BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          AB 2393 (Davis)
          As Amended March 29, 2012
          Hearing Date: June 12, 2012
          Fiscal: Yes
          Urgency: No
          NR   
                    

                                        SUBJECT
                                           
                          Family Law: Child Support Formula

                                      DESCRIPTION  

          Existing law establishes statewide uniform guidelines for 
          calculating court-ordered child support. These guidelines 
          provide that if an obligor's net disposable monthly income is 
          less than $1,000, there is a rebuttable presumption that the 
          obligor is entitled to a low-income adjustment that reduces the 
          child support amount. 

          This bill would increase the net disposable income threshold to 
          $1,500 per month.  This bill would require the Judicial Council, 
          on March 1, 2013, and annually thereafter, to determine the 
          adjustment amount based on the change in the annual California 
          Consumer Price Index, as specified.

                                      BACKGROUND  

          Existing law provides that parents of a minor child are 
          responsible for supporting the child. The statewide uniform 
          guidelines for calculating child support provide that if an 
          obligor's net disposable monthly income is less than $1,000, 
          there is a rebuttable presumption that the obligor is entitled 
          to an adjustment that would reduce the child support to be paid 
          thereby increasing the obligor's ability to remain compliant 
          with the order. 

          Federal and state laws require the Judicial Council to review 
          the statewide uniform guidelines at least every four years and 
          issue a report (hereinafter "Report") with its recommendations 
                                                                (more)



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          to the Legislature.  (Judicial Council, Review of Statewide 
          Uniform Child Support Guideline, Nov. 2010, < 
          http://www.courts.ca.gov/documents /20110429iteme.pdf> Ưas of 
          June 6, 2012].)  The primary purpose of the Report is to ensure 
          that the guideline and resulting child support amounts are 
          appropriate.  The findings of the 2010 Report indicate that the 
          low-income adjustment (LIA) may be a barrier to compliance with 
          child support orders.  The Report indicates that the cost of 
          living has increased nearly 50 percent since 1994, the year the 
          low income adjustment was established, yet the adjustment 
          threshold has not changed.  In April of 2011, the Department of 
          Child Support Services and the Administrative Office of the 
          Courts convened a workgroup to discuss and evaluate the Report, 
          and confirmed that the low-income adjustment under the 
          California guideline is inadequate. 
           
          This bill would adopt recommendations from the Judicial 
          Council's Report and increase the low income adjustment from 
          $1,000 net disposable income per month to $1,500 and make the 
          adjustment subject to an annual adjustment based on inflation. 

                                CHANGES TO EXISTING LAW
           
           Existing law  establishes a uniform statewide guideline for 
          calculating child support.  This mathematical formula is based 
          on the income of both parents and the amount of time they each 
          spend with the child.  (Fam. Code Sec. 4055.)  

           Existing law  creates a rebuttable presumption that an obligor 
          with net disposable income of less than $1,000 a month is 
          entitled to a low-income adjustment to his or her child support 
          obligation.  This presumption may be rebutted by evidence 
          showing that application of the adjustment would be unjust or 
          inappropriate in the particular case.  (Fam. Code Sec. 
          4055(b)(7).)

           Existing law  requires the Judicial Council to periodically 
          review the guideline to report to the Legislature appropriate 
          revisions, as specified.  (Fam. Code Sec. 4054.)
           
          This bill  would increase the low-income adjustment in the child 
          support guideline from less than $1,000 net disposable income 
          per month to less than $1,500 net disposable income per month. 

           This bill  would require the Judicial Council, on March 1, 2013 
          and annually thereafter, to update the low-income adjustment 
                                                                      



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          based on the California Consumer Price Index, as specified.

                                        COMMENT
           
           1.Stated need for the bill
           
          In support of this bill the author writes: 

             The current formula used by the California Department of 
             Child Support Services that determines child support orders 
             is outdated.  In an effort to improve compliance for 
             low-income parents that are obligated to pay child support, a 
             work group including the DCSS and the Judicial Council of 
             California's Administrative Office of the Courts, concluded 
             that a revision to the low-income adjustment threshold of 
             $1,000 needed to be increased to $1,500.
          The sponsor of this bill, the Western Center on Law & Poverty 
          writes: 

             According the California Department of Child Support 
             Services, consistent payment of support by low-income 
             obligors is better met if the order is "right-sized."  A 
             right-sized order would enable obligors to successfully meet 
             their obligations and provide more consistent child support 
             payments, improving the income stream for families, promoting 
             family self-sufficiency and improving overall wellbeing of 
             children living in single-parent households. 

           2.The Legislature is responsible for revising the uniform child 
            support guideline
             
          Existing law authorizes the Legislature to adjust the uniform 
          child support guideline.  The Judicial Council is required to 
          periodically review the guideline and report to the Legislature 
          appropriate revisions.  This bill, in addition to raising the 
          low-income adjustment threshold (LIA) from $1,000 to $1,500, 
          would have the Judicial Council annually determine the 
          appropriate adjustment to the LIA based on the annual California 
          Consumer Price Index (CPI). Thus, this bill represents a 
          departure from the typical procedure in which only the 
          Legislature is authorized to revise the state support 
          guidelines.  Regarding the annual LIA adjustment, the Judicial 
          Council writes: 

            The current $1,000 amount dates to 1993. If updated for 
            inflation, it would be $1,576 today, so an increase to $1,500 
                                                                      



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            is an appropriate way to bring the level up to current 
            dollars. In addition, the requirement that the adjustment be 
            revised each year based on the California CPI will prevent it 
            from becoming out of date in the future. Making the adjustment 
            more accurately reflect the cost of living in California will 
            ensure that low-income child support obligors have orders that 
            will not leave them unable to sustain their basic needs and 
            will therefore be more likely to continue working and 
            complying with the court's orders.

          Although it would allow increases without the full consideration 
          of the Legislature,  an annual adjustment based on the cost of 
          living and inflation could keep the LIA current and arguably 
          result in more reasonable support obligations for low-income 
          obligors.  Research indicates that reasonable obligations 
          promote consistent support payments to custodial parents.  (See 
          Comment 3.)  In addition, authorizing the Judicial Council to 
          make this determination maybe appropriate considering that it is 
          the entity entrusted with reporting on support guidelines, and 
          therefore familiar with the subject area.  

          However, because the Legislature is responsible for adjusting 
          the support guidelines, the committee should consider whether it 
          is appropriate to delegate this authority or allow automatic 
          adjustments.  Inevitably, an upward adjustment of the LIA will 
          result in lower support obligations for many families.  That 
          lower support obligations will result in more consistent 
          payments has yet to be proven on a state-wide basis.  Therefore, 
          until the benefits of an annual LIA adjustment are shown, the 
          Legislature may wish to maintain control over support guideline 
          revisions.  Amending this bill to include a five-year sunset 
          would allow the Legislature to consider the Judicial Council's 
          next Review of Statewide Uniform Child Support Guideline in 2015 
          and an additional three years of state-wide data in in 
          evaluating the effectiveness of the provisions of the bill.   

              Suggested amendment:
           
             Add a five-year sunset date to the proposed increase to the 
             LIA and the annual adjustment to the LIA based on the CPI. 
             
          3.Updating the low-income adjustment 
           
          The Judicial Council reports that the California guideline 
          amounts for low-income obligors are high compared to other 
          states, and that California's income presumption policy (which 
                                                                      



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          presumes that all obligors who do not provide employment 
          information are employed for 40 hours per week at minimum wage), 
          exacerbates the guideline problems for low-income parents 
          because the obligor's income is often presumed to be more than 
          it actually is.  Relative to other states, the Judicial Council 
          and advocates for low-income families agree that California's 
          low-income adjustment is inadequate. (Judicial Council, Review 
          of Statewide Uniform Child Support Guideline, Nov. 2010,         
              < http://www.courts.ca.gov /documents/20110429iteme.pdf> Ưas 
          of June 6, 2012].)  Most state guidelines consider a variety of 
          factors in their income attribution provision.  For example, the 
          Alabama Rules of Judicial Administration provide: 

             If the court finds that either parent is voluntarily 
             unemployed or underemployed, it shall estimate the income 
             that parent would otherwise have and shall impute to that 
             parent that income; the court shall calculate child support 
             based on that parent's imputed income. In determining the 
             amount of income to be imputed to a parent who is unemployed 
             or underemployed, the court should determine the employment 
             potential and probable earning level of that parent, based on 
             that parent's recent work history, education, and 
             occupational qualifications, and on the prevailing job 
             opportunities and earning levels in the community. The court 
             may take into account the presence of a young or physically 
             or mentally disabled child necessitating the parent's need to 
             stay in the home and therefore the inability to work. (Ala. 
             Rules Jud. Admin., Rule 32(B)(5).)

          According to the Report the "California guideline does not 
          specifically mention any of these considerations, a pattern 
          replicated in few other states." (Judicial Council Report at p. 
          77.) Failing to consider a variety of factors may result in 
          support orders which are unrealistic for obligors. For example, 
          in California, an obligor earning minimum wage for 35 hours per 
          week would not qualify for the current low-income adjustment.  
          After payment of child support at the unadjusted income amount, 
          the obligor would likely be left with insufficient funds on 
          which to live.  Research further indicates that if support 
          obligations are too high for low-income obligors, severe 
          consequences may result.   Obligors unable to meet support 
          responsibilities may have a reduced incentive to work, or cease 
          working in the mainstream economy.  They may also be unable to 
          make child support payments and have higher arrearages balances. 
           These consequences may also lead to strained parent-child 
          relationships.  
                                                                      



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          Raising the low-income adjustment in the statewide guideline 
          will arguably enable low-income obligors to make more consistent 
          child support payments, thereby allowing custodial parents to 
          better care for children.  The Judicial Council, in support, 
          writes that AB 2393 "will lead to more appropriate and 
          enforceable child support orders." 


           Support  :  Coalition of California Welfare Rights Organizations, 
          Inc.; The Executive Committee of the Family Law Section of the 
          State Bar (FLEXCOM); Feeding America San Diego; Judicial Council 
          of California

           Opposition  :  None Known

                                       HISTORY
           
           Source  :  Western Center on Law & Poverty

           Related Pending Legislation  :  None Known

           Prior Legislation  :

          SB 541 (Hart, Chapter 1156 Statutes of 1993) adjusted the 
          statewide uniform guideline in high-income cases. 

          AB 923 (Speier, Chapter 906 Statutes of 1994) gave courts 
          discretion to lower the amount of child support to be paid in 
          all cases where the net disposable income per month of the 
          obligor is less than $1000 and the court finds that a low income 
          adjustment should be made.

           Prior Vote  :

          Assembly Floor (Ayes 73, Noes 0)
          Assembly Appropriations Committee (Ayes 17, Noes 0)
          Assembly Judiciary Committee (Ayes 10, Noes 0)

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