2015 saw some ambitious reforms proposed for Minnesota’s child support statutes. So ambitious in fact that the biggest didn’t make it into law, as legislators settled instead for a formal study group to explore new proposals for 2016.

But while the changes to our child support laws aren’t as flashy or extensive as their custody-related counter-parts, they are part of a broader effort to create child support awards that support children rather than impoverishing parents.

Which is why the theme of 2015’s child support legislation may just as well have been “rightsizing”–a term I’m borrowing shamelessly from both a weight loss meal replacement, and a very thoughtful Department of Human Services presentation at the Legislative Wrap-Up put on by the Minnesota Women’s Consortium and the Legislative Office on the Economic Status of Women.

And though these changes don’t have the appearance of a broad legislative overhaul, they each contribute to making child support more workable for more families.

Rightsizing For More Families

The two biggest changes in the new laws might have been titled (were the legislature more concerned with dramatic panache) A Move Away From Child-Support-in-the-World-of-Make-Believe, or, alternatively, An End to Fairy Tale Income and Because-I-Said-So Child Support Orders.

Fairy Tale Income

Under our current law (which will remain in effect until March 1, 2016), a parent’s child support obligation may be calculated using “potential income” where a parent is “voluntarily unemployed, underemployed, or employed on a less than full-time basis.”  Potential income can be determined one of three ways:

  1. Likely earnings based on “employment potential, recent work history, and occupational qualifications;”
  2. Unemployment compensation; or
  3. 150% of minimum wage working 40 hours per week ($2,078 per month)

As a practical matter, alternative 3 often serves to set a functional floor.

But with approximately 65,000 Minnesota workers earning at or below the minimum wage as of 2012, and 20% of part-time employees who would prefer full-time work, that’s tens of thousands of Minnesota parents with entirely unaffordable child support obligations. So perhaps it shouldn’t surprise us that, according to the Washington Post:

[As of 2004 p]eople making less than $10,000 a year, or with no reported income, accounted for 70 percent of the total child support debt owed, or $49 billion of the $70 billion owed nationwide.

No longer.

As of next March, the floor on potential income drops to 100% of minimum wage at 30 hours per week ($1,039 per month).

Just for the sake of reference: in a family with two kids where the residential parent earns $35,000 per year, the amended presumption makes a difference of over $200 per month ($268 vs. $469).  That’s $2,400 per year (more than two months of imaginary pay).

When you’re not actually earning income in the first place, that’s a big difference.

For those concerned that the new law may foster child support avoidance, don’t be.  The law keeps in tact a judge’s right to set child support based on employment potential, recent work history, and occupational qualifications. So Courts can still select a higher income figure where facts warrant. The new law also doesn’t remove the rebuttable presumption “that a parent can be gainfully employed on a full-time basis,” that is 40 hours per week.

The bigger problem may be what to do with all those child support orders already using 150% of minimum wage.  New laws typically don’t receive retroactive application, Minn. Stat. § 645.21, so parents will presumably need to show a “substantial change in circumstances” sufficient to modify the outsized obligations in their pre-March 2016 Orders.

But if you were unemployed then, and you’re unemployed now, what’s the change?

Because-I-Said-So Child Support Orders

I always hated that answer as a kid, but as a new parent it’s become my best friend. I could be explaining “why” for the rest of my life.  But I’m very busy and important.  Or so I tell myself.

Why can’t we listen to Cat Stevens for the 13th time before lunch?

Because I said so.

The same could be said for child support obligations between parents with a wide income disparity, where the parent paying child support also has far less income.

The lower-income parent–maybe barely-making-ends-meet-income–has the kids, say, 6 overnights every two weeks.   Yet our hypothetical starving artist is still paying her wealthy ex child support. Does it make a substantial difference to the wealthier parent? No. Does it exacerbate an already large financial gap between the two households? Absolutely.

So why do it?

Because the law said so.

Until now.  Effective March 1, 2016, Courts will have discretion (read: may not must) to order no child support where the parent paying child support earns significantly less than the parent receiving child support.  Provided that the paying parent spends at least 3 nights per month with the child.

Could this open the flood gates to a lot more litigation? Sure.  But it still makes a lot of sense.

Rightsizing For the Affordable Care Act

A lot has been written about the impact of the Affordable Care Act on divorced and separated families.  For better or worse this blog is no exception.

So it should come as no surprise that a number of this year’s changes to our child support statute are intended to integrate the requirements of the ACA more fully into our child support laws.

For instance, in determining appropriate health care coverage for a child, the Court must now consider whether the proposed coverage will qualify as minimum essential coverage under the ACA.  Similarly, in dividing dependency exemptions between parents, the Court should consider “the impact of the dependent exemption on either party’s ability to claim a premium tax credit or premium subsidy,” under the ACA.

Maybe most important though, given the unique issues surrounding health insurance and the ACA, the new law (which takes effect January 1, 2016 for those keeping track) gives parents the ability to bring “Medical support-only” modification motions, where any one of five criteria are met (including two directly related to the interconnection between health care coverage and dependency exemptions).

Bigger Changes in Store

While 2015’s changes may still seem relatively modest when viewed against the flood of other family court reforms, bigger changes are on the horizon.  In place of a completely re-vamped child support calculator, the legislature devoted some of that billion dollar surplus to the creation of a study group to further review changes to how support obligations are adjusted based on different parenting time schedules.

The crux of the issue is essentially this:

As I explained in a prior post, in Minnesota, child support is calculated using an income-shares model: each parent’s income is added together to determine the total, household income, which corresponds to a level of child support determined by the legislature.  Each parent is then supposed to pay the portion of the total child support obligation that corresponds to his or her percentage of the total income.  So, if Dad makes 60% of the total income, and the support obligation based on both parent’s income is $100, then Dad pays $60 and Mom pays $40.

Of course, if the kids live primarily with Dad (let’s get away from gender norms here for a second), then the law assumes that Dad satisfies his obligations paying for the kids day-to-day expenses, and Mom is left to pay Dad her $40 per month obligation.

But what about all those kid’s expenses Mom pays during her time? Milk. Peanut butter. In-game app purchases.  Mom still has extra costs during her time with the kids.  And in recognition of that fact, our child support laws give Mom a small (12%) break if she parents the kids more than 3 overnights per month (more than 10% of the time), and a much bigger break if she parents them 14 or more nights per month.

But that’s it.  If Mom parents 13 overnights per month, she pays the same child support as someone who only parents 3, even though she almost certainly has far more kid-related expenses.

So the commission’s job is to figure out how to improve the current system of adjustments (which many have called child support cliffs)–with all its self-evident inequities–without creating unnecessary, conflict-fuel for divorced or separated families.

I’m sure glad they have that economist.

Updated (12/8/15): You can find more information on the revised parenting expense adjustment and the child support work group here.

Next Time

Alright, I admit it.  I’m two posts into this new legislation and still haven’t covered the monumental change that is our (completely re-written) best interest factors.

But I’m not ignoring them.

Ok, I’m kind of ignoring them.

Mostly I’m biding my time for others to weigh in so I can shamelessly link to their ideas, while providing a few of my own.

Soon.  I promise.

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