Boston Bar Association Received this Letter from a Certified Financial Analyst Decrying their Analysis of the Child Support Guidelines  

Dear Boston Bar Association,

I hope you had a nice holiday season, and that the New Year finds you well!

I am writing you to comment on your recommendations for changes to the child support guidelines. In the spirit of constructive dialogue, I would like to offer my thoughts on some of these recommendations, and ask that you might forward this letter to others involved with formulating the BBA’s submission.

Many of your recommendations reflect the incremental “band aid” approaches that the Massachusetts Bar Association has strongly advised against in their recommendations to Justice Barbara Dortch-Okara submitted in December. The media is reporting that the American Academy of Matrimonial Lawyers and the Boston Bar Association are supporting the MBA’s recommendation that a full-scale in-depth review be undertaken and completed by December 2002, instead of incremental band-aid approaches. I am therefore a little confused as to what the BBA is actually recommending – incremental fixes or a complete review? Let me know.

In any case, I address some of the problems with the incremental changes being recommended by the Boston Bar, and I urge you and your colleagues to review this information and contact me with any questions.

I also noticed that the Boston Bar spent considerable time in their recommendations to dispel the notion that “ Massachusetts has one of the highest child support guidelines in the country.” To support this argument the BBA presents four family scenarios comparing seven New England States, and noted that in all but one case, Massachusetts was “within the median” of outcomes.

This analysis has serious logical flaws.

You may recall that in my presentation to the Boston Bar on June 12, 2001 , I gave extensive comparisons and conclusions based on these comparisons. The analysis involved all 50 states, approximately 50 different family income scenarios and numbers of children (1,2,3). In the aggregate, there were over 700 computed child support guideline awards that were drawn from three previous studies and my own calculations. From this large amount of data, I showed that the Massachusetts child support guidelines produce dramatically higher awards for high income families involving one child, but were among the lowest for low income families involving 2 or more children.

For the Boston Bar to base observations and recommendations on only four family scenarios across seven states is misleading. Not enough states were compared, and too few family scenarios were examined, to draw any meaningful conclusions.

The remainder of this letter addresses the problems related to the incremental quick fix approaches being recommended by the Boston Bar.

Raising Custodial Parent ‘Disregard’

The Boston Bar asserts that the “income disregard” was implemented to allow the custodial parent to earn a modest income without jeopardizing the level of child support received. The BBA feels that due to the passage of time, the amount of the disregard, currently $15,000, should be adjusted upward due to increases in wages and/or prices.

However, upon investigating the basis for the Massachusetts child support guidelines, I found no documented economic basis for the “income disregard” aspect of the formula. I contacted Justice Dortch-Okara’s office, the Probate and Family Court, the Mass Department of Revenue, reviewed state filings with the Department of Health and Human Services, spoke with officials involved with setting the original guidelines, and combed the state archives at Columbia Point looking for such information. I could find no economic justification for disregarding $15,000 of one parent’s income in the determination of child support. The original 1985 Child Support Guideline Subcommittee’s Report does not even discuss this concept.

Looking beyond Massachusetts , I found that Massachusetts is the only state in the nation to have such an income disregard.¹

There is a well-established tradition in child support guidelines to hold each parent responsible for support in accordance with their relative incomes. Currently, 38 states use the most common child support guideline model, called the Income Shares method. In this approach, a total child support obligation that reflects the number of children and income of both parents is determined, and responsibility for paying this support amount is then divided between parents relative to their respective share of combined income. The income disregard in the Massachusetts formula arbitrarily lowers one parent’s income for purposes of calculating their share of the child support obligation, while not adjusting the other parent’s income in a similar fashion. This is unfair, and amounts to putting one’s “thumb on the scale”.

Some have argued that the disregard acts as a “self support reserve” for the custodial parent, who is less likely to work a full time position. However, two-income families are prevalent today, and it is unfair to have a “self-support reserve” for only one parent. Further, a true Income Sharing approach already takes into account that one parent’s income may be lower, and holds them responsible for a lesser amount of the child support obligation. If such a self-support reserve is warranted, should it not be allowed for both parents?

Upping Thresholds for Using Guidelines

To simply raise the income thresholds under which the Mass formula should apply according to changes in CPI (or wages) is an inappropriate economic rationale. The income ranges for which child support formulas apply are not based on current price levels or cost of living indexes, but instead define a range within which a guideline formula will produce a reasonable result. To raise the income thresholds simply on the basis of price and wage increases, without addressing whether the formula produces a reasonable result, ignores the most basic economic consideration: does the child support formula appropriately address the needs of the child?

It is well known that the Massachusetts guideline formula produces its most aberrant results at the high and low ends of the income spectrum.  For example, for affluent parents, awards can exceed twice the national average, and exceed the USDA’s estimated cost of raising children by up to 63%. For low-income parents, it appears that awards are as much as 42% lower than the USDA estimates.

The reason is that the Massachusetts formula applies a flat percentage to a non-custodial parent’s income when determining support, rather than a percentage that declines as income rises. Virtually all studies on child cost have proven this pattern, and many states have expressly built it into their guidelines. The Connecticut child support guidelines documentation actually makes the following statement:

“Economic evidence establishes that the proportion of household income spent on children declines as household income increases. This spending pattern exists because families at higher income levels do not have to devote most or all of their incomes to perceived necessities. Rather, they can allocate some proportion of income to savings and other non-consumption expenditures, as well as discretionary adult goods.”

The effect of raising the income thresholds is illustrated below. This is a comparison of annual USDA cost estimates for raising one child with presumptive awards produced by the Massachusetts child support formula, up to an income level of $150,000:

Notice that the Mass formula produces awards at increasingly larger spreads over USDA estimates, which suggests that the formula produces increasingly unreasonable results as the threshold is raised.

In its recommendations, the BBA provided a comparison of the thresholds where support formulas are used (so called “cap” income) in neighboring states. To simply compare cap income is overly simplistic, because it does not address the reasonability of presumptive awards produced by each formula.

As always, if anyone at the BBA is interested in speaking with me on the subject, or has any questions, I would be happy to address them.

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