Elegant Memo

							                                                        MEMORANDUM



TO:             REPRESENTATIVE EARL EHRHART, CHAIRMAN, CHILD SUPPORT COMMISSION

FROM:           DR. ROGER TUTTEROW, CO-CHAIR OF THE ECONOMIC STUDY AND OBLIGATION TABLE
                SUBCOMMITTEE OF THE CHILD SUPPORT COMMISSION

SUBJECT:        RECOMMENDATIONS OF THE ECONOMIC TASK FORCE

DATE:           10/6/2005

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                     Findings and Recommendations in the Matter of
                 An Economic Basis for Georgia Child Support Guidelines

      1. After reviewing academic and government literature on the economic cost of raising a child,
         economic studies associated with child support guidelines from other states, a presentation
         of Policy Studies Inc, various data sources including the U.S. Department of Labor's
         Consumer Expenditure Survey and the U.S. Department of Labor's Consumer Prices Index, and
         applying our professional training as economists, we have the following findings and
         recommendations with regard to Georgia’s child support guidelines.

      2. We recommend that the calculation of expenditures on children be based on national rather
         than Georgia-specific data other than those adjustments outlined elsewhere in these
         recommendations. We acknowledge that there may be some regional variations in
         consumption patterns. However, inspection of data from the Consumer Expenditure Survey
         suggests that the variation is not as significant as one might expect. While, at first blush, it
         may appear that differences in median incomes across states would require some adjustment
         in estimating the cost of raising a child, we believe that differences in incomes across states is
         implicitly controlled by allowing the expenditures on a child to vary with the combined gross
         income of the parent.

      3. We believe that intrastate variations are likely to be larger than interstate variations.
         However, adjusting for these intrastate variations would likely be prohibitive in complexity.

      4. We believe that both the Rothbarth and Engel estimators are grounded in economic theory.
         However, it is generally accepted that these estimators underestimate and overestimate the
         actual cost respectively. As such, we recommend that an arithmetic average of the Rothbarth
         and Engel estimators be used.

      5. We recommend that the Consumer Price Index (CPI-U) should be used for any inflation
         adjustments.

      6. We have no recommendation with regard to additional consideration of health insurance
         other than to acknowledge that it will be addressed as an “add on” in the statute.




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    7. We recommend that the child cost tables be extrapolated to households with more than four
       children.

    8. We recommend that the child cost tables be extrapolated to incomes beyond $20,000 per
       month.

    9. We make no recommendation with regard to any adjustment for non-current consumption.

    10. We recommend that consideration should be made for federal and state taxes.

    11. We believe that there is an economic basis for a self-support reserve. However, its
        application is seen as a policy issue for the entire Commission and the Georgia General
        Assembly.


                                          Child Support
                                      Economic Report Team


Dr. Angela Fertig
Carl Vinson Institute of Government
University of Georgia
201 N. Milledge Ave.
Athens, GA 30602
Phone: 706.542.2736
afertig@cviog.uga.edu

Dr. Sally Wallace
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302-3992
Phone: 404.651.1912
PRCSXW@langate.gsu.edu

Dr. Carol Dole
Richards College of Business
Department of Economics
University of West Georgia
Carrollton, GA 30118
Phone: 678.839.4774
cdole@westga.edu

Dr. Godfrey Gibbison
Department of Economic Development
Georgia Southern University
Statesboro, GA 30460
Phone: 912.681.0086
ggibbiso@georgiasouthern.edu




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Dr. Neal Thompson
4225 University Ave
Columbus, Georgia 31907
Abbott Turner School of Business
Columbus State University
Phone: 706.562.1674
thomson_neal@colstate.edu

Dr. Ben Scafidi
Georgia College and State University
CBX Box 020
Milledgeville, GA 31061-0490
Phone: 478.445.2578
ben.scafidi@gcsu.edu




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