# Child Support and COLA

- Link: https://thechildsupporthustle.com/child-support-and-cola/
- Published: 2024-05-06T14:23:35+00:00
- Author: MsRockMon

⌊\"\"⌉⌊\"\"⌉March 30, 2016 

 

Kenya N. Rahmaan

 

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 determines 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 might ring some truth if that number remained consistently 
under two percent.  However, based on the economic past of the United States, that
low percentage is far from a protected and concrete CPI.  Take, for instance, that
in the years 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 or SSA).

 

 

 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 calls 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), in situations where the child is pursuing higher
education,  a parent owes arrears, or a parent is providing for a child with disabilities,
the 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 the 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
conducted 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 to include a COLA provision.  Not only is the non-custodial parent required
to pay an increased amount of child support automatically, but 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 
toward child support debt equaled $140 million (Minnesota DHS, 2015).  This lack
of significant 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 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 
increase 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 lying around to be given to anyone (custodial parent 
included) with no accountability of how the money is being spent.

 

New York parents are 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 who 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 who 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 appealing 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 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 of
equal protection 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 an 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 contributing factors to how much one person can afford. 
The notion that a 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 protection.  Couples are not held under the same
scrutiny, judgmental laws, and guidelines forced upon non-custodial parents, and
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 York 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 for 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 newborn babies generally run between $20,000 and $30,000. 
The unaccounted-for, untaxed money could be used to adopt a child and serve the 
unsuspecting parent a child support complaint.  Thus, the cycle continues.

 

 This concept may seem a little farfetched, but it is a way to collect and spend
free money because there are 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 is used to automatically
increase child support payments owed by non-custodial parents, proving, again, just
how extremely one-sided, biased, and unfair the child support system can be toward
non-custodial parents.  We need to reform the unconstitutional child support system
in America as soon as possible.

 

 

 

References:

 

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](https://thechildsupporthustle.com/child-support-and-cola/\"http://www.nj.com/union/index.ssf/2015/10/15_arrested_in_union_county_child_support_sweep.html\")