SD9 - Technical Report: The Cost of Raising Children

Executive Summary:
Senate Joint Resolution 192 of the 2000 General Assembly Session directed the Joint Legislative Audit and Review Commission (JLARC) to examine "the costs of raising children in Virginia when parents live in separate households," and to "develop data that can [be] used to determine appropriate child support amounts." After analyzing currently available nationwide data on household expenditures (including data from single-parent households), JLARC staff conclude that it would not be cost-effective for the General Assembly to attempt a new, Virginia-specific data collection effort.

In this report, JLARC staff demonstrate how current nationwide data could be used to estimate expenditures on children, and how these estimates could be used to evaluate the current guidelines or to help determine new, alternative guidelines. Three findings from this analysis appear to be particularly salient.

• Among households earning less than $30,000 annually, estimated spending on children generally appears to exceed the amounts that are in the current guidelines.

• A key policy decision affecting the expenditure estimates is whether housing and transportation costs should be attributed to children on the basis of the per capita or the average use approach (or some combination of the two). These approaches are discussed more extensively in the report.

• Having a set of expenditure estimates alone would not be sufficient to determine appropriate child support amounts, because there is a need for additional policy decisions and adjustments to be made as well. However, using expenditure estimates as one of many components may help ensure that child support amounts realistically reflect the costs of raising children.