The Formula from Hell

A divorced dad uncovers a deliberate policy to drive separated parents further apart


by Candis McLean

TORONTO geologist Alar Soever was going through a divorce early in 1996 when he first encountered the Federal Child Support Guidelines which recommend amounts non-custodial parents should pay for child support. "My lawyer couldn't tell me how the figures were arrived at," he recalls, "so I contacted the federal Department of Justice which said that the document to explain the formula would be published in the fall of 1996. That made sense, since Parliament was going to debate the guidelines that winter." Mr. Soever then telephoned every two months, but the guidelines were never "ready." The controversial guidelines were passed by Parliament in February 1997 and came into effect two months later. The research report (CSR-1997-1E) which explained the formula was not released until 14 months after Parliament's decision.


Mr. Soever is a methodical man, and was intrigued by a number of issues, including how regulations affecting the lives of hundreds of thousands of divorcing parents could have passed without any public documentation as to how the guideline amounts were calculated. To find out, he undertook four years of investigations. On April 5 he released his findings to an Ottawa forum, Toward Shared Parenting, co-sponsored by the Family Forum of Ottawa and the National Alliance Advocating for the Needs of Children and Parents. His 31-page document was titled "The Federal Child Support Guidelines: A Breakdown of Democratic Process and the Canadian Legal system." According to B.C. resident Ross Bailey who attended the meeting, "Alar's paper has the whole non-custodial and grandparenting community across the country buzzing because they knew something was wrong with the guideline formula, but needed someone to tell them how it was wrong."


That community may buzz even louder with the news that last week, among materials obtained by Liberal MP Roger Gallaway through the Freedom of Information Act, Mr. Soever finally found an explanation of the guidelines which had been prepared in the fall of 1996. He believes the explanation was repressed because it gives examples of the financial consequences of the guidelines, "transparently indicating how unfair the formula is" (see story below). One of those to whom he revealed the document compared the situation to the "tainted-blood scandal," in which the government's suppression of information caused irreparable damage: "By not telling the judiciary what the formulas really meant, they caused serious harm which has included driving people into bankruptcy and even suicide."


As a geologist, Mr. Soever examines mineral reserves to separate the truth from self-serving hype, checking assumptions, formulas and calculations. "When I examined the guidelines," he says, "I realized it was like the Bre-X scandal, complete with flawed assumptions and skewed calculations. It was driven by psychology, with everyone thinking it was child support so it must be good, but it's actually promoting custody battles and hurting children. The bottom line? No one appeared to have done the due diligence on the underlying formula." He ended with a stunning question: "How is it that in a democracy we can have guidelines which contravene the Divorce Act, are based on a largely unknown, admittedly deficient formula, and are derived from undisclosed policy decisions that promote the loss of substantial contact with one parent?"


What Mr. Soever learned is that the guidelines as implemented contain not only child support but spousal support (which contravenes the Divorce Act), and overestimate expenditures on children for the custodial parent while underestimating them for non-custodial parents. That conclusion is also reached by University of Calgary sociology PhD student Paul Millar (www.canadianfamilyresearch.org), in research to be published in the June edition of the peer-reviewed academic journal, the Canadian Journal of Law and Society.


The formula used to generate the guidelines, Mr. Soever learned, makes two key assumption in all cases, whether valid or not:


1. The paying parent is always assumed to have the expenses of a single adult (i.e., no parenting expenses); and


2. The incomes of the paying and receiving parent are assumed to be equivalent.


In those cases where these assumptions match reality, the model does meet its objectives: equal standards of living and a sharing of expenses between the two parents. In practice, however, the amount of time that the non-custodial parent has custody of the child can range up to 40% (when over 40%, the guidelines do not apply). Among parents with average incomes, if the paying parent spends no time with the children and thus has no expenses, his standard of living tends to be 16% higher than the receiver's. If, however, the paying parent is an involved one, he or she has expenses--often almost as high as the other parent's. Yet the guidelines deny recognition of this. In fact, Mr. Soever has determined, if the parents have average incomes, once custody exceeds 5% (roughly one night every two weeks), the noncustodial parent and the children when they are with him are penalized with a lower standard of living than in their other home. Once custody approaches 40%, the standard of living in that home is almost 30% lower than in the other home, and barely above the poverty line.


In other words, concludes Mr. Soever, the more time children spend with their divorced non-custodial father, the poorer he gets and the more difficult and impoverished their time together. "The guidelines," he says, "offer clear and powerful financial disincentives to joint parenting by penalizing those payor parents with substantial custody. Most perversely, parents who abandon their children are actually rewarded with a higher standard of living than the children they abandoned."


A further by-product of the guidelines, the researcher says, is that they encourage custody battles as parents strive for the magical 40% threshold, and the benefit to the custodial parent is lost. Mr. Soever knows of one case where a wife was prepared to allow her ex-husband joint custody and about 38% residence time with the children, but not the 50% he desired. This led to protracted mediation and negotiations. The father suspected the guidelines' magical 40% threshold was the root of the problem. To test his theory, the father asked if the children might occasionally have lunch at home with him on Fridays. "Obviously, a hot lunch at home with a parent was preferable to brown-bagging it in a crowded cafeteria," he says. "This, however, would have put him over the magical 40%. It was not really a surprise when the mother's lawyer responded, 'My client is absolutely not agreeable to your suggestion with respect to the children having lunches.' The mother was prepared to fight a costly custody battle just to retain the 40% threshold. Could there be any more blatant example of the insidious nature of these guidelines?"


Ottawa economist Ross Finnie, now an adjunct professor with the School of Policy Studies at Queen's University in Kingston, was one of the developers of the guidelines, but has since published critical articles in the Ottawa Citizen: "A dubious 'victory' for divorced families" and "Federal proposal may worsen custody, payment programs," as well as a paper, "Good Idea, Bad Execution: The Government's Child Support Package" (caledon@caledoninst.org).


Mr. Finnie believes the underlying guidelines are fair, but objects to the custodial parent receiving all the tax credits. His major criticism, however, is the same as Mr. Soever's. The 40% threshold with no allowance for expenses, he says, "came out of the air with no real explanation. It came from within the Justice Department. Some people were top-notch, working with technically difficult concepts such as 'What does a child cost?' and just wanting to do the right thing, but that was not uniformly the case. I suspect someone said, 'How can we ratchet up these awards a little bit?' Let's just say," he smiles enigmatically, "it ended messily between myself and the Justice Department."



The secret document


THIS says it all!" exulted Toronto geologist Alar Soever at last month's discovery of a 31-page document obtained under a Freedom of Information request. "It is a detailed financial analysis of the Federal Child Support Guidelines showing how impoverished the paying parent would be and the inherent inequities in the model."


Titled "Detailing the Components of the Canadian Child Support Formula, 1997 Edition," labelled draft #6 and dated November 15, 1996, what makes it so different from the guidelines which, pared down to nine pages, were eventually made public, is its level of detail, as well as an appendix of case examples. "This is the comprehensive explanation of the guidelines that Parliament and the Canadian public deserved at the time they were debating and passing this legislation in the fall of 1996," declares Mr. Soever (dadalar@aol.com).


Spokesmen for the Justice Department, however, deny that the document was suppressed, saying it was merely delayed while being fine-tuned for the public. "We struggled mightily with the level of technicality and decided to cut it down to make it short and succinct. If we gave examples, it was too long," attests senior researcher Jim Sturrock, one of the developers of the guidelines. Senior council Lise Lafreniere Henrie adds that MPs had briefing notes while making their decision on the guidelines, but they were not public documents. "It was advice to the ministers, so it was confidential...However, we published a set of tables and in January 1995 we published an overview illustrated in a more simplistic way, so information was out there."


In the newly discovered draft, a theoretical case is given in which both parents live in Newfoundland, the two children live full-time with the custodial parent and each parent earns $25,000. Utilizing the formula, the document then indicates that the "after-tax, after [child-support] award" income for the custodial parent is $27,369, while the non-custodial parent's income is slashed to almost one-half that, at $14,489. Of the total expenditures on children, $4,435 is paid by the non-custodial parent, while only $2,825 is paid by the custodial parent. "This is without even considering any direct expenditures made by the non-custodial parent during his or her time with the children," points out Mr. Soever.


When the non-custodial parent earns $1,000 more (i.e., $26,000), while the income of the custodial parent remains unchanged at $25,000, the child-support award increases by $170 per year. The actual income of both parents rise: the custodial parent's to $27,539, the non-custodial parent's to $14,983, but while the non-custodial parent now pays $170 more of the children's expenses than before (at $4,605), the custodial parent actually pays $100 less than before. Of the $170 increase in child support, only $70 goes to "direct expenditures on the children," while $100 is directed to the "personal (for parent) disposable income."


So why is an apparent "spousal support" built into the child support in the new formula? Justice officials say it is simply mislabelled and should have been called "household income." Mr. Soever says, "The fact that the larger proportion of the child-support award is going to the receiving parent is perhaps inevitable, but very few people grasp the concept, and that's because it was never made clear when it was passed that the formula was a simple household standard-of-living equalization formula. Even two years after the guidelines were passed, the Supreme Court of Canada still didn't seem to grasp it," he says, pointing to the April 27, 1999, judgment in Francis v. Baker:


"However, even though the guidelines have their own stated objectives, they have not displaced the Divorce Act, which clearly dictates that maintenance of the children, rather than household equalization or spousal support, is the objective of child-support payments." According to Mr. Soever, "Either the justices didn't know the very basis of the guidelines was a household-equalization formula, or they have ruled that the manner in which the guidelines are constructed contravenes the Divorce Act."


Contends Mr. Soever, "In these case examples, the standard of living of the paying parent is already much lower than that of the receiver, despite using the guidelines' assumption that the household of the paying parent has only a single person and no direct expenditures on the children. In reality, one must remember that the children might be living with the paying parent up to 40% of the time and in that case, his or her direct expenditures on the children would only be marginally less than those of the receiving parent. Clearly being left with a disposable income half that of the receiving parent, the paying parent would not be in a position to provide a comparable standard of living for the children while they are with him.


"This November 1996 draft report with its case examples exposes the deficiencies in the child-support formula. Had it been published in the fall of 1996, as promised earlier, I do not believe the guidelines would have made it through Parliament in their present form. This, I believe, explains why the formula was not published in the fall of 1996.


"In all subsequent drafts, the detailed financial analysis and all the examples which exposed the true financial hardship inflicted by the Guidelines were deleted, so unless you do the detailed analysis yourself--which takes some time and knowledge--you cannot appreciate how it affects families and children. It took the Justice Department 18 months to remove the examples and financial analysis and edit this 31-page draft document down to nine pages which say far less about the nature of the Guidelines than the original. The fact that it has now been revealed that there was a comprehensive draft ready in November 1996 raises serious questions as to why the release of this document was delayed in an open and democratic society."