[28 Pa.B. 1216]
[Continued from previous Web Page]
Explanatory Comment to Rule 1910.16-3--1998 The Committee proposes to replace the existing grids and chart of proportional expenditures with this child support schedule. The schedule shows the amounts spent on children in intact families by combined income and number of children. It is used to find the parties' combined basic child support obligation. In turn, the obligor's share of this obligation is computed using the existing income shares formula in Rule 1910.16-4 which allocates the obligation in proportion to the parties' net incomes. (See the Committee Report).
Rule 1910.16-4. Support Guidelines. [Deviation] Calculation of Support Obligation. Formula.
(a) The following formula shall be used to calculate the obligor's share of the basic guideline child support, spousal support and/or alimony pendente lite obligation:
Child Support
Obligor Obligee 1. Total Gross Income per pay period ______ ______ 2. Less Deductions ______ ______ 3. Net Income ______ ______ 4. Conversion to Monthly Amount (if pay period is other than monthly) ______ ______ 5. Combined Total Monthly Net Income ______
6. BASIC CHILD SUPPORT OBLIGATION
(Determine from Schedule in Rule 1910.16-3 based on number of children and the line 5 Combined Monthly Net Income)______
7. Total Support ______ 8. Net Income Expressed as a Percentage Share of Income (Divide line 3 (or 4) by line 7) % % 9. Each Parent's Monthly Share of the Basic Child Support Obligation (Multiply line 7 and line 8) ______ ______ Spousal Support or APL
With Dependent Children 10. Obligor's Monthly Net Income (Line 3 or 4) ______ 11. Less Obligee's Monthly Net Income (Line 3 or 4) ( ______ ) 12. Difference ______
13. Less Obligor's Total Child Support Obligation ( ______ ) 14. Difference ( ______ ) 15. Multiply by 30% x .30 16. AMOUNT OF MONTHLY SPOUSAL SUPPORT OR APL
______
Without Dependent Children 17. Obligor's Monthly Net Income (Line 3 or 4) ______
18. Less Obligee's Monthly Net Income (Line 3 or 4) ( ______ ) 19. Difference ______
20. Multiply by 40% x .40 21. AMOUNT OF MONTHLY SPOUSAL SUPPORT OR APL
______
(b) Shared Custody. When the child spends an equal amount of time with both parties, the obligor shall be the party with the higher net income.
(c) Order For More Than Six Children. When there are more than six children who are the subject of a single order, the child support obligation shall be calculated as follows. First, determine the appropriate amount of support for six children under the guidelines. Using the same income figures, subtract the support amount for five children from the amount for six children. Multiply the difference by the number of children in excess of six and add the resulting amount to the guideline amount for six children.
(d) Divided or Split Custody.
(1) When calculating a child support obligation, and one or more children reside with each party, the court shall offset the parties' respective child support obligations and award the net difference to the obligee as child support. For example, if the parties have three children, one of whom resides with Husband and two of whom reside with Wife, and their net monthly incomes are $1,500 and $800 respectively, Husband's child support obligation is calculated as follows. Using the schedule in Rule 1910.16-3 for two children and the formula, Husband's support obligation for the two children living with Wife is $508. Using the schedule in Rule 1910.16-3 for one child and the formula, Wife's support obligation for the child living with Husband is $188. Subtracting $188 from $508 produces a net support amount of $320 payable to Wife as child support.
(2) When calculating a combined child support and spousal or APL obligation, and one or more children reside with each party, the court shall offset the obligor's spousal and child support obligation with the obligee's child support obligation and award the net difference to the obligee as spousal and child support. In the example above, Husband's spousal and child support obligation to Wife and two children is $564. Wife's child support obligation for one child is $188. Subtracting $188 from $564 produces a net support amount of $376 payable to Wife as spousal and child support.
(3) The procedures set forth in this subdivision should not necessarily be followed where one party's income is minimal and the other party's income is significantly greater. For example, where the non-custodial parent's income is $2,000 and custodial parent has no income, the guideline for one child is $472. If the same numbers are used, but each parent has custody of one child, the guideline is still $472 because the parent without income is not liable for support which would reduce the $472 order. This result is inequitable, and therefore the formula set forth above should not be used in similar situations.
(e) Support Obligations When Custodial Parent Owes Spousal Support. Where children are residing with the spouse obligated to pay spousal support (custodial parent) and the other spouse (non-custodial parent) has a legal obligation to support these children, the guideline amount of spousal support shall be determined by offsetting the non-custodial parent's obligation for support of the children and the custodial parent's obligation of spousal support, and awarding the net difference to the non-custodial parent as spousal support.
The following example uses the formula to show the steps followed to determine the amount of the non-custodial parent's support obligation to the children and the effect of that obligation upon the custodial parent's spousal support obligation. The example assumes that the parties have two children and the non-custodial parent's net monthly income is $1,000 and the custodial parent's net monthly income is $2,600. First, determine the spousal support obligation of the custodial parent to the non-custodial parent based upon their net incomes from the formula for spousal support without dependent children, i.e., $640. Second, recompute the net income of the parties assuming the payment of the spousal support so that $640 is subtracted from the custodial parent's net income, now $1,960, and added to the non-custodial parent's net income, now $1,640. Third, determine the child support obligation of the non-custodial parent based upon the recomputed net incomes in Step 2 from the schedule and formula for two children, i.e., $468. Fourth, determine the recomputed support obligation of the custodial parent to the non-custodial parent by subtracting the non-custodial parent's child support obligation from Step 3 ($468) from the original support obligation determined in Step 1 ($640). The recomputed spousal support is $172.
(f) Allocation. Consequences. An order awarding both spousal and child support may be unallocated or state the amount of support allocable to the spouse and the amount allocable to each child. However, the formula provided by these rules assume that an order will be unallocated. Therefore, if the order is to be allocated, the formula set forth in this Rule shall be utilized to determine the amount of support allocable to the spouse. If allocation of an order utilizing the formula would be inequitable, the court shall make an appropriate allocation. Also, if an order is to be allocated, an adjustment shall be made to the award giving consideration to the federal income tax consequences of an allocated order as may be appropriate under the circumstances.
When the parties are in higher income brackets, the income tax considerations are likely to be a more significant factor in determining an award of support. A support award for a spouse and children is taxable to the obligee while an award for the children only is not. Consequently, in certain situations an award only for the children will be more favorable to the obligee than an award to the spouse and children. In this situation, the trier of fact should utilize the guidelines which result in the greatest benefit to the obligee.
When the obligee's net income is equal to or greater than the obligor's net income, the guideline amount for spouse and children is identical to the guideline amount for children only. Therefore, in cases involving support for spouse and children, whenever the obligee's net income is equal to or greater than the obligor's net income, the guideline amount indicated shall be attributed to child support only.
Explanatory Comment to Rule 1910.16-4--1998 As part of the overall reorganization of the support guidelines, the Committee proposes to rescind the Chart of Proportional Expenditures, which is currently used in conjunction with the income shares formula to establish the support obligation, and substitute it with the new schedule in Rule 1910.16-3. The formula itself is modified only to conform to the new schedule. Rule 1910.16-4 also consolidates the following provisions relating to use of the formula in special situations which currently appear throughout existing Rule 1910.16-5.
1. Shared Custody. (See the Committee Report). Subdivision (b) reflects the Committee's recommendation for establishing the basic support obligation in a 50-50 shared custody situation. When the child spends half of the time living with one parent and the other half living with the other parent, then for purposes of establishing the basic support obligation, the obligor is the party with the higher net income. If the parties' incomes are identical and custody time is equal, there should be no basic guideline amount awarded except in unusual circumstances. In these cases, however, either party may still seek contribution from the other party for any of the additional expenses that he or she incurs on behalf of the children (e.g., health insurance premiums, private school tuition and/or any other additional expenses which are not reflected in the amounts shown in the schedule).
2. Order for More than Six Children. Subdivision (c) incorporates existing Rule 1910.16-5(e). It has been changed only to reflect the expanded application of the guidelines from four to six children and the new schedule. No substantive changes are intended here.
3. Divided or Split Custody. New subdivision (d) incorporates existing Rule 1910.16-5(h). It has been rewritten only to update the examples so that they reflect the new levels of child support and the new schedule. No substantive changes are intended here.
4. Support Obligations When Custodial Parent Owes Spousal Support. New subdivision (e) incorporates existing Rule 1910.16-5(j). It has been rewritten only to update the examples so that they reflect the new levels of child support and the new schedule. No substantive changes are intended here.
5. Allocation. Consequences. New subdivision (f) incorporates verbatim existing Rule 1910.16-5(f). No changes were made here.
Rule 1910.16-5. Support Guidelines. [Operation] Deviation.
(a) If the amount of support deviates from the amount of support determined by the guidelines, the trier of fact shall specify, in writing, the guideline amount of support, and the reasons for, and findings of fact justifying, the amount of the deviation.
Official Note: The deviation applies to the amount of the support obligation and not to the amount of income.
(b) In deciding whether to deviate from the amount of support determined by the guidelines, the trier of fact shall consider:
(1) unusual needs and unusual fixed obligations;
(2) other support obligations of the parties;
(3) other income in the household;
(4) ages of the children;
(5) assets of the parties;
(6) medical expenses not covered by insurance;
(7) standard of living of the parties and their children;
(8) in a spousal support or alimony pendente lite case, the length of the marriage; and
(9) other relevant and appropriate factors, including the best interests of the child or children.
(c) [Reduced or Fluctuating Income.] Moved to Rule 1910.16-2(e). No deviation from the support obligation shall be made for the amount of time that each parent spends with the child or children.
[(d) Net Income Affecting Application of the Guidelines.] Moved to Rule 1910.16-2(f).
[(e) Orders for More Than Four Children.] Moved to Rule 1910.16-4(b).
[(f) Allocation; Consequences.] Moved to Rule 1910.16-4(e).
[(g) Mortgage Payment.] Moved to Rule 1910.16-6(e).
[(h) Divided or Split Custody of Minor Children.] Moved to Rule 1910.16-4(c).
[(i) Child Care Expenses.] Moved to Rule 1910.16-6(a).
[(j) Support Obligations When Custodial Parent Owes Spousal Support.] Moved to Rule 1910.16- 4(d).
[(k) Determination of Post-Secondary Educational Expenses.] Rescinded. See Curtis v. Kline, 542 Pa. 249, 666 A.2d 265 (1995).
[(l) Private School Tuition. Summer Camp. Other Needs.] Moved to Rule 1910.16-6(d).
[(m) Direct Contributions of Noncustodial Parent.] Moved to Rule 1910.16-5(c).
[(n) Awards of Child Support When There are Multiple Families.] Rescinded. See 1910.16- 2(c)(1)(D) and (2).
[(o) Awards of Spousal Support When There are Multiple Families.] Rescinded. See Rule 1910.16-2(c)(1)(D) and (2).
[(p) Unreimbursed Medical Expenses.] Moved to Rule 1910.16-6(c).
[(q) Treatment of AFDC and SSI Benefits.] Moved to Rule 1910.16-2(b).
Explanatory Comment to Rule 1910.16-5--1998 As part of the overall reorganization of the rules relating to the support guidelines, new Rule 1910.16-5 incorporates existing Rule 1910.16-4 setting forth the factors for deviation. The Committee proposes that two substantive changes be made to this provision. Subdivision (b)(8) is added to permit the court to consider the length of the marriage in a spousal support or alimony pendente lite case. Subdivision (c) is added to expressly prohibit deviation based on the amount of time that each parent spends with the child or children. The Committee's rationale for recommending these changes is set forth in detail in the Report. (See the Committee Report).
Rule 1910.16-6. Support Guidelines. Adjustments to the Basic Support Obligation.
(a) Child care expenses. Reasonable child care expenses paid by the custodial parent, if necessary to maintain employment or appropriate education in pursuit of income, are the responsibility of both parents. These expenses shall be allocated between the parties in proportion to their net incomes and obligor's share added to his or her basic support obligation.
(1) Except as provided in subsection (2), the total child care expenses shall be reduced by 25% to reflect the federal child care tax credit available to the custodial parent, whether or not the credit is actually claimed by that parent, up to a maximum annual cost of $2,400 per year for one child and $4,800 per year for two or more children. For example, where the custodial parent incurs $7,000 per year of reasonable child care expenses for two children, the net child care expenses subject to allocation between the parties is calculated as follows. Multiply the first $4,800 of these expenses by .75-$3,600. Add the remaining child care expenses of $2,200 to this amount for a total of $5,800. Divide this amount by 12 months for a total of $483 per month of net child care expenses that are subject to allocation between the parties in proportion to their net incomes.
(2) The federal child care tax credit shall not be used to reduce the child care expenses subject to allocation between the parties if the custodial parent's gross income (before considering any support) falls below $1,200 per month for one child, $1,600 per month for two children, $1,800 per month for three children, $2,000 per month for four children, $2,300 per month for five children and $2,500 per month for six children.
(b) Health Insurance Premiums.
(1) A party's payment of a premium to provide health insurance coverage on behalf of the other party or the children shall be allocated between the parties in proportion to their net incomes, including the portion of the premium attributable to the party who is paying it. If the obligor is paying the premium, then obligee's share is deducted from the obligor's basic support obligation. If the obligee is paying the premium, then obligor's share is added to his or her basic support obligation. Employer-paid premiums are not subject to allocation.
(2) When the health insurance covers other persons or children who are not the subject of the support action, the portion of the premium attributable to them must be excluded from allocation. In the event this portion is not known or cannot be verified, it shall be calculated as follows. First, determine the cost per person by dividing the total cost of the premium by the number of persons covered under the policy. Second, multiply the cost per person by the number of persons who are not the subject of the support action. The resulting amount is excluded from allocation.
For example, if Husband pays $200 per month for a health insurance policy which covers himself, Wife, the parties' child, and two additional children from a previous marriage, the portion of the premium attributable to the additional two children, if not otherwise verifiable or known with reasonable ease and certainty, is calculated by dividing $200 by five persons and then multiplying the resulting amount of $40 per person by the two additional children, for a total $80 to be excluded from allocation. Subtract this amount from the total cost of the premium to arrive at the portion of the premium to be allocated between the parties--$120. Since Husband is paying the premium, Wife's percentage share of $120 is deducted from Husband's support obligation. If Wife had been providing the coverage, then Husband's percentage share would be added to his basic support obligation.
Official Note: Pursuant to 23 Pa.C.S. § 4326, the non-custodial parent bears the initial responsibility of providing health care coverage for the children if it is available at a reasonable cost on an employment-related or other group basis.
(c) Unreimbursed Medical Expenses. Unreimbursed medical expenses of the obligee or the children shall be allocated between the parties in proportion to their respective net incomes and obligor's share added to his or her basic support obligation.
(1) For purposes of this subdivision, medical expenses are annual unreimbursed medical expenses in excess of $250 per person which are recurring and can be reasonably predicted by the court at the time of establishment or modification of the support order. Medical expenses include insurance co-payments and deductibles and all expenses incurred for reasonably necessary medical services and supplies, including but not limited to surgical, dental and optical services, and orthodontia. Medical expenses do not include cosmetic, chiropractic, psychiatric or psychological services unless specifically directed in the order of court.
(2) If there are annual medical expenses in excess of $250 per person which are unpredictable or non-recurring, the court may order that such expenses, if incurred, be allocated in proportion to the parties' net incomes. The court may direct obligor to pay his or her share either to the obligee or directly to the health care provider.
(3) An annual limitation may be imposed when the burden on the obligor would otherwise be excessive.
Official Note: If the trier of fact determines that the obligee acted reasonably in obtaining services which were not specifically set forth in the order of support, payment for such services may be ordered retroactively.
(d) Private School Tuition. Summer Camp. Other Needs. The support schedule does not take into consideration expenditures for private school tuition or other needs of a child which are not specifically addressed by the guidelines. If the court determines that one or more such needs are reasonable, the expense thereof shall be borne by the parties in reasonable shares. The obligor's reasonable share may be added to his or her basic support obligation.
(e) Mortgage Payment. The guidelines assume that the spouse occupying the marital residence will be solely responsible for the mortgage payment, real estate taxes, and homeowners' insurance. Similarly, the court will assume that the party occupying the marital residence will be paying the items listed unless the recommendation specifically provides otherwise. If the obligee is living in the marital residence and the mortgage payment exceeds 25% of the obligee's net income (including amounts of spousal support, APL and child support), the court may direct the obligor to assume up to 50% of the excess amount as part of the total support award.
Explanatory Comment to Rule 1910.16-6--1998 As part of the overall reorganization of the rules, New Rule 1910.16-6 consolidates the existing provisions in Rule 1910.16-5 relating to the additional expenses that warrant an adjustment to the basic support obligation. Substantive changes are noted as follows.
1. Child Care Expenses. (See the Committee Report). New subdivision (a) substantially incorporates existing subdivision (i) of Rule 1910.16-5 with two substantive changes. First, it changes the method of allocation from one of equal shares to proportionate shares based on the parties' net incomes. Second, it reflects the federal child care tax credit that is available to the custodial parent. Although this tax credit ranges from 20-30% depending on the custodial parent's income, the Committee has chosen to simplify the calculation for purposes of establishing or modifying a support obligation by adopting the average of 25%. At higher income levels, the court should consider that the credit gradually begins to decrease to the point where it reaches the minimum rate of 20%. In terms of reducing the overall support obligation, however, the difference is negligible.
There are two important limitations on the use of this tax credit. First, it applies only to the first $2,400 per year ($200 per month) for one child or $4,800 per year ($400 per month) for two or more children. Only child care expenses incurred up to these amounts, therefore, are reduced by 25% before allocating them between the parties. Any remaining expenses are allocated between the parties without adjustment. Second, since the tax credit may be taken only against taxes owed, it cannot be used when the custodial parent does not incur sufficient tax liability to fully realize the credit. For this reason, subsection (2) provides that no adjustment to the total child care expenses may be made if the custodial parent's gross income falls below the thresholds set forth therein. The income thresholds are based on 1997 tax rates.
2. Health Insurance Premiums. (See the Committee Report). New subdivision (b) reflects the Committee's proposal to treat the cost of health insurance premiums as an additional expense to be allocated between the parties in proportion to their net incomes. In addition, the Committee proposes to permit allocation of the portion of the premium attributable to the party who is paying it as well as the portion attributable to the other party or children. Subsection (2) provides for proration of the premium when the health insurance covers other persons who are not the subject of the support action.
3. Unreimbursed Medical Expenses. (See the Committee Report). New subdivision (c) substantially incorporates existing Rule 1910.16-5(p) with four changes. First, since the first $250 of medical expenses per year per child is built into the basic guideline amount in the child support schedule, only medical expenses in excess of $250 per year per child are subject to allocation under this Rule as an additional expense to be added to the basic support obligation. Second, the Committee has chosen to draw this same line with respect to spousal support so that the obligee-spouse is expected to assume the first $250 per year of these expenses and may seek contribution under this Rule only for unreimbursed expenses which exceed $250 per year. The third proposed change is to amend the definition of ''medical expenses'' to include insurance co-payments, deductibles and orthodontia, and to exclude chiropractic services. The fourth proposed change is to distinguish between medical expenses which are recurring and predictable and those which are not. When the expenses are recurring and predictable, the court may establish a monthly amount for these expenses and add it to the basic support obligation so that it is collectible through a wage attachment.
4. Private School Tuition. Summer Camp. Other Needs. New subdivision (d) incorporates existing Rule 1910.16-5(l) and modifies the language only to conform to the new schedule.
5. Mortgage Payment. New subdivision (e) substantially incorporates existing Rule 1910.16(g), and has been changed only to provide some uniformity on what constitutes an unusually high mortgage payment that may justify an upward adjustment to the basic support obligation. The change is intended only for the benefit of the obligee living in the marital residence. There is no adjustment if the obligor is living there.
Committee Report The Family Support Act of 1988 [P. L. 100-485, 102 Stat. 2343 (1988)] requires that the child support guidelines be reviewed every four years to ensure that their application results in the determination of an appropriate child support award. With the assistance of Dr. Robert Williams, the developer of the Income Shares model, the Committee reviewed the most recent economic studies on child-related expenditures in intact households and assessed State guideline adjustments for low income, additional dependents, shared custody, child care, medical expenses and other factors that are considered in establishing or modifying a support award. Based on this review, the Committee proposes to recommend to the Supreme Court that it approve these proposed amendments to Pennsylvania Rules of Civil Procedure 1910.16-1 through 1910.16-5 relating to the support guidelines.
This Report highlights the major changes being proposed by the Committee.
1. Updating the Levels of Child Support1
The current levels of child support are based on economic estimates of intact household expenditures derived from national data dating back to the 1972-1973 Consumer Expenditure Survey conducted by the U. S. Bureau of Labor Statistics. In 1990, more recent economic estimates became available. These estimates are reflected in the proposed child support schedule in Rule 1910.16-3 and, pursuant to Federal and State law, must be adopted to ensure that children continue to receive adequate levels of support.
The more recent studies now consider households of up to six children. The support guidelines have been expanded, therefore, from four to six children. The newer studies also consider households with combined monthly net income of up to $12,600. Allowing for inflation, the model can be extended to families with monthly net income of up to $15,000. The Committee has chosen to do this so that the support guidelines will apply to more cases.
2. Elimination of the Grids and Chart of Proportional Expenditures2
In lieu of the existing grids and chart set forth in Rules 1910.16-2 and 1910.16-3(b) respectively, the Committee proposes to adopt a basic child support schedule as the method for presenting the new economic estimates. The schedule is a step between grids and a chart, but has significant advantages over both in its accommodation of the proposed amendments to the guidelines. While the grids may be easier to use and reflect amounts for both child and spousal support, they have limited coverage of combined income ranges. Further expansion of these ranges would produce grids that are too unwieldy and cumbersome to work with, particularly in light of the extension of the guidelines to combined monthly net income of $15,000.
Although the chart of proportional expenditures is more comparable to the schedule, the schedule provides a smoother mechanism for eliminating the gaps in support obligations that would otherwise exist as the result of the economic studies indicating that the proportion of net income spent on children declines as income increases, even though the level of spending (i.e., actual dollars) on children increases as income increases. The schedule also has the advantage of eliminating two steps in the calculation of support pursuant to the formula in Rule 1910.16-4.
3. Incorporation of a Computed Allowance Minimum (CAM)3
The Committee proposes to incorporate a Computed Allowance Minimum (CAM) so that low-income obligors retain sufficient income to meet their basic needs and maintain the incentive to continue working so that support can be paid. The CAM is built into the child support schedule in Rule 1910.16-3 and adjusts the basic support obligation so that obligor's net income does not fall below $500 per month. Since the schedule does not reflect amounts of spousal support or APL, proposed Rule 1910.16-3(e)(1)(B) requires a similar adjustment in these cases so that the obligor's net income does not fall below $500 per month in these cases.
The 1997 Federal poverty guideline is $658 per month. Income levels set by other states range from as little as $430 in Colorado to as much as $710 in Vermont. The Committee chose $500 per month as the level necessary to maintain a minimum standard of living, and invite comment on whether this is too high or too low.
4. Multiple Families4
The Committee proposes to simplify the calculation of support obligations in multiple-family situations. The premise of existing Rule 1910.16-5(n) governing multiple child support obligations is that all of the party's children should have equal access to his or her resources. While this may be a laudable goal, the Rule has proven extremely difficult in practice because it requires separate calculations for each family before an order can be established for the children who are the subject of the support action. It does not result in an accurate order, therefore, unless all of the families are present at the same hearing. This is not feasible in many cases, particularly when one or more families reside in different states. Nor does it work well in cases where a pre-existing child support order for other children has already been entered by another county or state and the amount of the order does not conform to the amount which would be theoretically calculated under the Rule.
To address these problems, the Committee proposes to rescind Rule 1910.16-5(n) and to recommend what is commonly described as the ''first mortgage, second mortgage'' approach. This approach requires a deduction from the party's gross income for any child support being paid pursuant to a pre-existing court order entered on behalf of first born children who are not the subject of the support action. While it gives some priority to these children over later born children, many Committee members felt strongly that a parent should be required to meet his or her obligations to the first family before incurring new ones, and that children from a prior marriage or relationship should be protected from the adverse financial consequences of the parent's decision to remarry or to have more children. Essentially, the second family takes the obligor as they find him or her--with an existing obligation. While it is true that the children of this second family had no choice in the matter, the majority of Committee members felt that these children are entitled only to the standard of living established by their two parents, and not the standard of living that may have existed earlier in the first family.
For many of these same reasons, the Committee also proposes to rescind Rule 1910.16-5(o) relating to multiple spousal support obligations and to recommend deducting from gross income the amount of alimony, spousal support or alimony pendente lite being paid to a prior spouse. Under the existing Rule, second and subsequent spouses do not receive priority over any children, including children born outside of or after the marriage. The Rule provides no guidance on the priority between a first spouse and later children. In examining the stated rationale for (o)-- ''unlike children who have no choice about the family situation into which they were born, these later spouses had an opportunity to investigate a potential spouse before committing themselves'' --the Committee concluded that this rationale did not apply to the first spouse, whose ''investigation'' before the marriage would not have revealed these children. If, however, this spouse were to receive priority over later children then, for the same reasons, second and subsequent spouses should also receive priority over children born outside of or after their marriages as well.
The proposed approach reorders the priorities in multiple-family situations. First born children subject to a pre-existing order receive priority over later born children and later spouses. A spouse receives priority over later spouses and may receive priority over children born after the marriage. This approach, which is used by the majority of Income Shares states, eliminates the practical problems associated with multiple-family calculations under Rule 1910.16-5(n) and (o). Since it effectively transforms the calculation into an issue of net income, it appears in proposed Rule 1910.16-2(c)(2) and(3) relating to the calculation of net income.
5. Shared Custody5
Under the existing guidelines, there is no formula or procedure for deviating from the basic support guideline when custody is shared equally or the non-custodial parent has substantial partial custody. Rule 1910.16-5(m) provides that a non-custodial parent's support obligation should be reduced only if that parent spends ''an unusual amount of time with the children.'' There have been several decisions rejecting deviation even if the non-custodial parent spends almost 50% of the time with the children. See e.g., Anzalone v. Anzalone, 449 Pa. Super. 201, 673 A.2d 377 (1996)(40% of time spent with father was not an unusual amount of time justifying deviation absent evidence of additional expenditures incurred as a result of that time with the child); Dalton v. Dalton, 409 Pa. Super. 258, 597 A.2d 1192 (1991) (average of 43% of time was not sufficient to warrant deviation).
The general assumption, however, is that in a case of 50-50 shared custody, there would be some reduction in the support obligation. Courts and hearing officers struggling with this issue have adopted various approaches, some on an ad-hoc basis, with varying degrees of success. While there is no reliable survey of the various methods being used, anecdotal evidence suggests that the most common method for addressing support in shared custody cases is to use the offset method for split or divided custody cases under Rule 1910.16-5(h), which involves determining what each parent would owe if the other parent were the primary custodian and then subtracting the difference. A common additional step is to then divide that difference in half. While this has the beauty of simplicity, it often produces inequitable, sometimes absurd, results. For example, under the present guidelines, if obligor has net income of $4,300 per month and obligee has net income of $2,900 per month, obligor's support obligation for three children is $1,114 per month. If, however, the parties shared custody 50-50, and support was calculated under the divided custody rule, and then further divided in half, the support payment drops to $181 per month.
As one can see, an increase in the non-custodial parent's time by as little as 7% (i.e., from 43% to 50%) can result in a reduction in the support obligation by almost 85%. Although not all income scenarios provide an example as stark as this one, in virtually every case the support reduction under this method is out of proportion to the increase in custody time.
The Committee has frequently been asked to provide some kind of guidance for a uniform approach to shared custody cases. The issue, however, is far from simple. Around the country, only 28 states have addressed support obligations in the context of shared custody. Some states are silent (like Pennsylvania has been until now). The states that do address it approach it in many different ways. None of the methods are mathematically simple and some are extremely complex and confusing. All of them produce anomalous results under some income or custody scenarios.
With the assistance of Dr. Williams, the Committee spent considerable time and effort examining seven separate methods. The Committee felt strongly that if there was to be an adjustment to the support obligation for an unusual amount of time spent with the child--for example, beginning at 30% and up to 50% of the time--the method must recognize that the custodial parent continues to incur fixed costs for the child even when the child is with the other parent. The Committee also felt strongly that the method should not create a strong financial incentive for the non-custodial parent to seek shared custody. If there was to be an adjustment, it must be a gradual one that is rationally tied to the gradual increase in time spent with the child and one which does not produce the enormous reduction in support at some point in time. Unfortunately, none of the models met all of these objectives. Some were better at some income levels or income differentials between the parties while others were better under other circumstances. All of them, however, resulted in inconsistencies or anomalies under some scenarios.
The Committee rejected the option of concluding that there was no perfect solution and that the rules should remain unchanged. If at all possible, guidance should be provided for shared custody situations.
The last option, and the one selected for recommendation by the Committee, is not to permit any deviation from the basic support obligation based on the amount of time that each parent spends with the children. This option eliminates the strong financial incentive to seek shared custody. While we considered that this option may also have the opposite effect of discouraging a party from seeking shared custody, even when it may be in the best interests of the children, we concluded that there is little difference between the parent who seeks shared custody in order to reduce the support obligation and the parent who is unwilling to spend more time with the children unless it means a reduction in the support obligation (or the parent who is reluctant to let the children spend more time with the other parent if it means a reduction in the support obligation). Financial considerations should not be relevant to a parent's decision to spend more or less time with the children. The proposed approach accomplishes this by removing the financial incentive altogether so that it doesn't factor either way into this decision.
Even in the vast majority of cases in which parties are not motivated by financial incentives, the Committee considered that the amount of time spent with the non-custodial parent, even if substantial, results in little savings to the custodial parent, who continues to incur fixed expenses relating to the children-- e.g., housing, furniture, and school-related expenses--even when the children are spending time with the other parent. Conversely, even though the non-custodial parent may incur additional costs as the result of more time spent with the children, many of these costs merely duplicate the costs already being incurred by the custodial parent.
In reaching a determination that there will be no deviation from the basic support obligation, the Committee had to determine who should be the obligor for purposes of support in a 50-50 shared custody situation. The Committee recommends that the obligor be the parent with the higher income so that the total available income is more evenly distributed between the two households. If the parties' incomes are identical, there should be no basic support obligation except in unusual circumstances. In these cases, however, either party may still seek contribution from the other party for any additional expenses incurred on behalf of the children which are typically added to the basic support obligation--e.g., health insurance premiums, child care, private tuition and other expenses that are not built into the basic support amounts set forth in the schedule.
This is a very short synopsis of a very lengthy, difficult and complex analysis. We do not expect this recommendation to be received with unanimous acceptance, but we believe it to be better than the present void. We recognize the possibility that there may be better solutions. The Committee invites comment from the bench and bar and all interested persons. Specific suggestions, formulas, and mathematical models are welcome. Expressions of general dissatisfaction, without more, are also welcome but are not helpful to an ultimate resolution of the problem.
6. Calculation of the Presumptive Minimum Amount of Child Support in High Income Cases6
Under the existing guidelines, the presumptive minimum amount of the child support obligation in high income cases is calculated as if the parties' only had $10,000 combined income. The parties' percentage shares of the obligation are also based on this theoretical income. The Committee proposes to alter the calculation so that the parties' percentage shares are calculated using their actual income rather than theoretical income.
There are several problems with calculating the parties' percentage shares using theoretical rather than actual combined income. For example, in the second illustration which appears in existing Rule 1910.16-5(a), where the obligor and obligee have monthly net incomes of $15,000 and $3,000 respectively, the presumptive minimum amount of support of $2,410 for three children is calculated using only $8,000 of obligor's income and $2,000 of obligee's income. The obligor's obligation of $1,948 is calculated as if his or her percentage share is 80% of $10,000 when, in reality, his or her percentage share is 83% of $18,000. This is economically unfair to the obligee and the three children, and is remedied by using actual combined income to determine the parties' percentage shares.
Another problem with using theoretical income is that the calculation uses only 53% of obligor's actual income ($8,000 of $15,000) while using 66% of obligee's monthly income ($2,000 of $3,000). This is also unfair to the obligee and the three children, and would be corrected by using all of the parties' income to determine their respective shares.
A third problem is that the income limitation of $2,000 per month for obligee results in the same presumptive amount of support for a family in which obligee earns only $2,000 as it does for a family in which the obligee earns substantially more than that, all other things being equal. This is unfair to the obligor and would be remedied as well by using the parties' actual combined income. If, for example, in the above illustration the obligee earned $9,000 rather than only $2,000, the obligor's percentage share would be reduced to 62% of $2,410, which effectively reduces the obligor's obligation to $1,494.
7. Calculation of Spousal Support7
Pursuant to the existing guidelines formula in Rule 1910.16-4, the presumptively correct amount of spousal support or APL is calculated as a straight percentage of the net difference between the parties' incomes (after considering child support). If no children are involved, the percentage is 40%; if children are involved, the percentage is 30%. The Committee has been asked repeatedly to clarify whether this formula is intended to apply to all spousal support and APL cases or whether, in cases where the parties' combined net income exceeds $15,000 per month, the court may disregard the formula and use a reasonable needs analysis like the one used in Melzer v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984) for child support. The issue has received even greater attention recently in light of Karp v. Karp, __ Pa. Super. ____, 686 A.2d 1325 (1996), which analyzed the needs and lifestyle of the parties in fashioning an appropriate APL and child support order, and Terpak v. Terpak, __ Pa. Super. ____, 697 A.2d 1006 (1997), which implicitly approved York County's use of the formula for calculating a spousal support obligation even though the parties' combined income exceeded the guideline amount, and held that a lack of need on the part of the obligee was not a basis for deviation (Terpak did not address the obligor's needs because it was not an issue raised in the case).
Neither the existing rules nor the case law provide any authority for going outside of the guidelines formula and using Melzer to calculate a spousal support or APL obligation. The Committee considered, however, whether the rules should permit this in cases where the parties' combined income exceeds $15,000 per month. Ultimately, however, we concluded that drawing a line at this income level, or any income level, would be purely arbitrary. The only reason that a court must shift from the guidelines to Melzer in child support cases is because the economic studies underlying the Income Shares model for child support do not, and cannot, consider intact households with combined income beyond $12,600 per month. There are no statistically significant numbers available for these households to support an extension of the model beyond this income level (inflation allows extension only to $15,000). In the absence of any comparable model for spousal support based on studies of spousal-related spending in intact households, there is no economic or theoretical basis to warrant the same shift from the guidelines to Melzer in spousal support cases when the parties' combined income reaches a certain level.
Of course, it is precisely the lack of any theoretical model for spousal support that has prompted some members of the bench and bar to question the fairness of using a formula which calculates the support obligation as a straight percentage of income. This raises a very different issue altogether, however,--namely, whether the formula should be used at all in any spousal support case. It is not just an issue which affects only high income cases because if, as the theory goes, a flat percentage of income bears no relationship to the parties' actual needs and circumstances, then it would be just as unfair to award it in lower and middle income cases as well. A family's needs and financial resources should be given the same consideration by the court regardless of whether that family has combined income of $5,000 per month or $15,000 per month.
The Committee concluded that the formula itself is not inherently unfair because it is used only to establish the presumptively correct amount of spousal support or APL. Proposed Rule 1910.16-1(d) clearly states that the support guidelines create a rebuttable presumption only and must be applied taking into consideration the special needs and obligations of the parties and the deviation factors set forth in Rule 1910.16-5. Any unfairness, therefore, results from the failure to consider unusual factors in arriving at an appropriate amount of support, and not from the use of the formula in establishing a presumptive amount of support.
Although the presumption is always susceptible to becoming the rule itself when mechanically applied without regard to the permitted deviations, this is true of any presumption and merely reflects an erroneous application of the support guidelines. When they are properly applied, they essentially provide a Melzer-type model for spousal support and APL. The Committee is not aware of a better model that would not involve an elaborate and complicated restructuring of the support guidelines. The alternative--no formula at all--does not address the existing problem in larger counties which are confronted daily with a large number of these cases. While there appears to be no better solution, the Committee invites comment on ways to improve the guidelines so that there is more meaningful deviation from the presumptive formula in spousal support and APL cases.
The Committee recommends that courts be permitted to consider the length of the marriage as a factor for deviation in spousal support or APL cases. The purpose of this provision is to prevent the perceived unfairness that arises in a short-term marriage when the obligor is required to pay support over a substantially longer period of time than the parties were married. The Committee considered more specific language which would have limited the duration of the support order to a period of one year or less in cases where the parties had been married for less than two years. We ultimately rejected this language as arbitrary and somewhat unrealistic in light of the fact that some divorce proceedings last much longer than two years. We invite comment on this issue as well.
8. Child Care Expenses8
Current Rule 1910.16-5(i) provides for equal sharing of child care expenses. The Committee proposes to adopt proportionate sharing based on the parties' net incomes so that child care expenses are divided in the same manner as other expenses which are typically added to the basic support obligation. The proposed Rule also reflects the availability of the Federal child care tax credit which can be claimed by the custodial parent. This credit essentially reduces the total expenses subject to allocation. For tax purposes, the actual credit can range anywhere from 20 to 30 percent depending on the custodial parent's income. For support purposes, the Committee has chosen to simplify the calculation by assuming an average tax credit of 25 percent. Although the court may always look at the actual tax rate that applies in a particular case, it will have very little impact on the overall support award.
The explanatory comment also sets forth the limitations on the use of this credit. First, the credit applies only to the first $2,400 per year for one child or $4,800 per year for two or more children. Thus, only child care expenses incurred up to these amounts are reduced by 25%. The remaining child care expenses, if any, are allocated between the parties without adjustment.
Since the tax credit may be taken only against taxes owed, it cannot be used when the custodial parent does not incur sufficient tax liability to fully realize the credit. For this reason, the proposed Rule does not permit any adjustment to child care expenses if the custodial parent's gross income falls below the income thresholds set forth in the Rule.
9. Health Insurance Premiums9
Current Rule 1910.16-5(b) permits a deduction from gross income of the portion of health insurance premiums benefitting the other party or the children. The Rule provides little incentive for either party to obtain or maintain health insurance coverage for the benefit of the other family members. If the obligor is paying for the insurance, it reduces the basic support award only marginally. If obligee is paying for the insurance, he or she receives virtually no financial credit at all in terms of a higher support award. Given the importance of health insurance coverage, the Committee proposes to maximize the value for the party paying the premium by treating it as an additional expense subject to allocation between the parties in proportion to their net incomes. This more accurately reflects the costs of carrying such insurance and also ensures that the obligee receives some financial credit for carrying the insurance.
The proposed Rule also permits allocation of the entire premium, including the party's portion of the premium, when the insurance benefits the other party or the children. This provides further incentive for parties to obtain health insurance for the benefit of the other party and the children.
10. Unreimbursed Medical Expenses10
The Committee proposes several changes to the treatment of unreimbursed medical expenses. Since the first $250 per year per child of these expenses is already built into the basic child support obligation reflected in the schedule, only medical expenses which exceed this amount are subject to allocation between the parties as an additional expense to be added to the basic support obligation. The proposed Rule reflects this distinction.
The Committee has also chosen to draw this same distinction with respect to spousal support so that the obligee-spouse is expected to meet the first $250 per year of his or her own unreimbursed expenses before seeking contribution from the obligor for any additional expenses.
To reduce the number of contempt cases involving unreimbursed medical expenses, the Committee proposes further to distinguish between those expenses which are predictable and recurring and those which are not. When the expenses are predictable and recurring, the court may establish a monthly amount for those expenses and add it to the basic support obligation. This permits the monthly amount to be collected more easily through wage attachment. When the expenses are not predictable or recurring, and thus not conducive to routine wage attachment, the court may nonetheless order the defendant to pay his or her percentage share of these expenses.
Finally, the Committee also proposes to amend the definition of ''medical expenses'' to include insurance co-payments and deductibles, and to include orthodontia and exclude chiropractic services.
HON. MAX BAER,
Chairperson
Domestic Relations Procedural
Rules Committee
[Pa.B. Doc. No. 98-370. Filed for public inspection March 6, 1998, 9:00 a.m.] _______
1 See Proposed Rule 1910.16-3.
2 See Proposed Rule 1910.16-3.
3 See Proposed Rules 1910.16-2(e)(1) and 1910.16-3.
4 See Proposed Rule 1910.16-2(c)(2)--(3).
5 See Proposed Rules 1910.16-4(b) and 1910.16-5(c).
6 See Proposed Rule 1910.16-2(e)(2).
7 See Proposed Rules 1910.16-1(d), 1910.16-3 (formula) and 1910.16-5(b)(8) (deviation).
8 See Proposed Rule 1910.16-6(a).
9 See Proposed Rule 1910.16-6(b).
10 See Proposed Rule 1910.16-6(c).
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