The state IV-D office prepared the COLA proposal, which was introduced in the legislature by Governor George Pataki as a program bill. In developing the COLA proposal, IV-D staff looked to the COLA model used in Minnesota and were impressed by the ease of administration and employer buy-in.^[28] The shape and scope of the original proposal was somewhat different from what ultimately passed. The Governor proposed an annual COLA by the amount of the Consumer Price Index-Urban (CPI-U). There was no differentiation between TANF and non-TANF cases; COLAs would be universal and automatic for both.

The legislature had some reservations about the initial bill. The Senate feared that an annual COLA would overwhelm the courts, employers, and IV-D staff with constantly changing orders. Instead, the Senate proposed a COLA every three years or if there was a 10% change in the cost-of-living.^[29] The Senate also was opposed to the universal COLA concept. Automatic COLAs for TANF cases made sense, the Senate noted, because there are fiscal implications for the counties. In TANF cases, custodial parents assign their rights to child support payments to the state, so the government has a fiscal interest in supporting COLAs. For non-TANF cases, however, the Senate thought the case for government involvement was less clear. If an order is in place and there are no complaints from either the custodial or non-custodial parent, legislators argued the government should not increase the order without the active consent of the parents.

The Assembly had other concerns. Chief among them was the effect of the proposed legislation on poor, non-custodial parents. For low-income parents who were struggling to pay their support orders, an annual COLA might thwart their ability to pay altogether.

The legislation that passed in 1997 was a product of this dynamic.

All COLAs are computer-generated at the state level by the Child Support Management System (CSMS). Monthly, CSMS identifies cases eligible for an adjustment and calculates the new order amount. CSMS then sends notices to cases eligible for review (i.e., two years have passed since the last adjustment and the CPI has risen 10% or more). Finally, CSMS generates the adjusted order of support. Exhibit III.2 depicts the COLA process in New York.

As noted above, two criteria must be met before a COLA is issued:

Exhibit III.3 illustrates the COLA calculation for a 1994 order with an obligation amount of $200 per month. Between 1994 and 1997, the CPI-U increased by a cumulative 10.7%. Therefore, the adjustment equals $200 multiplied by 10.7% or $21. The new order, $221, equals the prior order ($200) plus the adjustment ($21).^[32]

In New York, the COLA process differs for TANF and non-TANF cases in several important ways.

The agency issues the order at the same time it sends the notice. Copies of the adjusted order are also sent to the court and the county IV-D office.

To request the COLA, at least one parent must check off a box on an enclosed form and return it to the state IV-D office. CSMS then generates an adjusted order and sends it to both parties, the court, and the county IV-D office.

For both TANF and non-TANF cases, custodial and non-custodial parents have 35 days to appeal the adjustment. (As will be described shortly, the county IV-D office also can object.) If there is no appeal, the new order goes into effect 60 days after it is issued. We discuss the grounds for appeals further below.

It should be noted that the COLA applies to cases in which the orders were issued on or after September 15, 1989, the date New York adopted child support guidelines. TANF cases issued before this date receive a one-time review and adjustment to determine if the award is consistent with the guidelines.^[33] Non-TANF cases receive a mailer explaining that they are eligible for either a one-time review and adjustment or a COLA.

Also, a number of cases are not subject to a COLA. For example, if the non-custodial parent receives TANF, the order would be ineligible for a COLA because of the parent’s limited financial means.^[34] Also, cases in which the order was issued by another state are COLA ineligible (unless they have been registered in the state for a modification). Finally, if a TANF case has a domestic violence waiver and is not required to cooperate with IV-D officials, county officials would not apply a COLA or take any other enforcement action.

The custodial parent, non-custodial parent, and the county IV-D office each has a right to object to a COLA. Reasons for appeals are diverse. Appeals by custodial parents are typically triggered by the belief that the non-custodial parent’s income has increased at a rate well in excess of the cost of living. Conversely, the non-custodial parent may believe that his or her income has not kept pace with inflation. The county IV-D office might also object for a number of reasons. Using automated wage records, staff may find that the non-custodial parent’s income has increased by more than the 10% cost-of-living adjustment. At least one county has used the objection process to include medical support in orders. The IV-D office can appeal a COLA related to a TANF case without approval from the custodial parent. If the office objects to a non-TANF case, the custodial parent must consent.

Once an appeal has been filed, the COLA will not go into effect and a child support guidelines hearing will be held in court.

The contesting party must file the appeal with the court that issued the order. All parties involved—the other parent and the IV-D office, or, in the case of a IV-D appeal, both parents—must be served with a copy of the appeal. The court clerk sets a date for a guidelines hearing. Hearings are scheduled within 45 days of the appeal, and generally last about 30 minutes, provided all parties bring the required financial documents.

The COLA appeal hearing differs from the traditional child support modification hearing. In the latter instance, the parent petitioning the court must prove a change in circumstances (e.g., the non-custodial parent’s income increased), and the hearing is narrowly focused on that specific issue. Thus, if an issue is left off the modification petition (e.g., child care), it cannot be addressed at the hearing.

With a COLA appeal, the objecting party does not need to prove a change of circumstances. The hearing is similar to a new support order hearing with full financial disclosure for both parents,^[35] and is based on the state’s child support guidelines. In essence, the process starts from scratch, as if no award was in place. The state IV-D agency does not provide guidance to the counties regarding which cases are candidates for appeals;^[36] it is a local decision. Nor does the state have an automated system to determine which counties actively pursue appeals. Policymakers intentionally designed the appeal process to provide easy access for the parents—or the IV-D agency—to a court review of the order without the need to file a separate modification petition . The IV-D’s use of the appeal process varies considerably from county to county, with some county offices generating a sizable number of appeals and others generating none at all. Judicial-branch perspectives also vary by county, with some judges encouraging IV-D appeals and others not allowing them.

Because an appeal triggers what can be a fairly complex hearing—full financial disclosure based on the state’s child support guidelines—one or both parents may require professional legal assistance to navigate the process.

The computer system, and its central processing of notices and adjustments, was vital to the success of the COLA implementation. State officials found certain aspects were harder to implement than others. The variable pieces of the legislation—the 10% and two-year thresholds—made programming the system more difficult. It was also difficult to incorporate the COLA process into the established computer system. Creating a stand-alone process might have been easier. Drafting the notices that were to be sent out by the computer was also time consuming. They had to be easy to read, and different forms had to be created for TANF and non-TANF cases, as well as cases established before and after September 1989. The state implemented the policy over the course of one year, during which time 2.5 FTE were devoted to the project (one FTE for computer programming and 1.5 FTE for policy-related issues, such as writing regulations, drafting forms, and completing other administrative tasks).

At the county level, staff training was minimal.^[37] The state IV-D office dispatched trainers to the local offices to conduct one-day sessions for the child support investigators. These sessions, however, occurred several months before the computer system was up and running. Some local staff suggested that it would have been more helpful if training had occurred shortly before the system was activated. In addition to these training sessions, the New York Public Welfare Association had presentations on the new COLA policy at its annual meetings.

The judiciary, while not playing an active role during the legislative process, worked with the state IV-D staff on court-related logistics once the bill was passed. Topics included: how the notice would be sent out, how the notice would be conveyed to parents, and where parents would go to object. In New York City, for example, court staff has monthly meetings with the state and New York City IV-D directors. COLA-related issues were on the agenda for several meetings. In addition, the court administrator trained all of the local hearings examiners on the COLA law. The state child support staff also trained hearings examiners at seminars held in upstate New York and New York City.

Most staff interviewed said that once the COLA system became fully operational they have had to spend minimal time on COLA-related business and considerably less than they would have had they manually reviewed and adjusted the same number of cases.

For instance, the state IV-D office has 55 staff persons plus 6 programmers. Two staff persons spend a combined 11 days per month preparing lists of eligible cases and conducting other COLA-related work, including responding to county staff inquiries.

At the county level, staff time varies, but generally one person may spend one or two days per month on COLA-related business. The state sends a list of eligible cases to each IV-D office at the beginning of the month and staff must determine if any should be stopped. (A stop would be in order if there was an administrative error in the CSMS case record or some other action was pending on the case, such as a petition already filed in court.) If the COLA is stopped, a staff worker enters a code into the computer system. Otherwise, two weeks later, the state IV-D office sends the COLA notice to each parent. Even if either parent objects to the COLA, staff work is minimal. Parents deliver appeals directly to the courts, so county IV-D offices are not involved. And, unlike the traditional review and modification process, the IV-D office does not have to collect the financial data and build a case. Thus, staff time spent on COLAs is minimal in comparison to reviews and adjustments.

Staff from the four counties we visited confirmed that little time is needed to process COLAs. In Utica, for example, 15 out of 22 investigators and 3 out of 4 supervisors spent as much as 25% of their time on reviews and adjustments every month. Now, each spends just minutes on COLA cases. In Albany, 6 staff persons spent 20% of their time on reviews and adjustments. Now, one staff person spends one day per month reviewing the list of eligible COLA cases. Similarly, in Schenectady, 4 to 5 people spent 10 hours per week each on reviews and adjustments. Now, they spend almost no time.

Court staff in two counties we visited did not notice a major change in the court caseload as a result of the COLA legislation. In New York City, for example, the implementation of COLA did not affect the court’s budget. There was no direct need for additional staff. During the first year, the court administrator spent about 25% of his time on COLA-related training for data entry clerks and examiners. In 1999, there were about 200 appeals to TANF orders and 100 appeals to non-TANF orders. The appeals were distributed across 14 hearings examiners. Given that the New York City family courts hear 260,000 petitions per year, COLA appeals comprise a tiny fraction of the courts’ caseloads.

We asked an advocate representative and frontline caseworkers to relay their clients’ opinions about the policy. The Albany County representative of the Association for Children for Enforcement of Support (ACES), which generally represents non-TANF custodial parents, sees four advantages to the COLA. First, the COLA is effective in cases where the non-custodial parent is self-employed. In such cases, the state has difficulty calculating a fair income—net of business expenses—which makes a traditional modification contentious. Second, from the perspective of the custodial parent, the COLA presents no risk of a downward modification. Third, the COLA affords equal access to a modification to both TANF and non-TANF families, while the traditional modification process places a priority on TANF cases. Finally, in New York, a COLA appeal created an expedited path to a full-guidelines hearing without proving a change in circumstances .

Frontline staff have heard few complaints about the COLA from custodial parents. Caseworkers believe that custodial parents like the predictability and relative certainty of the COLA but note that the change in the order is often small.

Non-custodial parents were not well organized at the time the COLA was being debated in the legislature. According to a IV-D official, a number of organizations, such as the Fathers’ Rights Association and the Children’s Rights Council, are often opposed to new child support legislation. These groups generally oppose guidelines that are based solely on income and expenses and do not take into account the amount of time non-custodial parents spend with their children and other non-financial contributions. The president of the Children’s Rights Council also noted that non-custodial parent organizations opposed the COLA on the grounds that it made bad orders worse. In addition, the one-size-fits-all nature of the COLA does not recognize the diverse situations of non-custodial parents. Some work part time; others have second families. Despite having deep concerns about the COLA, these groups did not articulate their positions during the policy’s development.

During the first two years of implementation, agency and judicial staff fielded few complaints from non-custodial parents. When non-custodial parents do inquire about the COLA, they typically have a technical question about its calculation or effective date. County-level officials we interviewed also pointed to the very low appeal rate among non-custodial parents (discussed below) as evidence that there is no widespread opposition to the policy. (It should be noted, though, that the state has not received formal feedback from non-custodial parents as to whether they fully understand their right to appeal a COLA and the steps necessary to do so.) However, others suggest that the low appeal rate is driven by cost. An appeal to the COLA leads to a court hearing, which usually implies expensive legal representation. In most cases, the non-custodial parent likely concludes that paying the COLA (a $10 to $30 monthly increase) would be less expensive than a hearing.

Caseworkers gave high marks to the COLA policy and its implementation. The COLA greatly reduced the demand for formal modifications, which they view as time-intensive and contentious. From the perspective of the frontline CSE workers, the COLA involves only minutes of work per case per year. They generally view the process as an efficient and fair way to ensure that orders keep pace with the rate of inflation.

In counties where the IV-D office itself proactively appeals COLAs, staff involvement is somewhat more intensive. Workers review their TANF cases to identify candidates for formal upward modifications or for the addition of medical support. In these counties, frontline staff suggests that the COLA appeals process provides an easy and expedited method for revisiting the entire award, because an appeal forces a guidelines hearing.

In the past, the judicial community has been sensitive to legislation that infringes on judges’ authority and discretion. For example, the community initially was opposed to the 1989 child support guidelines. However, after the guidelines were implemented, judges saw that the new rules ultimately eased the settlement process.

Representatives of the judicial community did not comment during the development of the COLA. Once enacted, representatives of the family courts worked closely with the state IV-D agency to ensure the smooth implementation of the policy. For example, representatives of New York City’s family courts held monthly meetings with the state’s IV-D director during which they developed program specifics, detailing how the COLA notice would be sent to parents, how the IV-D agency would notify the court about proposed adjustments, and where parents could go to object to the COLA. Peter Passidomo, chief court attorney of the New York City Family Court, believes those meetings were key to the policy’s successful implementation.

According to one court official who was involved in drafting the COLA legislation, the lack of judicial objection to the policy could relate to the fact that COLA adjustments generally involve small amounts of money and that the courts still retain a role in the COLA-appeal process.