Case Name: DOLLY BAYLOR, APPELLANT, v. NEW JERSEY DEPARTMENT OF HUMAN SERVICES, DIVISION OF PUBLIC WELFARE, RESPONDENT
Court: New Jersey Superior Court, Appellate Division
Jurisdiction: New Jersey
Decision Date: 1989-06-26
Citations: 235 N.J. Super. 22
Docket Number: 
Parties: DOLLY BAYLOR, APPELLANT, v. NEW JERSEY DEPARTMENT OF HUMAN SERVICES, DIVISION OF PUBLIC WELFARE, RESPONDENT.
Judges: 
Reporter: New Jersey Superior Court Reports
Volume: 235
Pages: 22–47

Head Matter:
DOLLY BAYLOR, APPELLANT, v. NEW JERSEY DEPARTMENT OF HUMAN SERVICES, DIVISION OF PUBLIC WELFARE, RESPONDENT.
Superior Court of New Jersey Appellate Division
Argued May 22, 1989
Decided June 26, 1989.
Before Judges PETRELLA, SHEBELL and LANDAU.
Angelica Anaya-Allen argued the cause for appellant (Passaic County Legal Aid Society, attorneys; Angelica Anaya-Allen, on the brief).
James T. Hill, Deputy Attorney General, argued the cause for respondent (Peter N. Perretti, Jr., Attorney General, attorney; Mary C. Jacobson, Deputy Attorney General, of counsel; James T. Hill, on the brief).
Legal Services of New Jersey filed a brief amicus curiae (Nancy Goldhill, on the letter brief).

Opinion:
The opinion of the court was delivered by
SHEBELL, J.A.D.
Appellant, Dorothy Baylor, appeals from the Final Decision of the State Division of Public Welfare (the Division) affirming the calculation of Aid to Families with Dependent Children (AFDC) benefits which her family receives. In calculating the benefits paid, the Passaic County Board of Social Services (Board) failed to apply the $50 "disregard" for "child support" under the federal AFDC statute (the disregard provision), to the Title II Social Security Dependents' Insurance benefits (dependents' benefits) received by appellant's children.
On December 10, 1987, appellant requested a fair hearing to determine whether the AFDC benefits received by her family had been properly calculated. On March 21, 1988, a fair hearing was conducted by an Administrative Law Judge (ALJ). On April 15, 1988, the AU rendered her Initial Decision, ruling that Social Security dependents' benefits constitute "child support" subject to the "disregard" under N.J.A.C. 10:82-4.17, and that the Board had improperly failed to disregard the first $50 of those benefits when calculating the family's monthly AFDC benefits. The AU ordered that appellant's benefits be recalculated retroactively. The June 1, 1988 Final Decision of the Director of the Division rejected the AU's decision, and held that the Board correctly calculated appellant's AFDC benefits without the disregard.
Appellant and her two minor children have been long-standing recipients of monthly AFDC benefits. A 1983 court order against the father required him to pay child support. The father, now a disabled person receiving Title II Social Security Disability Insurance benefits, lives apart from appellant and their children. As dependents of a disabled person, each child receives monthly dependents' benefits of $31. In calculating monthly AFDC benefits for the family, the Board has reduced the benefits by the full $62 of dependents' benefits the children receive.
In its Final Decision, the Division stated, "[r]eview of the code of Federal Regulations at 45 CFR 302.51(b) reveals clearly that only amounts collected as support by the IV-D Agency are subject to the $50 disregard. Accordingly, the recommended decision by the AU cannot be accepted." An agency's final decision will not be set aside unless it is shown that "it was arbitrary, capricious or unreasonable, or that it lacked fair support in the evidence, or that it violated legislative policies express or implied in the relevant statute." East Windsor Reg'l. Bd. of Ed. v. State Bd. of Ed., 172 N.J.Super. 547, 552 (App.Div.1980). Here, the facts are undisputed and we need only determine if the Division's conclusion is in accord with relevant federal and state statutes and regulations. Any agency's determination of a question of law is subject to de novo review by the reviewing court. Grancagnola v. Planning Bd., 221 N.J.Super. 71, 75 n. 5 (App.Div.1987), citing Mayflower Securities v. Bureau of Securities, 64 N.J. 85, 93 (1973).
Neither state nor federal regulations define "child support;'' therefore, it is necessary to review the federal statutory and regulatory scheme and case law before concluding whether the dependents' benefits received by petitioner's two children are subject to the $50 disregard.
APDO is a public assistance program created and financed by the federal government under Title IV of the Social Security Act of 1935, 42 U.S.C.A. § 301 et seq,, Motyka, et al. v. McCorkle, et al., 58 N.J. 165, 168 (1971). Although state participation in the APDO program is voluntary, those that choose to participate must comply with the terms of the Social Security Act and regulations. Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120, 125 (1974); Barrera v. Dept. of Institutions and Agencies, 150 N.J.Super. 41, 45 (App.Div.1977). "A 'state plan' consists of all the statutes and regulations which create and provide for the administration of programs of assistance.'' Communications Workers v. Union Cty. Welfare Bd., 126 N.J.Super. 517, 524 (App.Div.1974).
Under the scheme prescribed by federal law, state AFDG plans must provide that all income and resources available to any child or relative claiming AFDG benefits be considered in determining the applicant's need level. 42 U.S.C.A. § 602(a)(7). However, some forms of "income" must be "disregarded," or not counted as family income, when the state makes a "need" determination. 42 U.S.C.A. § 602(a)(8)(A). "Once the state has made this need determination, a benefit award is calculated, and AFDG payments are made to the AFDG recipient." Todd v. Norman, 840 F.2d 608, 609 (8th Cir.), reh'g and reh'g en banc den., 840 F.2d 608 (8th Cir.1988).
In enacting the Deficit Reduction Act of 1984, Pub.L. No. 98-369, § 2640, 98 Stat. 494, 1145-1146 (1984), Congress created the following child support disregard provision at issue in this appeal, 42 U.S.C.A. § 602(a)(8)(A)(vi) ("the federal disregard provision"):
A State plan for aid and services to needy families with children must—
(8)(A) provide that . in making the determination under paragraph (7), the State agency—
(vi) shall disregard the first $50 of any child support payments . mth respect to the dependent child or children in any family applying for or receiving aid to families with dependent children (including support payments collected and paid to the family under section 657(b) of this title)____ [Emphasis supplied].
This requires state AFDC plans to provide that the first $50 of "child support" be disregarded when determining an applicant's need for assistance pursuant to § 602(a)(7).
Under N.J.S.A. 44:10-3(c), the Commissioner of the Department of Human Services is directed
[t]o provide that, in determining eligibility for financial assistance and the amount of assistance to be granted, there shall be taken into consideration all other income and resources of the dependent child and of the parent, parents, or other relatives with whom such child is living, except that, in making such determination, there shall be disregarded the amounts of income and resources required by Federal law as a condition of Federal financial participation____ [Emphasis supplied].
The state "child support" disregard provision is found at N.J.A.C. 10:82-4.17:
The first $50.00 of any child support payments received on behalf of a dependent child or children by any family applying for or receiving AFDC shall be disregarded. Such child support payments shall include disregarded child support (DCS) payments paid the family through the child support and paternity process and direct support payments received by the eligible unit which represent a current monthly support obligation. These monies are disregarded in determination of initial eligibility, maximum income eligibility, prospective needs test, and the grant computation. The total amount of child support disregarded shall not exceed $50.00 per month per eligible unit. [Emphasis supplied].
The Division found that "only amounts collected as support by the IV-D Agency are subject to the $50 disregard," citing 45 C.F.R. § 302.51(b). A "IV-D" agency is a state agency created pursuant to Part D of the federal AFDC statute, 42 U.S.C.A. § 651-665. Part D establishes the federal scheme for, among other things, state collection of child and spousal support for persons receiving AFDC. 42 U.S.C.A. § 652(a)(1). Under that scheme, the State must designate an agency to administer the state plan; the plan itself must provide that the State will undertake to collect "assigned" child support from legally liable persons. 42 U.S.C.A. § 654(3) and § 654(4)(B). As a prerequisite to eligibility, AFDC recipients must assign to the State any rights they might have to support from any other person. 42 U.S.C.A. § 602(a)(26); 45 C.F.R. § 232.11(a)(1). In New Jersey, an application for AFDC benefits operates as such an assignment. N.J.S.A. 44:10-2. Child support payments assigned to the State are collected by the state IV-D agency. Child support collected by the IV-D agency must be paid to the State for distribution as prescribed in 42 U.S.C.A. § 657. 42 U.S.C.A. § 654(5)(A); 45 C.F.R. § 302.50(a).
Title 42, U.S.C.A. § 657(b) itself gives directions for the distribution of those support payments collected by the IV-D agency, indicating in pertinent part that the first $50 of the child support collected by the agency be paid to AFDC families without affecting their eligibility for AFDC benefits. This instruction is repeated in the corresponding federal regulation, 45 C.F.R. § 302.51(b), which states in relevant part:
The State plan shall provide as follows:
(b) The amounts collected as support by the IV-D agency pursuant to the State plan for children and the parents of such children who are current recipients of aid under the State's title IV-A plan and for whom an assignment under § 232.11 of this title is effective shall be distributed as follows:
(1) Of any amount that is collected in a month which represents payment on the required support obligation for that month, the first $50 of such amount shall be paid to the family. [Emphasis supplied].
Title 45, C.F.R. § 232.11(a)(1) codifies the statutory requirement that as a condition of eligibility for AFDC, applicants must assign to the State "any rights to support from any other person____"
Hence, in citing the above regulation in its decision, the Division essentially posited that only child support payments assigned to and collected by the State were subject to the federal disregard. Thus, it follows that the federal disregard provision would not apply to Social Security dependents' benefits because, (1) under 42 U.S.C.A. § 407, the right to those benefits are not transferable or assignable and (2) they are not collected by the IV-D agency, but paid directly to the dependents.
This issue has not been raised previously in New Jersey. The parties agree that the term "child support" is not defined in the state public assistance regulations (N.J.A.C. 10:81-1.1 et seq.) or the federal AFDC statutes or regulations (42 U.S. C.A. § 601 et seq., 45 C.F.R. § 205 et seq.).
Terms used in an AFDC act should be given their ordinary and well-understood meaning. See State v. Pleva, 203 N.J.Super. 178, 188 (App.Div.), certif. den. 102 N.J. 323 (1985); accord 3A Sands, Sutherland Statutory Construction, § 72.03 at 582 (4th ed. 1986) ("Statutory Construction"). If it is clear and unambiguous, no further construction is required. Sutherland Statutory Construction, supra, § 72.03 at 582.
Appellant contends that the Division's interpretation of the federal disregard provision is contrary to the plain language of 42 U.S.C.A. § 602(a)(8)(A)(vi), which requires states to disregard "the first $50 of any child support payments . received . with respect to the dependent child or children . (including support payments collected and paid to the family under section 657(b) of this title)____" It argues that the federal disregard provision by its specific language applies to "any child support payments" received with respect to children receiving AFDC benefits.
While we agree with the conclusion of the Division's Final Decision, its reasoning conflicts with its own regulation which states that the "child support payments" subject to the disregard "shall include disregarded child support (DCS) payments paid the family through the child support and paternity process and direct support payments received by the eligible unit which represent a current monthly support obligation____" N.J.A.C. 10:82-4.17 (emphasis supplied). By its own terms, the state plan characterizes as child support items other than child support assigned to the State and collected and distributed by the IV-D agency. The provision does not limit "child support payments" to these two types of support. It states that they shall be included as child support. Hence, these regulations demonstrate that the "child support" subject to the disregard provision is not restricted to payments assigned to the State and passed through the IV-D agency.
Appellant argues that dependents' benefits must be classified as "child support benefits," because their purpose is to provide financial support when parents are deceased or disabled and unable to support their children by working. See Jimenez v. Weinberger, 417 U.S. 628, 634, 94 S.Ct. 2496, 2500, 41 L.Ed.2d 363, 369 (1974); Davis v. Richardson, 342 F.Supp. 588, 593 (D.Conn.1972), aff'd 409 U.S. 1069, 93 S.Ct. 678, 34 L.Ed.2d 659 (1972). We agree that dependents' benefits can for certain purposes properly be classified as child support benefits; however, we find no evidence that the federal disregard provision requires such application. Clearly, federal policy underlying the Social Security and AFDC laws is unrelated to state or local laws on marital or family matters flowing from the state's power to regulate domestic relations. Davis, 342 F.Supp. at 593.
We have reasoned that, under state law, dependents' benefits may satisfy a divorced father's child support obligation as the benefits are not gratuities but were earned by the wage earner and that during his or her period of unemployment they are insurance payments substituting for lost earning power. Potter v. Potter, 169 N.J.Super. 140, 148 (App.Div.1979). Indeed, the overwhelming majority of state courts that have considered the impact of dependents' benefits on parents' court-ordered child support obligations are in agreement on this issue. Todd v. Norman, 840 F.2d at 614 (Lay, C.J., dissenting).
Only one state appellate court, Georgia, has based its interpretation of the federal disregard provision on state domestic relations cases. Ledbetter v. Foster, 180 Ga.App. 696, 350 S.E.2d 31, 33 (Ct.App.), cert. den. (Sup.Ct. Nov. 26, 1986) (unpublished), Since Georgia courts had already defined child support in family law actions as including Social Security dependents' benefits and since there was nothing in the AFDC law precluding a similar definition of child support in the disregard provision, dependents' benefits were ruled subject to the disregard in Georgia. Ibid.
We are unable to arrive at such a result under the New Jersey State Plan. N.J.S.A. 44:10-3(c) limits the Commissioner of the Department of Human Services to disregard only "the amounts of income and resources required by Federal law as a condition of Federal financial participation____" Even if under federal law a state might arguably elect to disregard the first $50 of dependents' benefits received with affecting federal participation, we are not satisfied that it is required to do so. Cf. Stroop v. Bowen, 870 F.2d 969 (4th Cir.), reh'g den. (May 31, 1989) (unpublished).
The Stroop court said:
We perceive no distinction between support derived directly from a father's wages and support provided indirectly through Title II payments. In both cases, it is the father, a wage earner, whether current or past, who provided the support. The money to support the child comes directly through the father or indirectly through insurance he earned when working. [Id. at 974].
We do not disagree with this reasoning. See Potter, 169 N.J.Super. at 148. However, merely because dependents' benefits may under such reasoning be credited by a state towards a court-imposed child support obligation, it does not necessarily follow that Congress meant to include Social Security dependents' benefits in its definition of "child support payments," under the disregard provision of the federal AFDC statute.
In Todd v. Norman, 840 F.2d at 611, the court noted that Congress recognized a difference between "Social Security benefits" and "child support" payments, relying on the legislative history of 42 U.S.C.A. § 602(a)(38) which revised the definition of a family unit and which spoke "in terms of 'Social Security benefits' and 'child support' as separate and distinct sources of income." 840 F.2d at 611, citing S.Rep. No. 494, 97th Cong., 2d Sess. 47, reprinted in 1982 U.S.Code Cong. & Admin. News 781, 823. We suggest that the interpretation of federal statutes is best left to the federal courts. We accept the reasoning of the Todd majority as the more persuasive authorities on the present issue.
We are admonished that we should construe the disregard provision so as to avoid serious doubts about its constitutionality. See International Machinists v. Street, 367 U.S. 740, 749, 81 S.Ct. 1784, 1789, 6 L.Ed.2d 1141, 1150 (1961). It is urged that the Division's interpretation raises equal protection questions about the disregard provision. See Stroop v. Bowen, 870 F.2d at 973; Todd v. Norman, 840 F.2d at 613 (Lay, C.J., dissenting). If possible, federal statutes are to be construed so as to avoid serious doubt as to their constitutionality. International Machinists v. Street, 367 U.S. at 749, 81 S.Ct. at 1789, 6 L.Ed.2d at 1150.
Appellant contends that the Division's refusal to apply the child support disregard to Social Security dependents' benefits violates the equal protection provisions of the state and federal constitutions (N.J. Const. (1947), Art. I, par. 1 and U.S. Const., Amend. XIV, respectively). She argues that there is no rational basis for the distinction the Division has drawn between child support paid by a working parent and child support paid by the Social Security disability insurance program on behalf of a disabled parent.
In Todd v. Norman, 840 F.2d at 611-612, it is stated:
The closest statutory reference in pari materia is an earlier form of the child support disregard, formerly codified in large part at 42 U.S.C. § 657 (1976). The legislative history of that statute leaves little doubt that the child support disregard was established to encourage AFDC recipients to assist the state in establishing paternity and collecting child support. [Citation omitted]. The district court, after imputing the same purpose to the present statute, indicated that no such incentive is intended for AFDC recipients whose children receive Child's Insurance Benefits, because the state is barred by law from collecting such benefits. We are persuaded by the district court's reasoning. The problem addressed by the child support disregard is the collection of child support from absent parents. Child's Insurance Benefits simply are not part of that problem. [Footnote omitted].
We are satisfied that the above-stated legislative public purpose supplies a constitutionally sufficient, rational basis for distinguishing between support payments from an absent parent and benefits paid on behalf of a disabled parent under Social Security laws. See Bowen v. Gilliard, 483 U.S. 587, 107 S.Ct. 3008, 97 L.Ed.2d 485 (1987).
It may be argued that if our Legislature chose to maximize AFDC benefits by permitting the Commissioner to disregard those amounts of income and resources to the full extent permitted under federal law, as opposed to only those required under federal law as a condition of participation, it would be more equitable to the beneficiaries of AFDC. Such action, however, is a legislative and not a judicial function of government, as it requires a consideration and balancing of the views of all the people by elected representatives; thus, we may not reverse the Division's Final Decision on this basis.
Affirmed.