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COSTshares
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Introduction
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It may most formally be called the Rogers-Bieniewicz Cost Shares Model as anyone can develop a model for sharing the expenses of one or more children that is based on actual costs. However, this is the only formula currently in literature and is increasingly gaining professional acceptance. The cost of one child is also needed in forensic economics (where this model gained its first notoriety), so there are many applications for an accurate, legally acceptable child-cost formula endorsed by the economics community.

In the mid-1990s, the Children’s Rights Council (CRC) developed a prototype child support model based on the parents sharing child costs, with the costs based on actual measured costs in household surveys.  The cost shares model focuses on sharing the marginal costs of children: the additional costs parents incur by having children. For example, examine at how much higher a utility bill is after having a child than before the child to get the child’s share of that cost.

“Cost Shares” is not the same as “Income Shares.” As discussed in some of the more detailed papers linked to below, Income Shares, as its name implies, includes alimony in child support by using questionable definitions for child costs. For COSTshares, child expenditures are based on actual costs as measured by surveys, where the Percent-of-obligor and Income Shares models base child costs on indirect estimates. In most Income Shares guidelines, those estimates are derived by comparing changes in consumption of adult goods (tobacco, alcohol, and adult clothing) before and after having a child or having an additional child. In other Income Shares states, those estimates are derived by comparing changes in consumption of adult clothing or household consumption of food before and after having a child or having an additional child. COSTshares measures are based on actual child costs, not a theoretical concept.

COSTshares child expenditures are taken from surveys of single-parent households rather than of intact households. Similarly, the appropriate income used in the support tables is the average gross income of both parents, not total combined income, to derive what both parents can more realistically contribute.

Further, the COSTshares methodology proportionally distributes both child costs and child cost offsets (such as child tax credits) between the parents instead of omitting offsets altogether. This is not only more realistic but a procedural simplification for states that allow courts to order the custodial parent to sign over (per IRS regulations) the tax benefits every other year.

The COSTshares model has components for the major child cost categories: housing, food, transportation, clothing, health, child care and education, and “other.” Each category is based on an average of expenditures by category from survey data. Families within the survey varied as to whether they spent specifically on day care or medical insurance. Importantly, explicit dollar values for each category provides a basis for rebutting the presumptive amount in cases where a particular family spends less or more in that area. Neither the Percent-of-obligor nor Income Shares models have components to provide for a rebuttal. There are no components because the estimates indirect from measuring changes in adult consumption, not spending on children.

Basic Steps
The COSTshares model makes the following calculations:

1) Determine basic child costs for a single-parent household at a given income level: use the average income of both parents to step into the table of known child costs.

2) Add non-basic expenses when appropriate.

The basic child cost tables do not include daycare or extraordinary education expenses, so their cost can be directly added in.

3) Deduct the tax benefit that the custodial parent receives from total child costs. These monies are already paid – by and to whom is irrelevant – so this amount is subtracted from total child costs.

4) Allocate this net child cost between the parents in proportion to each parent’s share of combined, after-tax income that is above a recommended self-support level.

5) Each parent is considered equally entitled to reimbursement for the other’s share of the child costs incurred while in the one parent’s care. (Equal protection.) Therefore, when more than one parent has physical custody, the child costs are allocated between each parent according their share of the child(ren)’s time.

More explicit steps are discussed in the “background” paper on the cost shares guideline, “Child Cost Economics and Litigation Issues: An Introduction to Applying Cost Shares Child Support Guidelines.”

This methodology can be a replacement for current methodologies, or only used to augment them for things such as parenting time adjustments or to revise basic cost assumptions.
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More Detail
[Also see Published Papers by R. Mark Rogers and Analysis by Others.]

Summary of Cost Shares [PDF]
Short version of the next item. Covers the basic errors of both major guidelines, and the steps in building the Cost Shares model. Includes charts. (18 pages.)

Child Cost Economics and Litigation Issues: An Introduction to Applying Cost Shares Child Support Guidelines, by R. Mark Rogers and Donald J. Bieniewicz. [PDF]
The defining paper on Cost Shares. A full explanation of the need for an guideline based on economics and how to provide one. Thirty-seven pages, presented at the Southern Economic Association meeting in metro Washington, D.C. on Nov. 12, 2000.

“Child Cost Economics and Litigation Issues: An Introduction to Applying Cost Shares Child Support Guidelines,” from Assessing Damages in Injuries and Deaths of Minor Children, Thomas Ireland and John Ward, editors, Layers and Judges Publishing, 2002. Cost Shares has been recognized by peers in the forensic economics community. This article applies Cost Shares to non-family civil litigation. Available from Barnes and Noble.

Sample Economic Critiques of Specific State Guidelines

Report to Alabama Administrative Office of the Courts and the Guideline Review Panel [PDF]
Presented by R. Mark Rogers on March 31, 2006, this report provides a detailed critique of the standard Income Shares guideline proposals for Alabama and offers economic alternatives. Also: the PowerPoint presentation [PDF]

Testimony Before the 2001 Georgia Commission on Child Support, by R. Mark Rogers, June 1, 2001. [ PDF]
The origin of Georgia's child support guideline, its lack of economic basis, versus the Cost Shares model.

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