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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
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
13
Comparison of Economic Tables
14
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
Child Support Formulas - One ChildObligee Income = $0
0
200
400
600
800
1,000
1,200
1,400
1,600
Obligor Monthly Gross Income
Mon
thlh
y Su
ppor
t Obl
igat
ion
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)
16
Comparisons: 2 Children: CP Income = $0
Child Support Formulas - Two ChildrenObligee Income = $0
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
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)
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%
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)
18
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
19
Comparison to Existing Percentage Guidelines
20
Number of Children in Actual Georgia Orders
2 Children26%
3 Children8%
1 Child62%
4+ Children
4%
21
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
22
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
23
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
24
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%
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)
25
Comparisons: 1 Child: CP Income = NCP Income
Child Support Formulas - One ChildObligee Income = Obligor Income
5%
10%
15%
20%
25%
30%
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)
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%
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)
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
28
Comparison to Actual Order Amounts
29
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
30
Comparisons to Other States
31
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
Child Support Formulas - One ChildObligee 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
Obligor Monthly Gross Income
% 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
Obligor Monthly Gross Income
% O
blig
or G
ross
Inco
me
Current Georgia (midpoint) Proposed Georgia Alabama FloridaNorth Carolina South Carolina Tennessee
35
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).