Child support orders that are too high lead to debts that hurt both parents and children.
By Dwyer Gunn
(Photo: George Marks/Retrofile/Getty Images)
Across the country, states are experimenting with child support enforcement. One of those projects, the Child Support Noncustodial Parent Employment Demonstration, allows participating parents access to four core programs: employment assistance, parenting classes, case management, and “enhanced child support services.” The final category deals with the money stuff and includes services like debt forgiveness and expedited reviews of requests to modify child support orders that are too high (or too low).
Though non-custodial parents across the income spectrum pay child support, it’s the low-income parents who often struggle with high monthly orders. In fiscal year 2015, parents owed over $115 billion worth of child support debt in total. The majority of the debt is owed by low-income parents with grim employment prospects and low levels of education, many of whom also have criminal records. A 2007 study conducted by the Urban Institute on child support arrears in nine states found that 70 percent of debt is owed by parents earning less than $10,000 a year. The debts are often economically crippling to low-income parents, many of whom face the loss of their driver’s or professional license, black marks on their credit scores, and imprisonment should they fail to make payments.
What’s more, the evidence increasingly suggests that large child support debts actually discourage parents from participation in the formal labor market, where they’ll be subject to sometimes unreasonable levels of wage garnishment. A 2013 paper in the Journal of Policy Analysis and Management by Maria Cancian, Carolyn J. Heinrich, and Yiyoon Chung studied how large child support debt balances affected the employment and child support payment patterns of fathers. They found that higher debt burdens significantly reduced formal earnings and child support payments. “Fathers think to themselves ‘I’ll just go underground because I’ll never pay that in my lifetime,’” says Heinrich, a professor at Vanderbilt University. “They can’t buy a car, they can’t work in the formal system, it just sets up some really bad incentives.”
In recent years, a number of states have begun experimenting with child support debt forgiveness or compromise programs. According to a 2007 report from the Office of the Inspector General, 20 states operate either fully implemented or pilot debt compromise programs; 23 other states settle arrears on an informal, case-by-case basis. Only eight states explicitly prohibit debt compromise for child support arrearages. The programs vary dramatically in terms of their generosity and structure. By and large, however, the limited evidence suggests that well-designed child support debt compromise programs can successfully reduce participants’ debt and increase their future child support payments.
“A well thought-out and understandable debt compromise program makes so much sense, and it can be an incentive for better behavior.”
Consider, for example, a program called Families Forward in Racine, Wisconsin, which was subject to an evaluation by Heinrich and several colleagues. Families Forward relied on a somewhat novel structure: For every dollar that a non-custodial parent paid in current child support, the state forgave debt owed to the state by 50 cents. If a custodial parent consented to also participate, they agreed to forgive 50 cents of the debt owed to them for every $1 the non-custodial parent paid in current child support.
In other words, if the custodial parent agreed to participate in the program, the non-custodial parent received a dollar-for-dollar reduction in arrears for every dollar of current child support paid. Despite recruitment challenges and limited support from local child support enforcement case workers, the researchers found that “[s]tate child support debt balances decreased for program participants, and participants paid more toward their child support obligations and made more frequent child support payments.”
Similarly, a comprehensive review of debt forgiveness and compromise programs in five states concluded that, “[f]ollowing program enrollment, payment of monthly arrears obligations (and current monthly support where applicable) improves, state-owed child support debts are reduced, and high proportions of program participants succeed in complying with the terms of their payment agreements.”
The review also identified a number of features of effective programs — the most successful programs dealt with younger cases, lower debt levels, and cases with current orders — and recommended that more programs consider approaching custodial parents about debt forgiveness (many of the programs only focused on forgiving debt owed to the government and were reluctant to ask custodial parents to participate, despite the fact that the evidence suggests that many are open to debt compromise).
“Even the IRS compromises arrears, everybody compromises arrears,” says Jessica Pearson, one of the authors of the review referenced above and the director of the Center for Policy Research. “Definitely, a well thought-out and understandable debt compromise program makes so much sense, and it can be an incentive for better behavior.”
Of course, the best way to reduce the crippling debt that many low-income, non-custodial parents currently face may be to prevent those arrears from accumulating in the first place. The Obama administration has proposed a number of new regulations to tackle this issue, among them rules that would prohibit states from classifying incarceration as “voluntary unemployment” (a technical designation which means that the incarcerated can’t file for modification, causing debts to pile up while they’re in prison), the encouragement of state agencies to automatically modify child support orders for incarcerated parents, and the prodding of states to ensure that child support orders are set at a “right-sized” level when they’re established (which researchers believe is less than 20 percent of a non-custodial parent’s earnings).
States rely on different formulas to calculate child support orders, and while some advocates argue that the formulas themselves are unreasonable, Pearson says that the real problems arise when states are forced to “impute” a non-custodial parent’s income (usually based on past earnings, education level, work experience, or the assumption that someone works minimum wage for 40 hours a week).
“If a guy doesn’t show up for his child support hearing, in a lot of states, they will impute income based on some formula,” Pearson says. “But a lot of people don’t earn minimum wage, or they don’t work 40 hours a week. If someone doesn’t show up to hearings, it will not be a right-sized order.” Tellingly, researchers have found that child support orders set via imputation of income are frequently too high and actually result in higher rates of non-payment.
Jacquelyn Boggess, a child support analyst and the executive director of the Center for Policy and Practice who has been studying the child support enforcement system for decades, believes that establishing right-sized orders—and ensuring that those orders can be easily modified if circumstances change—is the key to eliminating the child support debt problem.
“I think it’s important to say that what we have is two poor parents who may be struggling to take care of their children,” she says. “Pretending that one of the parents has money does not provide money to the child.”