The cost-of-living-adjustment or COLA has been a significant piece of the economic structure in the United States since 1913 when the Consumer Price Index (CPI) was introduced. According to The Bureau of Labor Statistics (2014), the index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The COLA is important because this measurement helps determine any increases that should be made to particular entitlements and awards paid by the federal government. COLAs are generally equal to the percentage increase in the CPI for urban wage earners and clerical workers (CPI-W) for a specific period. This largely applies to Social Security and Supplemental Security Income (SSI) benefits and determine how significant or insignificant the COLA will be to monthly supplements. Unfortunately, for some, based on who is negatively affected, the COLA is also used to determine how much monthly child support payments should be increased every two years. For the record, New York, Minnesota, and New Jersey are the only states that mandate that the COLA be applied to child support payments. On the other hand, some judges include COLAs in their orders when setting child support, (NOLA). Either way, this more than guarantees that the set child support amount being paid by the non-residential parent will increase over the course of the child’s life.
Some may view the COLA increase in child support payments as quite insignificant as the last CPI increase was a meager 1.6% between 2015 and 2016 (estimate). The insignificant theory may ring some truth if that number remained consistently under two percent. However, based on the economical past of the United States, that low percentage is far from a protected and concrete CPI. Take for instance that in the years of 1990 and 2008, the COLA was calculated at above five percent. If a monthly child support payment was $200, the amount paid annually would increase to approximately $535. This is money paid out by the non-custodial parent who is not guaranteed a pay increase based on CPI or COLA. Of course, the COLA may not be applied to a child support order causing an automatic increase if the COLA was zero percent for two consecutive years. However, that has only occurred once since 1975 during 2009 and 2010, (Social Security Administration).
In states that automatically increase child support payment amounts, the money owed due to COLA should also be considered in the bottom line of child support debt owed. New Jersey Judiciary (2016), explains that the COLA shall be based on the average change in the CPI for the metropolitan statistical areas that encompass New Jersey. It is important to determine just how significant the COLA can be when being deducted from a non-custodial parent’s earnings over a period of years. Based on weekly earnings of $1,288 or $5,152 (before taxes) the NJ child support calculator determined that a non-custodial parent would pay approximately $233 weekly or $892 monthly to a custodial parent with zero income. Based on CPI percentages from 2009 to 2016 (2016 is an estimate), the total increase would equal approximately $85.08. This means that the average COLA increase would be roughly $21.27 annually.
Some could argue that $20 (give or take) more in child support is a trivial amount and call for the dismissal of any resistance to allowing an automatic COLA, but further exploration shows just how weighty these adjustments can be to a non-custodial parent. Even though child support is supposed to end after a child reaches adulthood (18 years of age by most accounts), situations where the child is pursuing higher education, a parent owes arrears, or a parent is providing for a child with disabilities, situation can push the obligation period way beyond the legal age of majority. To put this into perspective, a non-custodial parent can expect to pay an additional $1,021 per year, $18,371 over 18 years, $21,440 over 21 years, and more than $25,000 over 25 years. The COLA in NJ could mean approximately $27,542.72 in extra income for the custodial parent based on an average CPI of 2.3%. This is tax free and accountability free money that can land a non-custodial parent on the ‘deadbeat’ roundup list if mandatory increased amount should go unpaid.
New Jersey is arguably the most notorious state when it applies to hunting and arresting alleged ‘deadbeats’. The latest police roundup occurred in October of 2015 when, according to Jessica Remo of NJ.com (2015), the Union County Sheriff’s department conduced a child support sweep and arrested 15 people for failure to pay child support arrears. The total arrears owed by those arrested exceeded $400,000. An additional seven people surrendered to the Sheriff’s office for arrears totaling $171,792.98, (Remus, 2015). That’s quite a huge amount of child support debt to owe with a combination of current payments due, interest, late fees, court costs, and whatever else the judges and legislators deem appropriate to include in the quest of punishing parents who are allegedly delinquent in child support payments. Considering the serious repercussions parents (some non-parents) face when dealing with unpaid child support, mandatory COLAs must seriously be studied in relation to how important removing this mandate from child support payments could be to struggling people.
Moving on to Minnesota, this state mandates that the COLA be added to child support orders every two years. According to the Minnesota Department of Human Services or DHS, Minnesota law requires full-service child support and spousal maintenance orders include a COLA provision. Not only is the non-custodial parent required to pay an increased amount of child support automatically, divorced people are required to pay even more. In order to approximate the amount of child support a parent would be forced to pay based on the CPI percentages, consider the base child support amount which begins at $974 per month. This amount is based on the average weekly wage of all workers in the United States within the third quarter of 2015 who were covered by unemployment insurance and unemployment compensation for federal employees, (BLS, 2015). The approximate child support increase based on the average CPI of 2.3 percent, a parent paying an increase of $22 per month. Again, $22 may not seem to be a huge amount but based on the amount of child support debt owed on average and how much is actually collected, $22 may as well be $22,000 for wage earners trying to provide for their basic individual needs.
The Minnesota DHS reported that cumulative past due support or arrears owed as of September 30, 2015 was about $1.6 billion. On the other hand, the amount paid towards child support debt equaled $140 million, (Minnesota DHS, 2015). This lack of significate arrearage collections could be due to the over $2,030 needed to pay for basic living expenses coupled with the slow recession recovery that the state has admitted to experiencing over the past few years. Either barrier can cause quite a catastrophic life event when COLA obligations on forced upon these average to low-wage earners. The difference between the court ordered payment amount and the payment amount with the COLA over the course of 12 months is about $1,115. When that amount is multiplied over the course of 18 years, the amount balloons to an additional $20,070 of untaxed income paid to the custodial parent
Again, stretching the years from 18 to 25 is a more familiar scenario based on the amount of child support debt is owed by parents with valid child support orders in the state. In Minnesota, about 81% of all child support cases have debt (Minnesota DHS, 2015). The years that a parent is paying child support debt automatically increases as long as there is a balance due on the arrears account. Between interest on delinquent payments (currently 4% per annum), late fees, court costs, fines, penalties, etc., an automatic COLA can create a significant burden on parents who may not have piles of cash laying around to be given to anyone (custodial parent included) with no accountability of how the money is being spent.
New York parents fare no different than the other two states as it relates to being forced to pay more money no matter what financial crisis a parent might be facing because of the automatic COLA. For parents that do not have open child support cases through the Temporary Assistance for Needy Families or TANF (or other public programs), a notice is sent to both parents when a case becomes eligible for a COLA. For parents that do not have open child support cases through TANF (and related programs) a notice is sent to both parents when a case is eligible for a COLA. This gives both parties an appeal opportunity in the decision to increase the child support payment. Low-income parents receiving public assistance, as with many other public assistance programs, are ignored during the notification process.
According to the New York State Department of Child Support Enforcement (NYS DCSE) for cases where the custodial parent or child is on temporary or safety net assistance, the COLA is automatically made when the case becomes eligible. For parents earning a weekly wage of $1,463, this increase could prove detrimental to his or her basic way of life. The average monthly payment for a parent earning the almost $5,900 monthly is an estimated $1,006.50. Based on the previous CPI formulas, a parent can expect child support payments to increase from $217,260 to $239,156 over the course of 18 years. This, of course, is based on a child support payment paid by one parent, with no additional fees or costs over the childhood years. This is the amount that one parent will pay over 18 years which is just shy of the amount that a middle-income married couple pays during that same amount of time. According to Melanie Hicken of CNNMoney (2014), it will cost a middle-income couple just over $245,000 to raise a child born in 2013 to the age of 18. This is a definite violation to equal protects under the law as the non-custodial parent is forced to pay what two people are paying minus the extortion tactics by the government.
This amount can vary depending on several factors including income earned, location, and expenses, however, the amount is still based on a middle income couple. Low-income rural families will spend an estimated $145,000 raising their child to 19, (Hicken, 2014). The author does not mention the COLA as a reason for the cost but does point out that overall costs have grown more slowly in recent years, thanks to low inflation, (Hicken, 2015-quoted from Economist, Mark Lino). That slow inflation packs quite a extensive punch for non-custodial parents in NY who are mandated to pay a COLA every two years based on NY state guidelines. The difference between the basic 18 year payment and the payment increased by a COLA is approximately $22,000. This increase occurs automatically and does not consider barriers such as unemployment, underemployment, illness, homelessness, or becoming disabled as a contributing factor to how much one person can afford. The notion that non-custodial parent spends roughly the same amount as a couple spends on raising a child seems quite unreasonable considering that the non-custodial parent must pay or face extremely harsh penalties. Meanwhile, there are no penalties if a couple doesn’t spend the same amount or even less on the same number of children. This is another violation of equal protections. Couples are not held under the same scrutiny, judgmental laws, and guidelines forced upon non-custodial parents and get he or she is held in bondage until the government decides to hand over the key. During this time, the custodial parent is free with no financial accountability for the payments and is not forced to earn money to jointly provide for the child.
The double standard is one of many problems facing New Yok and parents nationwide and the mandatory COLA must be banished from increasing child support payments. One person should not be forced to pay more for caring for a child while the other person is permitted to do nothing. If the COLA is going to cause even more financial hardships on non-custodial parents, the law that requires an increase should be repealed immediately. If the cost-of- living increases, both parents have a responsibility to cover all expenses just as it occurs in two-parent households. Thousands of dollars in virtually ‘free’ money can be used to purchase many items, fund expensive vacations, or adopt a new baby. According to The Independence Adoption Center, attorney adoptions of new born babies generally run between $20,000 and $30,000. The unaccounted for, untaxed money could be used to adopt a child and serving the unsuspecting parent a child support complaint. Thus, the cycle continues. This concept may seem a little farfetched but as a way to collect and spend free money but because there are no little to no restrictions on custodial parents applying for child support and no guidelines on how the money, once received, is spent, the possibilities are endless as well as problematic. The COLA being used to automatically increase child support payments owed by non-custodial parents proves, again, just how extremely one sided, biased, and unfair the child support system can be toward non-custodial parents. We need reform to the unconstitutional child support system in America as soon as possible.
Bureau of Labor Statistics. (2015, December 2). Consumer price index frequently asked questions. Retrieved from http://www.bls.gov/cpi/cpifaq.htm
Bureau of Labor Statistics. (2016, March 9). Table 3. Covered establishments, employment, and wages by state, third quarter 2015. Retrieved from http://www.bls.gov/news.release/cewqtr.t03.htm
Hicken, M. (2014, August 18). Average cost of raising a child hits $245,000. Retrieved from http://money.cnn.com/2014/08/18/pf/child-cost/
Minnesota Department of Human Services. (2014, April 11). Cost-of-living adjustment. Retrieved from http://mn.gov/dhs/people-we-serve/children-and-families/services/child-support/programs-services/cost-of-living-adjustment.jsp
Minnesota Department of Human Services. (n.d.). Child support in Minnesota: Facts and figures. Retrieved from https://edocs.dhs.state.mn.us/lfserver/Public/DHS-4744-ENG
New Jersey Courts. (2009, September 1). Cost-of-Living adjustments for child support orders. Retrieved from http://www.judiciary.state.nj.us/rules/r5-6b.html
New York State. (n.d.). Child support services. Retrieved from https://www.childsupport.ny.gov/dcse/child_support_services.html
NOLA. (n.d.). What is a cost of living adjustment (COLA) clause? Retrieved from http://www.nolo.com/legal-encyclopedia/calculating-child-support-faq-29150-6.html
Remo, J. (2015, October 19). 15 arrested in Union County child support sweep. Retrieved from http://www.nj.com/union/index.ssf/2015/10/15_arrested_in_union_county_child_support_sweep.html
A parent and an author who has survived adverse situations and lived to write about it..