2015 saw the addition of words like “photobomb,” “cisgender,” and “crowdfunded” to the Oxford English Dictionary, and while the list of would-be words grows ever-longer, 2016 may be the year the venerable O.E.D. can remove “child support cliffs” from its list of hopefuls.
At least in Minnesota.
I’ve discussed in prior posts the reams of legislative changes passed into law in 2015, among them the creation of Minnesota’s Child Support Workgroup tasked with re-examining how child support obligations are adjusted based on varying levels of parenting time.
After several months of work, it seems the Workgroup may soon be closing in on the answer, as attorneys, courts, and parents everywhere collectively ask, “what now?”
For those interested in bypassing my comments and simply reading the report yourself, a draft copy is available here.
Update (1/30/16): A copy of the “final” report from January 29, 2016 is available here. The remainder of the post has not yet been updated to reflect changes between the draft and final report.
A Brief History of Child Support Cliffs (or Why We Have a Workgroup in the First Place)
For those who haven’t been following the issue, the Child Support Workgroup’s primary mission is the elimination of “child support cliffs”—a particularly evocative description of our current child support calculator, which can result in drastically different child support obligations based on relatively minor differences in parenting time.
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 pre-set level of total support determined by the legislature. Each parent is then supposed to pay a portion of the total child support obligation corresponding to his or her percentage of the combined income.
So, if Mom makes 60% of the total income, and the total support obligation based on both parent’s income is $1,000 per month, then Mom is responsible for $600 of the total, monthly obligation and Dad is responsible for $400.
Of course, if the kids live primarily with one parent (let’s say Mom), the law assumes that her obligation is satisfied by paying the kids day-to-day expenses (food, clothing, toiletries, etc.) during her time. So Dad is left to pay his remaining $400 per month as child support to Mom. Simple enough, right?
(Sidebar: for those looking for a delightfully straightforward legal explanation of this convoluted model, try the Minnesota Supreme Court’s opinion in In re the Matter of Dakota County, — N.W.2d –, No. A13-1240 (Minn. 2015))
But what about all those kid’s expenses Dad pays during his time? The kids (presumably) don’t stop eating, wearing clothing, or using shampoo and toilet paper just because they’re at Dad’s house. How do we ensure that Dad’s not paying twice for these expenses–once through child support and again during his parenting time?
Recognizing that Dad likely bears more of the kid’s expenses the more time he spends with them, Minnesota’s child support calculation gives Dad a small (12%) break if he parents the kids more than 3 overnights per month (more than 10% of the time), and a much bigger break if he parents them 14 or more nights per month (more than 45.1% of the time).
But those are the only two adjustments available. If Dad parents 13 overnights per month, he pays the same child support as someone who only parents 3.
Understandably, such dramatic variations in child support can lead to a good deal of fighting around the edges of these “cliffs,” where one additional overnight per week can mean the difference of thousands of dollars per year in support payments.
It’s not just that a parent may want a particular schedule or think it’s best for her children, there may be an economic incentive to insist upon that schedule (either to increase or reduce child support).
To prevent this result, and the financially-motivated parenting time disputes that can follow, the Workgroup examined parenting time expense adjustments from other states in the hopes of finding a model that provides more of a steady slope rather than a sudden crash as parenting time increases.
Lessons from Another “Great Lakes State”
Originally, proposals to overhaul Minnesota’s parenting time expense adjustment looked to Oregon for an alternative model. But after several months on the job, it appears the Workgroup is now leaning towards the Michigan parenting expense model known as “sum-of-days-cubed.”
It looks something like this:
I know, I know. Math. Ugh.
But to try to ferret out what this would mean for Minnesota families (at least those that pay or receive child support), I ran a few spreadsheets to get a taste for what the new adjustment might look like in practice.
Imagine the following hypothetical: Mom and Dad have two children and each earn gross income of $50,000 per year ($4,167 per month). Under the current Minnesota guidelines their combined support obligation is $1,731 (of which they’re each responsible for 50%–consistent with their equal incomes).
As things stand under the current parenting expense adjustment, if Dad parents less than 3 overnights per month, his child support obligation will be $866 per month. This number reduces to $762 per month if he parents between 3 and 13 overnights per month, and reduces even further to $0 if he parents 14 or more overnights per month.
Dad’s obligation under the current model is represented by the red line in the graph below, where the y-axis represents Dad’s basic child support obligation in dollars, and the x-axis reflects Dad’s total, annual overnights (up to 183–equal time):
Get it, “cliffs.”
Applying the sum-of-days-cubed model to the same family (represented by the blue line), Dad’s obligation is about the same up until he’s parenting 37 or more days per year.
Under the current Minnesota model, Dad would then get a sizeable break in comparison to fairly minor decreases under the new model.
In fact, Dad ends up paying more under the new model up until his parenting time reaches about 104 overnights per year (about 28% parenting time, remarkably close to the 25% minimum parenting time presumption).
For those who think better in percentages than dollars, the graph below shows the adjustment percentage to Dad’s basic support obligation (y-axis) for each additional overnight per year (x-axis) up to 183 (which gets you to equal time).
Again, where Minnesota’s current model jumps dramatically, the new model provides a curve increasing more slowly at first and pick up steam as it converges on equal time.
Planning for Unintended Consequences
Of course, no model, not even something as officious sounding as sum-of-days-cubed, is perfect. And the Michigan model is no exception.
While it does remove anything remotely resembling a cliff, even rolling hills can result in some odd variations where there are bigger income disparities between parents.
Take, for instance, the graph below, which reflects the parenting expense adjustments for a family in which one parent earns $180,000 per year ($15,000 per month), while the other earns $24,000 per year ($2,000 per month).
So long as the wealthier parent has less than half the total overnights, the model seems to work roughly as intended. But look what happens when the higher-earning parent passes equal time:
They’re still paying child support.
In fact, under the new model, the higher-income parent continues to pay child support until they parent for 241 overnights per year (roughly 66% of the time).
In other words, under a sum-of-days-cubed model, a higher-earning custodial parent may find themselves paying child support to a lower-earning non-custodial parent provided there is a big enough income disparity. This is true even under circumstances that would make the higher-earning parent the recipient of child support under our current model.
The obvious remedy, which the workgroup is entertaining, is to impose a cap on the parenting expense adjustment such that the parent with the majority of parenting time (55% is being discussed) would not pay the other parent unless one of a limited number of extraordinary circumstances applies.
Point being: families aren’t math problems. No formula works all the time.
Everybody’s a Critic
And in that vein, it bears mention that the Michigan formula has critics all its own (albeit mostly in Michigan).
According to one Michigan family law blog:
Some critics of the parental time offset formula argue that its application results in serious economic distortion. There appears to be no solid evidence to establish at what level of parenting time the custodial parent expense actually decreases and the non-custodial parent expense increases. Some critics have called the result “gaming time for money.”
Another blog compared the USDA’s food expenditures estimates with the Michigan parenting time adjustment, only to conclude
[T]he state formula does not credit the [non-custodial parent] with a budget large enough to feed the children until 117 days [of parenting time]. An [non-custodial] with fewer than 117 overnights is credited with negative funds for child-rearing after feeding the children. Conversely, [non-custodial parent’s] food expenditures equal custodial parent savings on food.
So while we may be solving one problem, broader questions about the justification and empirical research behind parenting adjustments remain, leaving ample fodder for future workgroups.
So what next?
None of the above is set in stone, and though the work group seems to be leaning heavily towards the Michigan model, they still have until January 15, 2016, to issue their final report to the legislature.
But even once we have a report, there’s no guarantee the legislature will be willing or able to take the issue up this session.
The 2016 session will only run from March until May, and after tackling a bevy of family law bills, you couldn’t blame lawmakers if they wanted a few months off.
Questions also remain as to what opposition the bill might face, and, even if passed, when any changes would take effect.
And of course, don’t forget Minn. Stat. § 518A.39, subd. 2:
Except as expressly provided, an enactment, amendment, or repeal of law does not constitute a substantial change in the circumstances for purposes of modifying a child support order.
So for now I’ll keep playing with graphs, and trying to figure out the unknowns this new formula may have in store.