The Revised Child Support Guidelines – When Deviation is Appropriate

by Charles F. Vuotto, Jr., Esq.

and
Risa A. Kleiner, Esq.*

2005

The Child Support Guidelines were first adopted by New Jersey in 1986.  Their enactment followed the passage of the Child Support Enforcement Amendments of 1984 which authorized federal matching funds to enforce support obligations.[i]  Effective September 1, 2006, the Supreme Court revised the Child Support Guidelines in two significant ways.  First, the Guidelines were expanded to include higher combined net income (increased from $2,900 per week to $4,420 per week, which equates to an increase from $150,800 to $229,840 net annually).   Second, the amount of child support has increased at lower income levels while decreasing at the upper income levels.[ii]  Effective September 1, 2007, the Guidelines were again altered, this time by  rolling back the top income level to which the Guidelines applies to a combined gross income of $3,600 per week or $187,200 gross per year.

As each state’s Guidelines are subject to review every four years,[iii] the New Jersey Administrative Office of the Courts (AOC) contracted with Policy Studies, Inc. to provide two quadrennial review reports, which served as the basis for implementing the recent revisions to the Guidelines.  Since the New Jersey Guidelines had not been amended since 1997, one of the reports focused on the “new measurements of child-rearing costs, current price levels, and adjuste[d] for income differences between New Jersey and the U.S. average …”[iv]  The report suggested that child rearing expenses in low income households have increased while they have decreased in middle to high income households.

According to the second report prepared by Policy Studies, Inc. and sponsored by the AOC, the Guidelines are intended to be a rebuttable presumption and are deviated from in only 4% of all child support cases.[v]  At the 2007 Family Law Symposium, Richard Russell, Esq. explained that the 2006 revision of the Guidelines was based upon updated, empirical data that suggest that the 1997 Guidelines resulted in child support amounts that were actually too high. This article will confirm that, although there was an argument to be made for updating the Guidelines based on this data, there is an equally strong opposing argument which that the new child support amounts are too low at the higher income levels to adequately cover child-rearing expenses in these more affluent families.

After enactment of the 2006 revisions, there was widespread disagreement among matrimonial practitioners as to whether the expanded combined net income to which the Guidelines applied was appropriate and whether any formula is applicable in these cases.  As a result of this strong opposition, there was a movement to reduce the upper limits of income to which the Guidelines apply.  Although the 2007 revisions do not retreat to the 1997 levels, they do roll back the upper income limits to an interim figure.

Traditionally, in higher income cases, courts have relied on the statutory factors set forth by the Legislature.  Under this approach, courts could consider the actual expenses of each child and thereby fashion a more appropriate child support amount “as the circumstances of the parties and the nature of the case shall render fit.”[vi]  The 2006 revisions to the Guidelines, however, effectively emasculated the nature of the case-by-case approach because large numbers of families now fall under the Guidelines umbrella, thus obviating the need for judicial review in those cases

In 2002, the New Jersey Department of Labor released a report on household and family income.  It concluded that only 4.3% of the total households in New Jersey had gross income levels above $200,000 annually.[vii]   Thus, more than 95% of the child support awards in New Jersey were calculated under the Guidelines as revised in 2006.  The result is a drastic reduction in child support in higher income cases, a reduction which is magnified with every additional child in a household.

To rectify this problem, the Family Practice Committee of the New Jersey Supreme Court proposed reducing the net combined income covered by the Guidelines to $3,600 net per week.  This amount is more than the previous cap of $2,900 per week but significantly less than the $4,420 per week in the 2006 Guidelines.  The Committee felt that the expanded income range put in place in September 2006 “was so high as to adversely affect the judge’s ability to fashion child support at these unique income levels.”[viii]

Furthermore, since the cost of living increased by 25% since the 1997 amendment to the Guidelines, the increased upper combined net income limit covered more than  95% of the families in New Jersey.  Pulling back the income limit to $3,600 net per week takes inflation costs into consideration while simultaneously maintaining the 95% applicability rate.  While the Family Practice Committee expressed concern about the reduced child support awards at higher income levels, it did not make any recommendations in this regard, but rather, reserved the issue for the next Rules cycle.  Thus, no change was made to the amount of child support in the 2007 revision.

The Family Law Section Committee on Rule Changes [the “Rules Committee”] not only agreed that the income limit should be reduced, but took the position that the Supreme Court Committee did not go far enough.  The Rules Committee found no justification for any increase in income limits and supported a return to $2,900 per week of net combined income, the pre-9/1/06 limit.  They cited the difficulty in fixing child support by a formula in high income cases where child-rearing costs can vary dramatically from family to family based on discretionary income choices. They specifically noted that the 2006 Guidelines reduce support by as much as 25% in some higher income cases when compared with the previous Guidelines, notwithstanding a 25% increase in the cost of living since 1997. The Rules Committee also acknowledged input from practitioners who advised that cases with combined net income in excess of $2,900 per week which settled before September 1, 2006 did so at much higher child support levels than those set forth in the revised Child Support Guidelines.

The 2007 revision to the Guidelines provides for a return to lower income limits, but does not address the need for higher child support amounts.  As a result, resourceful practitioners will need to advocate for deviation from the Guidelines as permitted by the Rules of Court and the Appendix to the Guidelines and as discussed more completely below.

AUTHORITY FOR DEVIATING FROM
THE CHILD SUPPORT GUIDELINES

In accordance with R. 5:6-A, the Child Support Guidelines must be used as a rebuttable presumption to establish and modify child support.  The Guidelines and the Rules of Court provide specific authority for deviating from the tables.  R.5:6A enables a court to modify or disregard an award under the Guidelines upon a requisite finding of good cause.  The Rule makes this concept applicable not only to orders in which child support is initially fixed, but motions where a modification is sought.  R.5:6A states in pertinent part:

The Guidelines may be modified or disregarded by the court only where good cause is shown.  Good cause shall consist of a) the considerations set forth in Appendix IX-A, or the presence of other relevant factors which may make the Guidelines inapplicable or subject to modification, and b) the fact that injustice would result from application of the Guidelines.  In all cases, the determination of good cause shall be within the sound discretion of the court.

Paragraph three of Appendix IX-A of the Guidelines authorizes a court to either disregard or adjust the guideline-based award to meet the needs of the child or parents’ circumstances if the “the Guidelines are inappropriate in a specific case.”  Appendix IX-A Paragraph 21 further provides a list of factors[ix] that may, at the court’s discretion, require deviation from the guideline-based award.  Whether these or other factors are used, the court’s decision to adjust an award should be based on a ‘best interests’ standard.  Paragraph 21 provides the following list of factors that the court may apply but notes that other factors may be used at the court’s discretion.

(a)    equitable distribution of property;

(b)   income taxes;

(c)    fixed direct payments (e.g., mortgage payments);

(d)   unreimbursed medical/dental expenses for either parent;

(e)    educational expenses for children (i.e., private, parochial, or trade schools, or other secondary schools, or post-secondary education);

(f)     educational expenses for either parent to improve earning capacity;

(g)    single family units (i.e., one household) having more than six children;

(h)    cases involving the voluntary placement of children in foster care;

(i)      special needs of gifted or disabled children;

(j)     ages of children;

(k)   hidden costs of caring for children such as reduced income, decreased career opportunities, loss of time to shop economically, or loss of savings;

(l)      extraordinarily high income of a child (e.g., actors, trusts);

(m)  substantiated financial obligations for elder care that existed before the filing of the support claim;

(n)    the tax advantages of paying for a child’s health insurance; and

(o)   one obligor owing support to more than one family (e.g., multiple prior support orders).

The Court Rules and Child Support Guidelines defer to the discretion of the court in deciding whether there should be a deviation from the guideline-based award.  Whether on the basis of R.5:6A (which allows the court to deviate to prevent injustice), or under the general language of Appendix IX-A (which discusses the conditions under which the court views an award as appropriate), or in observance of the best interests of the child (as stated in Appendix IX-A Paragraph 21), courts may avoid strict adherence to the Guidelines and may tailor child support orders to the specific facts of a case.[x]  Much in the same way they address extraordinary expenses, courts are not limited to the enumerated factors when determining whether  deviation is appropriate.  The court, inLozner v. Lozner, 388 N.J.Super. 471 (App. Div. 2006),  applied this concept when holding it permissible to consider student loans within the non-exhaustive list of factors available to a court when adjusting child support.

In all cases, the Guidelines child support amount and the rationale for deviating from that amount must be specified. This information  forms the basis for any future appeal or subsequent application for modification.  R.5:6A accordingly mandates that the Guidelines worksheet[xi] shall include the basis for not applying the Guidelines along with the pre-deviation/adjustment amount.  Ordukaya v. Brown, 357 N.J. Super. 231, 241 (App. Div. 2003).

Failure to comply with this procedural requirement can have a substantive impact on child support, as well as on other obligations incident to divorce proceedings.  The recent case of Navin v. Navin, 2007 WL 174375 (N.J. Super A.D. Jan. 25, 2007) confirms the court’s insistence on having an adequate basis for setting support.  In Navin the appellate court remanded for a review of the trial court’s findings relating to alimony and child support due to insufficient information.  The trial court based its award of alimony and child support on the defendant wife’s Case Information Statement and attempted to equalize the parties’ incomes by virtue of that award.  However, the child support was set significantly below the amount prescribed under the Guidelines and without any explanation of the court’s intent.  The Appellate Division noted the absence of a reason for the deviation on the Guidelines worksheet and specifically instructed the trial court to make a finding that the adjusted child support amount served the best interests of the child.

ABOVE GUIDELINES CASES

A primary reason to deviate from the Guidelines is to cover the costs of raising a child or children in a particular household with particular expenses that are not fully addressed in the Guidelines calculation.  This concept is linked to the specific issue of whether an adjustment is required to a Guidelines calculation when the combined net income of the parties exceeds the Guidelines’ income limits.  The case of Walton v. Visgil, 248 N.J. Super. 642 (App. Div. 1991) is instructive in this regard.  The Walton court disapproved calculating child support in such cases merely by extrapolating from the top of the Guidelines.

In addition, Appendix IX-A, Paragraph Eight, sets out the Considerations in the Use of the Child Support Guidelines.  This section identifies which expenses are included in the Guidelines calculation of basic support awards under Appendix IX-F (Basic Support Award Schedule).  The  following expenses are assumed to be included within the child support as calculated within the Guidelines:  Housing; Food; Clothing; Transportation; Unreimbursed Health Care Up to and Incl. $250 Per Child Per Year; Entertainment; Miscellaneous Items- such as personal care expenses, books, magazines, education expenses, personal insurance, cash contributions and finance charges not associated with a home or vehicle.

Paragraph Nine also addresses child-related expenses not  included in the basic child support award.  The unique nature of these expenses requires that they be added to the basic child support award as “extraordinary expenses.” Accardi v. Accardi, 369 N.J. Super. 75 (App. Div. 2004).  These extra expenses include the following: Child-Care Expenses; Health Insurance for the Child; Predictable and Recurring Unreimbursed Health Care Expenses in Excess of $250 Per Child Per Year; and Other Expenses Approved by the Court.

The defining characteristic of the extraordinary expenses allowed pursuant to Paragraph Nine is that they are “recurring and predictable” expenses.  This concept is supported by the explicit direction of Subparagraph (d) (Other Expenses Approved by the Court) which provides that nonrecurring and unpredictable expenses should be allocated separately to the parties based on their respective incomes.   Thus, Subparagraph (d) limits the court’s discretion to add an extraordinary expense which is anticipated and constant. Examples provided by Subparagraph (d) of these foreseeable but unique expenses are:Private elementary or secondary school;  Special needs of gifted or disabled children; Visitation transportation expenses.

This list of expenses is not intended to be all-inclusive, but simply serves to clarify the nature of the catchall provision of Subparagraph (d).  The court retains the discretion to supplement the expenses covered by the basic child support with extraordinary expenses as it deems appropriate and in the best interest of the child or children.  The distinction between ordinary and extraordinary expenses is not based on a bright-line rule. As a result, disputes may arise over what expenses should be added to the basic child support award.

Case law in this context is commonly based on disputes over the cost of extracurricular activities within high income families.  The recognition that children are entitled to be supported in a manner reflecting their parents’ standard of living and to share in their parents’ good fortune results in greater opportunities for children from high income families.  Zazzo v. Zazzo, 245 N.J. Super. 124 (App. Div. 1990).  By definition, the cost of these opportunities exceeds the common expenses incurred by average income families, and thus, also exceeds the direct support set forth in the basic Guidelines award.

Divorce does not destroy a child’s entitlement to enjoy these opportunities, but the determination of which parent bears the responsibility for their payment may be an issue for judicial discretion.  The analysis used in exercising this discretion is whether the direct expenses, as defined by the Guidelines (using the standard of the average income family) are consistent with the amount of the award and whether that award adequately addresses the needs of the child or children from the high income family.  If the court determines that a particular expense is not covered in the basic support award (that is, it is beyond the amount contemplated by the award provided for in a specific category), then this expense may be added to the child support obligation.  Thus, the discretion in deciding whether an expense is ordinary or extraordinary under Subparagraph (d) is not based on statutory directives, but is guided by case law.

The standard by which a court will determine whether an expense is extraordinary is based on a consideration of need, reasonableness, and the best interests of the child.  Issacson v. Issacson, 348 N.J. Super. 560 (App. Div. 2002).  Issacson suggests that expenses be considered in light of what is reasonably necessary to meet the child’s needs.  Pursuant to Issacson, the following expenses may be included on top of the basic support award as extraordinary:

• ·  private tutoring                   · vacations                                          · “good fortune trust”
• · music or art lessons             · clothing and incidentals for teens    ·  study abroad
• · summer camps                     · renovation to the home of the PPR
• · sports clinics                        · insured car for child who drives

The premise of Issacson is the acknowledgment that child support should secure the child’s right to be supported at a level consistent with the accomplishments of the obligated parent.  The “good fortune” trust referenced by the court (where a reasonable extraordinary expense can include contributions to a trust fund for the purpose of ensuring the future financial security of a child) supports this idea.  However, Issacson also provides that the reasonableness of extraordinary expenses is open-ended and case sensitive.

Loro v. Del Colliano, 354 N.J. Super. 212 (App. Div. 2002), expands on this concept and offers insight as to the extent to which a court can define extraordinary expenses.  Although remanded for an analysis by the trial judge of the reasonableness of improvements to the family home, the Appellate Division upheld the extraordinary expenses awarded.  These expenses included: Philadelphia Flyers tickets and a cell phone.

The holdings in both Issacson and Loro suggest that adding a third column to the Case Information Statement budget to reflect the expenses unique to the child in that household may help demonstrate the lifestyle on which the child support should be based. There is a clear trend in the cases toward a liberal approach in classifying an expense as extraordinary.  The equitable treatment of this issue by the courts suggests that the addition of an expense as extraordinary is based on the past practices of the family and that family’s available funds.  In the context of reasonableness, the issue is potentially limitless and subject only to an ability to pay.

CONCLUSION

            The 2006 modifications of the Child Support Guidelines extended the income limits to which the Guidelines apply and reduced the basic child support amounts, particularly at higher incomes.   As a result of efforts by the Family Bar to rectify what matrimonial practitioners saw as unjustified changes which may be detrimental to children, particularly those of higher earning parents, the 2006 income limits will be rolled back to an interim level as of September 1, 2007. Since there are still inequities in these Guidelines calculations, attorneys are reminded that the Guidelines are designed to form a presumption, one which can be rebutted by evidence supporting a higher amount of child support where appropriate.  Furthermore, the court has the discretion to enhance basic child support with extraordinary expenses or as otherwise appropriate.  It is the responsibility of the attorney representing the custodial parent to use the applicable tools to see that the Child Support Guidelines are applied appropriately – and to advocate for deviation where necessary in the best interest of the child.