Child Support and Unemployed Parent in Arizona

The Arizona Supreme Court considered the standard courts should apply in determining whether a non-custodial parent’s voluntary decision to leave their employment to become a full-time student constitutes a sufficient change in circumstances to warrant a reduction of the parent’s child support obligation in the case of Lisa L. Little v. Billy L. Little, Jr.

The parties divorced in 1995. The court ordered Billy, employed as an Air Force Lieutenant, to pay $1,186.00 per month in child support for his two children. In 1996, he resigned his commission in the Air Force and enrolled as a student at Arizona State University College of Law instead of seeking further employment.

When he left the Air Force, Billy petitioned the court to reduce his child support obligation to $239.00 per month. The trial court ruled that Billy had not proved .a substantial and continuing change of circumstances and denied his request for modification. In the trial court’s decision, the court specifically cited his voluntary loss of employment to further his own ambitions, ruled he failed to consider the needs of his children when making that decision, and found that such a significant reduction in child support would be detrimental to the children.

However, the court did reduce his child support obligation to $972.00 per month because Lisa obtained a higher paying job. When the case was appealed, the court of appeals applied a good faith test to determine whether Billy acted reasonably in voluntarily foregoing employment to pursue a law degree. The court of appeals ruled the trial court abused its discretion in finding his decision to end his employment and pursue a law degree unreasonable.

When the matter was brought before the Arizona Supreme Court, the justices began by examining current laws and guidelines pertaining to child support. Arizona’s law governing modification of child support orders states that a court should modify a child support order only if a parent shows a substantial and continuing change of circumstances.

The Child Support Guidelines provide when a parent is unemployed or working below their full earning potential, a trial court calculating the appropriate child support obligation may ascribe income to that parent, up to their full earning capacity, if the parent’s earnings are reduced voluntarily and not for reasonable cause.

The guidelines also state that the trial court can elect not to ascribe income to a parent if they are enrolled in reasonable occupational training that will establish basic skills or is reasonably calculated to enhance earning capacity. They noted that both the governing statute and the guidelines recognize that a parent’s child support obligation is paramount to all other financial obligations and a parent has a legal duty to support their biological and adopted children.

The justices also noted other jurisdictions have considered the same issue that was before Supreme Court. Those courts applied one of three tests to determine whether to modify a child support order when a parent voluntarily terminates his or her employment.

The first test (i.e., the “good faith” test), considers the actual earnings of a parent rather than their earning capacity, so long as they acted in good faith when they terminated their employment for a reason other than attempting to avoid a child support obligation. The second test (i.e., the “strict rule” test), disregards any income reduction produced by voluntary conduct and looks at the earning capacity of the parent in setting the support obligation. The third test (i.e., the “intermediate” test) balances factors to determine whether to use actual income or earning capacity to decide the support obligation.

The court found the good faith test erroneously assumes a divorced or separated parent will continue making decisions in the best overall interest of the family unit and that it fails to attach sufficient importance to a parent’s support obligation. The justices added that once the parent seeking the modification provides a seemingly good faith reason, the burden of proof often shifts to the parent opposing the modification to show that the reason given is fictitious and even if the burden doesn’t shift the court is still left with the difficult task of evaluation the parent’s subjective motivation.

The justices found the strict rule test to be flawed because it is too inflexible because it only considers one factor, the parent’s earning capacity, in determining whether to grant a modification of child support when the parent voluntarily leaves his or her employment.

The justices decided to apply the intermediate balancing test that considers a number of factors, consistent with Arizona statutes and guidelines.

The court also examined what factors an Arizona trial court may apply in future cases when ruling upon a modification of child support when a parent has voluntarily ceased his or her employment. If a reduction in child support due to a non-custodial parent’s voluntarily changing their employment status places a child in financial peril, the court generally should not permit the modification, but in many cases the impact will not be so severe.

In circumstances when the modification will not place the children in peril, trial courts must consider the overall reasonableness of the parent’s decision to terminate employment and return to school. The court should focus upon whether the parent’s current educational level and physical capacity provide them with the ability to find suitable work in the marketplace. If so, the trial court may find the parent’s decision to cease employment to be unreasonable.

If the additional training is likely to increase the parent’s earning potential, it is more likely that parent’s decision may be found to be reasonable. The court should also consider the length of the parent’s proposed educational program and the ages of the children to determine if the children are young enough to benefit from the parent’s increased future income.

The court should also inquire whether the parent can finance their child support obligation while in school through other resources, such as student loans or part-time employment. Finally, the court should consider whether the parent’s decision was made in good faith or made to avoid his or her child support obligation.

The Arizona Supreme Court justices cautioned, however, that they were not intending to suggest that the above factors are exhaustive of the relevant areas of inquiry and the primary task of a trial court is to decide each case based upon the best interests of the child, not the convenience or personal preference of the parents.


Child Support Modification and Unemployed Parent in AZ | The Ruling

The justices believed the balancing test conforms with not only Arizona’s public policy, but also with a national policy trend favoring strict enforcement of child support obligations. Several states have recently held a parent’s voluntary return to school does not justify a modification of his or her child support obligation.

Moreover, the federal government has passed laws recognizing the duty to support one’s children is paramount to all other obligations. Recently-enacted federal criminal legislation states that a parent who willfully fails to pay a child support obligation for a child that resides in another state shall be punished by fines and/or up to six months imprisonment for the first offense and by fine and/or up to two years imprisonment for any subsequent offenses.

In addition, Congress authorized the Bureau of Justice Assistance to provide grants to states to develop, implement, and enforce criminal interstate child support legislation and coordinate criminal interstate child support enforcement efforts.

The Arizona Supreme Court concluded that the court of appeals, rather than look to this development in public policy, relied upon a forty-year-old decision, Nelson v. Nelson, to support their decision. In Nelson, the court held that a father may in good faith make a change in occupation, fully aware that the change will reduce his ability to meet his financial obligations to his children.

The court acknowledged a father has a duty to support his children, but judgment of what is fair must include a consideration not only of the child’s economic circumstances, but of the father’s as well, and that it may be just to reduce the child’s standard of living if necessary to alleviate the father’s financial hardship. The Nelson court further held a father’s child support obligation should be reduced if he wished to turn to another occupation, even though it calls for a permanent reduction in his income, because it holds the prospect of a more satisfying life for him.

The supreme court rejected the court’s reasoning in Nelson for several reasons. First, its ruling elevates a parent’s wishes and financial status above the best interest of the child. Second, the decision clearly contradicts the current state statutory mandate that the obligation to pay child support is primary and all other financial obligations are secondary.

Lastly, they disagreed with the notion that attending school full-time and fulfilling one’s support obligation ate mutually exclusive options, given that a parent can fill income gaps by utilizing student financial aid and/or obtaining part-time employment. For these reasons, they felt the court of appeals erred when it relied upon Nelson.

After applying the balancing test to the facts involved, the supreme court concluded the trial court did not abuse it’s discretion when it refused Billy’s request for a downward modification of his child support modification. The justices felt the negative impact of his requested reduction on his children would have been substantial, if granted.

The court found that such a reduction would be to the children’s immediate detriment because it would place the family well below the federal poverty level. Second, the court noted that Billy held a Bachelor of Arts degree and a Master of Business Administration degree and by asking the court to assume he would earn more with a law degree than he could have in the private business sector was purely speculative.

The court felt the speculative nature of an alleged increase in income led the trial court to give that factor minimal weight in its decision. Third, the court held that the record didn’t reflect Billy attempting to obtain suitable employment after leaving the Air Force that would allow him to fulfill his financial obligation to his children.

Fourth, the court found he was able to support his education and part of his support obligation with student loans and there was nothing in the record to suggest he could not also obtain part-time employment to fulfill the remainder of his child support obligation.

Finally, the court found Billy failed to act in good faith and, instead, sought to further his own ambition when he chose to become a full-time student and not pursue further employment. For these reasons, the supreme court decided to vacate the appellate court’s opinion and affirm the decision of the trial court.

In line with a nationwide trend, this case illustrates the importance of a child support obligation and holds it as a non-custodial parent’s primary obligation over and above all other obligations. The court continually emphasize a parent’s duty to act in the best interests of their children first before considering their own self interests.

If a parent is contemplating quitting their job and returning to school, he or she must consider all options, such as student loans or part-time employment, allowing them to continue meeting their child support obligation before they apply for a modification.


Child Support and Unemployed Parent in AZ | Involuntary Unemployment

In a subsequent case, the Arizona Court of Appeals in the Stevens versus Yohannes case addressed the issue of what should be included as gross income when calculating child support in Arizona when someone is involuntarily unemployed, is searching for replacement employment, but has not been able to secure new employment.

The Court of Appeals overturned the trial judge’s decision to average the earnings the father had earned at his prior employment for the purpose of calculating child support. The Court of Appeals indicated the evidence proved the father had lost his employment due to the merger of his company with another company and not as a result of his fault or choosing. The evidence established father was working at a wage that was far less than he previously earned and, further, that he was actively seeking employment more consistent with his earnings from his prior employer.

The justices cited the Taliaferro v. Taliaferro case to support a trial judge’s ability to look at prior prior work experience and earnings, but the trial court distinguish such a practice when a person loses his or her job through no fault of their own, is currently working below his or her full earning capacity, and is actively seeking better employment.

The take away from the Stevens case, therefore, is that trial court should not necessarily attribute higher earnings to a parent who involuntarily loses his or her job and is actively seeking to secure employment at a higher salary.