Donald R. Downing appeals from a March 31, 1999, order of the Jefferson Family Court which raised his child support obligation for his two children from $2,112.00 per month to $3,475.00 per month based upon a substantial increase in his income. He also appeals from a November 17, 1999, order which denied his motion to reduce child support based upon a reduction in his income. The primary question presented in this appeal can be stated as follows: Where the combined parental gross income exceeds the highest level set out in the child support guidelines, may a trial court consider, among other factors, a mathematical extrapolation of the guidelines in calculating the appropriate level of child support? From our review of the record, we conclude that the trial court gave too much weight to its projection of the child support guidelines. In the absence of sufficient findings regarding the other relevant factors, we conclude that the trial court's method of calculating child support was an abuse of discretion. However, the trial court's findings regarding Donald's income are not clearly erroneous. Hence, we affirm in part, reverse in part, and remand for additional hearing and findings.
The appellant, Donald R. Downing (Donald) and the appellee, Sharon A. Downing (Sharon), were married in 1981. Two children were born of the marriage: Earon L. Downing, II (DOB 12/15/83) and Sean L. Downing (DOB 8/7/86). On April 27, 1992, Sharon filed a petition for dissolution of marriage in the Jefferson Family Court. The court granted the decree of dissolution on July 8, 1992. The decree incorporated by reference a property settlement agreement between the parties. Among other provisions, Sharon received sole custody of the two children. Donald agreed to pay Sharon $400.00 per week in child support, and to pay all of the children's health care costs. In addition, Sharon received the marital residence and her automobile, with Donald responsible for paying any debt on these items.
In 1994, Sharon filed a motion to increase Donald's child support obligation and to require Donald to pay Earon's tutoring expenses. A hearing was conducted before the Domestic Relations Commissioner (DRC) in July 1994. The DRC found that Donald is the sole owner of a collection agency known as Independent Collectors, Inc, (I.C.) and that he had a total income of $17,491.00 per month from that business. Based upon the children's extraordinary medical and psychological expenses, as well as the fact that the parties' combined income exceeded the child support guidelines, the DRC recommended that the total monthly support for the children be set at $2,200.00 per month, of which Donald would be responsible for paying $2,112.00 per month. The trial court overruled Sharon's exceptions to the DRC's report, and entered an order raising
In July 1998, Sharon filed another motion to increase child support, pointing to a substantial increase in Donald's income.
Both Sharon and Donald filed exceptions to the DRC's recommendation. The trial court overruled the exceptions and increased Donald's child support obligation as recommended by the DRC.
In response to Sharon's motion to increase child support, Donald filed a motion to decrease his child support. He presented evidence that I.C. lost its collections contract with the local cable company and was no longer able to generate the high incomes to which he had become accustomed. While the DRC agreed that there was some evidence to support Donald's claim that his income from the corporation had decreased, the DRC was not entirely convinced that Donald's reduction in income was a "substantial and continuing change" which would warrant a reduction in his child support obligation. The DRC also noted that Donald had made similar claims in 1994. As a result, the DRC reserved a ruling on Donald's motion.
Following an additional hearing, the DRC concluded that Donald's income had substantially decreased in the latter part of 1998. "However, in 1999, it appears that his income train has fully come up to steam and it further appears that the corporation will have gross receipts to exceed the highest previous year of 1997."
Donald first argues that the trial court disregarded the evidence that his income had decreased. He contends that the DRC should have accepted the testimony and documentary evidence which showed that his income declined substantially after 1998. For this reason, he asserts that the trial court erred in basing the modification of his child support obligation on income he no longer receives. Furthermore, he also argues that he was entitled to a reduction of his child support since his income has now been reduced. We disagree.
After extensively reviewing the documentary and other evidence, the DRC determined that while Donald's income from I.C. decreased during 1998, his long-term earning capacity has not changed significantly. The DRC further expressed skepticism at Donald's claims that his business was experiencing difficulties upon considering that he had made similar, unsupported claims at the 1994 hearing. Based upon the total circumstances and the financial information provided at the hearing, the DRC concluded that Donald's reduced income was not a "substantial and continuing change" which would justify a reduction in his child support obligation under KRS 403.213.
The factual findings of a commissioner, to the extent that the court adopts them, shall be considered as findings of the court. Findings of fact shall not be set aside unless they are clearly erroneous,
Donald's primary argument is that the manner in which the trial court raised his child support obligation was an abuse of discretion. He contends that the trial court erred by applying a projection or a linear extrapolation of the child support guidelines as its main basis for setting the amount of child support. In addition, he complains that the amount of child support set by the trial court was not based on any evidence regarding the reasonable needs of the children. As a result, he asserts that the trial court acted arbitrarily by increasing his child support.
The child support guidelines set out in KRS 403.212 serve as a rebuttable presumption for the establishment or modification of the amount of child support. Courts may deviate from the guidelines only upon making a specific finding that application of the guidelines would be unjust or inappropriate.
Kentucky trial courts have been given broad discretion in considering a parent's assets and setting correspondingly appropriate child support.
Donald argues that the method used by the DRC in calculating child support was arbitrary, leading to an arbitrary amount. The DRC set out three considerations for his determination of the appropriate level of support: (1) the reasonable needs of the children; (2) the standard of living enjoyed by the parents; and (3) a mathematical projection of the child support guidelines. Donald agrees that the first two criteria
As pointed out by both Donald and Sharon, the Kentucky Child Support Guidelines are based on the "Income Shares Model." The basic premise of this model is that a child should receive the same proportion of parental income that the child would have received if the parents had not divorced.
The more difficult question is whether child support should continue to increase at the same rate when parental income exceeds the highest amount set out in the guidelines. Sharon takes the position that this Court should adopt a "share the wealth" approach. Other courts adopting this approach have held that children are entitled to share in the fruits of one parent's good fortune after a divorce.
We reject this approach and have great difficulty with using a projection of the child support guidelines as the primary basis for calculating child support. An increase in child support above the child's reasonable needs primarily accrues to the benefit of the custodial parent rather than the children.
We recognize that the DRC did not use a straight-line extrapolation to calculate Donald's child support obligation. Rather, as noted above, the DRC applied a considerably lower percentage to the parents' combined income above $15,000.00 than the child support table uses. Indeed, we cannot say that the amount of child support ordered by the trial court was unreasonable per se considering Donald's income and other resources. Nevertheless, the DRC set child support based almost entirely on the mathematical calculation. In the absence of any other supporting findings or evidence in the record, we must conclude that the amount set by the DRC was arbitrary.
We do not agree with Donald that the highest applicable amount set by the guidelines is the presumptively correct amount of support. To the contrary, once the trial court finds a valid basis under KRS 403.211(3) for deviating from the guidelines chart it has considerable discretion in setting child support above the guidelines. Had the legislature intended to make the highest award in the schedule the presumptive basic support obligation in all cases with combined monthly income over $15,000.00, it would have so stated and would not have granted the trial judge discretion in fixing those awards.
At the same time, we must note that discretion is a two-edged sword. The trial court may not substitute a mechanical calculation for the exercise of its discretion. While such a calculation may be a useful tool in determining an appropriate amount of child support, the amount reached through such a calculation is not entitled to presumptive weight. In this case, we believe that the DRC gave presumptive weight to the amount reached through his calculation.
At a minimum, any decision to set child support above the guidelines must be based primarily on the child's needs, as set out in specific supporting findings.
In determining the reasonable needs of the children, the trial court should also take into consideration the standard of
Any assessment of the child's reasonable needs should also be based upon the parents' financial ability to meet those needs. Factors which should be considered when setting child support include the financial circumstances of the parties, their station in life, their age and physical condition, and expenses in educating the children.
Our recitation of factors which a trial court may consider in modifying child support above the guidelines is by no means exhaustive. Rather, the court should take into account any factors which affect the reasonable needs of the child under the circumstances. Since Sharon seeks a modification of an existing child support award, the trial court may factor in any increase in the cost of living. The trial court may also take into account the period of time that the children reside with each parent in setting child support.
Accordingly, we vacate the order of the Jefferson Family Court increasing Donald's child support obligation to $3,475.00 per month, and we remand this matter for a further hearing and findings as set out in this opinion. The trial court's order denying Donald's motion for a reduction in child support is affirmed.
$58,500.00 combined monthly income of the parties - $15,000.00 highest income provided by the Guidelines __________ $43,500.00 amount the parents' income exceeds the Guidelines × .04 percentage applied to income in excess of the Guidelines __________ $ 1,740.00 projected base monthly support obligation for two children for the amount of income exceeding the Guidelines + $ 1,844.00 base monthly support obligation for two children for parents' combined monthly income of $15,000.00 $ 3,584.00 projected base monthly support obligation for two children with combined parental monthly income of $58,500.00 × .97 Donald's percentage of parents' combined monthly income __________ $ 3,476.48 Donald's projected child support obligation