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Home > Child Support > Article

Massachusetts Child Support Guidelines:
A Benchmark Analysis

by David B Weden, III

page two



Analysis[vii]

The studies revealed a high degree of variation in state rankings depending on assumptions made in the computation of child support orders under state guidelines. For example, the Morgan-Lino study assumed three family scenarios as detailed below:

Morgan-Lino Assumptions

Assumption (two children)

Case 1

Case 2

Case 3

Annual Gross Income of Father and Mother

$21,600

$46,100

$75,000

Annual Net Income of Father and Mother

$20,330

$41,800

$65,480

Father's % of Total

71%

73%

71%

Mother's % of Total

29%

27%

29%

Health Insurance premium for children

$654/yr

$1,080/yr

$1,050/yr

Child Care Costs

$1,522/yr

$2,730/yr

$3,510/yr

Non-reimbursed medical expenses

$592/yr

$685/yr

$669/yr

Massachusetts Percentile

4%

78%

88%

Massachusetts Rank

49th of 51

12th of 51

7th of 51

For Case 1, a lower income scenario, Morgain-Lino's results show Massachusetts child support guidelines produce a child support obligation that was at the bottom of the range for all states. However, in the higher income scenario (Case 3), where gross family income was $75,000 annually, Massachusetts was 7th. In other words, the Massachusetts support formula produces one of the lowest child support obligations for low-income families and one of the highest for high-income families.

The Pirog study calculated child support awards using the following assumptions[viii]:

Pirog Assumtpions

Assumption

Case B

Case C

Case D

Monthly Gross Income - Father and Mother

$1,200

$2,500

$4,400

Father Share

$720

$1,500

$2,640

Mother Share

$480

$1,000

$1,760

Father's Union Dues

$30/month

$30/month

$30/month

Health Insurance for children (paid by Father)

$25

$25

$25

Child Care Costs (paid by Mother)

$150

$150

$150

Massachusetts Percentile

35%

88%

96%

Massachusetts Rank

35th of 50

7th of 51

3rd of 51

Again, changes in the assumed income of parents had a dramatic effect on the ranking of Massachusetts among state's child support guidelines. As with the Morgan-Lino study, Massachusetts' rank increased as higher incomes were assumed.

The Pirog and Morgan-Lino studies both assumed two-child scenarios, and were consistent in showing that Massachusetts' rank among states rose dramatically with increases in family income assumptions. In other words, as family income increases, the child support obligation rises more quickly for Massachusetts than for other states. This suggests that the Massachusetts formula behaves dynamically in a way that is at variance with the majority of other states.

The Fassler study dealt only with one-child situations. Rankings produced by the Fassler study are considerably different than those indicated by the Pirog and Morgan-Lino studies. Fassler found that Massachusetts was consistently ranked highest in all but one income scenario tested. The logical explanation here is that the one-child assumption causes the Massachusetts formula to behave differently relative to other states than under the two-child assumption. Scenario rankings for the Fassler study are as follows:

Summary of Fassler Results

Non-Custodial Income

$70,000

$20,000

$45,000

$40,000

$15,000

$30,000

$50,000

Custodial Income

$30,000

$15,000

$30,000

$15,000

$15,000

$30,000

$50,000

Number of Children

1

1

1

1

1

1

1

Massachusetts Percentile

100%

100%

98%

100%

100%

100%

100%

Massachusetts Ranking

1st of 50

1st of 50

2nd of 50

1st of 50

1st of 50

1st of 50

4th of 50

As the rankings indicate, the Fassler study concluded that Massachusetts had the highest child support obligations among all states, per the state guideline formulae. As stated previously, this result cannot be extended beyond the demographic assumptions of the study, which is limited to one-child situations.

It should be emphasized that the average child support obligation for all 50 states under a given set of assumptions should not necessarily be considered the "fair" obligation that should be paid. Many who have studied child support guidelines feel that the prevailing models in use do not adequately determine what should be paid. As expected, some believe that child support levels are generally too high, and some believe levels are too low. The author does not address this question in this article.

Effects of Cost of Living (COL)

In reviewing the results of the Fassler study, the results were quite profound in showing Massachusetts as being much higher than the national average. However, this might be explained by the fact that Massachusetts is considered one of the most expensive areas in the nation to live. To see if the high cost of living in Massachusetts could explain the results of the Fassler study, the author adjusted Fassler's results to normalize for variations in cost of living. If child support guidelines for each state were consistent with variations in cost of living, then normalizing the child support obligations computed for each state in the Fassler study should bring these amounts closer together. In a "perfect world", all states child support obligations should be the same after being normalized for COL.

To adjust for these effects, state by state results of the Fassler study were adjusted for cost of living for 319 Metropolitan Statistical Areas (MSA) around the nation. In some cases states had more than one MSA. Massachusetts has two distinct MSA's, Boston and Fitchburg, for which statistics were available. By adjusting for the high cost of living in Massachusetts, it would be expected that child support obligations adjusted for COL would fall into line with the national average. Results of the Fassler study, adjusted for COL, are summarized in the chart below for three of the seven income scenarios in Fassler's study.

Cost of living information is not produced by the US Government. However, COL information is published by the American Chamber of Commerce Research Association[ix]. Indexes are provided quarterly, and stated as variations from a national average factor of unity (1.0). MSAs that are more expensive have Cost of Living Index ("COLI") factors above 1.0, while relatively less expensive areas have factors less than 1.0. The factor for the United States as a whole is 1.0. Major items included in the index include housing, food, and transportation.

State orders calculated by the Fassler study were adjusted up or down, based on the COLI for the various MSAs within their state. Typically, child support guideline formulae are defined at the state level, as opposed to multiple regions in each state having separate guidelines. Thus, they produce the same results across all towns in any given state.

Based on this analysis, it would appear that when the Fassler study results are normalized for cost of living, the Massachusetts guideline formula still yields a result far higher than the national average. This result holds for the Fitchburg-Leominster area, as well as more expensive Boston.

In terms of percentiles and rankings, Massachusetts registers at the top of the spectrum across 319 MSAs after being normalized for Cost of Living (see below).

Cost of Living Analysis Results

Non-Custodial Income

$70,000

$20,000

$40,000

Custodial Income

$30,000

$15,000

$15,000

Number of Children

1

1

1

Boston Percentile

96th

95th

100th

Boston Rank

134h of 319

16th of 319

2nd of 319

Fitchberg-Leomenster Percentile

100th

100th

100th

Fitchberg-Leomenster rank

1st of 319

1st of 319

1st of 319

In summary, the cost of living argument cannot explain Massachusetts's ranking in Fassler's results.

Dynamic Analysis -- Massachusetts, Connecticut, and New Jersey

To analyze the dynamic behavior of child support formulae, Massachusetts was compared with two other states to allow for a more thorough analysis of how guidelines behave under various scenarios. This analysis focuses on the variability in child support orders caused by variations in assumptions used in calculating child support using state formulas.

New Jersey and Connecticut were chosen as states to compare to Massachusetts. These states were chosen because they used Income Shares guideline formulas, were similar in size to Massachusetts, and had suburban populations near large northeast cities. Conclusions from a comparison of these states should not be construed or extended to national conclusions, and the author acknowledges that other states could have been chosen. However, this comparison will show how the Massachusetts formula behaves dynamically relative to two other states where the income shares formula is used for computing child support orders, which is the prevalent model used by states.

Eleven different income scenarios were selected for the comparative analysis. One, two and three child scenarios were run for each income level, for 33 scenarios. The income scenarios are shown here for reference.

The first five income scenarios were chosen to show a one-bread-winner family, where the non-custodial parent earned as little as $15,000 per year or as much as $100,000 per year, and the custodial parent earned no income.



The six remaining scenarios included three situations where both parents earned the same amount and three other scenarios where the non-custodial made exactly twice the level of the custodial parent. A range of salaries was chosen for scenarios six through eleven.

Analysis - Dynamic Comparison

In some scenarios, the results were remarkably similar. In situations where the Non-custodial parent earned $30,000, or in situations where the non-custodial and custodial parents earned equally the same amount, child support orders were almost the same. When the non-custodial parent earned $15,000 and the custodial had no income, Massachusetts was actually lower than the other two states.

However, under scenarios where the non-custodial parent earned $60,000 or more, child support orders calculated for Massachusetts were far higher than for Connecticut and New Jersey, in some cases by over 70%. This trend was more dramatic for one-child situations and the disparity of results also increased as non-custodial parent income increased. Note that these results are consistent with results published by Fassler, Morgan-Lino, and Pirog.

The main reason for this tendency is that the income shares method employed by New Jersey and Connecticut identifies a level of child support that decreases as a percentage of income, as income rises. As income rises, the percentage of total parental income that is spent on behalf of children decreases.

The chart above shows graphically the results of the Massachusetts, Connecticut, and New Jersey Comparison for the one-child scenario.

Spending on Children as Percent of Family Income

The concept that child-rearing costs decrease as a percent of total income when incomes rise is not new. Annual estimates produced by the USDA, as well as the study by Betson, show that the percentage of income spent on children decreases as income increases. These studies, and this concept, have been widely cited and will not be repeated here in detail.

Connecticut recognizes this concept, and has documented this as part of their child support guidelines[x]:

Text Box: "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."
By contrast, the Massachusetts formula produces a result that increases as family income increases. This is compounded by the effect of taxes. As taxable income increases, marginal tax rates rise, thus decreasing net income. Thus, as income increases, the percentage burden on the after-tax income of the non-custodial parent increases due to increasing marginal tax rates at higher income levels.

The chart below presents a comparison of child support obligations using Massachusetts guidelines to after tax income, and shows that the Mass formula is in contravention with studies on family spending.



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