25

# CS =

(FAinc * BasicCS * ((MOtime - Threshold) / ATtime)) minus (MOinc * BasicCS * ((FAtime - Threshold) / ATtime))

Where: FAinc = father’s income (ex: $40,000) MOinc = mother’s income (ex: $25,000) FAtime = percent of child’s time with father, on an annual basis (ex: 45%) MOtime = percent of child’s time with mother, on an annual basis (ex: 55%) Threshold defined by State of Montana = 30% ATtime = “above threshold” time remaining in the year (100% – (30% * 2) = 40%) BasicCS = the basic amount of child support that would be owed in a sole custody situation, if the that parent was the paying parent.

# For example:

CS = ($40,000 * BasicCS * ((55% – 30%) / 40%)) minus ($25,000 * BasicCS * ((45% – 30%) / 40%))

# In other states using the same formula, but with a different threshold, the formula would change

slightly, depending on the change in threshold. In Hawaii, which uses a threshold of 39 percent (shared

custody is considered to be “40 percent or above”), using the same parental income and time-share

example as above, the formula would look like this:

CS = ($40,000 * BasicCS * ((55% – 39%) / 22%)) minus ($25,000 * BasicCS * ((45% – 39%) / 22%))

# The advantage of the above-threshold offset formula is that there are no cliff effects. Since the

mathematics of the formula do not begin the reduction calculation at zero time-share level, but rather at

the threshold, there is no opportunity for a cliff effect to be created. This can be seen in the plot of child

support orders on Figure 6, using the formulas from Montana and Hawaii.

# Even at larger discrepancies of income, or higher income, in general, no large cliff effects result

from the use of above-threshold offset formulas. Appendices B1 through B6 show the computation of

child support amounts using the Montana formula (with a 30 percent time-share threshold) and Hawaii

(with a 39 percent time-share threshold), for six different income situations. Large cliff effects created by

changing time-share by one percentage point cannot be detected in any of these examples.

# Given the positive features of the above-threshold offset formula, we have developed a possible

application of this formula for the State of Wisconsin. We have applied the above-threshold offset

formula to the Wisconsin basic level of child support, based on percentage standard guidelines, in