Massachusetts Child Support Guidelines:
A Benchmark Analysis
by David B Weden, III
Massachusetts versus Federal Statistics on Child Spending
Each year, the United States Department of Agriculture publishes "Family Expenditures on Children". These statistics are published as a context to be used by states when reviewing their child support guidelines.
The statistics take into account various expenses incurred by families, including housing, transportation, food, entertainment, and other items. The USDA statistics are produced to depict costs of raising children at various income levels, and in various regions of the country.
The statistics and the methodology used to derive them lead to many issues beyond the scope of this article. The author does not endorse or challenge the methodology used to derive these statistics, but merely notes that they are accepted in their use by states to review the adequacy of state child support guidelines. That being said, it is an appropriate part of this analysis to compare the Massachusetts guidelines with the USDA statistics.
The Morgan-Lino study used these statistics to compare child support guideline orders to the USDA's child rearing costs, looking at individual states. Statistics published for 1998 were used in the study, and are used here for comparability. As noted earlier, Morgan-Lino calculated child support obligations under three family income scenarios, which were the same as the income scenarios published in the USDA statistics. The Morgan-Lino analysis assumed a two-child scenario throughout. The major conclusion of the study was that child support guidelines in almost all states yielded support obligations that were not adequate to cover the costs of raising children based on the USDA statistics.
Rather than replicate the Morgan-Lino study, the author ran numbers for one-child scenarios, at the same three income scenarios published by USDA and used by Morgan-Lino. The results were distinctly different from those of Morgan-Lino, and are presented graphically here.
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To demonstrate this point, in the USDA scenario for family income of $90,100, family expenditures on one child are estimated to be $15,574. However, if we assume family income equal to $90,100 and use the Massachusetts child support guidelines, the child support order is $25,330, or 63% higher than the USDA statistic - - no small difference. Note that the pattern in this analysis is consistent with all three studies compared in this article: that Massachusetts child support obligations rise faster than other states as incomes rise.
USDA statistics for Family Spending on Children are produced for annual periods representing the first 17 years of a child's life. Over the first 17 years of a child's life, the amount of child support required under Massachusetts guidelines can vary significantly from the USDA's estimated expenditures on raising children when measured on a cumulative basis.
The author compared child support obligations under the Massachusetts guidelines to USDA statistics published for 1999[xi] for the first 17 years of a child's life. In the lowest income scenario child support obligations fall $85,557 short of covering expenditures, as estimated by the USDA. However, in the highest income scenario the reverse situation occurs: Child support obligations exceed estimated expenditures by $237,955 over a child's first 17 years.
This is significant because the USDA estimates are published as a benchmark for states to use in reviewing child support guidelines. Further the above amounts are in fact understated, because child support in Massachusetts can be ordered until a child turns 23, which is six years beyond the age covered by the USDA statistics.
Age of Children
No child support comparison study would be complete without a comparison of the age at which child support is no longer required. Each state has laws stipulating how old a child must be to reach the age of "emancipation", at which point child support stops. Although not directly part of guidelines formulae, it is an important aspect of child support law that says under what circumstances child support must be paid. Therefore, as part of the comparison of state guidelines, it is appropriate to compare this factor.
About 75% of states consider that when children reach the age of 18 or 19, child support terminates. In Massachusetts, the court may require that child support be paid until a child reaches the age of 23, depending on whether a child attends college. The theory is that if a child is attending college, the custodial parent still must support the child because they are still in school and have not entered the workforce yet. Massachusetts and Hawaii are the only two states that can require child support until age 23.
It should be noted that by age 23, a "child" has been able to vote and participate in military service for 5 years. It is widely considered that anyone over the age of 21 has reached the age of majority, and many define majority at age 18.
Family situations often change after a court orders child support. Almost half (46%) of all marriages are remarriages. In about 65% of those remarriages, one or both partners brought children from a prior relationship and thereby formed stepfamilies. The couple may also have children in this new marriage.
Further, when divorced parents remarry, it usually occurs within a very short period time, usually less than one year. Hence, the circumstances under which child support was determined only lasts for a short period.
To analyze the effect that child support has on stepfamilies the author created a scenario of two families. It was assumed that each family was the same size, and had the same income:
Both families have two spouses and one child.
Spouses in each household had the same income as the spouses in the other comparable household. There were three different income scenarios:
- One Breadwinner in each family
- All four spouses earned the same amount
- One Spouse earned twice the other spouse
The household income scenarios for the analysis were based on the middle income level scenarios published in the USDA's "Expenditures on Children by Families" for 1999.
Both families paid the same in taxes, and FICA.
The single difference between the two hypothetical families was that one family (the "Non-Custodial Family") paid the other family (the "Custodial Family") child support for the one child on the Custodial Family's household. Massachusetts guidelines were used to calculate child support payments.
The one breadwinner scenario represents a traditional family structure in which one spouse works and the other spouse stays at home to take care of the child. The second scenario depicts a two-earner family, which has become common today. Note that in this case, each family would most likely need to pay for childcare. Childcare costs have not been factored into the analysis. The incremental effect of childcare costs would be to increase child support paid by the non-custodial family to the custodial family. This is because childcare expenses reduce the custodial parent's income for purposes of the formula, and hence reduces the downward adjustment to the child support obligation.
The last scenario might represent a family where one spouse works part time.
Due to the symmetrical nature of the assumptions, paying child support produces a decrease in after tax income available to support the non-custodial family equal to the increase experienced by the custodial family. In the case where there was one breadwinner earning for the family, the effect of child support was dramatic on the two households.
The after tax income available to the non-custodial family dropped by 31%, while the after tax cash available to the custodial family increased by 31%. When these effects are combined, the custodial family's after tax income available for living expenses is 90% higher than that of the non-custodial family. This does not reflect the added cost the non-custodial family must incur for visitations, and other "add-ons". In effect, for two families earning the same amount and supporting the same number of children, the Massachusetts Child Support Guidelines produces a result that favors one family by at least 90% over the other. Both spouses in the non-custodial family would clearly have to work in order to maintain their standard of living.
The results for all three scenarios are summarized in the table below.
Percentage by which custodial family after-tax income exceeds that of non-custodial family after-tax income
All four spouses earn same amount
One spouse earns twice other spouse
The reader should recall that for the second two scenarios, there would most likely be childcare expense. The effect of childcare expense in the analysis would increase the percentages above.
Discussion and conclusions
Based on information obtained by the author, and analysis performed using this information, the following conclusions are supported:
In family situations involving one child, Massachusetts child support guidelines produce a result that is far higher than virtually all other states. This disparity increases as family incomes increase, and is especially dramatic for family incomes over $60,000.
Where family income exceeds $60,000, the Massachusetts child support guidelines produce a result that far exceeds family spending on children as reported annually by the federal government's USDA statistics. However, in low-income scenarios, the result produced by the Massachusetts formula produces a result that does not meet USDA family spending on children.
In lower income scenarios where more than one child is involved, the Massachusetts guidelines produce a result that is more consistent with other states. However, the disparity described above emerges in high-income scenarios.
Massachusetts is one of only two states that require child support to be paid until a child reaches the age of 23, if that child elects to go to college. If one concludes that the Massachusetts guidelines are too high, then this compounds the situation.
The Massachusetts guidelines formula produces a result that increases (as a percentage of after-tax income) as income rises. This is inconsistent with previous studies of costs of child rearing, as well as the USDA estimates.
The effect of child support on stepfamilies is dramatic, and is not addressed in the Massachusetts child support guidelines. For one-breadwinner families, the analysis presented by the author suggests that stepfamily households receiving child support are favored by up to 90% over stepfamilies paying child support.
David Weden has 20 years of Corporate Finance experience. He is a Vice President with a major financial services company in the Boston area. He holds a Bachelors of Science degree in Business Administration from Babson College, where he majored in Finance and Quantitative Methods. He also holds a Masters Degree in Business Administration from Boston University.
Mr. Weden resides in Massachusetts with his family.
[i] The author would like to thank the following individuals for reviewing drafts of this article:
R. Mark Rogers, Economist, Federal Reserve Bank of Atlanta, and Commissioner, Georgia Commission on Child Support.
Mark Lino, Senior Economist, United States Department of Agriculture.
John A. Lippitt, Research Associate, Early Childhood Policy Group, Family and Child Policy Center, Heller School, Brandeis University
Marjorie Engels, Phd, President, Stepfamily Association of America.
The help of these individuals was greatly appreciated.
[ii] A third formula, the Melson formula, is used by three states. The Melson formula is a derivative of the Income Shares Model, the three states using Melson were counted as Income Shares states.
[iii] 1. Robert G. Williams, Development of Guidelines for Child Support Orders: Final Report, U.S. Department of Health and Human Services, Office of Child Support Enforcement, March 1987.
[iv] See Williams work on development of Income Shares Method.
[v] For a more in depth discussion of the various child support guideline models in use, please see "How Wisconsin-Style Child Support Guidelines Violate Mainstream Economic Theory and Empirical Research: Georgia as an Example", November 1998, by Mark Rogers. Mr. Rogers is an economist with the Federal Reserve Bank of Atlanta.
[vi] It should be noted that the census statistics do not indicate whether the spouse not present is known. Knowledge of the non-present spouse is necessary for a child support order to be obtained.
[vii] The Massachusetts guideline formula indicates that for family incomes over $100,000, or where the non-custodial parent earns in excess of $75,000, the minimum award should be calculated at this threshold level. However, in interviews with attorneys experienced with family court practices, and with individuals who have been processed by the family court system, the tendency is for judges to apply the formula to all income, unless the income is grossly in excess of the threshold. Thus, the author assumed that the formula would apply to situations above the threshold, as well.
[viii] Pirog's study also included a Case A, which was not included because it did not provide results for Massachusetts.
[ix] Cost of Living Index numbers are published quarterly by the American Chamber of Commerce Research Association. The normalization calculations were run using ACCRA COLI data for 1997, third quarter. American Chamber of Commerce Research Association, 4232 King Street, Alexandria, VA, 22302-1507.
[x] Source: "Child Support and Arrearage Guidelines" published by State of Connecticut, and Issued by the Commission for Child Support Guidelines.
[xi] Note that 1998 statistics were used in the first part of the analysis so that it would be comparable to the Morgan-Lino study. In the "Cumulative" analysis, the newer 1999 statistics were used. Results using either years statistics would support conclusions stated here.
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