Resources and Publications

Keeping Up: State Approaches to Automatic Adjustments in Child Support Orders

Aug 01, 1997 | Jessica Sager and Paula Roberts

Introduction

According to government studies, the typical single parent with two children spends between $8,975 and $12,815 a year to meet his/her children's basic needs. Non-custodial parents contribute only a fraction of this amount to support their children--if they contribute at all. The mean amount of child support received by families who obtain at least some support is $2,227 per year. In other words, the contribution of non-custodial parents who pay some support amounts between 17 and 25 percent of the costs associated with their children in the typical single-parent family.

There are several reasons why child support amounts are so low:

In a minority of cases, the non-custodial parent is low income and cannot pay much support. One researcher estimates that 14 percent of non-custodial fathers are poor once child support payments are taken into account and 33 percent have incomes below 130 percent of poverty once child support payments are taken into account. Thus, while two-thirds of the fathers have enough income to pay adequate support, about one-third have a more limited ability to pay.
In many cases where the non-custodial parent was able to pay significant amounts of support, the support was very low to begin with. Prior to 1988, states were not required to use specific numeric guidelines to set child support orders. As a result, many older child support orders have no real relationship to the needs of the child or the non-custodial parent's ability to pay.
In a great number of cases, awards which may have reflected the ability to pay when they were set have not been updated. Thus, with the passage of time, the dollar value of the award has eroded.

Through Title IVD of the Social Security Act, Congress has attempted to address the latter two problems. In 1988, it required states to adopt and use numeric child support guidelines for setting child support awards. If the state's guidelines are not used, the reason for the deviation must be explained on the record. As a result, initial child support awards are increasingly reflective of the noncustodial parent's ability to pay.

In 1988, Congress also required states to develop a process for periodically evaluating and (if appropriate) modifying child support awards which are being enforced by the states' child support enforcement (IVD) programs. Such processes were to be in place beginning in 1990. By 1993, without the need to prove a "substantial change in circumstances," parents (or the states in public assistance cases) were to be allowed to request a review and modification under their state's child support guidelines at least once every three years. To conduct a review, the states have to obtain updated financial information about one or both of the parents; in many states information about child care costs, health insurance premiums and other child-related costs also has to be secured. This individual case information is then plugged into the states' guideline formula and a new order amount is calculated. If any party disagrees with the new amount, a hearing may have to be held. States are experiencing some difficulty in successfully establishing and implementing such systems.

Some of the difficulty can be attributed to the fact that Congress was also asking the states to computerize their child support systems and handle cases on a mass-processing basis. The individual, case-by-case guideline review required for a modification does not easily fit into a mass- processing scheme. This led some of the more creative states to explore modification methods which are more amenable to mass-processing techniques. One such method is inclusion of an automatic escalation clause in the order; another is to provide a cost-of-living (COLA) adjustment in the original order. Such orders are self-adjust making, individual modification unnecessary.

Recently passed federal legislation may encourage greater use of such automatic adjustments. Under this legislation, states are still required to have a process for review and modification of IVD orders at least once every three years--without the need for the parents to show a substantial change in circumstances--if one of the parents so requests. States can opt to conduct this review and adjustment on an individual case-by-case basis using their state child support guidelines as they did under prior law. However, they are given two other options for fulfilling their review and modification responsibilities under the new law:

apply a COLA adjustment in accordance with a formula developed by the state. For example, an order might require that each year, on the anniversary of entry of the order, the child support amount will be increased by a percentage equal to the percentage change in the U.S. Bureau of Labor's National Consumer Price Index (CPI) for the prior year; or
develop another automated method for adjustment using a threshold developed by the state. For example, a state might adopt an approach where all child support orders are increased by the greater of 3 percent or $50 per month on January 1 of each year.

If a state chooses one of these new approaches, then it must have a procedure under which either parent can object to the adjustment and request a guidelines review instead.

Several states and many child support advocates have expressed an interest in using these new processes. Their simplicity makes them attractive. For parents, the predictability of the adjustment and the fact that sensitive information does not need to be exchanged are also advantageous. The whole process is less acrimonious from a parent's point of view. For states, the fact that there is no need for personnel to gather and review individual income data makes automatic adjustments less costly and burdensome. Further, the need for administrative/judicial review of every adjustment is eliminated, conserving those scarce resources.

At the same time there is concern that when the non-custodial parent's income increases dramatically, the children will not obtain the benefit of this increase. A guidelines review would be more advantageous to these children. Likewise, there is a concern that when the non-custodial parent's income does not increase at the rate of inflation (or even decreases) awards will be automatically increased for those who truly cannot afford to pay more. The federal requirement that states opting for an automatic adjustment system provide hearings for those who want to challenge an automatic adjustment addresses these issues, placing the burden of challenge on the parent opposing the automatic adjustment.

This monograph is intended to help states decide how to proceed. It builds on work originally done in the 1980's by the National Center on Women and Family Law and updates the analysis through the Summer of 1997. Jessica Sager, a second year student at Yale University Law School, compiled the case law on a state-by-state basis so that officials and advocates can determine what the law in regard to automatic adjustments in their state is. She also provided copies of some statutory approaches, and a current bibliography of readings on the subject. These materials reveal that some state judiciaries and legislatures have already accepted the legitimacy of automatic adjustments in some or all cases. In those states, minor adjustments in the law, court rules or guidelines are all that is needed to implement one of the newly authorized federal approaches. In other states, the judiciary has rejected automatic adjustments so new statutes and procedures would likely be necessary to implement a different approach.

Particularly worth watching will be implementation of a new New York statute which authorizes the IVD agency to update orders it enforces through use of a COLA adjustment. This approach is something of a hybrid since the order itself does not contain an automatic escalation clause. Rather, in the new New York system, a parent may request the IVD agency to conduct a COLA review. If the cost-of living (as measured by the CPI) has increased by 10 percent or more since the child support order was entered or last modified, the agency will adjust the award upward by that percentage. A new agency order will be issued and sent to the parties and to the court which issued the most recent court order in the case. If no objection is filed, the new order is final without the need for any judicial or administrative review. The new amount will be due commencing with the date on which the next payment is due.

If, within thirty-five (35) days, either parent objects to the adjustment, they can request a judicial review. The adjustment is then stayed until a hearing is held and the court either confirms it or changes the adjustment.

If this system allows New York to conduct mass processing of modifications, it may well be worth importation by other states. Whether a 10 percent CPI change is reasonable, the extent to which non-custodial parents object to proposed modifications, how courts deal with administrative adjustment of judicial orders (especially in pre -1997 cases) and whether courts have the capacity to timely process parental objections will be worth evaluating. In the meantime, what follows suggests that other automated modification processes could be developed consistent with the law in many other states.