In Minnesota, child support and spousal maintenance obligations are subject to biennial cost-of-living adjustments based on the Consumer Price Index.  See Minn. Stat. § 518A.75 Subd. 1.  Generally, the implementation of a cost-of-living adjustment, “attempts to prevent an award of child support or maintenance that was determined to be appropriate at the time it was set…from becoming inequitable due to an inflation-based degradation of its relative value.”  Grachek v. Grachek, 750 N.W. 2d 328, 332 (Minn. Ct. App. 2008) review denied.

Notably, cost-of-living adjustments are distinct from a modification of spousal maintenance, and no burden exists on the obligee to show that the current maintenance award is unreasonable and unfair.  Id. At 331.  Instead, the obligor has the burden of demonstrating why the cost-of-living adjustment should be reduced or eliminated. See Braatz v. Braatz, 489 N.W. 2d 262 (Minn. Ct. App. 1992) review denied.

In order to maintain the continuing integrity of spousal maintenance and child support awards against the effects of inflation, Minnesota law states that a cost-of-living adjustment shall take effect unless the obligor establishes an insufficient increase in income to support the adjustment.  Minn. Stat. 518A.75 Subd. 3.  In contrast, the waiver or reduction of the cost-of-living adjustment by the Court is merely permissive, and a court is not required to reduce or eliminate a cost-of-living adjustment except where the clear facts support that an obligor’s only present source of income does not provide for a COLA.  See  Mower County Human Services v. Meyer, 543 N.W. 2d 682, 685 (Minn. Ct. App. 1996) (holding that a district court abused its discretion in applying a cost-of-living adjustment to a child support award where the award was based on income derived solely from fixed annuity payments).

Further, the court has broad discretion in implementing cost-of-living adjustments and is not limited only to a consideration of whether or not an obligor’s income specifically provides for a cost-of-living adjustment.  Rather, the court may look to any other “increase in income” as well as considering the obligor’s “total financial situation.”  McClenahan v. Warner, 461 N.W. 2d 509, 511 (Minn. Ct. App. 1990).