Chapter 3.FACTORS IN CHILD SUPPORT GUIDELINES

Note that the Tables and Exhibits are at the end of the chapter.

The evaluation of child support guidelines involved examining the major factors considered by State guidelines in determining award amounts. Whereas Chapter 2 of this report examines overall guideline implementation, this chapter examines seven factors that affect child support151multiple families, income definition, health care costs, child care costs, postsecondary education, tax considerations, and custody and visitation.

3.1OVERVIEW

As States develop and review their child support guidelines, they also address issues and factors that might affect child support awards. This chapter considers such factors as multiple families, income, health care costs, day care, postsecondary education, tax exemptions, and child custody and visitation. These factors were chosen upon the recommendation of the Office of Child Support Enforcement (OCSE) for their relevance to child support. Experts have discussed the issues related to these factors in Child Support Guidelines: The Next Generation, 1995 (Haynes, 1995) and guidelines reviewers from many States have considered them in their deliberations (see Volume II of this report).

State guidelines address the factors that affect child support in three ways. First, guidelines may direct the decisionmaker to handle the factor according to a specific procedure. For example, the guideline may advise providing reasonable child care expenses that are incurred in order for the custodial parent (CP) to work or seek employment should first be added to the basic support amount and then apportioned between parents in the same manner as the basic child support amount. Such provisions not only mandate that the decisionmaker consider the factor, but also direct how the factor should be numerically calculated within the guideline formula. These factors may be characterized as "mandatory numerical adjustment factors."

The second way in which guidelines address factors does not involve a mandatory numerical adjustment. The terminology for nonnumerical adjustments varies among State guidelines. In some States, the decisionmaker considers a list of factors that "adjust" the basic support amount. Other guidelines direct the decisionmaker to consider factors in deciding whether to "modify" the support amount. Still other guidelines list factors for courts to consider in deciding whether to "deviate" from the guideline amount. Despite the different terminology, the intent is the same for these guidelines; the decisionmaker may or must consider each factor, but may use his or her discretion in deciding the direction or amount of theadjustment. In particular, it is up to the decisionmaker's discretion to determine how important the factor is in each particular case, and if the decisionmaker decides to "adjust", "modify," or "deviate" from the basic support amount, he or she can use discretion in deciding how that "adjustment," "modification," or "deviation" will be calculated. In other words, no direction is given as to how to address the particular factor (although some State guidelines place a limit on the decisionmaker's discretion). Because of the different terminology, such factors are characterized as "discretionary factors."

Finally, guidelines may not address certain factors at all, either numerically through a mandatory adjustment or in a discretionary manner. New spouse income is an example of a factor that many guidelines fail to address. Such factors may be considered by decisionmakers as de facto "deviations to the guidelines."

The factors mentioned in guidelines as mandatory numerical adjustment factors or discretionary factors is consistent with the guidelines treatment of multiple family issues, as presented in the OCSE publication The Treatment of Multiple Families Under State Support Guidelines and in this chapter. This chapter also will use the terms "mandatory" and "numerical adjustment" when referring to mandatory numerical adjustment factors.

Some terms used in the following discussion are specific to the child support field. "CP" refers to the parent who has primary physical custody of the child(ren), and "noncustodial parent" (NCP) refers to the parent who does not have primary physical custody. The CP is usually a biological parent (often the mother), but may be another relative, such as a foster parent, or another legal guardian in the case. The NCP is almost always the parent who is required to pay the child support award issued in the case. In this report, party and parent are used interchangeably, although the parties to a given case may not always be the parents of the child(ren). An "obligor" is the person responsible for paying the award, and an "obligee" is the person or party receiving the award. In most cases, the obligor is the NCP, and the obligee is the CP, but in some cases (e.g., Cases that involve Aid to Families with Dependent Children [AFDC]), the obligee may be the State.

The chapter is organized into seven sections. Each section considers issues that involve factors affecting child support, the treatment of these factors in guidelines and guideline reviews, the perceptions of individuals in the support field regarding the significance and ways of addressing these factors, and the factors' impact on the cases as reflected in the records. The following section provides analysis of factors relating to multiple families. All factors are discussed in this chapter with regard to their treatment as mandatory numerical adjustment factors or as discretionary factors. The discussions are based on (1) the analyses of case records and interviews from the 11-State (and 21-county) study; (2) the findings from the State case studies of guidelines deviations; and (3) the study of State guideline reviews.

3.2MULTIPLE FAMILIES

Research indicates that an estimated 75 percent of divorced persons remarry, and many have additional children after they remarry. [ Espenshade, T. 1985. " Marriage Trends in America: Estimates, Implications, and Underlying Causes. " Population and Development Review 11:193.] Furthermore, Folk and colleagues [ Folk, K.F., Graham, J.W., and Beller, A.H. " Child Support and Remarriage. " Journal of Family Issues 13(2):142 – 57.] report that 80 percent of divorced men and 55 percent of divorced women remarry within 10 years. Multiple families are increasingly becoming the norm, not the exception.State guideline review teams recognized that the traditionally nuclear or "Ozzie and Harriet" type of family is no longer commonplace, and their reports acknowledged that parents throughout the country increasingly have children from more than one relationship. The review teams also noted that child support decisionmakers often review cases involving children from multiple relationships, remarriage, and blended families, and they require attention to these complex circumstances in guidelines. According to the State guideline review materials submitted to the American Bar Association (ABA), 16 States considered general multiple-family issues in their reviews. The consensus was that guidelines should specify consistent handling of this issue.

This consensus of State guideline review teams is supported by ABA interviews in the 11 study States. During interviews with more than 200 judges, mediators, masters, commissioners, IV-D attorneys, private attorneys, IV-D caseworkers, and parents, multiple family-issues were one of the three most commonly mentioned reasons for requesting a mandatory adjustment to income or a discretionary deviation from the guideline amount. In fact, 100 percent of the interviewed NCPs stated that court-ordered obligations or subsequent family situations must be considered by decisionmakers when guideline child support amounts are being established. Multiple-family issues also were cited as causing deviation in State case studies of deviations. In contrast, none of the CPs mentioned multiple-family issues as an issue of concern.

Surprisingly, sample of case records collected by CSR does not reveal a high incidence of multiple-family issues. Prior support orders and subsequent obligations were documented in only 0.5 percent to 42 percent of cases in the 21 counties (see Exhibit 3-2-1 following this page). This variability occurred both within and across States. Further analysis of the county data by various case aspects (e.g., case type, AFDC status, forum, and attorney presence) did not shed any further light on the wide variability and low incidence of multiple-family issues. Some variability can be explained bycertain aspects of the research methodology. For example, this study did not limit the case record collection to multiple-family cases or to modifications, where the majority of multiple-family issues are expected to appear.

The following subsections address issues and findings from States and study sites regarding multiple families, issues and findings regarding multiple-family deviations, and conclusions and recommendations. Each subsection presents information from the State guideline reviews, interviews with local officials, and analysis of case record data.

3.2.1Multiple-Family Issues and Findings

This subsection address preexisting support obligations and subsequent support obligations as discussed in State guidelines and in the guidelines used by the 11 study States.

3.2.1.1Preexisting Support Obligations

The following discusses preexisting support obligations as discussed in State guidelines, guideline review studies, case record data collection, and interviews.

Guideline Reviews

As part of the State guideline review process, a number of the review teams debated methods for handling support obligations established prior to each case. Typically, reviewers opted to subtract any existing court-ordered child support awards from the responsible parent's income prior to calculating the child support amount. In some jurisdictions, deductions also were permitted for children not covered by prior court orders, but these income adjustments were limited to verifiable expenses or to the Federal tax exemption available for the child. This is called a "first family approach," in which the earliest family's obligations are handled first. However, this approach can be extended to any prior child support order, regardless of when the child was born; therefore, it can be applicable to children outside a parent's first family.

Study States

Among the 11 States participating in this study, 8 had guidelines that deducted the full amount of any prior order from the obligor's gross income before support is calculated in the current action. [ These States include Arkansas, Florida, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, and Wisconsin.] Delaware and Pennsylvania developed other mandatory numerical adjustments to take prior orders into account. Only Washington State allowed thedecisionmaker to consider prior support orders as a basis for deviating from guidelines. Table G-1 in Appendix G presents a complete description of each State's strategy for prior support orders.

Whether State guidelines provide a mandatory adjustment for prior support orders or gives the decisionmaker discretion, this seems to impact the amount of documentation on that issue within the case record. Although prior orders were not frequently mentioned across all 21 study counties, prior orders were documented in 3 percent to 8 percent of cases from Washington, which uses a discretionary approach. In the 10 study States with a mandatory adjustment approach, prior orders were mentioned in up to 27 percent of cases. In 12 pilot counties, multiple families were reported in more than 5 percent of cases, and in 9 counties, they were reported in more than 10 percent of the cases (see Exhibit 3-2-2 following this page).

In most cases, decisionmakers in the 21 study counties followed their guideline mandates in calculating support where there was a prior order. In the 10 States using mandatory adjustment (e.g., deduct the full amount of the prior order from paying party's income), the mandated method was used in 33 to 100 percent of cases in which the NCP had a prior order. [ The low end of this range occurred in a county that had only three cases where the NCP had a prior order. ] In other counties decisionmakers occasionally deviated from the guideline or did not consider the prior order when establishing the current support order. Decisionmakers also used other methods, which varied from case to case, to consider the prior order(s) (see Exhibit 3-2-3).

There was considerable variation by State and county in how prior orders were handled. In Washington State, guidelines permit a discretionary approach to considering the NCP's prior order, so all adjustments are considered deviations. The two counties in this State were among those with the highest rates of deviations and of cases in which prior orders were not considered. More surprising was that data from neither Pennsylvania county showed numerical adjustments for prior orders, but this appears to be due to coding issues. In fact, the prior order calculations were performed in most cases but had no effect on the award. Decisionmakers also used other methods, which varied from case to case and often were not identified in the documentation (see Exhibit 3-2-3; also see Table E-1 in Appendix E for additional details).

The case data findings are supported by subjective perceptions gathered from interviewees in the study States. The majority of decisionmakers, attorneys, caseworkers, and parents interviewed agreed that decisionmakers usually follow the guideline methodology for addressing prior orders for support. Most agency attorneys and caseworkers believed that the results are fair. Private attorneys, some agency attorneys, and CPs believed that if prior court orders are deducted from the obligor's gross income, very littleincome, if any, is left to determine subsequent obligations. Respondents in Washington State generally were supportive of the discretionary approach used there.

3.2.1.2Subsequent Support Obligations

This section discusses subsequent support obligations and presents findings from the State guideline reviews, the case records collected in study counties, and interviews conducted in those counties.

Guideline Reviews

A number of State review teams considered how a new child impacts the parent's existing child support obligation. Some reviewers recommended that parents be allowed income deductions equal to an existing child support order or representing some level of expenditures made for subsequent children. Other reviewers recognized that these deductions could be perceived as permitting parents to decrease existing obligations by having more children and devised conditions for the use of the income deduction accordingly. For example, one team recommended an income adjustment for subsequent children in the amount of an appropriate child support order or actual expenses; however, a deduction would not be permitted in cases where a prior order is being modified if the deduction resulted in lower support for the child at issue. Other reviewers preferred that parents not receive the full benefit associated with additional children and recommended calculating separate support obligations for each household of new children. This award amount would be multiplied by a selected percentage and only then subtracted from the parent's gross income. Another suggested approach involved permitting a deduction equal only to the Federal tax exemption for the child rather than for actual expenses.

Other State review teams rejected the income adjustment approach for subsequent children. Two review teams recommended special multiple-family guideline formulas to facilitate the calculation of support. According to these teams, the goal of developing a fixed formula is an equitable and consistent treatment of multiple-family cases. Other State review teams believed that the decisionmaker should handle subsequent families because the establishment of fair and realistic orders in multiple-family cases requires consideration of complex and diverse issues beyond the scope of a formula.

Study States

Of the 11 study States, [ The 11 study States are Delaware, Missouri, New Jersey, Pennsylvania, and Wisconsin. ] 5 have guidelines that provide mandatory numerical adjustments for subsequent obligations. Three of these fiveStates [ The three States are Missouri, New Jersey, and Wisconsin.] require the decisionmaker to determine the support obligation for the subsequent children based on the guidelines and to deduct this obligation from the responsible parent's income before support is determined in the current action. The amount to be subtracted from the responsible parent's income varies slightly from State to State, especially with respect to using the new spouse or partner's income.

Delaware does not allow a deduction for subsequent obligations from the income of either parent before calculating the basic support amount, i.e., the amount defined in the guidelines as needed to support the basic needs of the child. However, the State's guideline does allow the obligor a credit for subsequent obligations before calculating the Standard of Living Allowance (SOLA) for each family involved. Pennsylvania allows each obligation of the responsible parent to be reduced proportionally if the obligations total more than 50 percent of his or her gross income.

The six remaining States [ The six remaining study States are Arkansas, Florida, Massachusetts, Minnesota, New Hampshire, and Washington.] either have no guideline regarding these obligations or have a discretionary provision allowing the decisionmaker to consider these obligations when determining support. A common rule for allowing the mandatory adjustment or general consideration of subsequent obligations is that the adjustment or consideration can be used only as a defense against a motion for an upward modification and not as a justification for a reduction in support. Table G-2 in Appendix G presents State-by-State details regarding subsequent obligations.

Unlike prior orders, the frequency with which subsequent obligations of the NCP was documented in case records did not appear to be related to the guideline approach adopted by the State151mandatory numerical adjustment for a subsequent obligation or discretionary consideration. In States that give decisionmakers discretion over subsequent obligations, the factor was noted in up to 14 percent of cases. The range was slightly wider in States that use a mandatory adjustment, from 1 to 19 percent of cases (see Exhibit 3-2-4 following this page). As with prior orders, from the case record documentation the extreme variability within and across States is surprising with regard to how often subsequent obligations were found to be a factor in the order.

In general, decisionmakers tended to follow their guideline mandate. As expected, in States that use a mandatory numerical adjustment, decisionmakers were most likely to use the mandatory method provided in the guideline to consider the NCP's subsequent obligations. Most counties studied used the mandatory method in 60 percent or more of cases when the NCP had a subsequent obligation. Decisionmakers occasionally did notconsider the subsequent obligation or used some other method to take the obligation into account. There was considerable variability in applying the mandatory numerical method across counties, with a range of up to 97 percent (see Exhibit 3-2-5 following this page).

In four of the counties that permit discretion, as a result of considering the subsequent obligation(s), decisionmakers deviated from the guideline amount in more than 70 percent of cases. In the remaining seven counties, the number of deviations was more variable and somewhat smaller. The overall range across all 11 counties was 16 to 100 percent of applicable cases in the county. In a small percentage of these cases, decisionmakers did not consider the NCP's subsequent obligation(s) when establishing the current support order (see Exhibit 3-2-5).

Responses to the ABA interviews varied on the issue of subsequent families, depending on whether their support guideline provided a mandatory numerical adjustment or allowed discretionary consideration of the factor. In States where an adjustment is mandated for subsequent children, especially when the adjustment can be used only as a defense against a motion to increase support, most respondents were satisfied with the result. In States where decisionmakers can use discretion to consider subsequent obligations, most respondents felt that subsequent obligations: should be considered, but one respondent said "the guidelines need to be flushed out more regarding the subsequent families to give better guidance in determining how much to deviate" One judge preferred the "old" method of calculating the deviation amount for subsequent obligations: "In the past, decisionmakers could deviate 10 percent rather than try to come up with what it costs to support a second family." The majority of obligors stated that subsequent families must be considered and one respondent said that "to do otherwise is telling an obligor that he no longer has a right to procreate because the prior relationship did not work out." One NCP stated, "My new spouse must have been crazy to marry me because I will not have more children. I can't afford to! This is unfair to my new spouse, and the theory that she knew what she was getting into doesn't fly in the face of reality."

3.2.1.3New Spouse or Partner Income

This section discusses new spouse or partner income as discussed in State guidelines and the guidelines used by the 11 study States.

Guideline Reviews

The impact the income of a new spouse or partner should have on a parent's child support obligation was addressed in four State guideline reports. The overwhelming sentiment expressed by reviewers was that income from a new spouse or partner should be excluded from support calculations. Reviewers recognized that the new spouse has no legal duty to support achild from a former relationship, and some were concerned about indirectly causing a disincentive to remarriage.

However, at least two States conceded that such income may be relevant in child support cases, because the expenses of children in the new marriage have an impact on calculation of the support obligation for the child(ren) covered by the order at issue. These jurisdictions cautiously included some or all of income of the new spouse or partner as income to the responsible parent. In doing so, the parent would receive no extra benefit from sharing expenses that would not be passed on to the child(ren) at issue in the current action.

The case record aspect of this study did not examine the impacts of new spouse or partner income.

3.2.2Issues and Findings Regarding Multiple-Family Deviations

This section discusses issues and findings regarding multiple-family deviations as found in State guideline reviews, case record data, and interviews in the 11 study States.

State Case Studies on Deviations

Ten States submitted information to the ABA about their data collection on guideline deviations. Eight States highlighted in their reports the most frequently cited reasons for deviation. Four of these States found that having multiple families was one of the most frequent reasons for deviation.

In Maryland, a 1992 case study found that 67 percent of all deviations were due to a subsequent obligation of the obligor. In fact, this was the overwhelming reason for deviation, with the next highest reason being an agreement between the parties (18 percent). A 1992 Massachusetts study of 21,577 cases found that having multiple families was the most frequent reason for deviation. A concern of the Massachusetts Department of Revenue was the large variance from the guideline amount that resulted from the deviation151the average judicial deviation was 36 percent below the guideline amount. As a result, the Department of Revenue recommended the addition of a supplementary formula to address expenses of subsequent families. Based on our 1995 case record data from Massachusetts, the factor of multiple families is still significant. In one study county, it was tied with custody and visitation factors as the deviation reason most frequently found in case records. In Virginia, approximately 20 percent of IV-D and non-IV-D cases deviated from the guidelines in 1991 and 1992. The second most frequently cited reason for the deviation was the fact that the obligor was providing actual monetary support to other children. In Iowa's 1994 study of 696 deviation cases, multiple families was the second most frequent reason for deviation, accounting for 17 percent of all deviations.

Based on a case sampling of 135 cases, Delaware found that factoring in multiple orders to ensure equal treatment of all the obligor's children was one of the issues most often litigated. However, multiple families was not a frequently cited reason for deviating upward or downward.

California found that 14 percent of all cases collected over a three week period in 1993 resulted in a discretionary deviation due to "hardship deduction" for the father ranging from $2.00 to $1,585.00. The types of hardship recognized by California include a natural or adopted child who lives with the parent. Similarly, in Kansas' sample of 286 orders established or modified after October 1, 1987, approximately 17 percent of the deviations were due to financial conditions. The meaning of this finding is unclear; perhaps included within the financial condition are preexisting orders for support or other dependents in the parent's current household. In New Mexico, there were deviations in 23 percent of all cases; the most frequently cited reason for deviation was substantial hardship on the obligor (16 percent), again with no explanation. California also found that approximately 12 percent of cases had a discretionary factor of new spouse income151another multiple-family issue.

Three States conducted written surveys that addressed multiple-family issues. Kansas received 511 responses to a 1993 survey. Approximately 36 percent of parent respondents and 35 percent of judicial and attorney respondents believed that a new spouse's income and extraordinary expenses should be wholly or partially considered in determining the support amount; however, approximately 60 percent of all respondents felt that a new spouse's income and extraordinary expenses should not be considered. Respondents were more supportive of considering preexisting support orders and other dependents. Approximately 66 percent of parent respondents and 88 percent of judicial and attorney respondents believed that the guidelines should include an adjustment for preexisting obligations. Approximately 55 percent of parent respondents, 68 percent of judicial respondents, and 71 percent of attorney respondents believed that if the NCP has remarried and has children from the new marriage, expenses related to the new children should be considered in determining support for the children of the prior marriage. [ The parent survey results do not distinguish between CPs and NCPs.] However, according to 86 percent of the parent respondents, a multiple-family adjustment was not applied in their case. When applied, 73 percent of the judicial respondents and 66 percent of the attorney respondents indicated that they thought the multiple-family adjustment resulted in "about the right amount" of support.

In Kentucky's 1993 written survey to judges and commissioners, the State found that 77 percent of the respondents felt that in addition to a deduction for any preexisting support order, parents legally responsible for and supporting other prior dependents should be allowed a deduction from grossincome for these payments, as long as they do not exceed the guideline amount.

The 277 respondents to Michigan's written survey in 1992 indicated that support orders follow the guidelines in approximately 90 percent of cases. The issue of multiple families was listed as a common reason for deviation, although it was not considered one of the most common reasons. In fact, it was one of the three areas recommended by the Administrative Office of the Courts (AOC) for further study.

Study States

The presence of prior orders and/or other dependents impacts child support orders. The impact was measurable in many cases that deviated from the guideline amount because sufficient information appeared on the worksheet and child support order to allow determination of the amount of the deviation. However, where there were multiple deviations in a case, it was impossible to disaggregate the total deviation into its component parts.

Two counties in Washington State authorize deviation from the guideline based on the presence of prior orders. A total of 12 deviations were reported for the existence of a prior support order of the NCP. The range of average deviation for the existence of a prior support order was a decrease of $114.00 to $185.00 per month. [ This range includes sole and combined deviations, as do all ranges presented in this section.] Only a small number of deviations were reported in counties that have a mandatory numerical adjustment for prior orders.

Eleven counties authorize consideration of subsequent obligations as a basis for deviation from the guideline amount. In all cases, the effect of the deviation was to reduce the amount of the child support order. The range of average deviation amounts in these counties was a decrease of $48.00 to $232.00 per month. Surprisingly, a number of deviations were reported in Pennsylvania, a State that has a mandatory numerical adjustment for subsequent obligations. The range of downward deviations for subsequent obligations in this State was $30.00 to $104.00 per month.

3.2.3Conclusions and Recommendations

This section presents conclusions and recommendations regarding consistency in considering multiple families and case record documentation of their effects on support orders.

3.2.3.1Consistency in Considering Multiple Families as an Equity Concern

The incidence of prior orders and subsequent obligations is higher in study States with mandatory numerical adjustments than those with only adiscretionary provision to deviate, although the disparity between the two was not striking. More importantly, parents residing in States using numerical adjustment have other obligations factored into the current support calculation in a more frequent and consistent manner.

In jurisdictions with guideline provisions allowing for discretion, it is less likely that multiple-family concerns will be considered in determining the award. When a multiple-family issue is considered, they apparently are not addressed consistently across cases. Within States the differences were not great between the counties. However, between States the range of average downward deviation was $48.00 to $232.00 per month for subsequent obligations and $17.00 to $185.00 per month for prior support orders.

Furthermore, State guideline review teams, practitioners, and participants in the child support system agree that multiple families are a pressing concern, and that consistent and equitable methods are needed to handle them.

Recommendation

By providing clear instructions, State guidelines can help ensure that other support obligations are both considered by the decisionmaker and treated in a consistent manner. If a State chooses to address multiple family issues, its guideline should contain a mandatory provision to consider pre-existing support orders and subsequent obligations.

3.2.3.2Case Record Documentation

During this study, it was sometimes difficult to determine the presence of a multiple family issue because the guideline worksheet was incomplete or the order did not contain detailed findings.

Recommendation

For research purposes, case records need more complete documentation about the existence of prior support orders and subsequent children. This information will be helpful to future decisionmakers at the time of modification.

3.3INCOME DEFINITION, VERIFICATION, AND IMPUTATION

A crucial step in developing a correct child support order is accurately determining parental income. The decisionmaker must decide which of the parents' resources will be used to calculate the child support award and whether credible proof of those resources exists. Federal regulations require that guideline calculations be based on all of an NCP's income; however,income is not defined in these regulations. [ 45 CFR 303.8.] When a party fails to appear at a hearing after service, or when a party is voluntarily unemployed or underemployed, the decisionmaker in many States may impute income. In States using Percentage of Income, the NCP's income is the most important. In States using income-shares and the Delaware Melson models, the decisionmaker must determine both parents' incomes.

The following sections discuss definition of income, gross versus net income, income verification, income imputation, and conclusions and recommendations regarding income verification and income imputation.

3.3.1Definition of Income

This section discusses the definitions of income specified by the guidelines reviews, State case samplings, and study States.

3.3.1.1Guideline Reviews

Income determination was one of the most popular topics of guideline reviews. A number of State reviewers recommended definitions of income. All offered expansive descriptions, generally including resources such as salary and wages; commissions; bonuses; tips and perquisites; rental income; estate or trust income; royalties; interest, dividends, and annuities; self-employment earnings; alimony and other unearned income; in-kind compensation or noncash fringe benefits; and lottery winnings.

Certain types of income were addressed separately. For instance, some committees examined the potential inclusion of income from means-tested assistance programs. They routinely concluded that AFDC benefits received for a child within the household would not be considered as income in calculating child support. Committees did not agree about other forms of public assistance. While some reasoned that these benefits were intended, and hence sufficient, to meet only the needs of the particular recipient, others recommended the inclusion of means-tested assistance because it represented a financial resource of the parent.

It appears that only one State review team questioned whether earnings from self-employment should be considered as income for child support purposes. The more prevalent issue was how that income level should be calculated. Overwhelmingly, the decision was to set self-employment income as gross receipts minus ordinary and necessary business expenses. With this definition, committees sought to include all the self-employed parent's earnings as well as to recognize that reinvestment of some resources is necessary for continued business growth.

States varied in their decision to consider overtime and part-time income from a second job. Some States, such as New Hampshire, limit consideration of income beyond a 40-hour work week if the income consists of hourly wages in an employment area that generally pays overtime. Other States, such as Pennsylvania and Florida, expressly include overtime and second job earnings.

Approximately five State reviews addressed the topic of a parent's extra earnings. The teams generally concluded that earnings from a second job should be included as income. Some committees recommended, however. to exclude this type of income during the modification phase of a case if the parent took the job after the support award was established and the purpose was to help pay the child support award, provide support for another family, or reduce a debt associated with divorce from the obligee.

The treatment of overtime income was somewhat more discretionary. The teams felt that the decisionmaker should determine whether the overtime was required or voluntary and whether it was sporadic or frequent. They usually included required overtime and voluntary but regular overtime as income.

3.3.1.2Study States

Guidelines in each of the 11 study States contain a detailed list of income to include and exclude in calculating support. However, the case record study did not investigate these various income components and how they were handled in each case.

3.3.1.3State Case Samplings

Five States submitted information to the ABA about written surveys they had conducted on implementation of support guidelines. In its 1993 survey, Kansas asked questions about gross versus net income, types of income considered, and imputation of income. Almost all parent respondents stated that the court had used the parents' gross income from their primary jobs in calculating support. The judicial respondents indicated a much higher consideration of income other than gross income: 80 percent said that they routinely considered income from a second job or overtime pay, and 70 percent routinely considered unearned income such as interest or royalties. Only 18 percent routinely considered income from a current spouse. In a 1992 written survey conducted by the State of Michigan, the judicial respondents listed overtime and second jobs and sources of income as two of the top five areas of deviation. As a result, they recommended that determination of income (e.g., overtime and second jobs, income imputation, self-employed parents, and deductions from income), be studied further. About 60 percent of the respondents also believed that support orders were inadequate when the obligor was self-employed because true income was hard to determine.

3.3.2Gross versus Net Income

Guidelines varied according to a parent's gross or net income. Most States used the gross income of one or both of the parents; however, a substantial minority used net income. Net income is defined in many ways. It is not necessarily wages adjusted for income, social security, and Medicaid taxes. Many States also allow as adjustments from gross income the following costs: amounts under prior support orders being paid, mandatory retirement contributions, mandatory union dues, and health insurance premiums paid for the child's benefit.

3.3.2.1Guideline Reviews

About half of the guideline review teams discussed whether their guidelines should base child support calculations on gross or net income. Review materials show that the States were split between the two positions; however, because States often interpreted the term "gross income" more narrowly than its traditional meaning151earnings before tax deductions or other adjustments151there frequently was little difference between States' definitions of gross and net income for child support purposes.

3.3.2.2Study States

Guidelines in the 11 study States varied in their use of gross or net income. All 11 States have at least 1 adjustment to gross income before support is calculated. Massachusetts, for example, allows only prior support orders to be deducted from the NCP's income before support is calculated. Other States, such as New Hampshire, New Jersey and Washington, allow many more adjustments, including taxes, mandatory union dues, and retirement plan payments. These States varied in how these adjusted income figures are termed. For example, New Hampshire refers to the adjusted income figure as "adjusted monthly gross income," New Jersey refers to this figure as "weekly available income" and Washington State refers to this figure as "monthly net income." Refer to each State's guidelines in Appendix C for a complete description of income adjustments. The case record analysis did not investigate the use of gross versus net income.

3.3.3Income Verification

This section discusses income verification as specified in the guideline reviews, study States, and State case samplings.

3.3.3.1Guideline Reviews

With the exception of New York (discussed below), no guideline reviews discussed income verification.

3.3.3.2Study States

The following sections discuss the guideline methodology and incidence in case records within the study States.

Guideline Methodology

Child support guidelines commonly instruct the decisionmaker to use certain documents to verify income. This is true of the majority of guidelines in the 11 study States. Supporting documentation may include current pay stubs, past years' income tax returns, financial affidavits, and employer verification. The guidelines in Arkansas, Massachusetts, Missouri, New Hampshire, and Wisconsin lack specific requirements or procedures for verifying income. Table G-3 in Appendix G following this section provides a more complete description of each State's strategy.

Incidence in Case Records

The extent of income verification varied widely among the 21 study counties. The following was found in case records:

149Income was verified for NCPs in as few as 23.7 percent of cases collected in one Wisconsin county and in as many as 97.8 percent of cases collected in a Massachusetts county (see Exhibit 3-3-1 following this page).

149Income was verified for CPs in States counting CP income [ Nationally, 73 percent of CPs with dependent children are working full time or part time. (Child Support for Custodial Mothers and Fathers 1991, Current Population Report, Bureau of Census, Series p. 60, No. 187, August 1995.)] in as few as 43.8 percent of cases collected in one Delaware county and in as many as 96.9 percent of cases collected in the Massachusetts county noted above [ This range excludes the States of Arkansas and Wisconsin because they use straight percentage-of- income models and do not explicitly include the income of the CP in calculations.] (see Exhibit 3-3-1).

Respondents perceived the incidence of income verification to be much higher than the case records indicate. The overwhelming majority of persons interviewed stated that income was verified in 70 percent or more cases. When income was verified, case records do not reveal that any particular documentation was required more frequently than others (see Exhibits 3-3-2 and 3-3-3). However, respondents to the ABA interviews most often described verification through financial affidavits, personal testimony, tax returns (Schedule C form for the self-employed), pay stubs, W-2 forms, Department of Employment Security records, and employer documentation.

Case records from agency personnel often contained an independent source of verification as well as more than one form of verification.

3.3.3.3State Case Samplings

The low level of income verification that CSR found in the case records from the 11 study States is consistent with the findings of States that have conducted similar case analysis within the State. For example, California collected orders over a 3-week period during July and August 1993. The Judicial Council discovered that often incomplete information appeared in the records, including a lack of income information. Because no mandatory form was used by all courts to enter a child support order, data ranged from a form order containing findings, to a minute order, to an attached computer printout of the worksheet calculations. In its study of IV-D and non-IV-D orders entered throughout the State between July 1992 and July 1993, New York found that all required proofs of income were missing from 55 percent of the NCP's files and 67 percent of the CP's files. Not surprisingly, noncompliance was highest in default cases (74 percent). Finally, in a sampling of IV-D and non-IV-D cases from 20 counties from September 1987 to December 1989, Wisconsin discovered that 24 percent of the cases lacked income information so that the researcher was unable to determine compliance with the guideline.

3.3.4Income Imputation

The decisionmaker commonly is authorized to impute income to a voluntarily unemployed or underemployed party or to a party who has purposely masked his or her true earnings to avoid paying child support. Guidelines instruct decisionmakers to generally impute income based on an evaluation of the opportunities available in the community and the parent's work history, age, education, and skills. Some guidelines establish a minimum wage rate or annual salary for purposes of imputing income.

The following sections discuss income imputation as specified in the guideline reviews and study States.

3.3.4.1Guideline Reviews

Imputed income was a major issue for review teams. Most States settled on imputing income for unemployed or underemployed parents. The definition of unemployment was not in dispute. However, teams took pains to define underemployment. They generally concluded that the terms described situations when the parent was not employed in a manner consistent with his or her education, skills, or experience.

The teams did carve out exceptions to the rules on attributing income. The four most common were when the parent's unemployment or underemployment (1) was related to the care of a preschool or disabledchild; (2) was due to medical reasons; (3) was caused or assisted by a depressed market (e.g., the parent had made diligent but unsuccessful efforts to find employment, within his or her geographic area, consistent with his or her education and skill level); or (4) had occurred so that the parent could pursue some legitimate self-improvement activity expected to benefit the child and was not undertaken to avoid child support obligations.

Review approaches regarding the amount of imputed income differed. Some States left the matter entirely to the discretion of the decisionmaker. A second group of committees set the imputed income level at the parent's last full-time employment amount. In a third group of States, the amount would be the minimum wage for a 40-hour work week unless the evidence pointed to a better figure. Finally, a few State teams recommended a set amount to be placed in the guideline; at least one used an artificially high figure as an incentive to parents to provide income evidence in their pleading or at the hearing.

3.3.4.2Study States

This section discusses the guideline methodology and the incidence in case records within the study States.

Guideline Methodology

Two States151Arkansas and Delaware151have guidelines addressing income imputation in self-employed cases. Delaware's guideline uses a formal methodology. Decisionmakers in Arkansas must use a net-worth approach or consider the parents' earning capacity.

Eight States151Delaware, Florida, Massachusetts, Minnesota, Missouri, New Hampshire, Pennsylvania, and Washington151authorize decisionmakers to impute income to voluntarily underemployed or unemployed parents. The guidelines usually state that factors to consider include the parent's education, work experience, job skills, and availability of work in the area. Washington's guideline differs; it states that income should be imputed based on the median income of year-round full-time workers as derived by the Current Population Survey (figures are provided in the guideline). New Jersey's guideline indicates that underemployment may make the guidelines inapplicable, and no other direction for imputing income is provided. Wisconsin's guideline discusses imputation only for non-income-producing assets or where income has been diverted to avoid child support.

The only guideline of the study States that mentions imputation in default cases is Delaware's guideline. It has a formal method for imputing income to an unprepared or nonappearing parent. Table G-4 in Appendix G presents a complete description of each State's strategy.

Incidence in Case Records

The frequency of income imputation varied greatly among the 21 study counties. The following was found:

149Income was imputed to NCPs in as few as 0.5 percent of cases collected in a Minnesota county and in as much as 34.5 percent of cases collected in a Washington county (see Exhibit 3-3-4 following this page).

149Income was imputed to CPs in as few as 0 percent of cases collected in a New Jersey county and in as much as 51.1 percent of the cases collected in a Delaware county [ This range excludes the States of Arkansas and Wisconsin because they use straight percentage-of- income models and do not explicitly include the income of the CP in their calculations.] (see Exhibit 3-3-4).

The most common reasons for imputing income to NCPs were underemployment or unemployment and the parent's failure to submit evidence of his or her earnings. The most common reasons for imputing income to the CP were underemployment or unemployment and "other" reasons. In most counties, these "other" reasons could not be determined. However, in one of the Florida counties, the most common reason for imputing income to the CP was because he or she was on AFDC. This case record finding was consistent with the Florida interview results. Judges and child support agency personnel stated that income will be imputed to a CP on AFDC based on 40 hours at minimum wage, unless there is a job available earning more.

The telephone survey did not specifically ask respondents to discuss reasons for imputing income to NCPs as distinct from imputing to CPs. However, based on responses, it appears that income is most often imputed to NCPs. Respondents stated that imputation occurs most frequently in cases where no income information is available or the decisionmaker is confident that the NCP is voluntarily underemployed or unemployed. The decisionmakers interviewed in Massachusetts stated that they imputed income in every default case. Based on responses from all the study States, it appears that imputation is less frequent in cases of self-employed parents than in cases of unemployed or underemployed parents.

Imputing the prevailing minimum wage for a 40-hour work week was a common imputation method among decisionmakers in the 21 study counties. This method also was often mentioned during the telephone interviews. However, the most frequent methods were classified as "other" (see Exhibits 3-3-5 and 3-3-6). "Other" reasons typically included using hourly wages above the minimum wage or following county-specific methods for imputing income. For example, the Delaware guidelines state, among other imputation requirements, that "all unemployed, able-bodied persons shall be attributed with no less than $5.00 per hour for a 40-hour work week." Another example of a State-specific imputation method comes from Arkansas, where decisionmakers typically use the minimum income and award amount from the "Monthly Family Support Chart" in the guidelines for the purpose of imputation. Telephone respondents also mentioned imputing income based on the community standard (e.g., certain income for certain types of jobs in that locale).

3.3.4.3Case Samplings on Deviation

Alaska collected deviation orders for 1 year (199215093). In examining 81 cases, the State found that the top two reasons for deviation were that the obligor's income was below poverty level (approximately 30 percent or 24 of 81 cases) and that no reliable income information was available from the obligor (approximately 26 percent or 21 of 81 cases). Iowa also found that income issues were the most frequent reason for deviation (32 percent or 223 cases). The phrase "income issues" was defined in this Iowa study to include unemployment and underemployment. In its 1994 case sampling of IV-D and non-IV-D cases, New Mexico found that 23 percent of the 236 sampled cases deviated from the guideline amount. Among the top five reasons for deviation were "default order with no income information" (four cases) and "AFDC case, no income information from the noncustodial parent" (three cases).

3.3.5Conclusions and Recommendations

This section presents conclusions and recommendations regarding income verification and income imputation.

3.3.5.1Conclusions and Recommendations Regarding Income Verification

Income ideally should be accurately verified for each parent in a child support action. The results from the study States do not fully reflect this ideal. This result can be explained, in part, by certain aspects of the research methodology, the nature of the documents collected, and administrative and court rules regarding the filing of certain documents.

In attempting to capture all information relevant to each child support matter during a specific period of time, CSR developed a protocol that included photocopying and forwarding to CSR income verification documents by county, or, in some instances, temporary personnel. It is quite possible that documents submitted by parents at the time of the hearing simply did not become part of the record used by this study. Furthermore, documents may have been returned to parents at their request or due to storage limitations at the court. It also is possible that some documents did not get photocopied. In some counties, such as one in New Jersey, CSR received few pieces of documentation. A variety of methodological issues might account for a portion of those cases not containing verified income for one or both parents.

After considering the above limitations, the overall findings do not seem completely unacceptable. Court, agency, and professional personnel stated that income is verified in 70 to 100 percent of cases. However, parents and agency personnel reported that while these are the requirements, only about 50 percent of parents submit verification. The failure of parents to submit proper forms of income verification likely is faced by many child support decisionmakers.

Recommendations regarding income verification include the following:

149State guidelines should require that income be verified;

149State decisionmakers should compel parties to comply with the verification requirement; and

149States should provide decisionmakers with resources to verify income through independent, automated sources such as employment security records, and access to these records should be available in non-IV-D as well as in IV-D cases.

3.3.5.2Conclusions and Recommendations Regarding Income Imputation

Although it seems appropriate to give decisionmakers discretion in determining whether to impute income in a particular case, greater State guidance for exercising that discretion would result in more consistent treatment of parents.

Recommendations regarding income imputation include the following:

149Where guidelines address imputation of income, they should specify the type of cases appropriate for income imputation and explain the basis on which income should be imputed. This decision should be discretionary.

3.4HEALTH CARE

The Family Support Act of 1988 and Federal regulations require that State guidelines provide for children's health needs through "health insurance or other means." [ 45 CFR 302.56(c)(8).] In addition, Federal regulations require the IV-D agency in an AFDC establishment or modification case to petition the court or administrative authority to include health insurance that is available to the NCP at a reasonable cost. In non-AFDC IV-D cases, consent from the applicant or recipient of IV-D services is needed before the IV-D agency maypetition for medical coverage. [ 45 CFR 303.31(b)(1). See the following for a discussion of support guidelines and health insurance: Notar, S.A., and Schmidt, N.C. 1995. " State Child Support Guideline Treatment of Children's Health Care Needs. " In Haynes, M., ed. Child Support Guidelines: The Next Generation, 1995 . Washington, DC: U.S. Department of Health and Human Services. ] In 1992 41 percent of AFDC IV-D cases had health insurance benefits included in their child support award. In 1991 only 69 percent of NCPs that were required to provide health insurance benefits as part of their child support award actually provided it. [ U.S. Bureau of the Census. 1995. Child Support for Custodial Mothers and Fathers: 1991 . Current Population Reports, Series P60-187. Washington, DC: U.S. Government Printing Office.] When discussing child health care needs, a distinction should be made between health insurance costs and routine, unreimbursed and/or extraordinary medical expenses. Typically, unreimbursed medical expenses include deductibles, copayments, and other expenses that are not covered by the health insurer or health maintenance organization. Extraordinary medical expenses include nonroutine expenses unique to the child, such as those due to accident, infirmity, and disability. [ See the following for a further discussion of these issues: Elrod, L.H. 1995. " Adding to the Basic Support Obligation. " In Haynes, M., ed. Child Support Guidelines: The Next Generation, 1995 . Washington, DC: U.S. Department of Health and Human Services.] The presentation of analysis and findings on child health care issues is divided into four parts in the following sections: health insurance in the guidelines, extraordinary health care costs, health insurance as a deviation factor, and extraordinary health care costs as a deviation factor. The presentation concludes with a summary of findings and recommendations. 3.4.1Health Insurance Issues and Findings From States and Study Sites

This section discusses findings from guideline reviews and study States regarding health insurance.

3.4.1.1Guideline Reviews

In State guideline reviews, health care issues arose in three contexts151(1) inclusion of insurance premiums in the child support calculation, (2) the amount of premium included, and (3) the payment of extraordinary medical costs.

A frequent issue arising in guideline reviews was how payments for health insurance premiums should impact child support awards. Some States recommended including insurance premium costs as deductions from parent income before calculation of the basic guideline support award. Other States treated insurance premium costs as a mandatory numerical add-on to the basic support amount. Therefore, these costs would be below-the-linecosts, and they would affect the guideline order after calculation of the basic guideline support award.

State guidelines also differed in their methods for determining the amount of insurance credit each parent should receive. According to some State guidelines reviewers, the only premium costs that should be considered are those for the child in the pending support case. At least one State permitted only one-half of the insurance costs to constitute an income adjustment to the obligor. However, under another approach a parent could receive an income adjustment for premiums paid for the health insurance of others within the household, but premiums for the child would be treated as a deviation factor.

3.4.1.2Study States

This section discusses the guideline methodology incidence in the study States and compliance with guideline methodology.

Guideline Methodology

Ten study States used mandatory numerical adjustments to address health insurance premiums. Below is a brief discussion of these adjustment that illustrates variability between States.

Six of the study States151Arkansas, Delaware, Minnesota, New Hampshire, New Jersey, and Pennsylvania151had guidelines requiring the deduction of health insurance premiums from the paying party's income before the guideline support amount was calculated. In New Hampshire, the deduction was limited to 50 percent of the dependent's coverage cost.

Florida's guidelines require that health insurance costs, excluding those of the dependent child(ren), must be deducted from gross income. The health insurance cost attributable to the dependent child(ren) is a mandatory add-on to the basic support amount, which is then prorated between parties based on their respective incomes. If the NCP prepays the premium, the insurance cost attributable to the child(ren) is credited to his or her support obligation. Missouri's guidelines are similar to those of Florida; the only difference is that the portion of health insurance cost not attributable to the dependent child(ren) is not an allowable income deduction.

Washington State takes a different approach to health costs. The health insurance costs paid by both parties for the dependent child(ren) is one component of the "extraordinary health care expense" computation on its child support worksheet. The Washington guideline states that "ordinary health care expenses are included in the economic table. Monthly health care expenses that exceed five percent of the basic support obligation shall be considered extraordinary health care expenses. Extraordinary health care expenses shall be shared by the parents in the same proportion as thebasic support obligation" (see Appendix C). As in Florida and Missouri, any health costs prepaid by either party are credited to their respective support obligations.

Massachusetts' guidelines require that 50 percent of the cost of family coverage is deducted from the obligor's obligation if he or she is providing the coverage. It is noteworthy that this insurance deduction is not limited to the cost of the child(ren)'s health insurance.

Of all the study States, only Wisconsin had guidelines stating that the cost of health insurance is a discretionary factor which the court can consider in deciding whether to deviate from the guideline amount. (See Table G-5 in Appendix G for a more complete description of each State's strategy.)

Incidence Within Case Records

In complying with Federal law, decisionmakers mandated health insurance in 82.7 percent of all collected cases (see Exhibit 3-4-1 following this page). In 18 of the 21 study counties, health insurance coverage was ordered in 70 percent or more of the cases. In the remaining three counties, coverage was ordered in only 34 percent of the cases in a New Jersey county, 51 percent in a Pennsylvania county, and 56 percent in a Wisconsin county. Health insurance was petitioned but not mandated in 3.5 percent of the cases across the counties. The reasons most commonly cited for not mandating health insurance were the unavailability of insurance at a reasonable cost and the inability of the payor to obtain employee-related health insurance. However, in one Pennsylvania county, 27 percent of cases lacked a reason for not ordering health insurance coverage.

Health insurance was not addressed in 13.8 percent of the cases across all counties. While this number seems high, in view of the Federal mandate to include health insurance in orders, the presence of significant numbers of modification cases in the case record sample tends to inflate this figure. Across all counties, 35.7 percent of cases that did not address health insurance were modifications (see Exhibit 3-4-2). The explanation is that many modification cases incorporated the terms of the prior order, especially with regard to health insurance. Hence, modifications tended to be silent on this issue.

In summary, there were important differences among the States and counties in the percentage of cases in which health insurance was ordered for children. These differences did not appear to be related to the type of case or type of award. While more complete data and especially data on type of case might have revealed other patterns, the available data suggest that the differences seen in the data resulted from differences among the counties in guideline implementation.

Compliance With Guideline Methodology

Across all cases, two-thirds ordered the NCP to obtain or maintain health insurance, 13.1 percent ordered the CP to do so, and 14.6 percent ordered it of both parents. As shown in Exhibit 3-4-2, the States of Arkansas and Washington tended to make both parties responsible for obtaining or maintaining health insurance, averaging approximately 57 and 44 percent, respectively. While often it is assumed that the NCP bears the heaviest burden of health insurance, the data show the following variations by county:

149The CP was ordered to obtain or maintain health insurance in more than 20 percent of the cases collected from five counties.

149Both parents were ordered to obtain or maintain health insurance in more than 40 percent of the cases collected from four counties.

149In two counties the NCP was ordered to obtain or maintain health insurance in less than 50 percent of the cases collected.

Case records were analyzed to determine whether and how insurance premium costs were factored into the guideline computations. Two-thirds of cases that ordered health care to be provided by one or both parents did not include the cost in the child support calculation (See Table E-7). In virtually all of these cases, however, the data suggest that the guideline methodology was used, as shown by the following:

149The order required one or both of the parties to continue current insurance coverage or to obtain coverage. In 19.8 percent of these cases, one party was ordered to continue current coverage.

149The order specified which of the parties was to pay for the medical insurance coverage in 78.4 percent of these cases, the remainder of which were missing data on payment responsibility.

Therefore, the data suggest that the cost of insurance coverage was not known at the time the worksheet calculations were performed to determine the award amount and that this was the primary reason why the cost of medical coverage was not included in the calculation.

3.4.2Extraordinary Health Care Costs and Findings From the States and Study Sites

This section discusses findings from guideline reviews and study States regarding extraordinary health care costs.

3.4.2.1Guideline Reviews

Typically, the costs of extraordinary medical expenses were treated as deviation factors by guideline review teams. Most of the discussion focused on how to define the term "extraordinary." The usual answers were that extraordinary expenses were those not covered by insurance; those associated with a chronic illness, as opposed to the cost of routine care; or costs above a threshold level set by the State.

A few State teams determined how extraordinary expenses should be divided between the parents. States were split between an equal allocation of these costs and a division in proportion to the parents' incomes.

3.4.2.2Study States

This section discusses the guideline methodology incidence in the study States and allocation of costs.

Of the 11 study States, 4 States (i.e., Missouri, New Jersey, Pennsylvania, and Washington) have guidelines that require a numerical adjustment for extraordinary health expenses. [ Note that the Washington guidelines define " extraordinary " as expense in excess of 5 percent of the basic child support need.] These expenses must be added to the basic support amount and shared proportionally by the parties. Six States (i.e., Arkansas, Florida, Massachusetts, Minnesota, New Hampshire, and Wisconsin) provide that extraordinary health expenses are discretionary factors that the court may consider in determining whether to deviate from the guideline amount. The Delaware guideline is silent. (See Table G-6 in Appendix G for a more complete description of each State's strategy.)Incidence in Case Records

In 14 counties extraordinary health care costs were discussed in one-half or more of the orders. In the other seven counties, such costs were not discussed very frequently, falling in a range of 5 to 42 percent, with the two Pennsylvania counties representing the high and low ends of the range. It is clear from the case record coding that the low percentages were found in counties that do not routinely contain standard health care language in the order (see Exhibit 3-4-3 following this page). It is surprising that orders in discretionary States were more likely to discuss extraordinary health costs than orders in States that have a mandatory numerical adjustment for such costs. There is no clear explanation for this difference.

Allocation of Costs

Across all counties, nearly 75 percent of the cases collected ordered that the parents share extraordinary health expenses in some manner (e.g., 50/50split, proportional shares of income). A very small percentage of cases ordered one of the parties to pay for 100 percent of these costs, as shown in Exhibit 3-4-4 following this page.

3.4.3Health Insurance Costs as a Deviation Factor

This section discusses health insurance as a deviation factor in State case studies and in the study States.

3.4.3.1State Case Studies on Deviations

Of the 19 States that indicated they had collected case data on deviations, only one State report listed health care coverage as among the top 5 reasons for deviation; in its 199115092 study of 2,036 deviation cases, Virginia found that the third highest deviation factor (9 percent of cases) was "direct payment ordered by court for health care coverage." In the five States conducting written surveys, the respondents also appeared to be satisfied with their guideline methodology for addressing health insurance costs.

There were two interesting findings in New York and Massachusetts. In its 199215093 study of 3,152 IV-D and non-IV-D cases, New York found that only 30 percent of all orders addressed allocation of health care expenses. Contrary to the guideline requirement that the expenses be prorated according to income, orders in 48 percent of the cases stated that the costs should be born equally between the parties. The Massachusetts Department of Revenue, Child Support Division, also was dissatisfied with one of its findings. At the time of the case sampling in 1993, the Massachusetts guideline allowed the entire cost of health insurance coverage, including the premium attributable to the obligor's coverage, to be deducted from the child support order as a below-the-line credit. Adjusting the order to account for such health insurance premium costs reduced the average order by 28 percent. The guideline committee felt that the result was too harsh for children. As a result, Massachusetts changed its guideline to allow a credit for only 50 percent of the cost of health insurance.

3.4.3.2Study States

The case record data show that deviations for health insurance appeared in only a small number of cases in seven counties. The low incidence is compatible with the guideline requirement in 10 of the study States that health insurance be addressed through a mandatory numerical adjustment rather than through the decisionmaker's discretion. [ Most respondents were aware that their State guidelines had a numerical methodology for addressing health insurance and were satisfied with that approach.]

3.4.4Extraordinary Health Care Costs as a Deviation Factor

This section discusses extraordinary health care as a deviation factor in State case studies and in the study States.

3.4.4.1State Case Studies on Deviations

Based on information submitted to the ABA, no State case study on deviations found extraordinary health expenses as one of the top five reasons for deviation. However, judicial respondents to a 1993 written survey in Kentucky ranked a child's extraordinary medical and dental needs as the second most frequently cited reason for deviation. Judicial respondents to a 1992 written survey in Michigan also listed health care as a frequent deviation factor. They noted that health care expenses resulted in more deviations in smaller counties, rural counties, and low-income counties. Twenty percent of the respondents thought that the guidelines should allow for uninsured medical expenses for the payer's immediate family or allow discretion in making an adjustment for the payer's extraordinary expenses. About 50 percent of all respondents believed that when there is no credit for child-related expenditures, child support orders seemed inappropriate. About 45 percent of the respondents believed that support orders were excessive when extraeducation and incidence of postsecondary support within the study States.

Guideline Methodology

All participating States addressed postsecondary education support in a discretionary manner. Seven study States' guidelines allow the decisionmaker to consider postsecondary education costs in determining awards, and the remaining four study States have guidelines that do not mention such support. Missouri is the only State in the study that uses a guideline worksheet that numerically addresses postsecondary education expenses. This line item on the worksheet is "special extraordinary expenses," which incorporates other expenses besides postsecondary support. However, filling out this line item is left to the discretion of the court or mediator (see Table G-8 in Appendix G).

Incidence of Postsecondary Education Support in Case Records

Given this project's case methodology, it is not surprising that the number of cases in the study sites that mentioned postsecondary support was relatively small. The frequency ranged from 0 percent to 60 percent, with raw numbers ranging from 0 to 120 cases (see Exhibit 3-6-1 following this page). Only Washington State had a significant number of orders that dealt with postsecondary support (slightly more than one-half of the State sample). Moreover, proceedings that ordered postsecondary support awards typically were stipulated agreements and non-IV-D cases. Case records from Missouri and New Hampshire provided evidence for this finding. Additionally, a correlation was not found between an order for postsecondary support and a parent's income.

Most persons interviewed by the ABA also stated that postsecondary education expenses are requested on an infrequent basis. Private attorneys most frequently reported postsecondary education support as a deviation factor, usually as part of a negotiated agreement. CPs complained that stopping support when a child reaches age 18 made their financial situations difficult because a great deal of financial help is needed to ensure that the child can attend college.

3.6.2Deviations Due to Support for Postsecondary Education

This section discusses support for postsecondary education as a deviation factor and allocation of postsecondary support expenses based on case records.

3.6.2.1Support for Postsecondary Education as a Deviation Factor

The following sections discuss deviation findings due to postsecondary education expenses found in the State case samplings and the study States.

Study States

There are instances when a decisionmaker can order postsecondary education support. In the first instance, the order requires immediate support because the child is in college or a vocational school or will shortly enter a postsecondary institution. In the second instance, the decisionmaker orders future support in case the child enters postsecondary education (e.g., the child is young and a trust fund is established). In the third instance, the order reserves the right to petition for such support in the future.

As indicated above, Washington was the only State with a significant number of cases that dealt with postsecondary education support. An overwhelming majority of its orders reserved the right to petition for future postsecondary education support (approximately 90 percent), while the remaining cases ordered the parties to establish a trust fund or to provide immediate support (approximately 4 percent and 2 percent, respectively).

Minnesota was the only study State where all respondents stated that postsecondary education expenses are considered by the decisionmaker in awarding support.

State Case Samplings

Ten States submitted information to the ABA on their data collection for guideline deviations. Of the eight States that highlighted the most frequent reasons for deviation, only Virginia found that education expenses were a significant reason for deviation. In its 199115092 examination of 2,644 deviation orders, including both IV-D and non-IV-D cases, Virginia found that the third most-frequent reason for deviation was direct payment ordered by the court for health care coverage, life insurance coverage, and education expenses (9 percent combined).

Five States conducted written surveys on the application of the guidelines. Kansas surveyed parents, judges and hearing officers, and attorneys in 1993, and respondents listed an agreement to support children past the age of majority as an adjustment factor; however, it ranked much lower as anadjustment factor than other such factors as income tax exemption, long-distance visitation costs, extended visitation and custody arrangements, special needs of the children, and overall financial conditions. Only approximately 40 percent of the judges and 32 percent of the attorneys who responded believed that judges should use their discretion to order child support through age 22.

3.6.2.2Allocation of Postsecondary Support Expenses Based on Case Records

In the 21 study counties, case data indicates that the most common method for allocation of postsecondary education support involved the parents splitting the expenses 50/50. Also common were cases in which the decisionmaker did not allocate the expenses at the time of the order, but presumably would determine the amount at a later date. One of these two allocation methods was used for most cases across the 21 counties in this study. Other methods included an order that either the NCP or CP pay 100 percent of the postsecondary education expenses or a requirement that both parties pay a proportional share of income.

Respondents in the 11 States provided further details of allocation methods. For example, respondents in Massachusetts stated that when postsecondary education support is requested and approved, the amount might be based on the child support guideline amount, the tuition amount, or a sum determined by the decisionmaker. Respondents in Missouri stated that the amount usually is larger than the guideline amount and is based on the school's tuition. The amount is then divided between the parents and prorated according to their incomes.

3.6.3Conclusions and Recommendations

The duration of child support varies widely across States. The purpose of this study was not to make policy decisions on the necessity of postsecondary support for children from separated families to ensure that they have the same educational opportunities as children from intact families. However, the study results do support the current practice in almost all States.

Should States decide to consider postsecondary education expenses as part of a child support award, it is recommended that the support be a discretionary factor because no requirement exists for the population at large to obtain a postsecondary education.

3.7TAX CONSIDERATIONS

For parents with middle- to upper-range incomes, tax-related matters are important issues. Child support orders may impact Federal income taxes intwo ways. First, the allocation of support to a spouse or child(ren) determines the tax consequences of that amount of money; that is, spousal support is taxable for the obligee and deductible for the obligor, whereas child support is neither taxable nor deductible. Second, the assignment of the dependent tax exemption(s) may have an important impact on one or both parents' income.

Tax implications were raised by guideline committees in the following ways: through determination of net income for purposes of applying guidelines, allowable withholdings, and allocation of the dependent tax credit. In the analysis of case records, the most common form of tax consideration was for orders that allocated the dependent tax credit(s). In States where guidelines address provided for tax considerations, cases addressing tax exemptions ranged from less than 5 percent (New Jersey) to nearly 40 percent (Washington). Responses from the 214 persons interviewed by the ABA also varied significantly among States. For example, all persons interviewed in Florida and Massachusetts stated either that tax exemptions never arise or that they arise infrequently when their child support orders are established or modified. In contrast, private attorneys and judges in Arkansas reported that tax exemptions frequently are cited as a basis for deviation from guideline amounts. Tax exemptions were not significant factors for deviation in case studies conducted by other States.

3.7.1Tax Consideration Issues and Findings From States and Study Sites

This section discusses issues and findings from guideline reviews and study States regarding tax considerations.

3.7.1.1Guideline Reviews

Guideline review committees raised the issue of tax implications of child support in several ways. First, some teams considered that income tax withholding largely determines the income available for child support. The trend among review committees was to permit some degree of Federal, State, and local income tax withholdings to adjust income before application of the guideline formula. Two review committees addressed the issue of the acceptable amount of tax withholdings. One team recommended that for child support calculation purposes, all parents should be allowed a tax withholding status at the single-person exemption level. By setting this standard level, all parents and children would be treated equitably. The other team recommended overturning the State practice of using standard deductions and tax tables to determine a parent's tax rate. The rationale for their decision was the indication that some obligors were getting a windfall because the table and standard amounts were more than what they actually paid.

Second, some State reviewers examined allocation of the tax exemption for the child. When the parties did not reach an independent agreement onthis issue, reviewers felt that the court should allocate the exemption between the parents in proportion to their contributions to the child's expenses. For instance, if the obligor bears 75 percent and the obligee bears 25 percent of the cost, then during a 4-year period, the obligor would claim the exemption for 3 years and the obligee for 1 year. One State team added a caveat to this approach151a parent would be prohibited from claiming the exemption if he or she would not receive a tax benefit from the exemption or if the parent had support arrears as of the end of the tax year.

3.7.1.2Study States

These following sections discuss the guideline methodology regarding tax considerations and incidence of tax considerations within the study States.

Guideline Methodology

Only one State, Arkansas, specifies that a particular parent should receive the dependent tax exemption151the CP receives the exemption unless the parties otherwise agree. Five States151Florida, Massachusetts, Minnesota, Washington, and Wisconsin151leave the decision up to the court or State that the support amount may be adjusted when taking into account the impact of the dependency exemption. In fact, Washington guidelines indicate that the court may award the exemption(s) to either parent, divide the exemptions between them, or alternate the exemption(s). The guidelines in three States151New Hampshire, New Jersey, and Pennsylvania151authorize the decisionmaker to optimize both parties' after-tax income by taking into account Federal tax consequences in determining support. Only two States' guidelines151Delaware and Missouri151did not direct the allocation of tax exemptions or other tax-related issues (see Table G-9 in Appendix G).

Incidence of Tax Considerations in Case Records

In this study, if the order allocated the tax exemption in some manner to either or both parents, the case was coded as one in which tax considerations were part of the child support order.

In two States where guidelines did not discuss tax-related matters, tax exemptions never (Delaware) or rarely (Pennsylvania) appeared in the case records. Judges and masters interviewed in Delaware stated that they never heard a request for deviation based on tax exemptions. The lack of such a request may be based on assumptions about the Delaware Melson formula. Both child support agency and private attorneys in Delaware stated that they believed the dependent tax credit was already factored into the guideline. Conversely, Missouri guidelines also do not discuss tax-related issues, but nearly a quarter of all cases addressed exemptions.

In study States with guidelines that authorize the decisionmaker to consider tax consequences, cases addressing tax exemptions varied from less than5 percent in New Jersey and one county in both Arkansas and Florida to nearly 40 percent in Washington (see Exhibit 3-7-1 following this page). It should be noted that Washington's allocation of the tax exemption is determined through an item on the standard court order form, but not the administrative order form. Little more than one-half of court orders in Washington allocated the tax exemption.

Responses of persons interviewed by the ABA also were varied. Most respondents stated that tax exemptions rarely arose as a basis for deviating from the guideline amount. However, private attorneys and judges in Arkansas reported that tax exemptions are frequently cited as a basis for a deviation.

3.7.2Findings on Deviations Due to Tax Exemptions

The following sections discuss deviation findings due to tax considerations found in the State case samplings and the study States.

3.7.2.1Study States

The study identified three basic ways in which decisionmakers, exercising their discretion, typically allocated the dependency tax exemption: (1) the NCP always received the exemption(s); (2) the CP always received the exemption(s); and (3) both parents shared the exemption(s), usually by splitting multiple exemptions or by alternating exemptions over the years. Exhibit 3-7-2 shows the allocation of exemptions between the parties.

Guidelines in only one State, Arkansas, specifically allocate tax exemptions (in this case to the CP) unless the parties agree otherwise. Case data from Arkansas indicate that its decisionmakers follow the guideline allocation method. In Washington, where guidelines present three discretionary methods for handling tax exemptions, the data show that when the exemption is given to one party, it is usually the CP who receives it. Orders that result in shared exemptions between parents are almost as common, and this shared allocation seems common throughout the study States. NCPs were given the tax exemption more frequently than CPs in only Massachusetts, one county in New Jersey, and one county in Wisconsin.

In some cases, the tax exemption allocation was conditional. For example, the order would specify that NCPs could claim exemptions until CPs became employed, NCPs could claim exemptions as long as support payments were current, or NCPs could claim exemptions for a certain number of years. In cases that allocated the exemption(s) in such a manner, the order would often specify that when the specified conditions were met, CPs could claim exemptions, exemptions could be split, or parents could alternate exemptions.

The allocation of tax exemptions usually was treated narratively in the order, and did not affect the calculation of the child support award. Considering the numerous conditional arrangements, orders often used tax exemptions to optimize parties' incomes over time, in expectation of changing circumstances. Occasionally tax exemptions were used as incentives to encourage continued payment of child support.

3.7.2.2State Case Samplings on Deviations

Tax exemptions were not significant factors for an overwhelming majority of State case samplings on deviations. Of the 10 States that submitted information to the ABA, only Kansas found tax exemptions to be a significant deviation factor. Furthermore, in Kansas, tax exemptions were the most frequent reason for deviation (46 percent of 65 deviation cases). All respondents151parents, attorneys, and judges151to a written survey in Kansas also listed tax exemptions as the most frequent reason or the second most frequent reason for deviation. A 199115092 study of 2,644 deviation cases in Virginia also found that tax consequences were among the "top five" listed deviation factors. However, tax considerations affected awards in only 5 percent of the cases, fewer than the top two deviation factors (i.e., a written agreement and actual monetary support to other children, representing 51 percent and 12 percent, respectively).

3.7.3Conclusions and Recommendations

Tax exemptions resulting from child support are frequently addressed by decisionmakers in several States, although some States rarely consider tax exemptions. The low incidence in such States may simply reflect the documentation that CSR received, not the true frequency. In Washington State, for example, the standard document for court orders addresses this issue. In other States where orders are not standard, tax exemption allocation often is not discussed.

It is recommended that State guidelines treat tax exemptions and other tax-related considerations in a consistent manner.

3.8CUSTODY AND VISITATION

State guideline review teams spent a great deal of time debating the way that child support guidelines should be applied to various custodial arrangements151it was the third most frequently discussed issue.

Sole custody has recently been the most common custody arrangement. In this custody scenario, one parent has primary physical custody of the child(ren) and the other parent has general visitation privileges. Often this visitation period consists of alternate weekends, designated holidays, and 2 weeks in the summer with the NCP. Most guidelines assume a level of visitation between the child and the obligor without any impact on the support amount. Guidelines differ regarding how much visitation is builtinto the basic guideline award and how additional visitation days affect the guideline award.

Increasingly, families are establishing joint custody arrangements (i.e., situations in which the parents share legal and physical custody of the children). Recent Census Bureau data show that 73 percent of noncustodial mothers and 58 percent of noncustodial fathers had visitation privileges, joint custody, or both. [ Census Bureau, U.S. Department of Commerce. 1995. Child Support for Custodial Mothers and Fathers: 1991 . Current Population Reports: Consumer Income, Series P-60, No. 187, August. Washington, DC: U.S. Government Printing Office.] State review teams recognized the growth of joint custody and extended visitation. They also recognized that where the guidelines did not account for this type of arrangement, inconsistencies and inequities were prevalent. State reviewers discussed a number of issues regarding joint custody or extended visitation arrangements. The main concern was the impact that extended visitation (i.e., visitation that exceeds a threshold established for usual visitation) had on the guideline support amount. For example, parents may extend the period of visitation by increasing the period of time that the child spends with the NCP during the summer or the number of days or nights that the child spends with the NCP during the school year. Such extended visitation may increase expenses for the NCP and may decrease expenses for the CP.

Some States also considered the calculation of support when each parent has one or more children from the relationship. This arrangement is often referred to as "split custody." Guidelines in the study States differed in their treatment of split custody and joint custody/extended visitation arrangements. Most treated the arrangements as a reason to deviate from the guideline amount. Extended visitation or split custody arrangements were rare in the 21 study counties, as shown in Exhibit 3-8-1 following this page. The distribution of these cases by custody arrangement is shown in Exhibit 3-8-2. These arrangements were more likely to arise in non-IV-D cases than in IV-D cases, [ This result may be influenced by the prohibition of State child support agencies using Federal IV-D funds for services related to visitation and custody.] and they usually resulted in a downward deviation from the guideline amount. In contrast to the data, most respondents interviewed by the ABA stated that shared custody arrangements are frequently used as reasons for deviation requests; NCPs often rated them as the most common basis for deviation requests. However, CPs often remarked that NCPs received a credit or deviation related to a shared custody and extended visitation arrangement without providing proof of the arrangement; in reality, the CPs complained, no custody or visitation was occurring.

The above results were consistent with studies conducted at the State level. Based on findings of case samplings conducted by the States, custodyarrangements were not usually the main reasons for deviation. However, the factor was frequently raised by respondents to State written surveys.

3.8.1Custody and Visitation Issues and Findings From States and Study Sites

This section discusses issues and findings from guideline reviews and study States regarding child custody and visitation.

3.8.1.1Guideline Reviews

This section discusses guideline review findings regarding sole and joint custody/visitation.

Sole Custody/Visitation

Because sole custody is a common custody arrangement, it was discussed most frequently during reviews. In the sole custody/visitation scenario, one parent has primary physical custody of the child and the other parent has general visitation privileges. Because questions arose about when the obligor should receive an abatement for visitation expenses, the State review committees needed to determine whether the basic child support award included any provision for these visitation expenses. Most review teams concluded that their guidelines did include some level of visitation between the child and the obligor. However, differences arose regarding how much visitation was built into the basic guideline award and the extent visitation beyond that threshold amount would affect the guideline award.

With respect to what constitutes "normal" visitation, States cited such amounts as 27 nights per year, 25 percent of a month, or between 100 and 185 days per year. Once the obligor met that level of visitation, some reviewers would allow no abatement, reasoning that visitation beyond every other weekend and 2 weeks in the summer does not necessarily translate into an expense-sharing situation. Another approach would be to leave the issue of support abatement to the discretion of the trier of fact. Finally, one State, Arkansas, permitted a 50 percent abatement of support for an extended visitation situation.

Joint Custody/Extended Visitation

State review teams recognized that increasing numbers of families have joint custody arrangements in which the parents share legal and physical custody of the children. However, guidelines in many States did not seem to account for this type of arrangement, and, as a result, inconsistencies and inequities were prevalent. States discussed many issues in this regard.

The first point raised by State review teams was the meaning of joint custody/extended visitation for child support purposes. Reviewers concludedthat joint custody/extended visitation was any custodial arrangement that exceeded the visitation threshold set for the sole custody scenario. Therefore, if a State's sole custody category anticipates visitation for 25 percent of the year, then joint physical custody/extended visitation is considered to be anything above that level.

The second issue was how to calculate support after a joint custody/extended visitation arrangement was evident. Several States instituted specific calculations for each situation. For instance, some States recommended the use of a multiplier, such as 1.5, to arrive at the support award amount. By increasing the basic support amount by 50 percent, the State attempted to recognize the increased cost of maintaining two households. Thus, a $200.00 support award in a sole custody case would become a $300.00 award in a joint custody/extended visitation case. The $300.00 would then be allocated between the parents based on the amount of time the child spends with each parent. At least one other State team felt that each parent should retain one-half of the respective support obligation in joint physical custody cases. [ To be entered in Volume II, Part A of this report]

Some States, however, rejected the use of a multiplier, and felt that the issue of offsetting child support in joint custody/extended visitation cases should be made at the discretion of the trier of fact. One reason for taking the discretionary approach was that, while the obligor might incur some additional expenses, joint custody/extended visitation does not always markedly reduce the obligee's household expenses. Therefore, the trier of fact must be able to evaluate the facts of the particular case in order to set the appropriate abatement amount.

In a related issue, one State committee considered the effects of an expected joint physical custody that does not occur. When the obligor fails to follow through with the arrangement for which she has received an abatement, what happens? The review team recommended that its guideline incorporate a solution151the situation would be grounds for a modification of support as long as the obligee did not deny the interaction between the obligor and child.

3.8.1.2Study States

This section discusses the guideline methodology, incidence in case records, and compliance with guideline methodology with regard to custody and visitation.

Guideline Models

Of the 11 study States, only Wisconsin had guidelines requiring a numerical adjustment to the guideline amount based on the number of days that the child spent with the NCP. The guidelines prescribed a percentage for decreasing the child support obligation, using a "shared-time formula" based on the percentage of overnight stays in 1 year (ranging from 30 percent to 60 percent of the year) spent with the NCP. Six States [ Arkansas, Massachusetts, Missouri, New Hampshire, New Jersey, and Washington ] provided that either joint custody arrangements or extended visitation are a reason to deviate from the guideline amount or that the guidelines only apply to the usual custody arrangements. Four States' guidelines [ Delaware, Florida, Minnesota, and Pennsylvania] did not address joint/shared custody arrangements (see Table G-10 in Appendix G for excerpts from each State's guidelines).

In addition, three States explicitly addressed extraordinary travel costs in their guidelines. In Massachusetts, Arkansas, and Wisconsin, these costs were considered grounds for a deviation. New Hampshire guidelines authorized deviations due to extraordinary costs related to the NCP's custody arrangements.

Incidence in Case Records

Joint custody/extended visitation arrangements were rare in the 11 study States. Joint physical custody arrangements were present in more than 5 percent of the cases in only two counties. [ 5.8 percent in one Missouri county and 8.0 percent in one New Hampshire county] In contrast, most respondents of the ABA interview stated that shared custody arrangements were frequent reasons for a deviation request. In addition, according to interviews, NCPs in Arkansas believed that credit should be given in the case of an extended stay because the situation created additional second household expenses. CPs in Delaware, however, stated that NCPs are often granted credit or deviation without providing proof, when in reality, no custody or visitation occurs.

Transportation costs for visitation purposes were considered in orders of 13 counties, but exceeded 5 percent of the cases in only one county in New Hampshire. Although in every county at least one case involving transportation costs was an interstate case, most interstate cases did not involve transportation costs.

Nearly two-thirds of the cases involving extended visitation arrangements and more than three-fourths of the joint physical custody cases in the 11 studyStates were non-IV-D cases, although in one county in Wisconsin, two-thirds of these cases were IV-D non-AFDC cases. One-third of the joint custody/extended visitation cases were pro se, while more than one-half of the cases involved a private or legal service attorney.

Compliance With Guideline Methodology

Based on the case records, the most common methods for handling these situations were (1) abatement of the NCP's child support costs during periods of extended visitation; (2) deviations from the guideline amount; and (3) use of numerical formulas, including an offset and Wisconsin's shared-time formula. Most frequently, custody issues resulted in deviations in all States except Delaware and Florida, regardless of whether they were listed in the guidelines as deviation reasons. In four counties, these issues arose in 8 percent to 10 percent of cases. [ One county in Missouri, two in New Hampshire, and one in Washington] In New Hampshire, many deviations were handled by offsetting the obligations of the two parties, or by setting an award amount of zero. In the remainder of counties the incidence was less than 5 percent. In particular, in Wisconsin, where extended visitation is handled by a numerical formula, two of the three extended custody cases used the formula, while the third used a deviation.

Abatement was most frequently used in addressing extended visitation in Missouri. [ 85 percent of the extended visitation cases in Missouri were handled using abatement. ] In one case, the NCP's obligation was abated during the summer months, when he had the children living with him; in a second case the obligation was abated whenever the NCP had the children with him for more than 2 weeks.

Transportation costs related to visitation appear to be most commonly handled by having the NCP pay 100 percent of the costs or by having both parents split the costs 50/50. Transportation costs for visitation reasons were used as reasons for deviations in five States (Arkansas, Massachusetts, Minnesota, New Hampshire, and Wisconsin), although this reason for deviation was used in fewer than 2 percent of the cases.

3.8.1.3Split Custody

Split custody was analyzed in the State guideline reviews and in the case record data.

Guideline Reviews

States considered the calculation of support when each parent has one or more children from the relationship. The approaches to addressing split custody recommended by review teams differed; there was no trend.

One approach was to calculate separate support orders for each household. The parent with the larger obligation would pay the difference between the two awards to the other parent. Add-on expenses would be prorated between the parents in proportion to their incomes.

Another option in split custody cases was to calculate a single support order for all children and then divide that award by the number of children present in each home. This approach was rejected in favor of the previous approach.

A third approach to addressing these cases involved a separate child support order calculation for each child. The amount per household would then be tallied and the parent with the larger obligation would pay the difference to the other parent.

Study States

Three States151Missouri, Pennsylvania, and Wisconsin151require the decisionmaker to compute awards using two worksheets in split custody cases. The awards are then offset, and the parent with the larger obligation pays the difference. The remainder of the States lacked a numerical formula for treating split custody cases. They either did not address the issues, state that split custody arrangements are a reason to deviate, or indicate that guidelines only apply to the usual custody arrangements.

Of the three States that give specific directions regarding split custody arrangement, the decisionmakers nearly always followed the guideline mandate. In Wisconsin, where orders are frequently expressed as percentages of gross income, the numerical computation often resulted in each parent paying the percentage of gross income appropriate for the number of children in the other parent's custody. However, in one order, a parent paid for a proportion of the percentage appropriate for the total number of children in the family, resulting in a lower award.

Missouri was the only State using numerical adjustments that also used deviations as a way to address split custody cases. Approximately one-half of the split custody cases in Missouri involved deviations.

3.8.1.4State Custody/Foster Care

This issue was addressed in guideline reviews. Two States [ To be entered from Volume II, Part A of this report.] considered the issue of child support for children in the State146s custody or foster care151children who live in foster homes or other State facilities, not in their parent146s home or family-arranged situation. One State team attempted to improve the guideline provision so that it would better apply to cases in which only some of the family146s children enter State custody or foster care. The other State team146s goal was to simplify the guideline calculation of State custody/foster care cases. It is not clear whether the recommendations of either team were enacted.

3.8.2Findings Regarding Deviations Due to Custody and Visitation

Deviations due to custody and visitation factors included joint custody and extended visitation, split custody, and State custody/foster care.

3.8.2.1Joint Custody and Extended Visitation

Data on joint custody and visitation were collected from state case samples and case records.

State Case Samplings on Deviation

Only one State case sampling that was reported to the ABA found that joint physical custody and extended visitation were frequent reasons for deviation from the guideline amount. In a retrospective random sampling of 599 IV-D orders established or modified after October 1, 1987, the Kansas Office of Judicial Administration discovered deviations in 60 percent of the cases (65 cases total) sampled after Kansas guidelines became presumptive. Of these 65 cases, long-distance visitation and time spent with the NCP were among the top 5 reasons for deviation, justifying the deviation in 8 and 5 cases, respectively. California's report also discussed visitation issues. In its 1993 sampling of 495 child support orders, it found that 85 percent of the cases involved one or two children. In 32 percent of the cases, the children spent less than 5 percent of the time with the NCP. In 38 percent of the cases, the children spent 16 percent to 20 percent of their time with the NCP. Based on these findings, the guideline review report recommended that the "default" level of visitation should be 20 percent, plus or minus 5 percent. Cases outside this range would be entitled to an upward or downward deviation, as warranted.

Despite the low incidence of joint physical custody and extended visitation factors in the case sampling data, respondents to State written surveys ranked the factors as among the most common reasons for deviation from the guideline amount. In a 1993 Kansas survey to parents, decisionmakers, and attorneys, judges listed the cost of long-distance travel for visitation as the most common factor considered as a basis for deviation. Also high on the judges' list was time spent with the NCP. Attorneys also ranked long-distance visitation costs and time spent with the NCP as frequent reasons for deviation. In a 1992 written survey to 277 judicial personnel, Michigan discovered that approximately 15 percent of all respondents believed that the guidelines should provide for a visitation cost offset if an extended geographical distance lay between the NCP and the child. Some believed that transportation costs should be split between the parties on a percentage, expense-sharing, or mileage basis. The Administrative Office of the Court recommended child-related expenditures, such as transportation costs for visitation, as areas for its further study.

Case Records

Deviations for joint physical custody occurred 49 times (68 percent of all joint custody cases) in the study and for extended visitation 21 times (51 percent of all joint custody cases). Nineteen of the joint custody deviations occurred in the two New Hampshire counties, [ These deviations occurred in 79 percent of the joint custody cases in that county. ] and thirteen occurred in one Missouri county. [ These deviations cases occurred in 68 percent of the joint custody cases in these two counties. ] In nearly every case in which joint custody/extended visitation were reasons for a deviation, the adjustment was downward. Often no information was given as to how the deviation was determined. However, when methods were described, they were often simply to set the obligation to zero or to calculate the obligations each parent would have had as an obligor, and the parent with the greater obligation would pay the difference. The average monthly downward deviation, where the custody arrangement was the only reason for the deviation, ranged from $32.00 in Arkansas to more than $300.00 in Missouri.

3.8.2.2Split Custody

Split custody did not appear to be a significant factor in the State case samplings on deviation. The exception was a 1993 Kansas written survey to parents, decisionmakers, and attorneys. In the survey, respondents ranked split custody as one of the top eight reasons for deviation.

Deviations for split custody occurred in only 6 cases across the 21 study sites. One case included an additional reason for the deviation, three cases carried out the deviation by offsetting the award against expenses, and the remaining two cases applied downward deviations of $372.00 and $500.00.

3.8.2.3State Custody/Foster Care

The existence of cases in which child(ren) were placed in State custody, such as in foster care cases, was not a significant deviation factor in the State case samplings. Only Iowa's report included such cases. In a 1994 sampling of 696 deviation cases, Iowa found that expenses related to foster care were the justification for a deviation in 23 cases (approximately 3 percent of the deviations).

3.8.3Conclusion and Recommendations

The case data collected from the 11 study States indicated that while custody arrangements other than sole custody were far from being the norm, they were frequent enough to warrant careful consideration. Of the three arrangements151split custody, joint physical custody, and extended visitation151split custody was addressed in the most consistent manner as a mandatory numerical adjustment factor. It was more difficult to determine whether shared custody and extended custody were handled in an equitable and consistent way. In States that provided a mandatory numerical adjustment for these cases, the number of cases using this method were too few to allow an assessment, and the individual circumstances of these cases were too varied to determine whether discretionary or mandatory methods would be appropriate. However, guidelines should clarify the level of visitation assumed within the guideline amount.

This chapter of the report has presented the findings from data collection and analysis for seven major factors in child support guidelines: multiple families; income definition, verification, and imputation; health care expenses; child care; postsecondary education; tax considerations; and a variety of custody and visitation arrangements. Findings for this evaluation were generated from analyses of guideline reviews, interviews with individuals in the child support system, and actual case records collected in 21 counties. The final chapter of this report summarizes findings, conclusions, and recommendations from the study as a whole.

• Exhibit 3-2-1: Percentage of Cases Involving Multiple Families, Including All Cases With Prior Orders and/or Other Obligations
• Exhibit 3-2-2: Percentage of Cases Involving Prior Orders, by Mandatory Numerical Adjustment and Discretionary States'
• Exhibit 3-2-3: Method Employed to Handle Prior Orders, by Mandatory Numerical Adjustment and Discretionary States'
• Exhibit 3-2-4: Percentage of Cases Involving Subsequent Obligations by Mandatory Numerical Adjustment and Discretionary States'
• Exhibit 3-2-5: Method Employed to Handle Subsequent Obligations by Mandatory Numerical Adjustment and Discretionary States'
• Exhibit 3-3-1: Percentage of Cases Involving Verified Income
• Exhibit 3-3-2: Sources of Income Verification for Noncustodial Parents
• Exhibit 3-3-3: Sources of Income Verification for Custodial Parents
• Exhibit 3-3-4: Percentage of Cases in Which Income Was Imputed, by Mandatory Numerical Adjustment and Discretionary States
• Exhibit 3-3-5: Method Employed To Impute Income to Noncustodial Parents
• Exhibit 3-3-6: Method Employed To Impute Income to Custodial Parents
• Exhibit 3-4-1: Health Insurance Provisions in Child Support Orders
• Exhibit 3-4-2: Party Responsible for Health Insurance of the Cases in Which Insurance is Ordered
• Exhibit 3-4-3: Cases Adjusted for Extraordinary Health Care Costs
• Exhibit 3-4-4: Method Employed To Handle Extraordinary or Unreimbursed Health Expenses
• Exhibit 3-5-1: Percentage of Cases That Mention Child Care Expenses
• Exhibit 3-5-2: Child Care Expense Adjustments of Cases Reporting Expenses, by Mandatory Numerical Adjustment and Discretionary States
• Exhibit 3-5-3: Cases Using Guidelines To Account for Child Care Costs, by Mandatory Numerical Adjustment and Discretionary States
• Exhibit 3-5-4: Average Monthly Child Care Costs, by Mandatory Numerical Adjustment and Discretionary States'
• Exhibit 3-6-1: Cases Involving Postsecondary Support
• Exhibit 3-7-1: Cases Addressing Child-Dependency Tax Exemptions
• Exhibit 3-7-2: Allocations for Tax Exemptions Resulting From Child Support Awards
• Exhibit 3-8-1: Cases Involving Split Custody, Joint/Shared Custody, and Extended Visitation
• Exhibit 3-8-2: Type of Custody Arrangement