Navigating Arkansas’s New Child Support Guidelines, Part 1: Arkansas Family Law Courts Must Now Take Both Parents’ Incomes into Account

As of July 1, 2020, all new child support orders issued in Arkansas will be governed by a new method of calculation referred to as the Income Shares Model. This post is the first in a planned three-part series on the new Child Support Guidelines. It will address the basics of how the “New Guidelines” (the Guidelines that took effect on July 1) will work. Part 2 will discuss the concept of a “material change in circumstances”, which is necessary to obtain a modification. And Part 3 will discuss grounds for deviating from the Guidelines.

Introduction

The Supreme Court of Arkansas recently approved a revised version of Administrative Order 10, the Child Support Guidelines, which governs the calculation of child support obligations. Though previous revisions implemented relatively minor changes, like updates to the Support Chart to reflect higher cost of living, the New Guidelines fundamentally change the way Arkansas courts calculate child-support obligations. This amendment has been in the works for some time, as the court published the proposed New Guidelines for comment in December 2019 after a review of the old approach. This came after a review conducted by the Arkansas Office of Child Support Enforcement found that the income shares model was the method utilized by 41 states and the District of Columbia. Therefore, this change brings Arkansas child support law in line with most of the rest of the country.

So, what’s changing?

Whereas the previous version (“Old Guidelines”) was based primarily on payor income (how much money the noncustodial parent made), the approach set forth in the New Guidelines is based on a system called the Income Shares Model. As of September 2019, when Arkansas’s Office of Child Support Enforcement published its review of the Arkansas child support system, 41 states (and the District of Columbia) used a model that considered the income of both parents.

Since the Old Guideline were implemented several decades ago, Arkansas courts have used the same method to calculate child support: 1) Determine the payor’s gross income, 2) Subtract allowed deductions like taxes and health care premiums, 3) Look to the Support Chart grid to see, based on the amount of children at issue and the net income of the payor, how much the Support Chart says that parent should pay, and 4) Decide if any special factors justify awarding more or less than the amount set forth on the Support Chart (i.e., a deviation). The payee/custodial parent’s income was considered, if at all, a basis for a deviation instead of a required step in calculating child support. This is what is changing.

Per the New Guidelines, “[T]he Income Shares Model… [was] developed by the Child Support Guidelines Project of the National Center for State Courts. The Income Shares Model is based on the concept that children should receive the same proportion of parental income that they would have received had the parents lived together and shared financial resources.” New Guidelines at 2. The income of the custodial parent is no longer an extra factor to be considered in Arkansas child support law; rather, it’s now just as important as the noncustodial parent’s.

The New Method

As stated above, under the Old Guidelines, courts calculated the payor’s net income, looked to the number of children at issue, and found the corresponding amount on the Support Chart. Now, courts will add the gross incomes of the parents and then find the amount of support that corresponds to that Combined Gross Income (“CGI”) and number of children. Then, based on each parent’s proportional share of the CGI, the court will assign each parent their respective share of the Basic Child-Support Obligation (“Basic Obligation”). Next, the court will add up the Allowed Additional Child-Rearing Expenses (“Additional Expenses”), such as health insurance premiums and daycare fees, and, as with income, assign the parties their respective shares. The amount of Additional Expenses that the payor is paying out of pocket will be deducted from that parent’s Total Child-Support Obligation (“Total Obligation”).

So, obviously, that’s kind of a lot to consider in the abstract. Let’s try an example--fortunately, there’s one included in the New Guidelines. Let’s call it Example A.

Let’s say Payor and Payee share one child, Junior. Payor grosses $2,000/month and Payee grosses $1,000/month. This results in a CGI of $3,000. Under the new chart, the Basic Obligation for one child whose parents have a CGI of $3,000 is $469. Based on the share of the combined income that their pay represents, Payor will be responsible for 2/3 of that amount, in this case, $312.67, and Payee will be responsible for 1/3, or $156.33.

Then, let’s assume that the court finds that raising Junior requires $300 in Additional Expenses, $100 that the Payor pays for Junior’s health insurance premium each month and $200 that Payee pays for childcare expenses each month. Based on their respective incomes, Payor will be responsible for $200 of that amount, increasing Payor’s obligation to $512.67 (Payor’s $312.67 share of the Basic Obligation plus $200 in Additional Expenses), and Payee’s to $256.33 ($156.33 in Basic Obligation and $100 in Additional Expenses).

Payor will then receive a credit for any Additional Expense that he is paying out of pocket. In this example, that means the $100 he is paying for health insurance is deducted from his Total Obligation.

The resulting assumed obligation will therefore be $412.67/month.

The shift that the Income Shares Model represents becomes clear when we consider what the obligation for the noncustodial parent in Example A would be if both parents had the same gross income. We will call this next scenario Example B.

For Example B, let’s say that the facts are exactly as they were in Example A, except that instead of $1,000/month, Payee grosses $2,000/month, the same as Payor. Under these facts, the Basic Obligation would be $612 split 50/50, for a Basic Obligation of $306. Then, instead of a 2:1 split, the $300 in Additional Expenses is split 1:1, for a Payor obligation of $150. Payor would still be credited for the $100 they pay out of pocket, meaning that only $50 is added to make up the Total Obligation. Therefore, the presumptive Total Obligation for the Payor in the example would be $356.

A noncustodial parent had the right to ask the court to consider the custodial parent’s income under the Old Guidelines, but judges had no obligation to do so. The Income Shares Model seeks to ensure that children will be supported at a level that is in line with their parents’ combined income while dividing the financial responsibility for the child more equitably. Notably, under Example B, the amount of money available for Junior’s support increases while Payor’s Total Obligation actually decreases.

If you face a family law issue and need help with the New Guidelines, feel free to contact our office for a free consultation with an Arkansas Family Law Attorney.