NJSBA Family Law Section

I have a dispute (the last issue in a very extensive MSA) with my adversary over the language of an MSA regarding the method for the calculation of the bi-annual COLA adjustment to child support. This is a high-income/child support case, so this can be a significant issue. At this juncture, we have agreed for direct-pay. We understand that if we start payment through Probation, this is a non-issue as Probation will make the calculation. Assuming we stay with direct-pay, the question is, what is the precise COLA adjustment calculation that Probation would use? So far, we haven't been able to get feedback from Probation. As such, we want to explain in the MSA how the bi-annual COLA adjustment will be made. Rule 5:6B provides that child support will be adjusted every two years to reflect the cost of living and must be compounded. Subparagraph (c) to the Rule states, "The cost-of-living adjustment shall be based on the average change in the Consumer Price Index for the metropolitan statistical areas that encompass New Jersey and shall be compounded." (See https://njcsi.org/cspm/Chapter_08_Modification/04_Modification/Cost-of-Living_Adjustment.htm)

Here are the two approaches:

• My approach: I believe that the Rule contemplates that you are to determine the percentage change in the CPI from the start to the end of the bi-annual review period and then apply that percentage to the child support. Specifically, every two years the steps are as follows:
  1. Determine the CPI for the month and year when the child support was set.
  2. Determine the CPI for the month and year when the child support is to be recalculated.
  3. Subtract the difference – that is the gross CPI increase over the bi-annual period.
  4. Then determine the percentage of the CPI increase by dividing the number arrived at in no. 3 by the number arrived at in no in 1. That is the percentage increase in the CPI.
  5. Multiply the child support by the percentage increase determined in no. 4. That is the new child support.

For example, if the CPI in the month when child support was set was 274.174 and then increased to 282.333 in the month and year when child support is to be recalculated, the gross increase is 8.16, which is a 2.98% increase. Therefore, that is the percentage by which child support would increase. If the child support at the start of the bi-annual review were $5,000 per month, the new number would be $5,149 per month.

• Adversary's approach: My adversary is focusing on the word "average". He believes that you should average the change in the CPI in the first year of the bi-annual review with the change in the second year of the bi-annual review. Specifically, he asserts that the adjustment shall be based upon the average change in the Consumer Price Index (using the average of the CPI increase in the two annual periods preceding the bi-annual review) as published for the metropolitan statistical areas that encompass New Jersey). Therefore, if the CPI increases by 1.5% in the first year of the bi-annual review and then by another 1.5% in the second year, the CPI percentage to be applied to the child support is only 1.5% (the average of the two years) instead of 3% (the percentage increase over the two years). Using the same example as above, if the child support at the start of the bi-annual review were $5,000 per month, the new number would only be $5,075 per month.

Which approach is correct?

I have a dispute (the last issue in a very extensive MSA) with my adversary over the language of an MSA regarding the method for the calculation of the bi-annual COLA adjustment to child support. This is a high-income/child support case, so this can be a significant issue. At this juncture, we have agreed for direct-pay. We understand that if we start payment through Probation, this is a non-issue as Probation will make the calculation. Assuming we stay with direct-pay, the question is, what is the precise COLA adjustment calculation that Probation would use? So far, we haven't been able to get feedback from Probation. As such, we want to explain in the MSA how the bi-annual COLA adjustment will be made. Rule 5:6B provides that child support will be adjusted every two years to reflect the cost of living and must be compounded. Subparagraph (c) to the Rule states, "The cost-of-living adjustment shall be based on the average change in the Consumer Price Index for the metropolitan statistical areas that encompass New Jersey and shall be compounded." (See https://njcsi.org/cspm/Chapter_08_Modification/04_Modification/Cost-of-Living_Adjustment.htm)

Here are the two approaches:

• My approach: I believe that the Rule contemplates that you are to determine the percentage change in the CPI from the start to the end of the bi-annual review period and then apply that percentage to the child support. Specifically, every two years the steps are as follows:
  1. Determine the CPI for the month and year when the child support was set.
  2. Determine the CPI for the month and year when the child support is to be recalculated.
  3. Subtract the difference – that is the gross CPI increase over the bi-annual period.
  4. Then determine the percentage of the CPI increase by dividing the number arrived at in no. 3 by the number arrived at in no in 1. That is the percentage increase in the CPI.
  5. Multiply the child support by the percentage increase determined in no. 4. That is the new child support.

For example, if the CPI in the month when child support was set was 274.174 and then increased to 282.333 in the month and year when child support is to be recalculated, the gross increase is 8.16, which is a 2.98% increase. Therefore, that is the percentage by which child support would increase. If the child support at the start of the bi-annual review were $5,000 per month, the new number would be $5,149 per month.

• Adversary's approach: My adversary is focusing on the word "average". He believes that you should average the change in the CPI in the first year of the bi-annual review with the change in the second year of the bi-annual review. Specifically, he asserts that the adjustment shall be based upon the average change in the Consumer Price Index (using the average of the CPI increase in the two annual periods preceding the bi-annual review) as published for the metropolitan statistical areas that encompass New Jersey). Therefore, if the CPI increases by 1.5% in the first year of the bi-annual review and then by another 1.5% in the second year, the CPI percentage to be applied to the child support is only 1.5% (the average of the two years) instead of 3% (the percentage increase over the two years). Using the same example as above, if the child support at the start of the bi-annual review were $5,000 per month, the new number would only be $5,075 per month.

Which approach is correct?

I have a dispute (the last issue in a very extensive MSA) with my adversary over the language of an MSA regarding the method for the calculation of the bi-annual COLA adjustment to child support. This is a high-income/child support case, so this can be a significant issue. At this juncture, we have agreed for direct-pay. We understand that if we start payment through Probation, this is a non-issue as Probation will make the calculation. Assuming we stay with direct-pay, the question is, what is the precise COLA adjustment calculation that Probation would use? So far, we haven't been able to get feedback from Probation. As such, we want to explain in the MSA how the bi-annual COLA adjustment will be made. Rule 5:6B provides that child support will be adjusted every two years to reflect the cost of living and must be compounded. Subparagraph (c) to the Rule states, "The cost-of-living adjustment shall be based on the average change in the Consumer Price Index for the metropolitan statistical areas that encompass New Jersey and shall be compounded." (See https://njcsi.org/cspm/Chapter_08_Modification/04_Modification/Cost-of-Living_Adjustment.htm)

Here are the two approaches:

• My approach: I believe that the Rule contemplates that you are to determine the percentage change in the CPI from the start to the end of the bi-annual review period and then apply that percentage to the child support. Specifically, every two years the steps are as follows:
  1. Determine the CPI for the month and year when the child support was set.
  2. Determine the CPI for the month and year when the child support is to be recalculated.
  3. Subtract the difference – that is the gross CPI increase over the bi-annual period.
  4. Then determine the percentage of the CPI increase by dividing the number arrived at in no. 3 by the number arrived at in no in 1. That is the percentage increase in the CPI.
  5. Multiply the child support by the percentage increase determined in no. 4. That is the new child support.

For example, if the CPI in the month when child support was set was 274.174 and then increased to 282.333 in the month and year when child support is to be recalculated, the gross increase is 8.16, which is a 2.98% increase. Therefore, that is the percentage by which child support would increase. If the child support at the start of the bi-annual review were $5,000 per month, the new number would be $5,149 per month.

• Adversary's approach: My adversary is focusing on the word "average". He believes that you should average the change in the CPI in the first year of the bi-annual review with the change in the second year of the bi-annual review. Specifically, he asserts that the adjustment shall be based upon the average change in the Consumer Price Index (using the average of the CPI increase in the two annual periods preceding the bi-annual review) as published for the metropolitan statistical areas that encompass New Jersey). Therefore, if the CPI increases by 1.5% in the first year of the bi-annual review and then by another 1.5% in the second year, the CPI percentage to be applied to the child support is only 1.5% (the average of the two years) instead of 3% (the percentage increase over the two years). Using the same example as above, if the child support at the start of the bi-annual review were $5,000 per month, the new number would only be $5,075 per month.

Which approach is correct?

My five cents - I don't see how the COLA adjustment is even being discussed when they are significantly over the guidelines anyway.  These parties can pick their own numbers over and above the "guidelines". 

 

 

Albertina Webb, Esq. Office: 732-852-7550 | Fax: 609-452-1888 2 Bridge Avenue, Suite 211 - The Galleria, Red Bank NJ 07701 www.hillwallack.com  email| vCard

I have a dispute (the last issue in a very extensive MSA) with my adversary over the language of an MSA regarding the method for the calculation of the bi-annual COLA adjustment to child support. This is a high-income/child support case, so this can be a significant issue. At this juncture, we have agreed for direct-pay. We understand that if we start payment through Probation, this is a non-issue as Probation will make the calculation. Assuming we stay with direct-pay, the question is, what is the precise COLA adjustment calculation that Probation would use? So far, we haven't been able to get feedback from Probation. As such, we want to explain in the MSA how the bi-annual COLA adjustment will be made. Rule 5:6B provides that child support will be adjusted every two years to reflect the cost of living and must be compounded. Subparagraph (c) to the Rule states, "The cost-of-living adjustment shall be based on the average change in the Consumer Price Index for the metropolitan statistical areas that encompass New Jersey and shall be compounded." (See https://njcsi.org/cspm/Chapter_08_Modification/04_Modification/Cost-of-Living_Adjustment.htm)

Here are the two approaches:

• My approach: I believe that the Rule contemplates that you are to determine the percentage change in the CPI from the start to the end of the bi-annual review period and then apply that percentage to the child support. Specifically, every two years the steps are as follows:
  1. Determine the CPI for the month and year when the child support was set.
  2. Determine the CPI for the month and year when the child support is to be recalculated.
  3. Subtract the difference – that is the gross CPI increase over the bi-annual period.
  4. Then determine the percentage of the CPI increase by dividing the number arrived at in no. 3 by the number arrived at in no in 1. That is the percentage increase in the CPI.
  5. Multiply the child support by the percentage increase determined in no. 4. That is the new child support.

For example, if the CPI in the month when child support was set was 274.174 and then increased to 282.333 in the month and year when child support is to be recalculated, the gross increase is 8.16, which is a 2.98% increase. Therefore, that is the percentage by which child support would increase. If the child support at the start of the bi-annual review were $5,000 per month, the new number would be $5,149 per month.

• Adversary's approach: My adversary is focusing on the word "average". He believes that you should average the change in the CPI in the first year of the bi-annual review with the change in the second year of the bi-annual review. Specifically, he asserts that the adjustment shall be based upon the average change in the Consumer Price Index (using the average of the CPI increase in the two annual periods preceding the bi-annual review) as published for the metropolitan statistical areas that encompass New Jersey). Therefore, if the CPI increases by 1.5% in the first year of the bi-annual review and then by another 1.5% in the second year, the CPI percentage to be applied to the child support is only 1.5% (the average of the two years) instead of 3% (the percentage increase over the two years). Using the same example as above, if the child support at the start of the bi-annual review were $5,000 per month, the new number would only be $5,075 per month.

Which approach is correct?