The

Story

Behind the Numbers

' Sorensen, Elaine and Chava Zibman, 2000. “A Look at
Poor Dads Who Don’t Pay Child Support,” New Federalism:
Discussion Paper 00-07. Washington, D.C.: The Urban
Institute.
? Sorensen, Elaine and Helen Oliver, 2002. Policy Reforms
Are Needed to Increase Child Support from Poor Fathers,
Washington, D.C.: The Urban Institute.
* Sousa, Liliana and Elaine Sorensen, 2006. “The Economic
Reality of Nonresident Mothers and Their Children,” New
Federalism, Series B, No. B-69. Washington, D.C: The
Urban Institute.
“For more information about what datasets provide
representative samples of noncustodial parents, their
incomes, order amounts, and the limitations of those data, see
Garfinkel, Irwin, Sara S. McLanahan, and Thomas L.
Hanson. 1998. “A Patchwork Portrait of Nonresident
Fathers” in Garfinkel, Irwin, et al., eds., Fathers under Fire:
The Revolution in Child Support Enforcement, New York,
New York: Russell Sage Foundation,
5, limitation to these studies is that they only consider
earnings reported to the State Unemployment Compensation
Quarterly Wage Files, which do not capture total income.
‘These files do not include unearned income, and not all
earnings are reported to Quarterly Wage Files. For example,
earnings for the self-employed and independent contractors
are not captured by Quarterly Wage Files.
*® Federal Register, Vol. 71, No. 15, January 24, 2006, pp.
3848-3849,
7 Sorensen, Elaine, 2006. Understanding Child Support
Arrears. Preliminary findings presented to the Federal Office
of Child Support Enforcement and the Assistant Secretary for
Planning and Evaluation, Department of Health and Human
Services, May 16, 2006, Washington, D.C.: Urban Institute.
® Office of the Inspector General. 2002. Child Support for
Children on TANF, February 2002. OIG-05-99-00392,
Washington, D.C.: Department of Health and Human
Services.
° Center for Policy Research and Policy Studies Inc., 2003.
OCSE Responsible Fatherhood Programs: Client
‘Characteristics and Program Outcomes. Report to the
Federal Office of Child Support Enforcement, Denver, CO.
Available on the Internet ://fatherhood.hhs.gov/
tability/Resy msClientCh: if.
"There were eight demonstration sites. Earnings data were
from State quarterly wage files.
"' Sorensen, Elaine and Chava Zibman, 2001. “Poor Dads
Who Don’t Pay Child Support: Deadbeat or Disadvantaged”
The New Federalism: Series B: No. B-30. Washington, D.C.:
‘The Urban Institute.
° Ibid.
"3 ‘These are the percentages at or just above poverty income.
Many States assign even smaller percentages at higher
incomes, The maximum of the range, 37%, is assigned to a
net income. Hence, when converted to a gross-income
amount, it would be less.
Child care expenses are included in the order infrequently.
For example, a recent California study found that child care
expenses were added to 15% of the orders. The low
percentage is attributed to low-income families receiving
subsidized child care or using relative care. Judicial Council
of California, 2006. Review of Statewide Uniform Child
Support Guidelines 2005: A Report to the California
Legislature, Administrative Office of the Courts, San
Francisco, California.
'S Venohr, Jane and Tracy Griffith, 2006. “Child Support
Guidelines: Issues and Reviews,” Family Court Review, vol.
43, no. 3, pages 415-428.

‘© Primus, Wendell and Kristina Daugirdas, 2000. Improving
Child Well-Being by Focusing on Low-Income Noncustodial
Parents in Maryland. Baltimore, MD: Abell Foundation.
"TLegler, Paul, 2003. Low-Income Fathers and Child
Support: Starting on the Right Track. Report to the Annie E.
Casey Foundation, Denver, Colorado: Policy Studies Inc.
Available on the Internet at:
hitp://www.aecf.org/publications/data/right_track.pdf.

'® This policy brief was developed through U.S.
DHHS/ACF/OCSE Contract Number 105-00-8300, Task
Order 39 with Policy Studies Inc. Interviews were conducted
with Colorado, Massachusetts, Mississippi, Missouri,
Nevada, South Dakota, and Wisconsin. The States were
selected to represent different geographic regions and various
child support guideline approaches.

Office of Inspector General, 2000. The Establishment of
Child Support Orders for Low Income Non-custodial
Parents, OIG-05-99-00390, Washington, D.C.: Department
of Health and Human Services.

® Thoennes, Nancy and Pearson, Jessica, 2001. Report to the
Colorado Department of Human Services, Denver, CO:
Center for Policy Research.

Peters, Jo, 1999, Overcoming the Barriers to Collection.
Olympia, WA: Washington Department of Social and Health
Services.

® Judicial Council of California, 2006. Review of Statewide
Uniform Child Support Guidelines 2005; A Report to the
California Legislature, Administrative Office of the Courts,
San Francisco, California.

2 California, Colorado, Massachusetts, Minnesota, and
Virginia are States that have conducted arrears studies,

% Peters, Jo, 2003. Determining the Composition and
Collectibility of Child Support Arrears, Volume 2; The Case
Assessment, Olympia, WA: Washington Department of
Social and Health Services.

Office of Child Support Enforcement, National Child
Support Enforcement Strategic Plan: FY2005-2009, U.S.
Department of Health and Human Services, Administration
for Children and Families, Office of Child Support
Enforcement, Washington, DC. Available on the Internet at:
www.acf.hhs.gow/programs/cse/pubs/2004/Strategic_Plan_F
¥2005-2009.pdf

Preliminary results from a 2005-06 Colorado
demonstration project that was funded by an OCSE 1115
grant find that the default rate was decreased by about a half
or more in the counties testing strategies aimed at reducing
the number of orders entered by default and encouraging
noncustodial parents to stipulate, Some of the specific
strategies used in the Colorado demonstration were
simplified notices (c.g., 5" grade reading level and also
available in Spanish).

U.S. Department of Health and Human Services
Administration for Children and Families
Office of Child Support Enforcement
http://www.acf hhs.gov/programs/ese/

ott

am

The Story Behind the Numbers
December 8, 2006



Effects of Child Support O Order Amounts on Payments by Low-
Income Parents

About a quarter of noncustodial fathers have
reported incomes below the Federal poverty
level! and about 2.5 million of these fathers do
not pay child support.” In addition, many
noncustodial mothers have reported incomes
below the Federal poverty guidelines.’

Neither national surveys nor the Federal Office
of Child Support Enforcement (OCSE)
administrative data track child support orders as
a percent of noncustodial parents’ income.‘
However, several multistate studies indicate that
many low-income noncustodial parents have
support orders that represent a high percentage
of their reported earnings (high percentage
orders).* The Department of Health and Human
Services (HHS) 2006 income guidelines set the
poverty level for one person at $9,800 per year,’
and earnings from year-round, 40-hour per week
employment at minimum wage are $10,712
gross per year.

A 2006 Urban Institute study matched
noncustodial parents in seven States (Arizona,
Illinois, Michigan, New Jersey, Ohio,
Pennsylvania, and Texas) to earnings from the
quarterly wage files.” The study found that
median current support orders are 83% of
reported earnings for noncustodial parents with
incomes up to $10,000 per year. In contrast, it
also found that median current support orders
are 11% of reported earnings for noncustodial
parents with incomes starting at $40,000 per
year.

A 2002 Office of Inspector General (OIG) study
of TANF (Temporary Assistance for Needy
Families) cases in 10 States found that support
obligations represented 40% of noncustodial
parents’ reported earnings on average. * The
same study found that child support obligations
are a substantially higher proportion of income,
69% among noncustodial parents with reported
earnings below the poverty line.

High percentage orders were found to be an
issue for low-income noncustodial parents

participating in responsible fatherhood
programs. An evaluation of OCSE responsible
fatherhood programs in five States found that for
noncustodial parent participants with reported
earnings of $500 per month or less, support
obligations averaged over 100% of their
reported earnings.’ The same study found that
percentage orders were less for participants with
reported earnings of $501 to $1,000 per month.
Support obligations ranged from 21% to 61% of
reported earings for noncustodial fathers in this
income Tange.

There is a relationship between low income and
high percentage orders. Both poor custodial
parents and noncustodial parents face barriers to
improving their income situation.'' Barriers
include lack of education and poor work records.
Studies show that 42% have less than a high
school education and about one-third lack recent
work experience. Health issues and not having a
telephone are other common employment
barriers.

A significant proportion of low-income
noncustodial fathers are also likely to be
institutionalized. One study estimates that 29%
of poor noncustodial fathers who are not paying
child support are institutionalized, mostly in
prisons.

FACTORS CONTRIBUTING TO HIGH
PERCENTAGE ORDERS AMONG LOW-INCOME
NONCUSTODIAL PARENTS

Factors that contribute to high percentage orders
are (1) the structure of child support guidelines,
(2) income imputation and default orders, (3)
retroactive support, (4) noncustodial parents
owing support on multiple orders, and (5) the
lack of modification of orders.

Guidelines

Most State guidelines assess between 17% and
37% of the noncustodial parent’s net or gross
income as the support obligation for one to two
children.’ In addition, many guidelines require
the establishment of minimum support orders—


typically $50 per month—and additional support
to cover the custodial parent’s work-related
child care expenses or the child” s non-
reimbursed medical expenses.“

Although many State guidelines allow low-
income adjustments to ensure that a
noncustodial parent’s income after payment of
child support and taxes provides a subsistence
level of living, these adjustments are not always
updated to account for inflation.'° As a result,
the adjustments become inadequate over time.
For example, prior to recently being updated, the
low-income adjustment in one State had not
been updated for over 10 years. As a result, a
noncustodial parent with annual earnings of
$10,000 would be left with about $6,000 (or
64% of the 1999 poverty level for one person)
after payment of the guideline amount, Federal
and State taxes, and work expenses.'*

Default Orders and Income Imputation

One of the major factors contributing to high
percentage orders is income imputation.
Sometimes the imputed income is much greater
than the noncustodial parent’s actual income.
Income imputation is common when the
noncustodial parent’s income is unknown or the
parent is temporarily or voluntarily unemployed
or underemployed. Income imputation occurs
frequently in default judgments because, by
definition, default means that the noncustodial
parent did not show up for the hearing.
Typically, at the hearing the noncustodial parent
has an opportunity to provide his/her actual
income information. Without accurate income
information, default orders are frequently based
on imputed income.

The practice of issuing default orders varies
widely among States and jurisdictions. For
example, a Casey Foundation publication reports
that the percentage of orders entered by default
ranged from 10% to 79% in selected
jurisdictions.'” Among the seven States
interviewed, the percentage of orders entered by
default ranged from about 25% to 83%.'* These
States reported varying rates of income
imputation, from a low of 2% among all cases in
one State to a high of 46% among TANF cases
in another State.

ry Behind the Numbers

Although the OIG analysis of case files in
several States did not note default orders, it
found that 45% of orders were based on imputed
income. The OIG also found that noncustodial
parents with imputed-income orders were about
four times more likely to pay nothing than
noncustodial parents without imputed-income
orders."”

Several state-specific studies found that
noncustodial parents are less likely to pay child
support if the order was entered by default. For
example, a 2001 Colorado study found that the
proportion of cases making no payments was
55% among orders established by administrative
default, compared to 35% of orders established
through a stipulation at administrative
conference hearings.”” A Washington State study
of hard-to-collect cases (i.e., cases with debts
over $500 and no payments in the preceding six
months) found that about 70% of orders entered
by default had no payment while 50% of orders
set by other means had no payment.”!

California was able to reduce the percentage of
orders established through default from 45% in
2001 to 29% in 2005 by undertaking measures
such as changes in policies and procedures,
placing family facilitators in the courts to help
parents navigate the court system, and training
of child support commissioners by the courts. 2
California also reduced income imputation. The
availability of the noncustodial parent’ s actual
income information also increased from 40% in
2001 to 76% in 2005. California attributes this
increased reliance on actual income to the same
policy and procedural changes that resulted in a
decline in defaults, along with advances in
technology and information sharing that provide
better access to income from automated sources
(e.g., quarterly wage data).

Retroactive Support and Arrears

The OIG 2000 study also found that
noncustodial parents were charged retroactive
support in 58% of TANF cases. About one-third
of noncustodial parents charged for more than

12 months of retroactive support made no
payment during the first 32 months of the
obligation. In contrast, only 14% of


noncustodial parents who were not charged
retroactive support made no payments during the
same time period.

There are numerous State studies that have
profiled cases with high arrears or assessed the
collectability of arrears.’ A Washington State
study illustrates a possible link between high
percentage orders and child support arrears.”*
The study found that the average order amount
for noncustodial parents who had increasing
child support arrears was in excess of 100% of
the parent’s wages. Specifically, the median
income of noncustodial parents with increasing
arrears was $163 per month and the median
order amount was $335 per month.

In contrast, median support order amounts were
4% of wages among noncustodial parents with
decreasing debt and 11% of wages among
noncustodial parents with no change to debt.
The median monthly gross income among
noncustodial parents with decreasing debt was
$1,812 per month. The median monthly gross
income among noncustodial parents with no
change in debt was $2,380 per month.

STATE RESPONSES

We interviewed seven States for this policy
brief. Based on their experience, they offered
several suggestions for setting orders in low
income cases. Their specific suggestions were
also congruent with strategies identified in the
National Child Support Enforcement Plan for
FY2005-2009, such as the strategy to emphasize
prevention and early intervention to avoid
payment problems.”*Other recommendations are
as follows:

Y Collaborate with programs and agencies that
help noncustodial parents find employment
or increase their earnings potential.

v Index or periodically review and update the
low-income adjustment in State child
support guidelines.

v Encourage noncustodial parents to appear
(hence avoid a default process) or otherwise
provide income information by keeping
legal notices easy to understand, clearly

ibers

explaining the establishment and
enforcement process, scheduling and
offering parents an opportunity to stipulate
at a negotiation conference, and reminding
both parents of conference and hearing
dates,”

v  Impute income only if information cannot be
obtained from other sources (e.g., the
noncustodial parent, the custodial parent,
employers, automated sources).

¥ When there is no evidence of income,
impute the noncustodial parent’s income
using the normal work hours of local
service-sector employers. For example, if
local fast-food restaurants only offer 32-
hour work weeks, impute income using a
32-hour work week, rather than a 40-hour
work week.

v Use early intervention strategies (e.g.,
personal telephone reminders) to engage the
parent and to help alleviate barriers to full
compliance.

v Limit the period covered by retroactive
support and limit the assessment of state-
owed retroactive support, particularly when
the noncustodial parent has low income or is
receiving public assistance.

Further, the interviewed States affirmed the
importance of establishing reasonable and
appropriate support order amounts from the
start. That is, establish order amounts that:

¥  noncustodial parents have the ability to pay;

v help avoid the accumulation of arrears that
are not collectable;

¥ provide adequate support for children; and

v promote family self-sufficiency.