Case Title: Steere v. State, Dept. of Public Welfare

Citation: 243 N.W.2d 112

Docket Number: 

State: minnesota

Court: Minnesota Supreme Court

Date: 1976-05-21T00:00:00Z

Document:
243 N.W.2d 112 (1976) Lucille STEERE, Appellant, v. STATE of Minnesota, DEPARTMENT OF PUBLIC WELFARE, Respondent, Hennepin County Welfare Board, Respondent. No. 45615. Supreme Court of Minnesota. May 21, 1976. *114 Eric S. Janus, Legal Aid Society of Minneapolis, Minneapolis, for appellant. Warren Spannaus, Atty. Gen., Thomas Fabel, Deputy Atty. Gen., John H. Daniels, Sp. Asst. Atty. Gen., Dept. of Public Welfare, St. Paul, for State. Heard before KELLY, TODD and MacLAUGHLIN, JJ., and considered and decided by the court en banc. KELLY, Justice. Appellant, Lucille Steere, a recipient of Aid to Families with Dependent Children (AFDC),[1] appeals from an order of the district court affirming a determination of the commissioner of public welfare which authorized recoupment of certain amounts from her AFDC grant. We affirm. Appellant has been a recipient of AFDC for her needs and those of her two minor children since 1972. She was employed during 1973, and her employer withheld a portion of her earnings for state and Federal income taxes. In January 1974, the Hennepin County Welfare Department (hereafter the Welfare Department) sent appellant and other AFDC recipients a printed card which read in relevant part: *115 On February 14, 1974, the Welfare Department also requested of appellant copies of her state and Federal tax returns. She promptly supplied the returns. Appellant received a Federal income tax refund of $255.70 on March 24 and a state income tax refund of $67.10 on March 26, for a total of $322.80 in refunds. She spent the refunds almost immediately and before April 1, 1974, on food, clothing, heating, and other necessary items for her family. Although she admitted receiving the card instructing her to report the refunds when received, she did not do so. When she telephoned her eligibility technician in early April to ask a question regarding a financial report, the technician asked whether she had received her refund and she responded affirmatively. On April 1, 1974, appellant received her full April grant of $275. On April 2, 1974, the Welfare Department suspended appellant's grant of $275 for May 1974 and reduced her grant for June 1974 to $265.50. This action was taken to recoup $284.50 which the Welfare Department alleged was overpayment to appellant in March when she had received her full grant plus the income tax refunds. The $284.50 figure (rather than the full refund of $322.80) was apparently used because it represented income tax withheld from appellant's income in 1973 according to the Welfare Department's records. Appellant challenged the suspension and reduction in an appeal to the Minnesota State Department of Public Welfare (hereafter State Department). On July 26, 1974, the commissioner of public welfare entered a revised order affirming the reduction, but reversing the suspension on the ground that state regulations permitted recoupment of only one-half of total monthly "disregarded income." Appellant challenged the commissioner's order in the district court, which affirmed the order on November 29, 1974. Pursuant to the commissioner's revised order, appellant's grants were reduced in amounts varying from $55 to $62 a month until $284.50 had been recouped. Appellant raises three issues on this appeal: (1) Can public assistance be recouped from the recipient without specific Minnesota statutory authorization? (2) Are tax refunds "income" under Federal regulations governing AFDC? (3) Are Minnesota and Federal recoupment regulations consistent with the Social Security Act? 1. Appellant initially challenges the right of the Welfare Department or any public agency to recoup public assistance funds not fraudulently obtained without specific Minnesota statutory authorization. She relies chiefly on the following dictum in Robertson v. Johnson, 294 Minn. 201, 205, 200 N.W.2d 316, 319 (1972): Beaulieu supported the above proposition only in dicta, but cited County of Brown v. Penkert, 164 Minn. 55, 204 N.W. 469 (1925), in which this court held that a decedent's estate was not liable for poor relief furnished to her in the absence of statutory authorization. The language in County of Brown, however, is narrower than that in the other cases. In County of Brown, we discussed the problem as follows: We think the facts and administrative scheme here warrant disregard of the dicta in our prior cases based on the above quoted language in County of Brown. The appellant was overpaid in the instant case. She was not entitled to (nor was the Welfare Department legally obligated to provide her with) full grants in March and April when she had received and had available her tax refunds. Such an overpayment of government funds, which resulted at least in part from appellant's failure to report receipt of her refunds immediately, gives rise to an obligation to repay. As the New Jersey Supreme Court stated in facing a similar problem: Moreover, the commissioner of public welfare is given broad statutory authority to regulate public assistance and comply with Federal regulations, including those asserted to justify recoupment in the instant case. Minn.St. 256.01, 256.011. We decline to interfere with what we perceive to be the commissioner's broad discretion to fairly administer public assistance. 2. Appellant argues that Department of Public Welfare Regulation IMM III-3240.14, which treats tax refunds as "income" to be applied to current need, violates 45 CFR 233.20(a)(3)(ii)(c) of the Federal AFDC regulations promulgated by the Department of Health, Education, and Welfare (HEW). "IMM" designates Income Maintenance Manual, a compilation of the State Department's policies and procedures for administration of the AFDC program. While we will use the term "regulation" to refer to the department's policy on income tax refunds, this regulation is not a "rule" within the meaning of Minn.St. 15.0411, subd. 3, of our Administrative Procedure Act, nor was it promulgated pursuant to administrative rulemaking procedures. It is merely a policy statement of the State Department. In Wacha v. Kandiyohi County Welfare Bd., Minn., 242 N.W.2d 837, filed herewith, we held that this policy statement is not invalid as a violation of state rulemaking procedure. The state regulation provides: The applicable Federal regulation, provides in relevant part: *117 Appellant argues that tax refunds are not available for current use "on a regular basis" and should therefore be considered personal property she is allowed to keep and not income.[2] Several courts have considered this question and a split of authority has developed. We will discuss what we regard as the two significant cases.[3] In Kaisa v. Chang, 396 F. Supp. 375, 377, note 13 (D.Hawaii 1975), the United States District Court said that an income tax refund was not available on a regular basis because of "the uncertainty of receiving any tax refund and the fact that even if received, it can be expected, at most, once annually." In Walker v. Juras, 16 Or.App. 295, 518 P.2d 663 (1974), the Oregon Court of Appeals held that tax refunds were properly income. In Walker the court noted that refunds were available on an annual basis and were distinguishable from other kinds of lump-sum payments (inheritances, gifts, insurance benefits, personal-injury damages, etc.) in that they were (1) attributable to the efforts of the recipient and (2) to some extent, within his control. The court quoted from an unpublished Federal district court opinion, Carr v. Saucier (N.D.Ga.1973) No. 16,704 Civil, as follows: We prefer the result of the Oregon case. Black, Law Dictionary (Rev. 4 ed.), p. 1450, defines "regular" as: "* * * Steady or uniform in course, practice, or occurrence; not subject to unexplained or irrational variation." Income tax refunds are a reasonably predictable annual source of income. While they may be subject to some variations, for wage earners with low incomes and relatively stable economic circumstances (a characterization which we note describes most AFDC recipients) tax refunds are a sufficiently uniform source of income to be deemed available on a "regular" basis.[4] *118 This result comports more closely with the view taken by HEW, the agency charged with administration and regulation of AFDC on the Federal level. In an HEW Program Instruction to state agencies administering public assistance programs, HEW stated in part: In addition, HEW has deleted reference to the term "regular" in its revised income assessment regulations. The proposed provision, 45 CFR 233.20(a)(3)(ii)(d), provides as follows: While we are informed that this regulation has not yet taken effect, the fact that the term "regular basis" has been deleted further evidences HEW's belief that all income, including tax refunds, must be applied to offset need. Although the Program Instruction and regulation change occurred after the initiation of administrative proceedings in the instant case, they provide persuasive evidence of HEW's views on this issue.[5] Finally, viewing income tax refunds as income comports more closely with the equitable and efficient operation of the AFDC program. As noted in Carr v. Saucier (N.D. Ga.1973) No. 16,704, Civil, cited in Walker v. Juras, supra, recipients would otherwise be encouraged to claim fewer deductions than they were legally entitled to in order to secure a larger, grant-determination-free refund. Federal and state treasuries thus become a protected savings account which may be withdrawn annually without an impact on the AFDC grant. Such a result would threaten the laudable goals and fiscal integrity of the AFDC program.[6] We therefore hold that income tax refunds are net income actually available for current use on a regular basis within the meaning of 45 CFR 233.20(a)(3)(ii)(c) and may be considered income to be applied to current need in the AFDC structure. 3. Appellant challenges state and Federal regulations authorizing recoupment as inconsistent with the Social Security Act. Her challenge is two-pronged: (1) She argues that all recoupment through grant reduction is prohibited under the Social Security *119 Act, 42 U.S.C.A., § 601 et seq.; and (2) she argues that Minnesota Department of Public Welfare regulations governing recoupment violated the "earned income disregard" provisions of 42 U.S.C.A., § 602(a)(7, 8). Appellant asserts that 45 CFR 233.20(a)(12), which, in essence, authorizes recoupment from AFDC grants in certain instances, is invalid. That regulation provides in relevant part: The essence of appellant's argument is that Congress, which has authorized recoupment for other kinds of public assistance,[7] but specifically rejected it for AFDC, intends that AFDC benefits should be restricted only because of lack of need or dependency.[8] Appellant concludes that the Federal regulation authorizing recoupment is not a need or dependency regulation and is therefore invalid. After careful consideration and review of the authorities cited by appellant, we reject this argument for the reasons that follow. First, the legislative history of the Social Security Act and the Federal district court cases cited by appellant do not provide persuasive support for her argument. While Congress has not passed proposed legislation authorizing mandatory recoupment by state agencies in the AFDC program, neither has it prohibited recoupment or made any effort to invalidate the Federal regulation at issue here. Thus, Congressional "intent" in this area is uncertain. *120 Under these circumstances, we decline to engage in speculation about it and prefer to uphold the regulation. Likewise, United States Supreme Court cases provide little assistance. While the Supreme Court has held that state agencies may not, in considering the income and resources available to a recipient in fixing a grant, consider income or resources that are not "in fact" available to a recipient for current use on a regular basis,[9] it has also accorded those agencies substantial discretion in making need and benefit determinations consistent with local policies and socioeconomic value judgments.[10] Second, contrary to appellant's assertion, lower Federal court cases which have faced recoupment issues similar to the one at bar are either distinguishable on their own facts or support the validity of the Federal regulations before them. The United States District Court for the District of Columbia held a predecessor of the current Federal recoupment regulation invalid because it purported to authorize recoupment from current assistance payments without regard to need. That court commented: In a similar vein, appellant argues here that she spent the tax refunds almost immediately and that they were not available to meet her needs or those of her children in May 1974 or thereafter, when recoupment was accomplished. Appellant ignores several factors which distinguish her case from National Welfare Rights Organization v. Weinberger, supra: (1) The reason recoupment could not be accomplished until May 1974 was that appellant did not promptly report receipt of her tax refunds, and the Welfare Department did not learn of their receipt until after the April grant had been paid; (2) regardless of when and how appellant actually disposed of her tax refunds, those refunds were available to her to meet needs that would otherwise have been met by the AFDC grant; and (3) recoupment did not invade established minimum grant levels of need, but only appellant's earned income beyond those levels. *121 The last factor noted distinguishes appellant's case from all of the cases she cites. As noted in the statement of facts, recoupment from appellant's grant was accomplished at the rate of one-half her "earned income disregard," or approximately $55 per month. The recoupment arose from outside income earned by appellant. At no time did the appellant's grant plus her other available income fall below the minimum standards of need set for herself and her two children under the AFDC program. The court in National Welfare Rights Organization v. Weinberger, supra, seemed to acknowledge the possibility of valid recoupment in this situation in the statement of the issue in that case: This factor also distinguishes the case of Cooper v. Laupheimer, 316 F. Supp. 264 (E.D.Pa.1970), relied on by appellant, which invalidated a Pennsylvania recoupment regulation. In that case, decided by a three-judge panel, the court observed: One other Federal case is worthy of consideration in connection with the third factor. In Holloway v. Parham, 340 F. Supp. 336, 343 (N.D.Ga.1972), the three-judge court saved a Georgia recoupment statute by carefully construing it so any recoupment would not invade established need: The court remanded the case with instructions to waive recoupment unless there had been a change in "need": Since the Minnesota scheme of recoupment is careful to leave in the hands of the recipient more than sufficient income to meet minimum levels of need established under the AFDC program, we uphold it as consistent with the relevant Federal authorities discussed above.[11] Third, we cannot agree with appellant's assertion that because she had spent her refunds on necessities before recoupment, the Welfare Department may not reduce her subsequent grants to compensate for her use of those refunds. Our acceptance of such an assertion would require the Welfare Department to catch recipients with funds "in hand" at the time *122 their monthly grants were paid in order to ensure that the funds had not been spent before recoupment was begun. This is an obvious administrative impossibility. If it became a requirement, practically no available income could be considered in determining the grant. The essence of appellant's situation is this: She was entitled to receive a $275-a-month grant based on a formula which considered need and income. Whether she actually spent the grant in a day or in 30 days, her grant remained $275 a month. When she received her income tax refunds, she received income sufficient to replace over one month's grant at the $275-a-month rate. Again, whether she spent her refunds in a day, a month, or two months, they were available to her to meet the equivalent of over one month's grant, and she could have so treated them in budgeting. The AFDC program is not designed to provide funds to cover all expenses a recipient might reasonably spend on "necessary" items. It is designed to provide funds to meet minimum established levels of need for large numbers of families. It can do so fairly, equitably, and efficiently only if availability of income is presumed for the same period and in the same manner as the availability of the grant itself would be presumed. Appellant's most troublesome argument is that Minnesota Department of Welfare Regulations IMM IV-1291[12] violates 42 U.S.C.A., § 602(a)(7, 8), which requires the state agency to disregard a certain portion of appellant's income in determining "need" as a work incentive. 42 U.S.C.A. § 602, provides in relevant part as follows: Clause (8) and the statutory scheme in which it operates contemplates the following *123 formula for calculation of an AFDC grant: The operation of clause (8) can be illustrated as follows. Assume that the state agency's minimum need level (ascertained by other state and Federal statutes and regulations not relevant here) for a family of two children is $300 a month. Assume further that the recipient and head of this family has monthly income of $270. The monthly AFDC grant would be calculated in this way: The "earned income disregard" in this example is the first $30 of income plus 1/3 of the amount of monthly income remaining (i. e., 1/3 of $240), or $110. At the outset, we note that the state must disregard the income referred to in clause (8). In X v. McCorkle, 333 F. Supp. 1109 (D.N.J.1970), affirmed per curiam sub nom., Engelman v. Amos, 404 U.S. 23, 92 S. Ct. 181, 30 L. Ed. 2d 143 (1971), a three-judge court held that New Jersey regulations which fixed an "administrative ceiling" on income for purposes of AFDC eligibility, but did not disregard the income referred to in clause (8), were invalid. The court commented as follows on the history and policy of clause (8): The court rejected New Jersey's arguments that its scheme substantially complied with clause (8) and provided sufficient work incentives: The revised order of the Minnesota commissioner of public welfare authorized recoupment of one-half of appellant's "earned income disregard" per month. Thus, it would initially appear that appellant is correct in her contention that the commissioner is not disregarding the full amount of income required by clause (8). However, clause (8) refers to disregarding income "in making the determination under clause (7)." Clause (7), in turn, refers to taking into consideration income and resources "in determining need." The issue therefore becomes whether the recoupment process carried out in the instant case was a determination of need. The United States District Court for the District of Minnesota, speaking through Judge Earl Larson, has recently considered this issue of first impression in Johnson v. Likins (D.Minn.1975) No. 4-75-318 Civil. Judge Larson issued a preliminary injunction prohibiting the Minnesota Department of Public Welfare recouping overpayments caused solely by agency error from disregarded income. In issuing the injunction, the court held that the Minnesota recoupment regulation involved a determination of need and violated the mandate of § 602(a)(8): Judge Larson further concluded that Federal regulations did not authorize the kind of recoupment accomplished in Johnson, since "income or resources exclusive of the current assistance payment currently available" in 45 CFR 233.20(a)(12)(i)(A)(1) did not include clause (8) disregarded income. The instant case is distinguishable from Johnson since the conduct of the recipient, and not the error of the agency, was the cause of the overpayment. While the Welfare Department has not alleged fraud on the part of this recipient, the administrative hearing record discloses the following uncontradicted testimony of appellant herself: The referee, in holding for the county, stated: The commissioner upheld this finding in a revised order, and an experienced district court judge approved it, noting: "While there may be no allegation of fraud, certainly appellant was mistaken in not notifying the county at the time she received her income tax refund as she had been requested to do."[13] Our examination of the relevant regulations and statutes convinces us that recoupment is not a "determination of need" within the meaning of 42 U.S.C.A., § 602(a)(7, 8). While the recoupment process may consider "need," in the ordinary meaning of that word, in order to avoid cutting into the minimum grant level for a particular family, it does not determine need within the meaning of the Social Security Act. The process of determining need for assistance, which is completely separate from the recoupment process, includes the steps set forth in the hypothetical example discussed earlier: (1) Setting a basic grant level for a family of a particular size; and (2) deducting currently available income and resources from that level. When that process takes place, $30 plus 1/3 of the remainder of any net income must be disregarded under the Act. It is uncontroverted that the Welfare Department does routinely disregard that income, and that it did so in this case. Appellant maintains, however, that such income must continue to be disregarded throughout the recoupment process as well, since that process also determines need. We disagree. The recoupment process corrects prior overpayment, it does not determine need. The fact that the recoupment process takes care that recoupment not invade a family's basic grant level as established in the need-determination process does not mean that recoupment is a redetermination of need. It means, at most, that the recoupment process recognizes and utilizes need as already established by the former process. The recoupment regulations at issue here allow recoupment from "income or resources exclusive of the current assistance payment currently available in the amount by which the agency proposes to reduce payments." 45 CFR 233.20(a)(12)(i)(A)(1). (Italics supplied.) Earned income from employment, such as appellant's here, is exclusive of her payment (i. e., it comes from her employer, not AFDC) and is currently available to her. Therefore, prior overpayments may be recouped from that earned income. Since the Minnesota regulations recoup only one-half of the amount of that income that had been previously disregarded in the need-determination process, they clearly fall within the limits permitted by Federal regulations.[14] Furthermore, in response to *126 appellant's argument that the work-incentive policy of the Social Security Act is violated, we note that the Minnesota regulations allow appellant to retain one-half of her disregarded income, and that retention constitutes an incentive to her to keep her job and continue earning income. Acceptance of appellant's argument would virtually eliminate recoupment except in cases of fraud. While a negligible number of recipients might receive windfalls and be caught with those funds in hand, we doubt that the vast majority of recipients have any additional income or resources available to them other than earned income. If the disregarded portion of that earned income could not be touched, and the remainder were deducted from the grant in any event, there would be no practical way to recoup overpayments. Such a situation would disturb the fiscal integrity of AFDC and would give overpaid recipients an unfair windfall when compared with other recipients. Our views on this problem are shared by HEW. In a memorandum on behalf of the United States as amicus curiae filed in the case of Johnson v. Likins, supra, after Judge Larson's issuance of the preliminary injunction, HEW takes the position that recoupment from disregarded income of overpayments caused by agency error is permissible under the Social Security Act and the regulations discussed herein. In commenting on the plaintiff's contentions and Judge Larson's memorandum in Johnson, HEW states: In commenting on the redetermination-of-need argument used in Johnson and in the instant case, HEW states: As we interpret the HEW position, that agency would regard the recoupment in the instant case as consistent with its regulations and the Social Security Act. The views of HEW on the construction of statutes and regulations it administers are entitled to great weight. New York State Dept. of Social Services v. Dublino, 413 U.S. 405, 93 S. Ct. 2507, 37 L. Ed. 2d 688 (1973). See, also, N. L. R. B. v. Boeing Co., 412 U.S. 67, 93 S. Ct. 1952, 36 L. Ed. 2d 752 (1973); United States v. Jackson, 280 U.S. 183, 50 S. Ct. 143, 74 L. Ed. 361 (1930). Therefore, we hold that the recoupment process undertaken in the instant case was not a "determination of need" within the meaning of clause (7), and the Welfare Department could recoup from earned disregarded income.[15] See, McGraw v. Berger, 410 F. Supp. 1042 (S.D.N.Y.1976) (upholding New York's method of recouping overpayments in the face of a § 602[a][8] challenge). We emphasize that this decision is based upon the particular facts of the instant case and the statutes and regulations relevant thereto. We offer no opinion regarding the effect of changes in state or Federal regulations subsequent to this case nor any opinion on the merits of the case before Judge Larson or his arguments. We leave to future cases the ultimate resolution of these matters. We have also considered appellant's final contention regarding calculation of the recoupment, and we find it to be without merit.[16] Since the recoupment in the *128 instant case was in all respects proper, the order must be affirmed. Affirmed. [1] AFDC is an example of so-called "cooperative federalism," i. e., joint Federal-state financial and administrative participation in a program designed to materially assist dependent children and their families. While the program is administered by state and county welfare departments, much of its financial support comes from the Federal government. It is axiomatic that state officials are bound by valid Federal statutes and regulations in administering the program. See, Blue Earth County Welfare Dept. v. Cabellero, Minn., 225 N.W.2d 373 (1974); Meagher v. Hennepin County Welfare Bd., 300 Minn. 446, 221 N.W.2d 140 (1974). [2] Minnesota statutes and regulations accord certain "lump sum payments"e. g., inheritances and insurance settlementsand "liquid assets"such as savings, cash on hand, and certain investmentsthe status of personal property which a recipient and two children are allowed to possess up to a value of $500 and still remain eligible for full benefits. Minn.St. 256.73, subd. 2(2); Minnesota Department of Public Welfare, AFDC Program Manual, IV-M-9-i and IV-L-4. [3] Other cases include Richards v. Lavine, 78 Misc.2d 801, 357 N.Y.S.2d 982, N.Y. Supreme Court, Broome County (1974) (refunds are deferred income available on a regular basis); County of Alameda v. Carleson, 5 Cal. 3d 730, 97 Cal. Rptr. 385, 488 P.2d 953 (1971), appeal dismissed for want of a substantial Federal question, 406 U.S. 913, 92 S. Ct. 1762, 32 L. Ed. 2d 112 (1972) (approving a California scheme differentiating between recurring and nonrecurring lump-sum payments). See, also, Carr v. Saucier, (N.D.Ga.1973) No. 16,704 Civil (unreported decision) (one-time lump-sum social security benefit payment was not properly considered income available on a regular basis). [4] Among the elements of regularity in the income tax refund are the following: (1) The amount of tax withheld (and hence the amount of any refund) is determined from a prepared table based on gross income, number of dependents, and marital status; (2) the recipient most often calculates his own tax and is therefore aware of the amount of any refund before it arrives; (3) the refund is available on an annual basis at a time based in large part on when the recipient files his return. [5] Alternatively, income tax refunds might be considered "currently available resources" within the meaning of the Federal regulation. They are certainly "resources" within the ordinary meaning of that term and are available to meet need when received. This construction would comport with the general Federal AFDC policy that all income and resources be considered in grant calculation absent a specific policy to the contrary. Shea v. Vialpando, 416 U.S. 251, 253, 94 S. Ct. 1746, 1750, 40 L. Ed. 2d 120, 125 (1974). [6] This problem was obviously a concern of HEW in the drafting of the proposed regulation, 45 CFR 233.20(a)(3)(ii)(d). Under that regulation, a recipient claiming fewer deductions than he was permitted would nonetheless by credited with the receipt of income assuming the proper number of deductions. [7] In 1972 Congress added recoupment provisions to the Supplemental Security Income Program, which combines and overhauls former programs for the aged, blind, and elderly. 42 U.S.C.A., § 1383(b). [8] Appellant argues that Congress therefore acquiesced in the decision in Bradford v. Juras, 331 F. Supp. 167 (D.Or.1971) (three-judge court) that overpayments may not be recouped by reducing current AFDC payments. Congress was aware of the Bradford decision when it considered and rejected mandatory recoupment. See S.Rep.No.92-1230, Report on H.R. 1, 92nd Cong. 2nd Sess. (1972), p. 476. [9] Van Lare v. Hurley, 421 U.S. 338, 95 S. Ct. 1741, 44 L. Ed. 2d 208 (1975); Lewis v. Martin, 397 U.S. 552, 90 S. Ct. 1282, 25 L. Ed. 2d 561 (1970); King v. Smith, 392 U.S. 309, 88 S. Ct. 2128, 20 L. Ed. 2d 1118 (1968). [10] New York State Dept. of Social Services v. Dublino, 413 U.S. 405, 93 S. Ct. 2507, 37 L. Ed. 2d 688 (1973); Wyman v. James, 400 U.S. 309, 91 S. Ct. 381, 27 L. Ed. 2d 408 (1971); Dandridge v. Williams, 397 U.S. 471, 90 S. Ct. 1153, 25 L. Ed. 2d 491 (1970); Charleston v. Wohlgemuth, 332 F. Supp. 1175 (E.D.Pa.1971), affirmed, 405 U.S. 970, 92 S. Ct. 1204, 31 L. Ed. 2d 246 (1972); Snell v. Wyman, 281 F. Supp. 853 (S.D.N.Y.1968), affirmed, 393 U.S. 323, 89 S. Ct. 553, 21 L. Ed. 2d 511 (1969). [11] Any consideration we would give to the decision in Bradford v. Juras, 331 F. Supp. 167, 169 (D.Or.1971) (three-judge court), relied on by appellant, is markedly diminished by that court's obvious error in determining that the "earned income disregard" is not mandatory. 42 U.S.C.A., § 602(a)(7, 8). See, X v. McCorkle, 333 F. Supp. 1109 (D.N.J.1970), affirmed per curiam sub nom., Engelman v. Amos, 404 U.S. 23, 92 S. Ct. 181, 30 L. Ed. 2d 143 (1971). [12] IMM IV-1291 reads in relevant part: "Recoupment of overpayments may be made only in a case in which the recipient has disregarded income, and the amount recovered each month shall not exceed one-half of the total monthly disregarded income. "Recoupment of overpayments is obtained by withholding the determined amount from each monthly assistance check until the total overpayment has been recovered or until the recipient is no longer eligible for assistance, whichever occurs first." [13] Under the circumstances, the county might have sought a specific finding that the overpayment was caused by "willful failure of the recipient to report changes in income, resources or other circumstances which may affect the amount of payment" within the meaning of 45 CFR 233.20(a)(12)(i)(B)(2). Appellant admitted knowledge of her obligation to report her tax refunds, but she did not do so until after she had received her full April grant and then only in response to a specific inquiry. Despite the clear and specific notice to report receipt of the refunds immediately, she failed to comply. Since recoupment in cases of willful conduct is plainly allowed by Federal regulations from the assistance payment itself, appellant's argument on disregards would fail if a finding of willful conduct has been made. 45 CFR 233.20(a)(12)(i)(A)(2). However, we proceed on the record and findings before us. [14] We do not deem the fact that recoupment is accomplished through ultimate grant reduction to be of legal significance. That Minnesota welfare authorities choose to recoup by reducing the grant rather than through a civil lawsuit or other more cumbersome means is a matter of administrative convenience and discretion, not legal right. [15] In response to HEW's memorandum, appellant relies heavily on X v. McCorkle, 333 F. Supp. 1109 (D.N.J.1970), affirmed per curiam sub nom., Engelman v. Amos, 404 U.S. 23, 92 S. Ct. 181, 30 L. Ed. 2d 143 (1971). That case involved a New Jersey regulation which denied AFDC benefits to the extent that a family's "available adjusted income," calculated without deduction for the "statutory disregards" specified by § 402(a)(8) of the Social Security Act, 42 U.S.C.A., § 602(a)(8), exceeded an administrative ceiling figure set by the state. 333 F. Supp. 1113. The three-judge district court there emphasized that New Jersey did not deduct any disregarded income of any employed person in determining eligibility or in calculating the amount of the grant. Instead, it substituted its own administrative ceiling in the need-determination process. Under these circumstances the district court found that the New Jersey scheme violated clause (8), and the United States Supreme Court affirmed. The instant case is clearly distinguishable from McCorkle. Minnesota does deduct the full amount of disregarded income in determining eligibility and calculating the amount of the grant. It does not do so in the recoupment process because that process recovers overpayment and does not determine eligibility or need. Minnesota had already provided appellant with a larger grant than she was entitled to; it did not attempt to shortcircuit Federal standards to provide a smaller grant as did New Jersey. [16] Appellant argues that the Welfare Department may recoup no more than $275, the amount of her monthly grant, because she could have voluntarily terminated her assistance when she received the refund and reapplied for the full grant the following month. This argument lacks merit. First, she did not terminate her grant. Second, as the trial court noted: "* * * However, if the county had been notified of the payment, appellant would have been required to budget the refund and any amount above and beyond that required for a single month would be budgeted for subsequent months." We see no reason why the Welfare Department may not recoup what it has determined to be the full amount of the overpayment under the state and Federal regulations discussed herein.