NOTICE OF PUBLIC HEARING
Child Support Guidelines
March 4, 2003
NOTICE IS HEREBY GIVEN that pursuant to ss. 49.22 (9) and 227.11,
Stats., the Department of Workforce Development proposes to hold three
public hearings to consider changes to chapter DWD 40, relating to the
child support guidelines.
Hearing Information
March 17, 2003
GEF 1 Building, Room D203
201 E. Washington Avenue
Madison
1 p.m.
March 25, 2003
State Office Building, Room 45
819 North 6th Street
Milwaukee, WI
1 p.m.
March 27, 2003
Portage County Public Library
Pinery Room
1001 Main Street
Stevens Point, WI
1 p.m.
Interested persons are invited to appear at the hearings and will be
afforded the opportunity to make an oral presentation of their
positions. Persons making oral presentations are requested to submit
their facts, views, and suggested rewording in writing. If you have
special needs or circumstances that may make communication or
accessibility difficult at the hearings, please call (608) 267-9403 at
least 10 days prior to the hearing date. Accommodations such as ASL
interpreters, English translators, or materials in audiotape format will
be made available on request to the fullest extent possible.
Analysis Prepared by the Department of Workforce
Development
Statutory authority: Sections 49.22 (9) and 227.11, Stats.
Statutes interpreted: Sections 49.22 and 767.25, Stats.
Section 49.22 (9), Stats., requires the department to adopt standards
for courts to use in determining a child support obligation under s.
767.25, Stats. Chapter DWD 40 establishes these standards based on a
percentage of income of either or both parents. Chapter DWD 40 also
contains special provisions that a court may use in determining the
child support obligations for a serial payer, a split-custody payer, and
shared-placement parents. The percentage standards and special
circumstance provisions are based on the principle that a child's
standard of living should not be adversely affected because his or her
parents are not living together.
In spring 2001, with input from members of the legislature, the DWD
Secretary appointed an advisory committee to provide guidance to the
department on revisions to chapter DWD 40. The advisory committee
included members of the courts, state bar, community-based
organizations, county child support agencies, citizens, and the
department. The committee recommended changes to the provision affecting
shared-placement parents and new special provisions for high-income
payers and low-income payers.
Shared-placement parents. The concept behind the special
provision for shared-placement parents is that the shared-placement
order is smaller than a full percentage order because the parent has
significant placement and is covering the child's basic support expenses
while with that parent. The current threshold for application of the
shared-placement provision is placement of at least 30 percent. If a
parent's placement falls between 30 percent and 40 percent, that parent
pays the other parent a child support amount that is less than the full
percentage standards but there is no determination or offset of any
obligation of the other parent. If the period of placement with the
parent with less time is above 40 percent, the current rule reduces the
child support obligation of the parent with less time and requires the
determination and offset of the obligation of the parent with more time.
Because the current formula does not proportionately reduce the paying
parent's share of support at the same rate as the increase in placement,
it creates a cliff effect that encourages litigation between the
parties.
The proposed shared-placement provision is based on the premise that
when both parents have significant periods of placement the formula
should take into account the duplicated costs of child rearing in both
households and both parents' incomes as a more realistic and equitable
basis to set child support. The court may apply the proposed formula
when both parents have a court-ordered period of placement of at least
25 percent overnights or the equivalent and each parent is ordered to
assume the child's basic support costs in proportion to the time that
the parent has placement of the child. Basic support costs are defined
as food, shelter, clothing, transportation, personal care, and
incidental recreational costs.
The first step in calculating the child support obligations of
shared-placement parents is determining each parent's obligation under
the percentage standards. In determining whether to impute income based
on earning capacity for an unemployed parent or a parent employed less
than full time, the court shall consider the benefit to the child of
having a parent remain in the home during periods of placement and the
additional variable day care costs that would be incurred if the parent
worked more. The next steps are multiplying the obligation under the
percentage standards for each parent by 150 percent to account for
household maintenance expenditures duplicated by both parents, such as a
bedroom, clothes, and personal items; multiplying that amount for each
parent by the proportion of time that the child spends with the other
parent; and offsetting resulting amounts against each other. The
shared-placement payer will pay the lesser of the amount determined
under the shared-placement formula or the straight percentage standards.
If the shared-placement payer is also a low-income payer, the parent
will pay the lesser of the amount determined under the shared-placement
formula or the low-income schedule.
High-income payers. The proposed special provision for
high-income payers is based on the premise that above certain income
levels, parents share a smaller percentage of their income with their
children. The payer's full monthly income is considered in determining
the child support obligation. The standard percentages of 17 percent for
1 child, 25 percent for 2 children, 29 percent for 3 children, 31
percent for 4 children, and 34 percent for 5 or more children apply to a
payer's income less than $150,000 per year. The court may apply
approximately 80 percent of the full percentage standards to the portion
of a payer's annual income that is greater than or equal to $150,000 and
less than or equal to $198,000. These percentages are 14 percent for 1
child, 20 percent for 2 children, 23 percent for 3 children, 25 percent
for 4 children, and 27 percent for 5 or more children. The court may
apply approximately 60 percent of the full percentage standards to the
portion of the payer's annual income that is above $198,000. These
percentages are 10 percent for 1 child, 15 percent for 2 children, 17
percent for 3 children, 19 percent for 4 children, 20 percent for 5 or
more children.
Low-income payers. The proposed special provision for
low-income payers is based on the premise that many low-income payers
have insufficient income to pay current ordered amounts. Lower support
levels for low-income payers may enable them to pay current support and
accrue fewer arrears. Lower support levels may also increase their
emotional and financial investment in their children.
Under the proposed low-income provision, the court may determine a
low-income payer's obligation by referring to a special schedule. The
schedule provides a minimum monthly support amount for payers with
income below approximately 70 percent of the federal poverty level. For
monthly income between approximately 70 percent and 150 percent of the
federal poverty level, the schedule provides graduated percentage rates
that result in a child support obligation that is between the minimum
monthly support amounts and the child support determined by applying the
full percentage standards. For one child, the graduated rates range from
4.25 percent or $21/month to 17 percent or $183/month. The court may
deviate from the support amounts in the schedule based on the factors
listed in s. 767.25 (1m), Stats., or the total economic circumstances of
the low-income payer, including any in-kind benefits such as food and
shelter, that are available to the low-income payer and impact his or
her ability to pay child support. The department will revise the
schedule every four years based on changes in the federal poverty level
since the schedule was last revised. This coincides with the federal
requirement at 42 USC 667(a) that states review their child support
guidelines at least once every 4 years.
Miscellaneous. The department proposes the following
additional changes:
- · Assigning responsibility for payment of variable
costs. The court shall assign responsibility for payment of the
child's variable costs in proportion to each parent's share of physical
placement, with due consideration to a disparity in the parents'
incomes. The court shall direct the manner of payment to be either
between the parties or from a party to a third-party service provider
and not to the department or the department's designee. Variable costs
are reasonable costs above basic support costs, including child care,
tuition, a child's special needs, and other activities that involve
substantial cost.
- Income imputed based on earning capacity. In determining a
parent's ability to earn, the court shall consider a parent's earnings
during previous periods and physical and mental health, in addition to
the current factors of education, training and work experience, and
availability of work in or near the parent's community. A requirement is
added that evidence must be presented that due diligence has been
exercised to ascertain information on the parent's actual income or
ability to earn and that information is unavailable before the court may
impute income at 40 times the federal minimum hourly wage.
- Shared-placement order with serial families. The concept
behind the special provision for shared-placement parents is that the
order is smaller than a full percentage order because the parent has
significant placement and is covering the child's basic support expenses
while with that parent. A shared-placement parent with one child is
spending approximately 17 percent of his or her income on the child even
though the child support order may be substantially less than that
amount if the parents' placement periods and incomes are similar. The
concept behind the special provision for serial families is to give
credit for the amount spent on the first family before determining the
order for children in the next family. The current serial family
provision only gives credit for the amount of the order and does not
consider the special situation of shared-placement parents with serial
families. The proposed provision on shared-placement orders in serial
families gives credit for the full percentage standard.
- Social Security disability insurance. The court may include
social security benefits received by a child based on a parent's
entitlement to federal disability insurance in the parent's gross income
and may adjust the parent's child support obligation by subtracting the
amount of the child's social security benefit. In no case may this
adjustment require the payee to reimburse the payer for any portion of
the child's benefit.
- Maintenance. If a payer will have obligations for both
child support and maintenance in a particular case, the court shall
determine the payer's child support obligation before the maintenance
obligation.
- Effect of rule change. A modification of any provision of
chapter DWD 40 shall not be considered a substantial change in
circumstances sufficient to justify a revision of a judgment or order
under s. 767.32, Stats.
- Trust. The court may create a trust for the child if the
payer's child support obligation exceeds the amount necessary to
maintain the standard of living the child would have if the child were
living with both parents.
- Undistributed income of a closely held corporation. Further
detail is proposed to clarify when to include undistributed corporate
income in gross income. The rule currently provides that undistributed
income is included if the payer has ownership interest sufficient to
individually exercise control or access the business earnings. The
proposed rule defines undistributed income as federal taxable income of
the closely held corporation, partnership, or other entity plus
depreciation claimed on the entity's federal income tax return less a
reasonable allowance for economic depreciation using the straight line
method. The court may adjust gross income to include undistributed
income not determined reasonably necessary for the growth of the
business.
- Terminology.
- "Monthly income available for child support" is the proposed term to
refer to the monthly income at which the child support obligation is
determined. It includes gross income, or if applicable, income modified
for business expenses; income imputed based on earning capacity; and
income imputed from assets. "Monthly income available for child support"
is similar to the current term "base," except "base" does not include
income imputed based on earning capacity. A support obligation based on
earning capacity is a separate calculation under the current rule.
- The proposed rule uses the term "split-placement" in place of
"split-custody," which is incorrectly used in the current rule.
- The split-placement subsection is rewritten because the current rule
refers to the payer and payee at the beginning of the calculation before
it can be accurately known who will be the payer or payee.
Initial Regulatory Flexibility Analysis
The proposed rule changes do not affect small business.
Fiscal Impact
The proposed rule changes do not have a fiscal effect on state or
local government.
Contact Information
The proposed rules are available on the DWD web site at http://www.dwd.state.wi.us/dwd/hearings.htm.
A paper copy may be obtained at no charge by contacting:
Elaine Pridgen
Office of Legal Counsel
Dept. of Workforce Development
201 E. Washington Avenue
P.O. Box 7946
Madison, WI 53707-7946
(608) 267-9403
elaine.pridgen@dwd.state.wi.us
Written Comments
Written comments on the proposed rules received at the above address
no later than March 31, 2003, will be given the same consideration as
testimony presented at the hearing.
