416 U.S. 251 (1974), 72-1513, Shea v. Vialpando

Docket Nº:No. 72-1513
Citation:416 U.S. 251, 94 S.Ct. 1746, 40 L.Ed.2d 120
Party Name:Shea v. Vialpando
Case Date:April 23, 1974
Court:United States Supreme Court

Page 251

416 U.S. 251 (1974)

94 S.Ct. 1746, 40 L.Ed.2d 120




No. 72-1513

United States Supreme Court

April 23, 1974

Argued February 26, 1974




Section 402(a)(7) of the Social Security Act requires state agencies in administering the Aid to Families with Dependent Children (AFDC) program to "take into consideration . . . any expenses reasonably attributable to the earning of . . . income." Such expenses are deducted from an AFDC applicant's income in determining eligibility for assistance. Colorado's AFDC regulations, which previously had permitted the deduction from income of all expenses reasonably attributable to employment, including transportation expenses, were amended in 1970 to subject work-related expenses (with certain exceptions) to a uniform allowance of $30 per month. This substantially reduced respondent's monthly deductions for work-related transportation expenses and the corresponding increase in her monthly net income made her ineligible for continued AFDC assistance. She then brought this action for injunctive and declaratory relief, claiming, inter alia, that Colorado's standardized work expense allowance violated § 402(a)(7). The District Court granted summary judgment for respondent, and the Court of Appeals affirmed.

Held: The Colorado regulation conflicts with § 402(a)(7), and is therefore invalid. Pp. 258-266.

(a) In light of the statute's legislative history and the normal meaning of the term "any," the language of § 402(a)(7) requiring the consideration of "any" reasonable work expenses in determining eligibility for AFDC assistance is to be interpreted as a congressional directive that no limitation, apart from that of reasonableness, may be placed upon recognition of work-related expenses, and hence a fixed work expense allowance that does not permit deductions for expenses exceeding that standard directly contravenes the language of the statute. P. 260.

(b) Standardized treatment of work-related expenses without provision for showing actual and reasonable expenses exceeding the standard amount threatens to defeat the purpose of the

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mandatory work expense recognition provision of § 402(a)(7) of encouraging AFDC recipients to secure and retain employment, since, by limiting work expenses to $30 per month, the Colorado regulation results in a disincentive to seek or retain employment for all recipients whose reasonable work-related expenses exceed or would exceed that amount. Pp. 263-265.

(c) It is not the adoption of a standardized work expense allowance per se that violates § 402(a)(7), but the fact that the standard is, in effect, a maximum or absolute limitation upon the recognition of such expenses. P. 265.

475 F.2d 731, affirmed.

POWELL, J., delivered the opinion for a unanimous Court.

POWELL, J., lead opinion

MR. .JUSTICE POWELL delivered the opinion of the Court.

In administering the Aid to Families with Dependent Children (AFDC) program of the Social Security Act of 1935, as amended (Act), 42 U.S.C. § 601 et seq., state agencies are required by § 402(a)(7) of the Act, 81 Stat. 881, 42 U.S.C. § 602(a)(7), to "take into consideration . . . any expenses reasonably attributable to the earning of . . . income." Such employment-related expenses are deducted from an AFDC applicant's income in the process of determining eligibility for assistance. We granted certiorari, 414 U.S. 999 (1973), to determine whether, in light of § 402(a)(7), a State may adopt a standardized allowance for expenses attributable to the

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earning of income which does not allow an applicant to deduct expenses that exceed the standard. We hold that it may not.


The AFDC program is designed to provide financial assistance to needy dependent children and the parents or relatives who live with and care for them. A principal purpose of the program, as indicated by 42 U.S.C. § 601, is to help such parents and relatives

to attain or retain capability for the maximum self support and personal independence consistent with the maintenance of continuing parental care and protection. . . .

The program "is based on a scheme of cooperative federalism," King v. Smith, 392 U.S. 309, 316 (1968). It is financed in large measure by the Federal Government on a matching-fund basis, and participating States must submit AFDC plans in conformity with the Act and the regulations promulgated thereunder by the Department of Health, Education, and Welfare (HEW). The program is, however, administered by the States, which are given broad discretion in determining both the standard of need and the level of benefits. See Jefferson v. Hackney, 406 U.S. 535, 541 (1972); Rosado v. Wyman. 397 U.S. 397, 408-409 (1970); Dandridge v. Williams, 397 U.S. 471, 478 (1970); King v. Smith, supra, at 318-319.

Under HEW regulations, all AFDC plans must specify a state-wide standard of need, which is the amount deemed necessary by the State to maintain a hypothetical family at a subsistence level. Both eligibility for AFDC assistance and the amount of benefits to be granted an individual applicant are based on a comparison of the State's standard of need with the income and resources available to that applicant. 45 CFR § 233.20(a)(2)(i). The "income and resources" attributable to an applicant, defined in 45 CFR § 233.20(a)(6) (iii-viii),

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consist generally of "only such net income as is actually available for current use on a regular basis . . . and only currently available resources." 45 CFR § 233.20(a)(3)(ii)(c). See also HEW, Simplified Methods for Consideration of Income and Resources (1965). In determining net income, any expenses reasonably attributable to the earning of income are deducted from gross income. 42 U.S.C. § 602(a)(7). If, taking into account these deductions and other deductions not at issue in the instant case, the net amount of "earned income" is less than the predetermined state-wide standard of need, the applicant is eligible for participation in the program, and the amount of the assistance payments will be based upon that difference. 45 CFR § § 233.20(a)(3)(ii)(a) and (c). Prior to May, 1970, Colorado's AFDC regulations permitted the deduction from income of all expenses reasonably attributable to employment, including but not limited to the actual cost of transportation, if "essential to retain employment."1 Child care expenses and mandatory payroll deductions were also treated as employment-related expenses, and all such expenses were computed on an [94 S.Ct. 1751] individualized basis. In May, 1970, this policy was changed by the establishment of a maximum transportation work expense allowance of either $30 per month, if the use of a car was essential, or the actual

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expense of public transportation. Effective July 1, 1970, the Colorado work expense allowance regulation was again amended to provide that, in addition to mandatory payroll deductions and child care expenses:

For employment expenses such as transportation, special clothing, union dues, special education or training costs, telephone, additional food or personal needs, etc., which are an obligation due to the employment, an allowance of $30 per month is made for such costs.2

Thus, while Colorado continued to allow individualized treatment of mandatory payroll deductions and child care costs, all other work-related expenses were subjected to a uniform allowance of $30, even if an applicant could prove actual expenses in excess of that figure. The Regional Commissioner of the Social and Rehabilitation Service of HEW thereafter accepted the incorporation of this provision into Colorado's AFDC plan.3

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When this suit was commenced in July, 1970, Mrs. Vialpando was employed some eight miles from the small Colorado community in which she resided with her two-year-old daughter. Since no public transportation was available, respondent traveled to and from work each day in a used automobile she had purchased for that purpose. In making the requisite eligibility and assistance determinations under the Colorado AFDC program, Mr. Vialpando had been permitted to deduct $47.30 in mileage costs and $63.81 in car payments4

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from her monthly gross income. [94 S.Ct. 1752] These deductions of approximately $110 per month, coupled with child care and mandatory payroll deductions, entitled her to an AFDC grant of $74 per month for herself and her daughter. The effect of the July, 1970, amendment of the Colorado AFDC regulations was to reduce respondent's monthly deductions for transportation expenses related to employment from $110 to $30. The corresponding increase in her monthly net earned income rendered her ineligible for continued AFDC assistance.5

Respondent thereupon brought this class action in the United States District Court for the District of Colorado under 42 U.S.C. § 1983 and 28 U.S.C. §§ 1343(3) and (4). She sought the convening of a three-judge District Court, and requested injunctive relief and a declaratory judgment that the Colorado standardized work expense allowance violated § 402(a)(7) of the Act and the Equal Protection Clause of the Fourteenth Amendment. Named as defendants were the Executive Director of the Colorado Department of Social Services and other state

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officers involved in administering Colorado's AFDC program. Upon stipulated facts and in reliance upon § 402(a)(7) of the Act, the District Court, in an unreported order, granted respondent's motion for summary judgment and enjoined enforcement of the challenged regulation.6 Finding the pendent federal statutory claim dispositive, the District Court properly did not reach the constitutional issue, and properly did not convene a three-judge court. Hagans v. Lavine, 415 U.S. 528 (1974).

The United States Court of Appeals for the Tenth Circuit affirmed. 475 F.2d 731 (1973)...

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