Tenn. Comp. R. & Regs. 1240-02-04-.03 - THE INCOME SHARES MODEL

(1) General Basis.

(a) The Tennessee Child Support Guidelines are based on an Income Shares Model. This model presumes that both parents contribute to the financial support of the child in pro rata proportion to the actual income available to each parent.

(b) The Income Shares model differs from the Department's prior Flat Percentage model, established in 1989, which calculated the amount of the child support award based upon the net income of the non-custodial or alternate residential parent and which assumed an equivalent amount of financial or in-kind support was being supplied to the child by the custodial or primary residential parent. Although federal law requires consideration of only the income of the alternate residential parent, under the Income Shares model, both parents' actual income and actual additional expenses of rearing the child are considered and made part of the support order.

(2) The Income Shares model, which is used by over forty (40) other states, is generally based on economic studies of child-rearing costs, including those of David Betson, Erwin Rothbarth, and Ernst Engel, and studies conducted by the United States Department of Agriculture and the United States Department of Labor's Bureau of Labor Statistics involving expenditures for the care of children.

(3) The Child Support Guidelines established by this chapter were developed and adjusted as needed based upon:

(a) Studies of child-rearing costs conducted by David Betson, Erwin Rothbarth, and Ernst Engel which utilized information on child-rearing costs conducted by the United States Department of Agriculture and the United States Department of Labor's Bureau of Labor Statistics;

(b) Comments on these Guidelines by advocacy groups, judges, child support magistrates, attorneys, legislators, Title IV-D child support contractors and staff of the Tennessee Department of Human Services, and oral and written comments resulting from public hearings;

(c) The work and input of the Tennessee Department of Human Services' Child Support Guidelines Task Force established in 2002. The Task Force was established to assist the Department in reviewing and considering changes to the existing Child Support Guidelines that were originally adopted in 1989 and based upon the Flat Percentage Model;

(d) Review of the child support guidelines of other states;

(e) Recommendations made to states generally by the United States Office of Child Support Enforcement regarding measurements of child-rearing costs and their use in establishing child support guidelines;

(f) The Income Shares Advisory Committee established in 2005 pursuant to 2005 Tenn. Pub. Acts 403; and

(g) A Task Force established in 2017 in order to address requirements outlined in the federal "Flexibility, Efficiency, and Modernization in Child Support Enforcement Programs" final rule of 2016, located at Fed. Reg. Vo. 81, No. 244 (Dec. 20, 2016).

(4) Assumptions and Methodology Used in the Income Shares Model.

(a) Determination of the Basic Child Support Obligation.

1. The Income Shares Model incorporates a numerical schedule, designated in these Guidelines as the CS Schedule or Schedule, found in Rule 1240-02-04.09, that establishes the dollar amount of child support obligations corresponding to various levels of parents' combined AGI, the number of children for whom the child support order is being established or modified, and taking into consideration SSR requirements.

2. The Schedule is used to determine the BCSO, according to the rules in this chapter.

3. Each parent's share of the BCSO is determined by prorating the child support obligation between the parents in the same ratios as each parent's individual AGI is to the Combined AGI.

4. If custody or guardianship of a child is awarded to a person or entity other than a parent of the child as defined in 1240-02-04-.02(15), the child support obligation shall be calculated on the Worksheet according to the rules for standard parenting, and each parent will be responsible for paying his/her share of the final obligation to the non-parent caretaker of the child. If only one parent is available, then that parent's income alone is considered in establishing the child support award. The income of a non-parent caretaker is not considered. If the tribunal is able to order both parents to pay support for the children, the tribunal shall assign each parent a Pro Rata share of the additional expenses.

5. When a child is placed in State custody, the Department of Children's Services may set the initial child support order without using the worksheet.

(b) Child Support Schedule Assumptions.

1. The Child Support Schedule is based on the Combined AGI of both parties.

2. Self Support Reserve (SSR).

(i) The guidelines include a SSR that ensures obligors have sufficient income to maintain a minimum standard of living based on 90% of the 2020 federal poverty level for one person ($957 gross income per month).

(ii) If the obligor's AGI falls within the shaded area of the CS Schedule and the SSR is used, the BCSO is computed using only the obligor's income. This shaded area incorporates a SSR of $957 (90% gross income of the 2020 federal poverty level for one person). In all other cases, the BCSO is computed using the combined AGIs of both parents.

(iii) If the obligation using only the obligor's monthly gross income is an obligation within the shaded area of the CS Schedule, that amount shall be compared to the obligor's proportionate share using both parents' monthly gross incomes. The lesser amount establishes the BCSO. If the SSR is applied, the obligor will not receive the parenting time credit.

3. Taxation Assumptions.

(i) All income is earned income subject to federal withholding and the Federal Insurance Contributions Act (FICA/Social Security).

(ii) The ARP will file as a single wage earner claiming one withholding allowance, and the PRP claims the tax exemptions for the child or tax benefits associated with the child such as the Federal Earned Tax Credit (EITC).

(iii) The Schedule's combined obligation includes the tax adjustments for federal withholding and the Federal Insurance Contributions Act (FICA/Social Security).

4. The Schedule is based upon the 1996-1999 Consumer Expenditures Survey, conducted by the U.S. Bureau of Labor Statistics, and updated to 2003 levels by adjusting for the rise in the Consumer Price Index since 1996.

(i) The Schedule has been evaluated as part of each guidelines review in consideration of the most current economic data on the cost of raising children, more current expenditures data and price level data, and changes in Tennessee incomes. This information does not overwhelmingly indicate that substantial changes to the Schedule are necessary.

(ii) The Schedule also incorporates the 2018 federal poverty level for one person based on the 2016 federal requirement for states to consider the obligor's subsistence needs.

5. Basic Expenses.

(i) The Schedule assumes that all families incur certain child-rearing expenses and includes in the BCSO an average amount to cover these expenses for various levels of the parents' combined income and number of children. The bulk of these child-rearing expenses is comprised of housing, food, and transportation. The share of total expenditures devoted to clothing and entertainment is also included in the BCSO but is relatively small compared to the other three items.

(ii) Basic educational expenses associated with the academic curriculum for a public school education, such as fees, books, and local field trips, are also included in the BCSO as determined by the Schedule.

(iii) The BCSO does not include the child's health Insurance premium, work-related childcare costs, the child's uninsured medical expenses, special expenses, or extraordinary educational expenses because of the highly variable nature of these expenses among different families.

6. Extraordinary Education Expenses.

(i) Extraordinary education expenses including, but not limited to, tuition, room and board, fees, books, and other reasonable and necessary expenses associated with special needs education or private elementary and secondary schooling are not included in the basic child support schedule.

(ii) Extraordinary educational expenses may be added to the presumptive child support order as a deviation.

7. Special Expenses.

(i) Special expenses include, but are not limited to, summer camp, music or art lessons, travel, school-sponsored extra-curricular activities, such as band, clubs, and athletics, and other activities intended to enhance the athletic, social, or cultural development of a child that do not otherwise qualify as mandated expenses like health insurance premiums and work-related childcare costs.

(ii) Special expenses incurred for child rearing which are quantified shall be considered and may be added by the tribunal to the Presumptive Child Support Order (PCSO) as a deviation when this category of expenses exceeds seven percent (7%) of the monthly Basic Child Support Obligation (BCSO).

(c) In the Income Shares model, it is presumed that the PRP spends his or her share of the child support obligation directly on the child and that the ARP share is only one component of the total child support obligation.

(d) Adjustments to the BCSO.

1. In addition to basic support set forth in the Schedule, the child support award shall include adjustments that account for each parent's pro rata share of the child's health insurance premium costs, uninsured medical expenses, and work-related childcare costs, as provided in 1240-02-04-.04(8). These costs are not included in the Schedule because they are highly variable among cases.

2. The BCSO shall also be adjusted based upon the parenting time of the ARP.

(5) Revisions to the Child Support Schedule.

(a) The CS Schedule will be reviewed by the Department, as required by T.C.A. § 36-5 - 101(e) and by Federal law, and revised, if necessary, to account for changes in the BCSO due to tax changes and/or to account for changes in child rearing costs as reported by the Consumer Expenditures Survey conducted by the U.S. Bureau of Labor Statistics and to reflect authoritative economic studies of child rearing costs. If significant changes in tax laws and child rearing costs warrant, the Department may review and revise the CS Schedule prior to the regular review.

(b) Any revised CS Schedule published subsequent to the first Schedule appearing in Rule 1240-02-04-.09 will be incorporated by rule amendment, provided to the Administrative Office of the Courts for distribution to all Tennessee judicial tribunals, distributed by the Department to its Title IV-D Offices, and posted for use by the public on the Department's website.

Notes

Tenn. Comp. R. & Regs. 1240-02-04-.03

New rule filed December 18, 1987; effective February 1, 1988. Amendment filed August 25, 1989; effective October 13, 1989. Amendment filed September 29, 1994; effective December 14, 1994. Amendment filed September 29, 2003; effective December 13, 2003. Repeal and new rule filed November 4, 2004; effective January 18, 2005. Emergency rule filed March 3, 2005; effective through August 15, 2005. Amendment filed June 1, 2005; effective August 15, 2005. Repeal and new rule filed April 6, 2006; effective June 20, 2006. Stay of effective date of rule filed April 19, 2006; new effective date of rule June 26, 2006. Amendments filed February 10, 2020; effective May 10, 2020. Amendments filed July 2, 2021; to have become effective September 30, 2021. However, a 1-day stay of the effective date of the rules was filed July 28, 2021; new effective date 10/1/2021.

Authority: T.C.A. §§ 4-5-202, 36-5-101(e), 71-1-105(a)(12) and (15), and 71-1-132; 42 U.S.C. § 667; 45 C.F.R. § 302.56; and 45 C.F.R. § 303.31.