 NCP Gross $ 30,000 $ 60,000 $
90,000 NCP Gross $ 30,000 $ 60,000 $ 90,000
CP Gross $ 15,000 $ 30,000 $ 45,000 CP Gross $ 15,000 $ 30,000 $
45,000 CP Gross $ 15,000 $ 30,000 $ 45,000
New 6,619 13,934 18,372 New 6,619 11,943 16,774 New 7,281 13,138
18,452
Old 8,100 14,954 19,882 Old 8,910 14,256 20,048 Old 9,315 14,904
20,959
Change $ (1,481) (1,020) (1,510) Change $ (2,291) (2,313) (3,273)
Change $ (2,034) (1,766) (2,507)
Change % -18% -7% -8% Change % -26% -16% -16% Change % -22% -12% -12%
NCP Gross $ 30,000 $ 60,000 $ 90,000 NCP Gross $ 30,000 $ 60,000 $
90,000 NCP Gross $ 30,000 $ 60,000 $ 90,000
CP Gross $ 15,000 $ 30,000 $ 45,000 CP Gross $ 15,000 $ 30,000 $
45,000 CP Gross $ 15,000 $ 30,000 $ 45,000
New 7,807 16,648 24,298 New 7,807 14,270 20,072 New 8,588 15,697
22,080
Old 9,000 18,000 24,300 Old 9,900 15,840 22,275 Old 10,350 16,560
23,288
Change $ (1,193) (1,352) (2) Change $ (2,093) (1,570) (2,203) Change
$ (1,762) (863) (1,208)
Change % -13% -8% 0% Change % -21% -10% -10% Change % -17% -5% -5%
NCP Gross $ 30,000 $ 60,000 $ 90,000 NCP Gross $ 30,000 $ 60,000 $
90,000 NCP Gross $ 30,000 $ 60,000 $ 90,000
CP Gross $ 15,000 $ 30,000 $ 45,000 CP Gross $ 15,000 $ 30,000 $
45,000 CP Gross $ 15,000 $ 30,000 $ 45,000
New 8,738 18,474 26,881 New 8,738 15,835 22,206 New 9,612 17,418
24,426
Old 9,900 19,800 26,730 Old 10,890 17,424 24,503 Old 11,385 18,216
25,616
Change $ (1,162) (1,326) 151 Change $ (2,152) (1,589) (2,297) Change
$ (1,773) (798) (1,190)
Change % -12% -7% 1% Change % -20% -9% -9% Change % -16% -4% -5%
Three 5 Year Old Children Three 10 Year Old Children Three 15 Year
Old Children
One 5 Year Old Child One 10 Year Old Child One 15 Year Old Child
Two 5 Year Old Children Two 10 Year Old Children Two 15 Year Old
Children
Three 5 Year Old Children Three 10 Year Old Children Three 15 Year
Old Children
MASSACHUSETTS CHILD SUPPORT GUIDELINES
COMPARATIVE ANALYSIS - NEW VS OLD
One 5 Year Old Child One 10 Year Old Child One 15 Year Old Child
Two 5 Year Old Children Two 10 Year Old Children Two 15 Year Old
Children