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Characteristics of Shared-Placement Child Support Formulas Used in the Fifty States - page 26 / 54

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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

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