Garcia v. Swoap

• Citation: 63 Cal.App.3d 903,134 Cal.Rptr. 137
• Court: California Court of Appeals
• Decision Date: 17 November 1976
• Parties: Marguarita GARCIA and Palmida Castanon, Plaintiffs and Appellants, v. David B. SWOAP, as Director of the State Department of Benefit Payments, Defendant and Respondent. Civ. 47086.

Page 137

134 Cal.Rptr. 137

63 Cal.App.3d 903

Marguarita GARCIA and Palmida Castanon, Plaintiffs and Appellants, v. David B. SWOAP, as Director of the State Department of Benefit Payments, Defendant and Respondent.

Civ. 47086.

Court of Appeal, Second District, Division 5, California.

Nov. 17, 1976.

Rehearing Denied Dec. 15, 1976.

Hearing Denied Feb. 3, 1977.

Daniel M. Luevano, Rosalym M. Chapman, Philip L. Goar, and Dorothy T. Lang, Western Center on Law & Poverty, Los Angeles, and Warren Weinstein and Ronald S. Javor, Legal Aid Foundation of Long Beach, San Pedro, for plaintiffs and appellants.

Evelle J. Younger, Atty. Gen., Ronald V. Thunen, Jr., and Ronald Gold, Deputy Attys. Gen., for defendant and respondent.

STEPHENS, Presiding Justice.

In a class action against the Director of the State Department of Benefit Payments (Department) plaintiffs and appellants challenged the validity of a Department regulation in a complaint for injunctive and declaratory relief. The preliminary injunction was denied, and judgment was entered for the defendant. Plaintiffs then entered the instant appeal.

Facts

Plaintiffs Marguarita Garcia and Palmida Castanon, represent themselves and a class of persons who are recipients of the Aid to Families with Dependent Children (AFDC) program. The administrative regulation challenged by them, EAS 44--315.6, provides as follows:

"Budget Period

'.61 The budget period in counties without an approved alternate payment system:

'.611 The budget period for AFDC-FG and AFDC--U cases shall be the second prior calendar month before the first installment of the corresponding payment period.

'. . .he

'.62 The budget period in counties with approved alternate payment systems:

'.621 The budget period for AFDC-FG and AFDC--U cases shall be a 28 to 31-day period ending not more than 31 days nor less than 28 days before the first installment of the corresponding payment period. The budget period is not limited to a calendar month.'

Under the instant regulation, known as 'Prior Month Budgeting,' an AFDC grant for the current month is calculated on the basis of the net nonexempt income that is received two months prior to the actual payment of the grant. ¹ Since the budget period precedes the payment period by two months, a grant in April is based on a recipient's February income, a grant in May is based on March income, and so forth. All AFDC recipients are required to submit a monthly report of all income received during the budget period. In the intervening month between the budget period and the payment period, the County Welfare Department computes the welfare grant based upon that reported income, and issues the grant at the start of the payment period.

Appellant Garcia and her four children received an AFDC check for $355 in July 1974. ² For the four preceding years, her only source of support was the AFDC program. In both June and July 1974, she received, in addition to the AFDC grant, $200 in child support from her ex-husband. No child support money was received in August or September. She reported the income to her caseworker on the two occasions that she received it, but claims that her caseworker never told her that the income would be used to lower her AFDC grant two months later. In August and September her AFDC grant was reduced to $155 to reflect her June and July income. Appellant Garcia had no other available income in August or September other than the AFDC grant since the child support payments received in June and July had been spent on past due bills.

In July 1974, Mr. Castanon was residing with his wife and child and earned from part-time work net nonexempt income of approximately $250. Appellant Castanon declares that her husband spent all of the income in July by contributing $180 toward his father's funeral and the remainder on his own personal needs. In August, Mr. Castanon left his family and has not returned; appellant's grant was reduced to $86 to reflect Mr. Castanon's July income.

Contentions

Appellants Garcia and Castanon contend, on behalf of themselves and the class of welfare recipients receiving aid under California's AFDC program, that the Prior Month Budgeting scheme (PMB) is contrary to state and federal law and that the regulation which implemented this scheme (EAS 44--315.6) is therefore beyond the rule-making authority of the Director of Benefit Payments. In particular, appellants claim that the PMB regulation is in direct conflict with the purpose of AFDC--to provide for the Current needs of dependent children, and with a federal AFDC regulation (45 C.F.R. § 233.20(a)(3)(ii)(D)) requiring that grants to needy families by made based on currently available income and resources. It is further claimed that the PMB system contravenes California statutes setting minimum aid standards (Welf. & Inst.Code, § 11450) and limiting reductions of current grants to effect recoupment for prior overpayments (Welf. & Inst.Code, § 11004).

Discussion

Before reaching appellants' objections to California's current AFDC budgeting scheme we note that there may be an independent ground for reversal of the judgments against Mrs. Garcia and Mrs. Castanon. At the time of trial, the federal 'income and resources' regulations then in effect allowed consideration only of 'such net income as is actually available for current use On a regular basis' in determining the amount of AFDC assistance. (45 C.F.R. § 233.20(a)(3) (ii)(C), effective January 29, 1969; emphasis added.) ³ By implication, nonregular or sporadic income was not to be considered by the welfare agency. Clearly, Mrs. Garcia's income could have been classified as 'sporadic,' though it is not clear that the part-time earnings of Mr. Castanon could have been so classified. Thus, Mrs. Garcia's reduction of payment could be attributed not to the operation of PMB, but rather to the possibly erroneous consideration of sporadic income in reducing a subsequent assistance grant. But because Mrs. Castanon's complaint more likely arises from the operation of the PMB system itself, we cannot avoid an evaluation of such a system in this appeal. Further, since the income and resources regulation has since been amended to delete the regular income restriction (45 C.F.R. § 233.20(a)(e)(ii)(D), effective August 1, 1975) ⁴ cases such as Mrs. Garcia's will properly come within the scope of PMB, and in such cases the lower court will need our guidance as to the propriety of injunctive relief.

In reviewing the Prior Month Budgeting regulation we recognize that we cannot superimpose our own policy judgment upon that of a state administrative agency which acts in a quasi-legislative capacity. (Pitts v. Perluss, 58 Cal.2d 824, 832, 27 Cal.Rptr. 19, 377 P.2d 431.) But the latitude which an administrator has in implementing a state and federal statutory scheme is not unlimited. It is well settled that a state welfare administrator may not operate welfare programs which alter, impair, or impede their statutory schemes (Morris v. Williams, 67 Cal.2d 733, 748, 63 Cal.Rptr. 689, 433 P.2d 697; see also California Welfare Rights Organization v. Carleson, 4 Cal.3d 445, 458, 93 Cal.Rptr. 758, 482 P.2d 670; Daley v. State Department of Social Welfare, 276 Cal.App.2d 801, 804, 81 Cal.Rptr. 318), and it is this court's obligation to strike down regulations effectuating such welfare operations. (Morris v. Williams, supra.) Thus, to the extent that the PMB regulation is inconsistent with controlling state and federal statutes, fundamental principles of administrative law require that it be declared invalid, and its further operation may properly be enjoined. (See Cooper v. Swoap, 11 Cal.3d 856, 864--865, 115 Cal.Rptr. 1, 524 P.2d 97.)

We proceed not to an evaluation of the controlling federal law and policy governing the AFDC program. Initially we note that states which qualify for AFDC funding and which elect to participate, must comply with the mandatory requirements established by the Social Security Act, as interpreted and implemented by regulations promulgated by the Department of Health, Education and Welfare. (Ogdon v. Workmen's Comp. Appeals Bd., 11 Cal.3d 192, 199, 113 Cal.Rptr. 206, 520 P.2d 1022; County of Alameda v. Carleson, 5 Cal.3d 730, 739, 97 Cal.Rptr. 385, 488 P.2d 953.) Title IV of the Social Security Act, 42 U.S.C. § 602(a)(7), requires that a state AFDC plan 'must . . . provide that the state agency shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid . . ..' The regulation adopted pursuant to this directive provides that 'net income (actually) available for current use' shall be considered in determining need and the amount of assistance. (45 C.F.R. § 233.20(a)(3)(ii)(D).) Once a family is found to be eligible for AFDC assistance the federal statute further requires that aid to dependent children 'be furnished with reasonable promptness . . ..' (42 U.S.C. § 602(a)(10).)

The federal AFDC program was designed to provide welfare for families without a 'breadwinner,' 'wage earner,' or 'father,' a need unfulfilled by other welfare programs. (King v. Smith, 392 U.S. 309, 328, 88 S.Ct. 2128, 20 L.Ed.2d 1118.) As such, it has as its primary and almost exclusive purpose the protection of such dependent children through the provision of assistance payments to meet their current needs. (42 U.S.C. § 601 (1970)); King, supra, at p. 325, 88 S.Ct. 2128; see Rodriguez v. Vowell (5 Cir. 1973) 472 F.2d 622, 627.) ⁵ It has been recognized, in addition, that a state welfare agency may not frustrate this purpose to advance otherwise valid concerns such as state fiscal and deterrence objectives. ⁶ (See King, supra, 392 U.S., at p. 320, 88 S.Ct. 2128.) Two corollaries have developed out of these principles: First, cases interpreting the 'income and resources' regulations (45 C.F.R. § 233.20(a)(3)(ii)(D)) have all recognized that the state welfare agency may not Presume that...