HB 1027 & Residential Support Credit

While Representative Moeller's HB 1027 has many notable features it does retain the existing "deviation" language regarding residential credit in lieu of the Work Group's recommendation to implement the "Indiana Credit Formula"  (page 23 and Appendix XI of Work Group Report). 

The following is an excerpt drawn from the Parenting Time Credit  section of the Indiana Child Support legislation.

  Analysis of Support Guidelines.  The Indiana Child Support Guidelines are based on the assumption the child(ren) live in one household with primary physical custody in one parent who undertakes all of the spending on behalf of the child(ren).  There is a rebuttable presumption the support calculated from the Guideline support schedule is the correct amount of weekly child support to be awarded.  The total amount of the anticipated average weekly spending is the Basic Child Support Obligation (Line 4 of the Worksheet).

                The Guideline support schedules do not reflect the fact, however, when both parents exercise parenting time, out-of-pocket expenses will be incurred for the child(ren)’s care.  These expenses were recognized previously by the application of a 10% visitation credit and a 50% abatement of child support during periods of extended visitation.  The visitation credit was based on the regular exercise of alternate weekend visitation which is equivalent to approximately 14% of the annual overnights.  With the adoption of the Indiana Parenting Time Guidelines, the noncustodial parent’s share of parenting time, if exercised, is equivalent to approximately 27% of the annual overnights. As a result, these revisions provide a parenting credit based upon the number of overnights with the noncustodial parent ranging from 52 overnights annually to equal parenting time.  As parenting time increases, a proportionally larger increase in the credit will occur.

Analysis of Parenting Time Costs.  An examination of the costs associated with the sharing of parenting time reveals two types of expenses are incurred by both parents, transferred and duplicated expenses.  A third category of expenses is controlled expenses, such as the 6% uninsured health care expense that remains the sole obligation of the parent for whom the parenting time credit is not calculated.  This latter category is assumed to be equal to 15% of the Basic Child Support Obligation.

Transferred Expenses. This type of expense is incurred only when the child(ren) reside(s) with a parent and these expenses are “transferred” with the child(ren) as they move from one parent’s residence to the other.  Examples of this type of expense are food and the major portion of spending for transportation.  When spending is transferred from one parent to the other parent, the other parent should be given a credit against that parent’s child support obligation since this type of expense is included in the support calculation schedules.  When parents equally share in the parenting, an assumption is made that 35% of the Basic Child Support Obligation reflects “transferred” expenses.  The amount of expenses transferred from one parent to the other will depend upon the number of overnights the child(ren) spend(s) with each parent.

Duplicated Fixed Expenses. This type of expense is incurred when two households are maintained for the child(ren).  An example of this type of expense is shelter costs which are not transferred when the child(ren) move(s) from one parent’s residence to the other but remain fixed in each parent’s household and represent duplicated expenditures.  The fixed expense of the parent who has primary physical custody is included in the Guideline support schedules.  However, the fixed expense of the other parent is not included in the support schedules but represents an increase in the total cost of raising the child(ren) attributed to the parenting time plan.  Both parents should share in these additional costs.

When parents equally share in the parenting, an assumption is made that 50% of the Basic Child Support Obligation will be “duplicated.”  When the child(ren) spend(s) less time with one parent, the percentage of duplicated expenses will decline.

Controlled Expenses.  This type of expense for the child(ren) is typically paid by the custodial parent and is not transferred or duplicated.  Controlled expenses are items like clothing, education, school books and supplies, ordinary uninsured health care and personal care.  For example, the custodial parent buys a winter coat for the child.  The noncustodial parent will not buy another one.  The custodial parent controls this type of expense.  The controlled expenses account for 15% of the cost of raising the child.  The parenting time credit is based on the more time the parents share, the more expenses are duplicated and transferred.  The controlled expenses are not shared and remain with the parent that does not get the parenting time credit.  Controlled expenses are generally not a consideration unless there is equal parenting time. These categories of expenses are not pertinent for litigation.  They are presented only to explain the factors used in developing the parenting time credit formula.  The percentages were assigned to these categories after considering the treatment of joint custody by other states and examining published data from the Bureau of Labor Statistics’ Consumer Expenditure Survey.