Houston Welfare Rights Organization, Inc. v. Vowell

• Decision Date: 13 July 1977
• Docket Number: No. 75-2815,75-2815
• Citation: 555 F.2d 1219
• Parties: HOUSTON WELFARE RIGHTS ORGANIZATION, INC., et al., Plaintiffs-Appellants, v. Raymond W. VOWELL, etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1219

555 F.2d 1219

HOUSTON WELFARE RIGHTS ORGANIZATION, INC., et al Plaintiffs-Appellants, v. Raymond W. VOWELL, etc., et al., Defendants-Appellees.

No. 75-2815.

United States Court of Appeals Fifth Circuit.

July 13, 1977.

Jeffrey J. Skarda, Houston, Tex., John R. Williamson, Texas Rural Legal Aid, Harlingen, Tex., for plaintiffs-appellants.

John L. Hill, Atty. Gen., Frank C. Cooksey, Asst. Atty. Gen., Austin, Tex., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before GODBOLD, SIMPSON and GEE, Circuit Judges.

GEE, Circuit Judge:

This appeal requires us to consider whether the State of Texas, in the administration of its program of Aid to Families with Dependent Children (AFDC), complied with federal requirements. ¹ The district

court concluded that the Texas Department of Public Welfare's administration of the AFDC program did not violate federal law, see Houston Welfare Rights Organization, Inc. v. Vowell, 391 F.Supp. 223 (S.D.Tex.1975). Plaintiffs appeal, arguing two major points: first, that Texas' policy of budgeting only a pro rata share of shelter and utility expenses when a non-AFDC recipient shares a recipient's residence violates federal regulations; and second, that Texas' use of an averaging process in changing from a system of individual budgeting employing ceilings on allowable need to a consolidated flat-grant system obscured the standard of need in violation of congressional requirements. We hold that the proration policy is invalid and remand to the district court for the entry of an order mandating a re-evaluation of the standards of need established under the new system.

FACTS

Aid to Families with Dependent Children (AFDC) is a public assistance program established by the Social Security Act of 1935, as amended, 42 U.S.C. § 602 (1970). AFDC provides federal matching funds to states choosing to participate in order to aid the "needy child . . . who has been deprived of parental support or care by reason of the death, continued absence from home, or physical or mental incapacity of a parent, and who is living with" any of the several listed relatives. 42 U.S.C. § 606(a) (1970). States electing to receive such funds must employ them in programs which do not conflict with the Social Security Act. Van Lare v. Hurley, 421 U.S. 338, 340, 95 S.Ct. 1741, 44 L.Ed.2d 208 (1975); Townsend v. Swank, 404 U.S. 282, 92 S.Ct. 502, 30 L.Ed.2d 448 (1971).

Two aspects of federal administration of the AFDC program are of importance here. The first is a federal regulation, 45 C.F.R. § 233.90(a) (1976), that provides in part:

In establishing financial eligibility and the amount of the assistance payment, only such net income as is actually available for current use on a regular basis will be considered, and the income only of the parent . . . will be considered available for children in the household in the absence of proof of actual contributions.

The second is a congressional requirement imposed on participating states by 42 U.S.C. § 602(a)(23) (1970), ² which requires that states adjust the determination of needs of individuals to reflect changes in living costs up to July 1, 1969. In Rosado v. Wyman, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970), the Supreme Court noted two reasons for this requirement:

First, to require States to face up realistically to the magnitude of the public assistance requirement and lay bare the extent to which their programs fall short of fulfilling actual need; second, to prod the States to apportion their payments on a more equitable basis.

397 U.S. at 412-13, 90 S.Ct. at 1218.

The State of Texas participates in the AFDC program and administers it through Another aspect of the Texas system of AFDC expenditure applied consistently under both plans of determining AFDC expenditure is the DPW's policy of prorating recipients' shelter and utility expenses in calculating the standard of need when noneligible individuals live with a recipient. ⁵ The proration occurs whether or not the noneligible lodger actually contributes to the shelter and utility expenses of the household. The DPW justifies the policy as recognizing the economies of scale which result when several individuals live in one shelter and as avoiding state payment of a noneligible individual's shelter and utility expense. The proration policy has the effect of lowering the recipient's allowable need so as to lower, in turn, his level of benefits.

                the Texas Department of Public Welfare (DPW).  Prior to March 1, 1973, Texas' AFDC program employed a combination of ceilings on allowable need and percentages of the allowable need to determine the level of benefits for recipients.  The procedure is fully described in the district court's opinion, see 391 F.Supp. at 227-28.  It suffices to say here that the DPW defined three categories of need (personal need allowance, shelter allowance and utilities allowance), with ceilings upon each category.  3  The sum of the amounts determined under each category calculated for the family unit was the "standard of need."  The DPW determined the "level of benefits" by taking 75% of this standard of need.  The payment to each recipient was further decreased by any income he received other than welfare benefits.  On March 1, 1973, the DPW converted its program by consolidating the various categories and standards of need to one figure determined by the size and composition of the household.  4  The level of benefits is 75% of the consolidated figure.  The DPW determined the consolidated figure by averaging past standards of need for households of various sizes and compositions receiving AFDC payments.  Thus, the DPW changed from a system of individualized budgets to standardized budgets with an attendant increase in administrative efficiency
                

PRORATION POLICY

Plaintiffs challenge the Texas DPW's proration policy as violating45 C.F.R. § 233.90(a) (1976) by presuming that the noneligible individual living with the recipient contributes toward the shelter and utility expenses, thus reducing the need of the recipient. The DPW responds that its policy does not presume income to the recipient, only reduction of the recipient's standard of need. The DPW merely presumes In Van Lare, the Supreme Court considered the effect of a New York public welfare regulation similar to that of Texas:

that the nonrecipient will pay his own way. The nonrecipient's presumed contribution to cover his expenses combined with economies of scale realized by group living indicates that the recipient's standard of need is less. The district court accepted the state's argument, but a Supreme Court decision since the district court's determination, Van Lare v. Hurley, 421 U.S. 338, 95 S.Ct. 1741, 44 L.Ed.2d 208 (1975), mandates a different result.

A non-legally responsible relative or unrelated person in the household . . . shall be deemed to be a lodger or boarding lodger . . . . In the event a lodger does not contribute at least $15 per month, the family's shelter allowance including fuel for heating, shall be a pro rata share of the regular allowance.

18 N.Y.C.R.R. § 352.30(d). The Court found the regulations invalid "insofar as they are based on the assumption that the nonpaying lodger is contributing to the welfare household, without inquiry into whether he in fact does so." 421 U.S. at 346, 95 S.Ct. at 1747. Van Lare appears to control, but the state attempts to distinguish it on the ground that the invalidated New York statutory scheme specifically presumed that the income of a lodger was devoted to his prorata share of shelter costs.

The state's attempt to distinguish Van Lare fails. The relevant New York statute provided in pertinent part:

18 N.Y.C.R.R. § 352.31:

(a) For applicant or recipient.

(3) When a female applicant or recipient is living with a man to whom she is not married, other than on an occasional or transient basis, his available income and resources shall be applied in accordance with the following:

(iv) When the man is unwilling to assume responsibility for the woman or her children, and there are no children of which he is the acknowledged or adjudicated father, he shall be treated as a lodger in accordance with section 352.30(d).

18 N.Y.C.R.R. § 352.30:

352.30 Persons included in the budget.

(d) A non-legally responsible relative or unrelated person in the household, who is not applying for nor receiving public assistance shall not be included in the budget and shall be deemed to be a lodger or boarding lodger. The amount which the lodger or boarding lodger pays shall be verified and treated as income to the family. For the lodger, the amount in excess of $15 per month shall be considered as income; for such boarding lodgers, the amount in excess of $60 per month shall be considered as income. In the event a lodger does not contribute at least $15 per month, the family's shelter allowance including fuel for heating, shall be a pro rata share of the regular shelter allowance. (emphasis supplied)

The state argues that the language of § 352.31(a)(3) ("his available income and resources shall be applied in accordance with the following") and § 352.30(d) ("The amount which the lodger or boarding lodger pays shall be verified and treated as income to the family") reveal that the New York scheme for reducing the shelter allowance prorata involved a presumption of income to the welfare family, not a presumption of reduced need. We disagree with the state's characterization of the New York approach. Although the New York scheme generally speaks of income, the relevant section in which the prorata policy appears does not explicitly presume that the nonrecipient's income will be applied to shelter expense; ⁶ instead, the statute implies that an AFDC Even had Texas successfully distinguished the New York statutory scheme from its proration policy, the DPW's policy still runs afoul of 45 C.F.R. § 233.90(a). The...