It wasn’t too long ago when I wrote about how little guideline child support has changed over the past 30 years. Change is now afoot. The California legislature has adopted SB-343 which modifies the formula for calculating child support and makes some notable changes to the handling of child support add-ons which include guidance on how daycare and unreimbursed medical expenses for children are to be shared. In this week’s blog we take a little peak at the changes taking place which are set to move forward effective September 1, 2024. The intention behind these changes are to see to it that the needs of our children are being met and that both parents are called to contribute to those needs as much as they are able.
Changes to Guideline Child Support (and Spousal Support). Guideline child support began as an algebraic formula set forth in the Code and when I first began practicing I would do the math so I could counsel my clients on their support obligation. The calculating has since been simplified by computer programs that do the calculations for us. The change taking place September 1, 2024 modifies the formula so that when we do our calculations the numbers will be different. Based on what I have heard when the combined incomes from the parties are lower the resulting guideline child support amounts will be less than previously calculated. Once the combined incomes get to a certain level there will be no change to the calculation and thereafter, as the combined incomes get higher, the calculation will result in a higher child support amount.
With the computer generated spousal support amount used by the Court for temporary spousal support orders, the opposite will be true. Since the payment of child support impacts income available for spousal support, because child support will be less for lower combined incomes, the spousal support calculated will be higher, and since with higher combined incomes the child support will go up, the spousal support will conversely go down.
The important thing is since the guidelines are changing effective September 1, 2024 it is important that the divorce professional you are working with makes sure that the updated software has been implemented so that the calculations are completed consistent with the law change.
The sharing of add-on expenses. In addition to guideline child support, parents are responsible for sharing in the costs associated with work related daycare expenses and unreimbursed medical, dental, orthodontia, counseling and prescription drug costs for the children. Historically, the default sharing of these expenses was 50/50. The statute that is about to be changed did provide that if a parent sought a different allocation and provided documents supporting the Court ordering a different allocation, the Court could do so. The legislature in making the pending change to how add-ons are to be addressed acknowledged that opting for a sharing of the add-on expenses other than 50/50 was infrequently sought under existing law. They thought allocating the sharing based upon net income differentials should be the rule and not the exception and thus made the change.
What does all this mean? What this means is the standard way to calculate the sharing of add-on expenses is no longer 50/50 and is instead to be based on the adjusted net incomes of the parties after consideration of the payment/receipt of support as follows: We start with the net income of each party, reduce the support payor’s net income by any amounts paid for child support and spousal support, and increase the support recipient’s net income for any spousal support received, but not for any child support received.
As an example, if the payor spouse has a net income of $5,000, the payee spouse has a net income of $2,000, child support is $1,049 and spousal support is $709, the add-ons would be allocated as follows: The payor’s net for considering add-ons would be $5,000 minus $1,049, minus $709 for a net of 3,242. The payee’s net for add-ons would be the $2,000 plus $709 for a net of $2,709. Based on these figures the payor would be responsible for paying 55% of such costs and the payee would be responsible for paying 45% of such costs. Presumably the support calculator will provide us with these percentages as part of the numbers as we calculate the guideline support.
Paid add-ons presumed to be reasonable. Another part of the change about to take place is that if a party pays for daycare expenses, such expenditure is presumed to be reasonable. The other party would have the burden to overcome this presumption by proving it was not reasonable. For medical expenses there is a provision requiring the use of existing health insurance plans if there is an expectation for reimbursement. There is also some adjustment to the amount of time that a party has to seek reimbursement from the other party and various mechanisms for how such expenses should be paid. This will impact some of the standard language in our settlement agreements that will need to be adjusted to be consistent with the changes that have taken place in the law.
Change can be good. When the child support guidelines were originally established, there was a directive in the statute that they should be reviewed and adjusted from time to time. These changes taking place show that some work is being done to try to adjust the guidelines to accomplish support consistent with the best interests of the children involved. This includes trying to assure that both parents are set up to provide for the needs of the children. I am yet to do my first calculation with these adjusted figures so the jury is still out. Considering the adjusted net incomes available to both parents when considering the allocation of add-on expenses makes sense as the higher “net” earner, after the appropriate adjustments, is presumably in a better position to bear a little more of the burden. As September arrives we will all need to adjust our calculations to implement these changes that are now upon us.