BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2393 (Davis) - Child Support Formula.
Amended: June 18, 2012 Policy Vote: Judiciary 4-0
Urgency: No Mandate: No
Hearing Date: July 2, 2012 Consultant: Jacqueline
Wong-Hernandez
This bill may meet the criteria for referral to the Suspense
File.
Bill Summary: AB 2393 increases the low-income adjustment (LIA)
in the child support guideline from less than $1,000 net
disposable income per month to less than $1,500 disposable
income per month, until January 1, 2018, and provides for annual
living increases to the adjustment amount, as specified.
Fiscal Impact: This bill will likely result in state revenue
loss in some cases and increased revenue in others, as
determined by the behavior of affected individuals.
Increased number of child support payments: To the extent
that this bill increases the number of child support
payments made, it will increase revenue to the state when
the payee is a CalWORKs participant. Increasing the number
of child support payments for which the state is involved
will also help the state's Department of Child Support
Services (DCSS) meet federal performance requirements and
avoid penalties.
Decreased amount of child support payments: To the extent
that this bill decreases the amount of support paid to
individual CalWORKs participants, there will be a revenue
loss to the state.
Background: Existing law provides that parents of a minor child
are responsible for supporting the child. Existing law also
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.)
The statewide uniform guidelines for calculating child support
provide that if an obligor's net disposable monthly income is
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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. 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.)
Federal and state laws require the Judicial Council to review
the statewide uniform guidelines at least every four years and
issue a report with its recommendations to the Legislature. The
primary purpose of the report is to ensure that the guideline
and resulting child support amounts are appropriate. The
Judicial Council's 2010 report findings indicate that the LIA
may be a barrier to compliance with child support orders. The
report further indicates that the cost of living has increased
nearly 50% since 1994 - the year the LIA was established -
yet the adjustment threshold has not changed.
In April of 2011, the DCSS and the Administrative Office of the
Courts (which is the staff to the Judicial Council) convened a
workgroup to discuss and evaluate the report, and agreed that
the current LIA of $1,000 under the California guideline is
inadequate.
Existing law also establishes the CalWORKs program, a welfare
program that gives cash aid and services to eligible needy
California families. The program serves all 58 counties in the
state and is operated locally by county welfare departments.
Families that apply and qualify for ongoing assistance receive
money each month to help pay for housing, food and other
necessary expenses. The amount of a family's monthly assistance
payment depends on a number of factors, including family income,
the numbers of eligible family members, and any special needs.
Existing law allows the state to collect child support on behalf
of a custodial parent enrolled in CalWORKs to offset the aid
given to the family. A CalWORKs child support case is opened
when a custodial parent applies for and receives benefits. The
Department of Social Services (DSS) informs the DCSS when
CalWORKs benefits are granted, and a child support case is
opened by the DCSS. As a condition of receiving CalWORKs
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benefits, the custodial party automatically assigns all rights
to child, spousal, and medical support to the county up to the
amount of aid paid. This includes all current and past-due
support and continues as long as a family is receiving aid. Any
current child support payments which exceed the amount of
CalWORKs benefits paid by the state is sent to the custodial
party. In cases when monthly child support collected does not
exceed CalWORKs aid but is greater than $50, the custodial party
is given a $50 "pass-through" portion of that child support.
Proposed Law: AB 2393 would increase the LIA 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 LIA based on the
California Consumer Price Index, as specified. The provisions of
this bill sunset on January 1, 2018.
Staff Comments: The LIA decreases the amount of child support
that an obligor is ordered to pay under the standard state
formula. This bill raises the disposable income ceiling for LIA
eligibility from $1,000 per month to $1,500 per month; in so
doing, the LIA would capture a larger number of obligors and
reduce the amount of child support they are required to pay.
This bill immediately results in reduced child support payments
for obligors whose monthly disposable income is $1,500 or less.
It also locks in a continued annual adjustment until January 1,
2018.
The impact to state funds primarily occurs when child support
payments are made to a custodial parent who receives CalWORKs
benefits. As a condition of receiving CalWORKs benefits, the
custodial parent automatically assigns all rights to child
support to the county up to the amount of aid paid. The
custodial parent is given a $50 "pass-through" of child support
for each month support in excess of $50 is collected, and the
state receives the rest of the child support to partially offset
the CalWORKs benefits it pays to the custodial parent.
This bill may result in an increased number of payments. The
DCSS and the Judicial Council believe that the LIA income
ceiling is currently set too low, and that obligors are unable
to pay the amount of court-ordered child support. Those agencies
have opined that adjusting the LIA will make child support
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orders "right-sized," and will increase obligors' ability and
willingness to pay child support. If this bill results in more
payments made to CalWORKs participants, the total increased
child support collected (and portion reimbursed to the state)
may be more than the potential state revenue lost from reducing
the amount paid each month.
The DCSS projects that once fully implemented, increased
collections from an overall improvement in compliance will
offset losses from a higher disposable income ceiling for the
LIA. The DCSS predicts that participation would increase from
37.6% to 46.5%, and the net increase in collections for the
first year would be $4.7 million ($1.9 million General Fund).*
For each instance that this bill applies the adjusted LIA to an
obligor paying child support to a CalWORKs participant, the
amount of support collected by the state will be reduced. This
is a direct revenue loss to the state; it reduces the
reimbursement level for benefits the state pays. For each
instance in which the LIA results in an additional obligor
making a child support payment to a CalWORKs participant, which
he or she would not have made without the LIA adjustment, there
is a direct revenue gain to the state. Both results will occur,
on a case-by-case basis. The fiscal impact to the state will be
determined by the extent to which the number of child support
payments increases under the expanded LIA.
* The DCSS projection assumes the support order reduction would
impact 25% of low-income cases with a "currently aided" status;
approximately 75,375 cases. Based on sample guideline
calculations made by DCSS, the average reduction in child
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support due for obligors with net disposable incomes of $1,499
or less would be $54 per month ($648 annually). Based on current
experience, the GF share of recoupment (which is for
CalWORKs-participant cases) is assumed to be 45%.