1 Presentation to Georgia Child Support Commission November 30, 2005 Jane C. Venohr, Ph.D. Policy...

1

Presentation to

Georgia Child Support Commission

November 30, 2005

Jane C. Venohr, Ph.D.Policy Studies Inc.

1899 Wynkoop St, Suite 300Denver, CO 80202

[email protected]

2

Presentation Outline

Purpose: Unveil draft of economic tables

Outline: Background

Draft Tables

Comparisons of Draft Tables to:

• current guidelines amounts

• current order amounts

• bordering states

Summary & Conclusions

3

Background: HB221

HB221 specifies how FICA is to be considered.

HB221 implies child care, health insurance expenses, uninsured medical expenses, parenting time, and other adjustments made in worksheet, not schedule.

All draft tables comply with HB221

HB221 charged the Commission with creating child support obligation table.

HB221 implies table should provide same “economic standard of living enjoyed by children living in intact families consisting of parents with similar financial means.”

4

Background: Commission

Sept. 9: Commission heard Dr. Venohr’s presentation that there is a range of credible estimates of child-rearing costs that could be used as economic basis of the schedule

Oct. 6: Commission adopted the Economic Study and Obligation Table Subcommittee’s recommendations

including a recommendation to draft a table based on the average of the lowest & highest estimates of child-rearing expenditures

5

Background: Estimates of Child-Rearing Costs

Georgia’s current percentages are adapted from Wisconsin, which came from van der Gaag (1981)

DHHS-commissioned report (Lewin/ICF) recommended any amount between these 2 estimators as appropriate for state guidelines

Rothbarth (lower bound) Engel (upper bound)

Dr. Betson estimated child-rearing costs in 1990 and 2001 using Rothbarth & Engel estimators 2001 study used national data from 1996-99

6

Background: Gap between Betson’s Rothbarth & Engel Estimates (1996-99 data)

One Child

29.5% 29.5% 29.8% 30.0%26.9%

22.7% 20.7%17.6%16.7%

13.7%

26.8% 26.7% 26.3% 25.7% 22.6%18.8%

0.0%

10.0%

20.0%

30.0%

40.0%

Less than$15,000

$15,000-$20,000

$20,000 -$30,000

$30,000 -$40,000

$40,000 -$60,000

$60,000 -$80,000

$80,000 -$125,000

$125,000and higher

Perc

ent

of

Net

In

com

e

Betson-Engel Betson-Rothbarth

Three Children

50.1% 50.2% 51.2% 51.8%46.6%

39.4% 36.0%30.7%

21.1%26.2%

44.7% 44.5% 43.3% 41.9%36.4%

30.0%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%

Less than$15,000

$15,000-$20,000

$20,000 -$30,000

$30,000 -$40,000

$40,000 -$60,000

$60,000 -$80,000

$80,000 -$125,000

$125,000and higher

Perc

en

t o

f N

et

Inco

me

Betson-Engel Betson-Rothbarth

Comparisons are based on net income & include child care, Insurance premiums, and uninsured medical expenses. However, these items are adjusted for in the tables.

7

Background: Other Steps in Developing the Georgia Tables

1. Adjust to current price levels: September 2005 price levels

2. Extend to 4, 5 & 6 children: Formula developed by National Research Council

3. Extrapolate to $30,000/mo Gross: Estimates of child-rearing expenditures available to about $14,000/mo net (about $22,000/mo gross).

4. Apply tax assumptions

a. Married couple with dependents being # of children for whom support is determined

b. Single individual (norm of Income Shares states)

8

Example: Income Shares Schedule Is Backed into Gross Income

Hidden Net

Income Column

Combined Gross

IncomeOne Child

Two Children

Three Children

Four Children

Five + Children

2035.00 2500.00 510 712 821 916 10072073.67 2550.00 518 724 834 930 10232112.35 2600.00 527 735 847 945 10392151.02 2650.00 536 747 860 959 10552189.70 2700.00 544 758 873 973 10702228.37 2750.00 553 770 886 987 10862267.05 2800.00 561 781 898 1002 11022303.26 2850.00 569 792 911 1015 11172336.93 2900.00 577 802 922 1028 11302370.61 2950.00 584 812 933 1040 11442404.28 3000.00 592 822 945 1053 11592437.96 3050.00 600 833 957 1067 11742471.63 3100.00 608 844 970 1081 11902505.31 3150.00 616 855 982 1095 12052538.98 3200.00 624 866 995 1109 1220

Effect of tax assumption is married with children results in higher order amounts because there is more disposable income

9

Draft of Economic Tables

10

Alternative Tables

Estimates Tax Filing Status Price Levels & Other

Assumptions

1. Rothbarth Single 2005 price levels & other assumptions are the same

2. Rothbarth Married w/ children

3. Average of Rothbarth & Engel Single

4. Average of Rothbarth & Engel Married w/ children

5. Engel Single

6. Engel Married w/ children

Oct 6 Recommendation Is to draft table based on the average

11

Proposed Table 3: Average with Single Tax Filing Status

Combined Adjusted Gross

Income 1 Child 2 Children 3 Children 4 Children 5 Children 6 Children

2000.00 437 624 723 807 887 965

2050.00 446 637 739 824 906 986

2100.00 455 650 754 840 924 1006

2150.00 465 663 769 857 943 1026

2200.00 474 676 783 873 961 1045

2250.00 483 688 798 890 979 1065

2300.00 492 701 813 907 997 1085

2350.00 501 714 828 923 1016 1105

2400.00 510 727 843 940 1034 1125

2450.00 519 740 858 956 1052 1145

2500.00 528 752 873 973 1070 1165

2550.00 537 765 888 990 1089 1184

2600.00 547 778 902 1006 1107 1204

2650.00 556 791 917 1023 1125 1224

2700.00 565 804 932 1039 1143 1244

2750.00 574 816 947 1056 1162 1264

2800.00 583 829 962 1073 1180 1284

2850.00 592 842 977 1089 1198 1303

2900.00 601 855 992 1106 1216 1323

2950.00 611 868 1006 1122 1234 1343

3000.00 620 881 1021 1139 1253 1363

Proposed Schedule of Basic Child Support ObligationsAverage of Betson-Rothbarth and Betson-Engel Estimates (Single Tax Filing)

12

Example of Income Shares Calculation

CHILD SUPPORT WORKSHEET: SOLE CUSTODY Number of Children = 1, Parent B is the Noncustodial Parent

Parent A Parent B Combined

1. Monthly Income $1,000 $2,000 $3,000

2. Proportional Share of Income 33% 67% 100%

3. Basic Child Support Obligation (from table)

$620

4. Each Parent’s Share (Line 2 X Line 3) $207 $413 $620

5. Adjustments for work-related child care, health insurance premium, and shared-parenting time

6. Child Support Order $413

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Comparison of Economic Tables

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Comparisons: 1 Child: CP Income = $0

Child Support Formulas - One ChildObligee Income = $0

5%

10%

15%

20%

25%

30%

35%

Obligor Monthly Gross Income

% o

f Obl

igor

Gro

ss In

com

e

Existing Georgia (Minimum) Existing Georgia (Midpoint) Existing Georgia (Maximum)Rothbarth (Single) Rothbarth (Married) Engel (Single)Engel (Married) Average Rothbarth and Engel (Single) Average Rothbarth and Engel (Married)

15

Comparisons: 1 Child: CP Income = $0


0

200

400

600

800

1,000

1,200

1,400

1,600


Mon

thlh

y Su

ppor

t Obl

igat

ion


16

Comparisons: 2 Children: CP Income = $0

Child Support Formulas - Two ChildrenObligee Income = $0

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


% o

f Obl

igor

Gro

ss In

com

e


17

Comparisons: 3 Children: CP Income = $0

Child Support Formulas - Three ChildrenObligee Income = $0

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%


% o

f Obl

igor

Gro

ss In

com

e


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Observations of Comparisons of Draft Tables 1-6

Small differences in tables

A decreasing percentage of income is assigned to child support because: Disposable income is a smaller proportion of gross income for higher income

families due to progressive tax rates Higher income families do not spend all of their disposable income Higher income families devote a smaller proportion of their disposable income

to child-rearing expenditures

Schedule starts at $800 gross per month because an insufficient sample of families with lower income

Could extrapolate downward 2005 poverty level is $798 net per month

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Comparison to Existing Percentage Guidelines

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Number of Children in Actual Georgia Orders

2 Children26%

3 Children8%

1 Child62%

4+ Children

4%

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Income Scenarios from Actual Georgia Case File Data

% of Cases One ChildTwo

ChildrenThree

Children All Cases

Custodial Parent has no income 16.8% 7.4% 5.0% 29.2%

Custodial Parent has significantly less income than Noncustodial Parent

13.7% 7.4% 0.6% 21.7%

Custodial Parent income is about half of Noncustodial Parent income

12.4% 7.5% 2.5% 22.4%

Custodial Parent and Noncustodial Parent have almost equal incomes

9.3% 5.0% 2.5% 16.8%

Custodial Parent has significantly more income than Noncustodial Parent

6.8% 2.5% 0.6% 9.9%

All Cases 59.0% 29.8% 11.2% 100%

Accounts for 74.5% of orders

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Income Information from Actual Case Files

274 orders reviewed in 11 counties

NCP income missing in 5% of reviewed orders

About 200 orders have income information for both parties & number of children

In cases with missing information, most missed CP income Missing may mean CP income = $0

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NCP Income Information from Actual Case Files

14%

52%

21%7% 5%

20%7%

24%14%

34%

0%10%20%30%40%50%60%

Less thanminimum

wage

Minimumwage-$1,500

$1,501-2,500

$2,501-3,500

$3,501+

IV-D NCP Gross Income Non-IV-D NCP Gross Income

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Comparisons: 1 Child: CP Income = 50% NCP Income

Child Support Formulas - One ChildObligee Income = 50% of Obligor Income

5%

10%

15%

20%

25%

30%

35%


% o

f Obl

igor

Gro

ss In

com

e


25

Comparisons: 1 Child: CP Income = NCP Income

Child Support Formulas - One ChildObligee Income = Obligor Income

5%

10%

15%

20%

25%

30%


% o

f Obl

igor

Gro

ss In

com

e


26

Comparisons: 1 Child: CP Income = 150% of NCP Income

Child Support Formulas - One ChildObligee Income = 150% Obligor Income

5%

10%

15%

20%

25%

30%


% o

f Obl

igor

Gro

ss In

com

e


27

Projection of Cases Eligible for Modification

Less than 15% difference

Eligible for Downward

Modification

Eligible for Upward

Modification

Rothbarth w/ Single Tax Status [Table 1]

82% 16% 2%

Average w/ Single Tax Status [Table 3]

76% 11% 13%

Based on Actual Incomes in Georgia CasesAssumes no deviations, percentage guidelines appliedNo additional adjustments

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Comparison to Actual Order Amounts

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Application of Current Guidelines (e.g., 17-23% one child)

41% of orders reviewed had a deviation noted 90% of the deviations were downward 59% of the deviations were due to support obligations to other children 9% of the deviations were due to CP income 9% of the deviations were due to accident/sickness insurance for

dependents The following reasons accounted for 5% or less of the deviations each:

• Age of the child; uninsured medical expenses; day care costs; shared custody; suppression of income; mortgage payments; NCP extraordinary needs; debt; in-kind contributions; cost of living; historical spending; extraordinary travel expenses

Implication: More orders will be eligible for upper modifications

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Comparisons to Other States

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Estimates Underlying State Guidelines Schedules

van der Gaag

Espenshade/Engel

Betson 1 /Rothbarth

Betson 2 /Rothbarth USDA

Year of Study 1981 1984 1990 2001 Annual

Number of States Basing Guideline on Study

5* 8* 14 8**MN- adjusted effective 2007

Years of survey data

Various years

1972-73 1980-86 1996-99 1990-92

*Estimated and mostly states that have never updated their schedules

**AZ, CT, MO, NC, OR, TN, VT, WY

32

Economic Basis of Bordering States

Alabama FloridaNorth

CarolinaSouth

Carolina Tennessee

Price Levels 1988 1991 2002 1996 2004

Estimation Methodology

Engel by Dr. Espenshade

, but realigned

Engel by Dr. Espenshade

Rothbarth by Dr. Betson

Rothbarth by Dr. Betson,

but realigned

Rothbarth by Dr. Betson

Self Support Reserve in Schedule

Yes Yes Yes Yes No

Data Collection Years

1972-73 1972-73 1996-99 1980-86 1996-99

33

State Comparisons: 1 Child: CP Income = $0


5%

10%

15%

20%

25%

30%

800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2500 3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 8000 8500 9000 9500 10000


% O

blig

or G

ross

Inco

me

Current Georgia (midpoint) Georgia #3 Alabama FloridaNorth Carolina South Carolina Tennessee

34

State Comparisons: 2 Children

Child Support Formulas - Two ChildrenObligee Income = $0

5%

10%

15%

20%

25%

30%

35%

40%

800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2500 3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 8000 8500 9000 9500 10000


% O

blig

or G

ross

Inco

me

Current Georgia (midpoint) Proposed Georgia Alabama FloridaNorth Carolina South Carolina Tennessee

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Summary & Conclusions

36

Summary and Conclusions

Workgroup recommended draft tables of Rothbarth, Engel & Average

Theoretically sound

Higher than other Income Shares states

Impact on Georgia is difficult to assess because:

• Almost half of current orders are deviations, not guidelines-determined amounts

• Insufficient information on additional dependents, child care, health insurance premiums, timesharing arrangements to assess total differences

New guidelines will not be “ONE-size fits all”

New guidelines will be:

More predictable

More uniform

More valid

37

References: Child Rearing Costs (1 of 2)

Jacques van der Gaag, On Measuring the Cost of Children, DP663-81, University of Wisconsin Institute for Research on Poverty, Madison, Wisconsin (1981).

Thomas J. Espenshade, Investing in Children: New Estimates of Parental Expenditures, Urban Institute Press: Washington, D.C. (1984).

David M. Betson, Alternative Estimates of the Cost of Children from the 1980-86 Consumer Expenditure Survey, Report to U.S. Department of Health and Human Services (Office of the Assistant Secretary for Planning and Evaluation), University of Wisconsin Institute for Research on Poverty (September 1990).

Lewin/ICF, Estimates of Expenditures on Children and Child Support Guidelines, Report to U.S. Department of Health and Human Services (Office of the Assistant Secretary for Planning and Evaluation), Lewin/ICF (October 1990).

38

References: Child Rearing Costs (2 of 2)

David M. Betson, “Chapter 5: Parental Expenditures on Children,” in Judicial Council of California, Review of Statewide Uniform Child Support Guidelines , San Francisco, California, (2001).

Available at: www.courtinfo.ca.gov/programs/cfcc/programs/description/1058study2001.htm

Mark Lino, Expenditures on Children by Families: 2004 Annual Report, U.S. Department of Agriculture, Center for Nutrition and Policy Promotion. Miscellaneous Publication No. 1528-2004 (2005).

Available at: www.usda.gov/cnpp/Crc/crc2004.pdf

Constance F. Citro and Robert T. Michael, Editors. Measuring Poverty: A New Approach, National Academy Press, Washington, D.C. (1995).

http://www.usda.gov/cnpp/Crc/crc2004.pdf

http://www.usda.gov/cnpp/Crc/crc2004.pdf

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