Cooper v. Swoap

Decision Date02 July 1974
Citation115 Cal.Rptr. 1,524 P.2d 97,11 Cal.3d 856
CourtCalifornia Supreme Court
Parties, 524 P.2d 97 Laura COOPER et al., Plaintiffs and Appellants, v. David B. SWOAP, as Director, etc., Defendant and Respondent. Sac. 7985. In Bank

Ralph Santiago Abascal, Edmund S. Schaffer, Jay-Allen Eisen, San Francisco, and Eugene S. Swann, for plaintiffs and appellants.

Evelle J. Younger, Atty. Gen., Elizabeth Palmer, Asst. Atty. Gen., N. Eugene Hill, Raymond M. Momboisse, and John Fourt, Deputy Attys. Gen., for defendant and respondent.

TOBRINER, Justice.

In this case, as in the companion case of Waits v. Swoap, Cal., 115 Cal.Rptr. 21, 524 P.2d 117, we must determine the validity, under state and federal law, of an administrative welfare regulation promulgated by the State Department of Social Welfare subsequent to the enactment of the Welfare Reform Act of 1971. The regulations at issue in both cases represent variations on a single administrative theme: that 'noncash economic benefits' enjoyed by certain recipients of aid to families with dependent children (AFDC) may be treated as 'income' of such recipients so as to warrant a reduction of their welfare grants. 1 The regulation challenged in the instant case finds that such 'noncash economic benefits' may arise when AFDC recipients share housing with a recipient of one of the state's 'adult aid' programs; accordingly, in such situations the regulation requires that the AFDC grant be reduced by a designated sum. The principal question presented is whether this particular regulation, and, more generally, the entire 'noncash economic benefit' concept, is consistent with the governing statutory scheme.

For the reasons discussed more fully below, we have concluded that the regulation at issue here cannot be squared with the controlling provisions of the Welfare Reform Act of 1971, and is therefore invalid. Initially, we shall point out that at the time the 1971 legislation was enacted a provision identical to the instant regulation was proposed by the administration but was decisively rejected by the Legislature; thus, the legislative history provides perhaps the clearest indication that the present regulation is inconsistent with legislative intent.

Moreover, we shall explain that on a more general level the department's newly devised 'noncash economic benefit' concept is completely at odds with the 'flat grant' system of welfare benefits that lies at the heart of the 1971 welfare reform legislation. In establishing a flat grant system, the Legislature consciously abandoned the previous practice under which welfare grants were set on the basis of an administrative determination of need; instead, the Legislature took it upon itself to set fixed grant levels to be paid to All recipients without regard to individual need. The regulation at issue directly contradicts this flat grant approach, reducing certain recipients' grants on the basis of an administrative judgment that such recipients have less need than other recipients.

Although the department defends its new approach on the ground that 'noncash economic benefits' generally, and shared housing in particular, constitute 'income' to recipients which may properly be considered in calculating welfare grants, such benefits have never been considered income throughout the entire history of California's welfare system, and we can find absolutely no indication that the Legislature intended to alter its consistent treatment of such 'benefits.' Moreover, with respect to the 'adult aid' payments governed by the instant regulation, a specific statute explicitly mandates that such aid 'shall not be construed as income' under these circumstances (Welf. & Inst.Code, § 11006). Finally, we shall explain that even if it were permissible to construe 'noncash economic benefits' as income, the present regulation would be invalid for it does not measure the actual value of benefits received by an individual recipient but instead assigns an arbitrary, fictitious measure of income, in contravention of the controlling federal and state statutes.

Consequently, we have concluded that the challenged regulation cannot stand.

1. The facts.

Laura Cooper is a recipient of aid to the disabled (ATD); she lives with her five minor children and receives on their behalf aid to families with dependent children (AFDC). Moice Palladino has also been receiving ATD benefits for herself and AFDC benefits on behalf of her minor son. The ATD program covers only the mother's needs; the AFDC program covers the needs of the children.

Under the payment schedule established by the Legislature in Welfare and Institutions Code section 11450, the Palladino child was entitled at the time this litigation was instituted to a welfare grant of $115 per month (AFDC unit of one), and the Cooper children to a grant of $320 per month (AFDC unit of five). Because both of the families qualified for two welfare programs, however, the State Department of Social Welfare (department) directed that the grants to the children be reduced by application of its newly propounded Regulation 44--115.8, 2 the regulation at issue in the instant case. Under this new regulation, the Palladino child was to receive $92 per month instead of $115 (a $23 deduction) while the Cooper children would obtain $289 per month instead of $320 (a $31 deduction). 3

Mrs. Cooper and Mrs. Palladino, joined by the California Welfare Rights Organization, then instituted the present class action against the department challenging the validity of Regulation 44--115.8. All parties stipulated that no factual disputes existed and after oral argument the superior court granted the department's motion for summary judgment, concluding that the challenged regulation was valid under state and federal law. Plaintiffs appeal from that judgment.

2. The governing statutory background.

In determining whether or not the regulation before us is consistent with the current California statutory scheme, we must briefly review the historical background of the Welfare Reform Act of 1971. Prior to 1971, the Legislature had delegated to the department the authority to determine individual recipients' needs, and to pay corresponding benefits, up to a statutory maximum. The department accordingly promulgated detailed regulations specifying allowances for itemized needs. Allowances for nonhousing items, such as food and clothing, were calculated on the basis of the age and sex of each family member, the family's size and county of residence; the housing and utilities allowances reflected actual payments for these commodities up to a specified maximum. Among the regulations previously in effect was former Regulation 44--115.61 which expressly declared that 'partially free or shared living costs Do not represent income.' (Emphasis added.)

Determining individual families' needs on the basis of such diverse factors as family composition and geography, however, proved unacceptably inefficient. The Reform Act of 1971 replaced this cumbersome system with a simple, uniform flat grant. The Legislature abolished the administrative allowances and need figures and took upon itself the task of determining the minimum need level of recipients (Welf. & Inst.Code, § 11452). The Legislature itself then set Uniform welfare payments (Welf. & Inst.Code, § 11450) Based on a fair averaging of all AFDC grants, a method of welfare benefit computation recently approved by the United States Supreme Court in Rosado v. Wyman (1970) 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442. 4

The chief purposes of the reform were to streamline the administration of the welfare program 5 and to eliminate welfare paternalism by allowing recipients to allocate grant money according to their own priorities. 6 The Legislature accomplished these purposes by replacing the complicated administrative allowances with flat grants determined solely by family size, and mandating that the full grants be paid without regard to actual expenditures for particular need items. The amount received by each family is now dictated by a schedule adopted by the Legislature and contained in Welfare and Institutions Code section 11450, subdivision (a): 'For each needy family which includes one or more needy children . . . there shall be paid . . . an amount of aid each month which when added to his income . . . is equal to the sums specified in the following table. . . .' 7

Thus, whereas under the pre-1971 practice the administrative agency was primarily responsible for establishing the basic amount of a recipient's grant, the 1971 legislation withdrew the department's authority in this regard and established a schedule of legislatively mandated 'flat grants.'

Subsequent to the enactment of the 1971 act, the department promulgated a series of regulations purporting to implement the reform legislation. In one of the regulations (Reg. 44--115.9), the department adopted a schedule of housing and utility 'allowances,' assigning a designated dollar value to housing and utilities assertedly used by different sized AFDC family units. 8 Regulation 44--115.8, the regulation at issue here, provides that whenever this administrative 'allowance' figure exceeds the amount of an AFDC recipient's actual pro rata expenditure for housing and utilities, the 'excess' amount shall be considered 'income' to the recipient; by its terms, the regulation confines its operation to situations in which the AFDC recipient resides in the same household with one or more recipients of 'adult aid.' 9 Although the precise rationale of the regulation is not explicitly stated, the regulation appears to be an attempt to measure the 'noncash economic benefits' which an AFDC recipient obtains by sharing housing and utilities with an individual who is receiving an independent welfare grant.

As noted above, the central issue in this case is whether Regulation 44--115.8,...

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