Title: Reilly v. Marin Housing Authority
Citation: N/A
Docket Number: S249593
State: California
Issuer: California Supreme Court
Date: August 31, 2020

IN THE SUPREME COURT OF 
CALIFORNIA 
 
KERRIE REILLY, 
Plaintiff and Appellant, 
v. 
MARIN HOUSING AUTHORITY, 
Defendant and Respondent.  
 
S249593 
 
First Appellate District, Division Two 
A149918 
 
Marin County Superior Court 
CIV 1503896 
 
August 31, 2020 
 
Justice Chin authored the opinion of the Court, in which 
Justices Liu, Cuéllar, and Groban concurred. 
 
Chief Justice Cantil-Sakauye filed a dissenting opinion, in 
which Justices Corrigan and Kruger concurred. 
 
1 
REILLY v. MARIN HOUSING AUTHORITY 
S249593 
 
Opinion of the Court by Chin, J. 
 
The federal Housing Choice Voucher program is a key 
program in section 8 of the United States Housing Act of 1937.  
(42 U.S.C. § 1437 et seq., as amended by § 201(a) of the Housing 
and Community Development Act of 1974.)    Commonly referred 
to as “Section 8,” the program provides low-income families a 
monthly subsidy to pay for a portion of their rent.  The amount 
of the subsidy depends, in part, on the income Section 8 families 
receive.  The program, which is funded and regulated by the 
United States Department of Housing and Urban Development 
(HUD), is administered locally by public housing authorities 
(PHAs).  In this case, we address whether a Section 8 
beneficiary’s compensation for providing in-home care for a 
severely disabled adult daughter should be excluded from 
income in calculating the rental subsidy.  For reasons that 
follow, we conclude that it should be excluded and reverse the 
Court of Appeal’s judgment.  
FACTUAL AND PROCEDURAL BACKGROUND 
 
In 1998, plaintiff Kerrie Reilly and her two daughters 
moved into a three-bedroom apartment in Novato and began 
receiving Section 8 housing assistance payments to subsidize 
their monthly rent.  Reilly has an adult daughter, K.R., who is 
severely disabled and requires constant supervision.  Reilly 
receives compensation to provide in-home supportive care for 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
2 
K.R. through the state and federally funded In-Home 
Supportive Services (IHSS) program. 
In 2004, Reilly’s other daughter, R.R., moved out of their 
subsidized apartment, but Reilly did not inform the Marin 
Housing 
Authority 
(MHA), 
which 
is 
responsible 
for 
administering Reilly’s Section 8 voucher.  Five years later, when 
Reilly told MHA that R.R. no longer lived with her, MHA 
advised her that her failure to report her daughter’s leaving 
constituted a violation of the program rules.  Reilly could only 
stay in the government-subsidized apartment if she paid 
approximately $16,000 in damages to MHA.  
 
Reilly agreed to pay MHA in monthly installments, 
initially starting at $486 and eventually lowered to $150 per 
month at Reilly’s request.  In 2010, after Reilly missed an 
installment payment, MHA warned her that future missed 
payments would result in termination of her housing assistance.  
Reilly missed multiple payments in 2012, 2014, and 2015.    
 
In 2015, Reilly requested that MHA recalculate her rent 
and exclude her IHSS compensation from “income” under the 
relevant federal regulation.  (See 24 C.F.R. § 5.609(c)(16) 
(2020).)  MHA did not respond to this request, but instead served 
Reilly a notice of termination of her Section 8 voucher.  After a 
hearing on MHA’s decision to terminate Reilly’s housing 
voucher, the hearing officer upheld the agency’s decision, noting 
that Reilly’s failure to pay amounts under the settlement 
agreement constituted grounds for terminating her housing 
assistance.  The hearing officer did not address whether the 
IHSS compensation counted as income, however.   
On October 26, 2015, Reilly filed a petition for writ of 
mandate seeking an order requiring MHA to terminate her 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
3 
repayment plan and reinstitute her Section 8 voucher; she also 
sought an administrative writ ordering MHA to terminate the 
repayment plan and exclude Reilly’s IHSS payments in 
calculating her income going forward.  The trial court rejected 
Reilly’s assertion that IHSS payments were excepted from the 
meaning of “annual income” (24 C.F.R. § 5.609(c)(16) (2020)).  It 
sustained MHA’s demurrer without leave to amend, and the CA 
affirmed the judgment.  (Reilly v. Marin Housing Authority 
(2018) 23 Cal.App.5th 425.)  Both lower courts ordered “a stay 
in the enforcement of the administrative order terminating 
Reilly’s Section 8 benefits.”  MHA later agreed to an extension 
of this stay pending review in this court.   
We granted review, limited to the issue whether IHSS 
payments should be excluded from “annual income” for purposes 
of calculating a Section 8 beneficiary’s home assistance 
payment.  
DISCUSSION 
A. Overview of Section 8 voucher program 
In 1974, Congress added the Section 8 housing program to 
the United States Housing Act of 1937 “[f]or the purpose of 
aiding low-income families in obtaining a decent place to live.”  
(42 U.S.C. § 1437f(a); see generally Friedman et al., Cal. 
Practice Guide:  Landlord-Tenant (The Rutter Group 2019) 
¶ 12.)  The program gives eligible families either “tenant-based” 
or “project-based” rent subsidies administered locally through 
PHAs.  (See Park Village Apartment Tenants Ass’n v. Mortimer 
Howard Trust (9th Cir. 2011) 636 F.3d 1150, 1152–1153 
[overview of Section 8 housing assistance].)  “ ‘[T]enant-based 
assistance’ ” is a rent subsidy that is tied to a specific family 
even if the family moves to other suitable housing.  (42 U.S.C. 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
4 
§ 1437f(f)(7).)  “ ‘[P]roject-based assistance,’ ” on the other hand, 
is tied to a specific housing development or unit.  (42 U.S.C. 
§ 1437f(f)(6).)  We focus on tenant-based assistance, which is at 
issue in this case.   
Under the tenant-based assistance program, at least 75% 
of all admitted families must be “[e]xtremely low[] income,” i.e., 
their income may not exceed 30% of the median income 
calculated by HUD for the relevant area (24 C.F.R. § 5.603(b) 
(2020)); and all remaining admitted families must be “[l]ow 
income,” i.e., their income may not exceed 50% of the median 
income.  (Ibid.; id., § 982.201(b)(1), (2)(i) (2020) [eligibility and 
targeting].)   
After a Section 8 family selects an eligible rental unit 
approved by the applicable PHA, the PHA enters into a contract 
with the rental property owner.  That owner “functions as a 
landlord in the private rental market.  The owner signs a lease 
with the Section 8 tenant (which includes a HUD Lease/Tenancy 
Addendum) and also signs a Housing Assistance Payments 
(HAP) contract with the Housing Authority.”  (Apartment Assn. 
of Los Angeles County, Inc. v. City of Los Angeles (2006) 136 
Cal.App.4th 119, 123.)  The PHA gives the subsidy payments 
directly to the property owner.  (24 C.F.R. § 982.311(a) (2020).)   
As we explain below (see post, at p. 8), the amount of the 
housing subsidy depends in large part on the “annual income” 
the Section 8 family receives or expects to receive.  (See 24 
C.F.R. § 5.609(a) (2020); id. § 982.201(a), (b) (2020).)  The issue 
is whether the IHSS payments Reilly receives to provide 
services to keep her developmentally disabled daughter at home 
are excluded from income under 24 Code of Federal Regulations 
part 5.609(c)(16) (2020).   
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
5 
B. IHSS 
IHSS is a state social welfare program implemented under 
The Burton-Moscone-Bagley Citizens’ Income Security Act for 
Aged, Blind and Disabled Californians, enacted in 1973.  (Welf. 
& Inst. Code,1 § 12000 et seq., added by Stats. 1973, ch. 1216, 
§ 37, p. 2904; see County of Sacramento v. State of California 
(1982) 134 Cal.App.3d 428, 430–431.)  The purpose of the 
legislation is to give the aged, blind and disabled the “assistance 
and services which will encourage them to make greater efforts 
to achieve self-care and self-maintenance, whenever feasible, 
and to enlarge their opportunities for independence.”  (§ 12002.)  
IHSS is specifically “designed to avoid institutionalization of 
incapacitated persons.”  (Basden v. Wagner (2010) 181 
Cal.App.4th 929, 931.)  Providers perform nonmedical 
supportive services for IHSS recipients, such as domestic 
services, personal care services, protective supervision, and 
accompaniment to health-related appointments.  (§ 12300; see 
Miller v. Woods (1983) 148 Cal.App.3d 862, 867, disapproved on 
other grounds by Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 
955, 986, fn. 15.)   
“IHSS is actually provided under three programs: the 
original IHSS program (the residual program) (§ 12300 et seq.); 
the Medi-Cal personal care services program (PCSP) (§ 
14132.95); and the IHSS Plus waiver program (§ 14132.951).[2]  
                                        
1  
All further statutory references are to Welfare and 
Institutions Code unless otherwise noted. 
2  
Section 14132.951, subdivision (a) provides:  “It is the 
intent of the Legislature that the State Department of Health 
Services seek approval of a Medicaid waiver under the federal 
 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
6 
The latter two programs tap into federal funds, and IHSS 
recipients will receive services under the residual program only 
if they do not qualify under the other two programs. (§§ 12300, 
subd. (g); 14132.95, subd. (b); 14132.951, subd. (d).)”  (Basden v. 
Wagner, supra, 181 Cal.App.4th at p. 933, fn. 4; see 2 Dayton et 
al., Advising the Elderly Client (2019) § 22:40 (Advising the 
Elderly Client); Calderon v. Anderson (1996) 45 Cal.App.4th 
607, 609–610.)  
The State Department of Social Services (Department) 
administers the IHSS program in compliance with state and 
federal law.  The Department promulgates regulations to 
implement the relevant statutes, which are set out in its Manual 
of Policies and Procedures: Social Services Standards (July 
2019) (MPP).  (MPP, §§ 30-700 to 30-785; see Norasingh v. 
Lightbourne (2014) 229 Cal.App.4th 740, 744–745.)  County 
welfare departments administer the IHSS program with the 
Department’s supervision, and determine an applicant’s 
individual needs to authorize necessary services.  (Norasingh v. 
Lightbourne, at pp. 744–745; see MPP, § 30-761 [needs 
assessment standards].) 
 A county welfare department may either obtain and pay 
directly a provider of the supportive services, or pay the 
recipient who hires one.  (Basden v. Wagner, supra, 181 
Cal.App.4th at p. 940 [when state pays provider or recipient 
directly, it assumes certain “ ‘employer’ duties”]; MPP, § 30-
                                        
Social Security Act in order that the services available under 
Article 7 (commencing with Section 12300) of Chapter 3, known 
as the In-Home Supportive Services program, may be provided 
as a Medi-Cal benefit under this chapter to the extent federal 
financial participation is available.  The waiver shall be known 
as the ‘IHSS Plus waiver.’ ” 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
7 
763.44.)  Or, as in this case, it may compensate the parent who 
provides in-home care to her disabled child.  (See § 12300, subd. 
(e); MPP, § 30-763.45 et seq.; see also Fam. Code, § 3910, subd. 
(a) [parent’s responsibility extends to a “child of whatever age 
who is incapacitated from earning a living and without 
sufficient means”].)  It bears noting that “[t]he vast majority of 
home care is provided by family and friends.”  (Advising the 
Elderly Client, supra, § 22:17.) 
 
Reilly’s daughter suffers from a severe developmental 
disorder and obtained authorization for protective supervision, 
i.e., 24-hours-a-day supervision that allows her to remain at 
home safely.  (§ 12301.21; MPP, § 30-757.173.)  Protective 
supervision 
involves 
“observing 
recipient 
behavior 
and 
intervening as appropriate in order to safeguard the recipient 
against injury, hazard, or accident.”  (MPP, § 30-757.17; see 
Marshall v. McMahon (1993) 17 Cal.App.4th 1841, 1847 
[“ ‘Protective supervision’ appears to be similar to care given 
small children, that is, anticipating everyday hazards and 
intervening to avert harm”].)  Such supervision is available for 
“nonself-directing, confused, mentally impaired, or mentally ill 
persons only.”  (MPP, § 30.757.171; see Marshall v. McMahon, 
at p. 1847; Calderon v. Anderson, supra, 45 Cal.App.4th at 
p. 616.)  There is no dispute that Reilly’s adult daughter was 
entitled to IHSS services, or that Reilly was authorized to 
receive IHSS compensation for providing those services to her.   
C. HUD regulation on “Annual Income” and its 
exclusions  
The applicable federal regulation defines “annual income” 
broadly, as “all amounts, monetary or not.”  (24 C.F.R. § 5.609(a) 
(2020).)  For example, income includes “compensation for 
personal services” (id., § 5.609(b)(1) (2020)) and “[p]ayments in 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
8 
lieu of earnings, such as unemployment and disability 
compensation, worker’s compensation, and severance pay” (id., 
§ 5.609(b)(5) (2020)).  However, income does not include such 
amounts as “specifically excluded” under the regulation.  (Id., 
§ 5.609(a)(3) (2020).)  There are 16 such exclusions.  (Id., 
§ 5.609(c)(1)–(17) (2020).)   
“An extensive set of statutory provisions and regulations 
governs the calculations of the subsidy that must be paid on 
behalf of each tenant.”  (Nozzi v. Housing Authority of City of 
Los Angeles (9th Cir. 2015) 806 F.3d 1178, 1184.)  In general, 
Section 8 tenants must contribute 30% of their monthly adjusted 
income or 10% of their gross monthly income, whichever is 
greater, towards each month’s rent.  (42 U.S.C. § 1437f(o)(2)(A).)  
The housing assistance payment covers the balance of the rent, 
up to a statutorily capped amount.  (Nozzi v. Housing Authority 
of City of Los Angeles, at pp. 1184–1185.)   
We do not examine the underlying method used to 
calculate the rental subsidy, however, but focus on whether 
Reilly’s IHSS compensation for care of her disabled daughter is 
“specifically excluded” (24 C.F.R. § 5.609(a)(3) (2020)) from 
income as “[a]mounts paid by a State agency to a family with a 
member who has a developmental disability and is living at 
home to offset the cost of services and equipment needed to keep 
the developmentally disabled family member at home” (id.,  
§ 5.609(c)(16) (2020), italics added).  The parties do not dispute 
that if Reilly’s daughter received IHSS care from a third party 
rather than a family member, such amounts paid would qualify 
under the exclusion.  MHA argues that for the exclusion to 
apply, however, a family must incur costs for hiring someone 
because only then would the “[a]mounts paid” by the state to a 
family truly “offset” those “cost[s].”  (24 C.F.R. § 5.609(c)(16) 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
9 
(2020); see In re Ali (Minn. 2020) 938 N.W.2d 835, 840 (Ali) 
[“Cost means an actual monetary expense . . . incurred by the 
family to keep the disabled family member living at home”].)   
Because the state pays Reilly to provide care for her own 
daughter and not to hire a third party provider, MHA maintains 
there is no actual “cost” to Reilly for such services, and 
consequently, there is nothing to “offset.” 
1. Meaning of “Offset” & “Cost” 
MHA’s interpretation is based in part on the dictionary 
definition of “offset,” which generally means to counterbalance 
or compensate for something.  (See Steinmeyer v. Warner Cons. 
Corp. (1974) 42 Cal.App.3d 515, 518.)  Echoing the Court of 
Appeal, MHA asserts that payments by the state must offset 
costs the family itself incurs to keep a developmentally disabled 
member at home; “[o]therwise the payment does not 
counterbalance or compensate for the costs of services.”  As 
MHA puts it, “the payment must go to the same entity that 
incurs the cost of those services.”  MHA further insists that 
“cost” is a monetary term that does not encompass emotional 
costs Reilly bears in caring for her daughter, nor any lost 
opportunity costs when Reilly forgoes outside employment to be 
her daughter’s IHSS provider.  
We disagree with MHA’s interpretation.  Unlike the word 
“reimburse,” which means to “pay back or compensate (another 
party) for money spent or losses incurred” (American Heritage 
Dict. (5th ed. 2020) p. 1214, italics added), “offset” is not 
similarly restrictive.  (See Briggs v. Eden Council for Hope & 
Opportunity (1999) 19 Cal.4th 1106, 1117 [“Where different 
words or phrases are used in the same connection in different 
parts of a statute, it is presumed the Legislature intended a 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
10 
different meaning”].)  For example, the term “reimbursement” 
is used in two other exclusions.  (24 C.F.R. § 5.609(c)(4), (8)(iii) 
(2020).)  Consistent with the meaning of “reimburse,” those 
exclusions refer to compensation of specific, discrete amounts, 
e.g., “the cost of medical expenses” (id., § 5.609(c)(4) (2020)) and 
“out-of-pocket expenses” to participate in a publicly assisted 
program (id., § 5.609(c)(8)(iii)).  
While the term “reimburse” suggests there may be full 
recompense for any out-of-pocket expenses a family incurs 
under those exclusions, “offset” as used here does not necessarily 
reflect that same meaning.  (See Briggs v. Eden Council for Hope 
& Opportunity, supra, 19 Cal.4th at p. 1117.)  Here, what is 
“offset” is the “cost of services and equipment needed to keep the 
developmentally disabled family member at home.”  (24 C.F.R. 
§ 5.609(c)(16) (2020).)  “[C]ost,” in turn, is defined to include both  
“an amount paid or required in payment for a purchase; a price” 
and “the expenditure of something, such as time or labor, 
necessary for the attainment of a goal.”  (American Heritage 
Dict., supra, at p. 454.)  Whether a family uses homecare 
payments to support itself so that it may care for a 
developmentally disabled member at home, or instead uses the 
funds to pay a third party to provide care for some of the time, 
these payments do no more than “offset” the “cost” of services 
and equipment needed to avoid institutionalization, costs that 
are not otherwise specified or limited.  (24 C.F.R. § 5.609(c)(16) 
(2020).)  
Further, contrary to MHA’s suggestion, “cost” in this 
exclusion (24 C.F.R. § 5.609(c)(16) (2020)) does not have the 
same meaning as “cost” used in other provisions of the 
regulation.  For instance, “actual cost of shelter and utilities” (24 
C.F.R. § 5.609(b)(6)(ii) (2020)) and “cost of medical expenses for 
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Opinion of the Court by Chin, J. 
 
11 
any family member” (id., § 5.609(c)(4) (2020)) both refer to 
discrete, monetary amounts.  “[T]he presumption that ‘identical 
words used in different parts of the same act are intended to 
have the same meaning . . . readily yields whenever there is such 
variation in the connection in which the words are used as 
reasonably to warrant the conclusion that they were employed 
in different parts of the act with different intent.’ ”  (Roberts v. 
Sea-Land Services, Inc. (2012) 566 U.S. 93, 108.) 
2. Rulemaking history of 24 Code of Federal 
Regulations par 5.609(c)(16) (2020) 
This interpretation of the terms “offset” and “cost” is also 
consistent with the rulemaking history of 24 Code of Federal 
Regulations part 5.609(c)(16) (2020).  (See 60 Fed.Reg. 17388–
17395 (Apr. 5, 1995) [“Combined Income and Rent”; interim rule 
as precursor to 24 C.F.R. § 5.609(c)(16) (2020)]; 61 Fed.Reg. 
54492–54504 (Oct. 18, 1996) [final rule]).  Though the Court of 
Appeal found this history to be unhelpful and not illuminating, 
we do not share that view.  (See Thomas Jefferson Univ. v. 
Shalala (1994) 512 U.S. 504, 512 [relevance of agency’s “ ‘intent 
at the time of the regulation’s promulgation’ ”].)   
In 1995, HUD published an interim rule proposing eight 
new income exclusions — among them the homecare payments 
exclusion — to the definition of annual income under Section 8 
and other assisted housing programs.  (See 60 Fed.Reg. 17388–
17395 (Apr. 5, 1995); 24 C.F.R. § 5.609(c) (2020).)  It determined 
that the new exclusions “are essential for achieving its goals of 
ensuring economic opportunity, empowering the poor and 
expanding affordable housing opportunities.  Moreover, HUD 
believes that the costs of additional exclusions will be offset by 
long-term future savings because the exclusions will increase 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
12 
the number of economically self-sufficient families residing in 
assisted housing.”  (60 Fed.Reg. 17388, italics added.)   
 
Regarding the “homecare payments” exclusion in 
particular, HUD explained that the “exclusion exempts amounts 
paid by a State agency to families that have developmentally 
disabled children or adult family members living at home.  
States that provide families with homecare payments do so to 
offset the cost of services and equipment needed to keep a 
developmentally disabled family member at home, rather than 
placing the family member in an institution.  Since families that 
strive to avoid institutionalization should be encouraged, and 
not punished, the Department is adding this additional 
exclusion to income.  The Department wishes to point out that 
today’s interim rule does not define ‘developmentally disabled’ 
since whether a family member qualifies as developmentally 
disabled, and is therefore eligible for homecare assistance, is 
determined by each individual State.”  (60 Fed.Reg. 17388, 
17389 (Apr. 5, 1995), italics added.)   
 
In finalizing the rule and responding to public comment 
that “ ‘developmentally disabled children’ ” and “ ‘adult family 
members’ ” should be expressly defined, HUD rejected the 
suggestion as unnecessary:  “There is no need for HUD to define 
these terms, as they are defined by the State program providing 
the payments.  If the family is receiving such a payment from the 
State because a family meets the criteria of the definition, the 
[public housing authority] should consider the family eligible for 
the exclusion.”  (61 Fed.Reg. 54492, 54497 (Oct. 18, 1996), italics 
added.)   
 
We find several points from this rulemaking history to be 
significant.  As to the meaning of “offset,” HUD recognized that 
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Opinion of the Court by Chin, J. 
 
13 
states that make payments for in-home services “do so to offset 
the cost” to the family keeping the developmentally disabled 
member at home “rather than placing the family member in an 
institution.”  (60 Fed.Reg. 17388, 17389 (Apr. 5, 1995).)  
Significantly, HUD here did not use “cost” and “offset” in terms 
of a specific monetary expense or amount a Section 8 family 
incurs, but in a broad sense with respect to describing the 
overall objective of the exclusion.  HUD regarded homecare 
payments as reducing or offsetting costs to families caring for 
developmentally disabled individuals, costs that would be borne 
by state and federal governments if the family member were 
institutionalized.  (See Perkins & Boyle, Addressing Long Waits 
for Home and Community-Based Care Through Medicaid and 
the ADA (2001) 45 St. Louis U. L.J. 117, 119 [“Most states have 
reduced costly institutional care by shifting some public funding 
to home and community settings”].)   
This background clearly informs the interpretation of 24 
Code of Federal Regulations part 5.609(c)(16) (2020).  The 
language of the regulation (“amounts paid by a State agency . . .  
to offset the costs of services and equipment needed to keep the 
developmentally disabled family member at home” [italics 
added]) closely tracks this rulemaking language (“States that 
provide families with homecare payments do so to offset the costs 
of services and equipment needed to keep a developmentally 
disabled family member at home, rather than placing the family 
member in an institution”) (60 Fed.Reg. 17388, 17389, italics 
added), and the italicized phrases at issue here are identical.      
The only express limitation HUD has placed on this 
exclusion is that the in-home care payments must be for services 
and equipment needed to keep the “developmentally disabled” 
family member at home.  (See post, at pp. 15–16.)  Even then, 
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Opinion of the Court by Chin, J. 
 
14 
HUD found “no need” to define what “developmentally disabled” 
meant, and instead left this up to the states to decide.  (61 
Fed.Reg. 54492, 54497 (Oct. 18, 1996; see 60 Fed.Reg. 17389 
(Apr. 5, 1995) [“whether a family member qualifies as 
developmentally disabled, and is therefore eligible for homecare 
assistance, is determined by each individual State”].)  From 
HUD’s perspective, “If the family is receiving such a payment 
from the State because a family member meets the criteria of 
the definition, the [public housing authority] should consider the 
family eligible for the exclusion.”  (61 Fed.Reg. 54492, 54497, 
italics added.)  
Notwithstanding the general rule that exclusions from 
income should be construed narrowly (see Commissioner v. 
Schleier (1995) 515 U.S. 323, 328), we find no indication that 
HUD intended a narrow construction of the homecare payments 
exclusion.  We perceive no reasoned basis — including any basis 
informed by the regulation’s language — why HUD would single 
out a parent provider’s compensation as unworthy for income 
exclusion.  Rather, we find HUD’s stated goals of encouraging 
families to avoid the institutionalization of developmentally 
disabled individuals through the addition of this exclusion (60 
Fed.Reg. 17388, 17389 (April 5, 1995)), and more globally of 
“ensuring economic opportunity, empowering the poor and 
expanding affordable housing opportunities” (60 Fed.Reg. 
17388), would be furthered by permitting all homecare 
payments for services to keep developmentally disabled family 
members at home — whether the provider is a family member 
or third party — to be excluded from the meaning of “annual 
income.”  (24 C.F.R. § 5.609(c)(16) (2020).)  By allowing these 
families to realize the full benefit of the homecare payments 
without facing a corresponding increase in rent, the exclusion 
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Opinion of the Court by Chin, J. 
 
15 
would operate as intended by not penalizing families who take 
on the onus of caring for a developmentally disabled family 
member at home.   
To that end, it is helpful to remember that “[t]he United 
States Housing Act is a program of ‘cooperative federalism.’ ”  
(James v. New York City Housing Authority (S.D.N.Y. 1985) 622 
F.Supp. 1356, 1359; see 42 U.S.C. § 1437; see also Hodel v. 
Virginia Surface Mining & Recl. Assn.  (1981) 452 U.S. 264, 
289.) “HUD’s delegation of eligibility requirements to local 
public housing authorities is intended to effectuate the 
underlying policy of the United States Housing Act by 
promoting efficient management of the programs . . . .”  (James 
v. New York City Housing Authority, at pp. 1361–1362.)  With 
respect to the exclusion for homecare payments specifically (24 
C.F.R. § 5.609(c)(16)) (2020)), HUD expressly left it to the states 
to define “developmentally disabled,” which in part determines 
a family’s eligibility for the income exclusion.  (See ante, at p. 
12.)   
Along these lines, HUD did not limit the income exclusion 
based on whether a state allows a family to use a family member 
or a third party to provide the necessary care; the exclusion 
covers “[a]mounts paid by a State agency to a family” with a 
developmentally disabled member (24 C.F.R. § 5.609(c)(16) 
(2020)).  Indeed, acknowledging such a distinction would do 
little to advance the complementary purposes of the federal and 
state statutes.  Congress established Section 8 with “the 
purpose of aiding low-income families in obtaining a decent 
place to live.”  (42 U.S.C § 1437f(a).)  And our Legislature 
created IHSS with the goal of providing “supportive services . . . 
to aged, blind, or disabled persons . . . who are unable to perform 
the services themselves and who cannot safely remain in their 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
16 
homes or abodes of their own choosing unless these services are 
provided.”  (§ 12300, subd. (a).)  Like the purpose of the federal 
exclusion (see ante, at pp. 12–13), the IHSS program’s purpose 
is to enable “ ‘disabled poor persons to avoid institutionalization 
by remaining in their homes with proper supportive services.’ ” 
(Basden v. Wagner, supra, 181 Cal.App.4th at p. 939.)   
Nevertheless, MHA would have us read in the words “from third 
parties” after the phrase “cost of services” (24 C.F.R. § 
5.609(c)(16) (2020)) thereby making it correspondingly harder 
for certain families to provide necessary in-home care.  Given 
this cooperative federalism regime, we ought to be reticent to 
interpret the HUD regulation in a way that would foreclose or 
hinder the objectives of the state IHSS program.   
The dissent  overstates the import of the authority it cites 
(see dis. opn., post, at pp. 1–2, 16–19).  (See Anthony v. Poteet 
Housing Authority (5th Cir. 2009) 306 Fed. Appx. 98, 101 
(Anthony) [“One must incur costs before they can be offset”]; Ali, 
supra, 931 N.W.2d 835.)  In Anthony, an unpublished Fifth 
Circuit decision that first addressed the issue, plaintiff Brenda 
Anthony provided in-home care for her severely disabled son in 
their Section 8 subsidized apartment.  Unlike California, the 
State of Texas does not pay families directly for in-home care; 
such care is provided by third party intermediaries, who in turn 
employ in-home attendants and pay them wages partially 
funded by the state.  Through her employment as a personal 
care attendant with two private for-profit companies, Anthony 
provided care not only for her son but also for other clients under 
the terms of her employment.  
In determining Anthony’s annual income for purposes of 
calculating her subsidized rent, the PHA refused to exclude 
Anthony’s wages under 24 Code of Federal Regulations part 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
17 
5.609(c)(16) (2020)).  The Fifth Circuit agreed with the PHA’s 
decision:  “[T]he fact that Anthony’s employment income 
coincides with state funds that are set aside for her son’s care 
does not make that income a form of reimbursement.”  (Anthony, 
supra, 306 Fed. Appx. at pp. 101–102.)  The court further 
rejected Anthony’s claim that the services she provided her son 
were at a cost and were not free:  “[F]or Anthony, they are free.  
She has no out-of-pocket expenses — ‘costs’ — that must be 
reimbursed or ‘offset’ by the state.”  (Id. at p. 102.)   
We are not persuaded by Anthony’s reasoning on several 
grounds.  Fundamentally, Texas’s program is distinct from the 
IHSS scheme in that “all state-funded in-home attendant-care 
services in Texas are provided by private intermediaries, and 
Texas does not provide any amounts directly to families to offset 
costs incurred to keep a disabled family member at home.”  
(Anthony, supra, 306 Fed. Appx. at p. 101.)  Next, although 
Anthony’s private employers paid her to provide in-home care to 
her son “with money partially provided by the state” (id. at p. 
101), it is unclear what portion of her wages truly constituted 
“pass-through” state funds.  Her employers paid Anthony not 
just to care for her disabled son, but also to care for other clients.  
(Id. at p. 100.)  Thus, Anthony’s compensation as an in-home 
attendant was arguably indistinguishable from wages a parent 
earns from outside employment, and therefore properly not 
excluded from income under 24 Code of Federal Regulations 
part 5.609(c)(16) (2020)).  Finally, we do not agree with the Fifth 
Circuit’s narrow interpretation of the exclusion as limited to out-
of-pocket expenses that a state directly reimburses.  (See 
Anthony, supra, 306 Fed. Appx. at pp. 101–102; see ante, at pp. 
9–11.)    
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
18 
Nor are we persuaded by the Minnesota Supreme Court’s 
recent decision in Ali, supra, 938 N.W.2d 835, which relied in 
part on both Anthony and the Court of Appeal opinion below to 
reach a similar conclusion.  (See Reilly v. Marin Housing 
Authority, supra, 23 Cal.App.5th 425.)  Under Minnesota’s 
Consumer Directed Community Support option for home and 
community-based services, a family receives a budget for 
specific 
services 
and 
equipment 
needed 
to 
keep 
a 
developmentally disabled member at home.  (Ali, supra, 938 
N.W.2d at p. 837.)  The plaintiff, whose autistic son was eligible 
for the program, “chose to allocate a portion of the budget to 
herself as a paid parent to provide to her son some of the 
necessary services.”  (Ibid.)  Following Anthony and Reilly, the 
Ali court adopted a narrow view of “cost” to mean out-of-pocket 
expenses, and concluded that the mother incurred no actual 
monetary expenses to “offset.”  (Id. at p. 840.)  
As with the Texas program, the Minnesota program —
which allowed the mother to “allocate her budget as she saw fit 
to keep her son living at home” — is structured differently from 
the IHSS program in a way that makes Ali distinguishable.   
(Ali, supra, 938 N.W.2d at p. 837.)  Moreover, as with Anthony, 
we disagree with the Ali court’s narrow interpretation of “cost” 
and “offset.”  
D. MHA’s policy arguments 
Notwithstanding this reading of the HUD regulation, 
MHA asserts that including a parent’s IHSS compensation as 
income is necessary to achieve a measure of parity between 
families in similar circumstances.  An expansive reading of the 
exclusion (24 C.F.R. § 5.609(c)(16) (2020)), MHA argues, would 
unfairly advantage families who provide in-home care to a 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
19 
developmentally disabled member because their compensation 
is not counted as income for purposes of calculating their rent 
subsidy, whereas no comparable income exclusion is available 
for a family with a medically disabled member or for a family 
who hires a third party provider.   
In advancing this argument, MHA asserts the state pays 
Reilly “wages” under the IHSS program.  Describing an 
employment relationship between Reilly and the State of 
California, MHA relies in part on the Court of Appeal’s 
reasoning that “IHSS payments substitute in the family’s 
budget for the money the parent would have earned outside the 
home.”  Such wages, MHA continues, should be considered part 
of her annual income just like the outside income of a parent 
who instead hires an in-home provider.  We address these points 
in turn.  
1. Disparity based on individuals’ different 
disabilities 
 
First, we reject MHA’s and the dissent’s assertion that 
excluding Reilly’s IHSS payments from annual income under 24 
Code of Federal Regulations part 5.609(c)(16) (2020) would 
create an unfair disparity by extending the exclusion to families 
with a developmentally disabled member but not to families 
with a medically disabled member.  To the extent there is any 
disparity, it is inherent in the federal regulation itself, which 
specifically limits the exclusion to payments made to families 
caring for a “developmentally disabled family member.”  (24 
C.F.R. § 5.609(c)(16) (2020).)  Put another way, even assuming 
MHA’s position is correct that the exclusion is limited to 
payments made to third party providers, it would still treat 
developmental disabilities more favorably than physical 
disabilities because whatever its scope, the exclusion by its 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
20 
terms applies only to “[a]mounts paid by a State agency to a 
family with a member who has a developmental disability.”  
(Ibid., italics added.)    
The regulation, moreover, does not require that an 
individual meet a particular definition of “developmentally 
disabled” for the income exclusion to apply.  As previously 
discussed (see ante, at p. 15), HUD has not defined 
“developmental disability” in the regulation, but instead left it 
up to states to determine its meaning.  Specifically, if a state 
program authorizes a family to receive in-home care for a family 
member, in HUD’s view that family member “meets the criteria 
of the definition” of developmentally disabled, and the PHA 
“should consider the family eligible for the exclusion.”  (61 
Fed.Reg. 54492, 54497 (Oct. 18, 1996), italics added.)  This 
expansive view in favor of applying the exclusion is consistent 
with HUD’s expressed concern that families of developmentally 
disabled members in particular would receive unfair treatment 
if this income exclusion were not made available to them.  HUD 
added the relevant exclusion for families with a developmentally 
disabled member “[s]ince families that strive to avoid 
institutionalization should be encouraged, and not punished.”   
(60 Fed.Reg. 17388, 17389 (Apr. 5, 1995), italics added.)   
 
The dissent, however, asserts that precluding Reilly from 
utilizing this income exclusion would not amount to punishment 
because no other group, besides foster parents, enjoys the 
benefit of the income exclusion.  (See  dis. opn., post, at p. 34, fn. 
18.)  This critically misapprehends the nature of the penalty 
involved.  The punishment here is not merely withholding a 
benefit to a family that is not otherwise given to similarly 
situated families; in other words, the dilemma a family faces is 
not choosing between enjoying or forgoing a “preferential 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
21 
benefit,” as the dissent seems to suggest.  (Dis. opn., post, at 
p. 23.)  Rather, if a family cannot utilize the income exclusion to 
exclude compensation for a parent’s in-home care, this may 
cause the family to lose its Section 8 housing altogether because 
it is unable to pay an increased portion of  rent.  Without such 
housing, a family may face having to institutionalize a 
developmentally disabled member, a result the exclusion seeks 
to prevent in the first place. 
Further, despite no expressed preference for family 
providers per se, “[r]ecipients needing 24-hour protective 
supervision — and other services — are more likely to receive 
better continuous care from relatives living with them whose 
care is more than contractual.”  (Miller v. Woods, supra, 148 
Cal.App.3d at p. 870.)  This continuity of care is particularly 
salient here because of the nature of need-based tasks under the 
IHSS program.  Because an IHSS recipient may only receive 
specific services based on an assessed need — i.e., where 
“[p]erformance of the service by the recipient would constitute 
such a threat to his/her health/safety that he/she would be 
unable to remain in his/her own home” (MPP, § 30.761.14) — 
not all time that a provider spends with a recipient would be 
compensable.  (See § 12300, subd. (a); MPP, § 30.761.12.)  Many 
tasks are discrete and not clustered together throughout the day 
(such as feeding, dressing, bowel and bladder care), and a 
provider may not be compensated for time spent waiting in 
between those tasks.  It would no doubt prove challenging to find 
many providers — other than family members — willing to work 
that intermittently during the day. 
 
Family members may also make particularly good 
providers because IHSS services “involve a most intimate and 
personal aspect of an individual’s life” and family providers 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
22 
often “insure the least intrusion upon the recipient’s privacy.”   
(Miller v. Woods, supra, 148 Cal.App.3d at p. 878; see § 12304.1 
[“preference shall be given to any qualified individual provider 
who is chosen by any recipient”].)  Also recognizing that family-
provided care is often the best type of care for individuals with 
disabilities, Congress has included it as one of the “goals of the 
Nation” to provide families of children with disabilities the 
services necessary to “enable families of children with 
disabilities to nurture and enjoy their children at home”; and 
“support family caregivers of adults with disabilities.”  (42 
U.S.C. § 15091(a)(6)(B), (D) [congressional findings of Families 
of Children with Disabilities Support Act of 2000]; id., 
§ 15091(a)(1) [“It is in the best interest of our Nation to preserve, 
strengthen, and maintain the family”].)  Congress further 
emphasized the important cost savings when family members 
are themselves providers for their disabled children:  “Families 
of children with disabilities provide support, care, and training 
to their children that can save States millions of dollars.  
Without the efforts of family caregivers, many persons with 
disabilities would receive care through State-supported out-of-
home placements.”  (Id., § 15091(a)(2); see 60 Fed.Reg. 17388, 
17389 (Apr. 5, 1995).)  These expressed goals fully align with 
HUD’s objective to have developmentally disabled individuals 
avoid institutionalization and instead live with their families at 
home.3  
                                        
3  
Contrary to the dissent’s suggestion, nothing in our 
opinion should be construed as implying that third party 
caregivers as a whole will provide “substandard” care compared 
to family members.  (Dis. opn., post, at p. 31.)  We merely 
confirm what Congress has expressly recognized about the 
benefits of having family caregivers. 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
23 
This leads us to the inescapable conclusion that parents 
who keep their disabled child at home instead of in an 
institution — while also providing care as their child’s IHSS 
provider — are different from other caregivers.  That difference, 
however, cuts in favor of allowing a parent’s IHSS compensation 
under the exclusion.  Unlike third party caregivers whose job it 
is to take care of someone on an hourly basis, for these parent 
providers, caring for their child “is not a day job; it is their life.”  
(In re Hite (Bankr. W.D.Va. 2016) 557 B.R. 451, 458 [holding 
parents’ in-home care payments excluded from monthly income 
and consequently not deemed disposable income subject to 
creditors].)  If in-home care payments are not excluded from her 
income, the benefits Reilly receives — the in-home care for her 
disabled daughter K.R. and the Section 8 housing assistance — 
would be at cross-purposes.  A family should not be forced to 
make an impossible choice between these two critical benefits.  
We perceive no plausible reason why Reilly should not realize 
the full benefit of what each program has to offer her family.4    
2. IHSS payments as wages 
Next, we reject MHA’s underlying assumption that a 
parent provider’s compensation under the IHSS program seeks 
to replicate the wages and hours of a parent who is employed 
outside the home.  A parent’s employment is relevant only to the 
extent it relates to the parent’s suitability or availability to 
provide IHSS services to a child.  (MPP, § 30-763.451; Dept. All-
County Letter No. 19-02 (January 9, 2019) (All-County Letter 
                                        
4  
This conclusion focuses on Reilly’s general entitlement to 
benefits under the Section 8 voucher and IHSS programs, and 
does not consider any other basis for terminating these benefits 
such as the failure to comply with any program requirements.  
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
24 
19-02).)  As section 12300, subdivision (e) explains, the predicate 
for a paid parent provider is that “no other suitable provider is 
available.”  (§ 12300, subd. (e); see MPP, § 30-763.451.)  In 
providing the necessary in-home care to a disabled child, a 
parent forgoes any outside employment — not to displace 
otherwise competent professional caregivers — but to prevent a 
third party caregiver’s “inappropriate placement or inadequate 
care” for their child.  (§ 12300, subd. (e).)    
For instance, in its 2019 All-County Letter 19-02, the 
Department clarified the paid parent provider requirements:  
“The paid parent IHSS provider requirements, set forth in MPP 
Section 30-763.451, do not require or imply that a parent must 
have marketable job skills or a work history to be their child’s 
paid IHSS provider, as long as it is the recipient child’s needs 
which prevent the parent from maintaining or obtaining full-
time employment.”  (All-County Letter 19-02, supra, at p. 4, 
italics added.)  Likewise, parents who retire or are laid off may 
also serve as their child’s provider only if their retirement or 
layoff is due to the child’s need for IHSS services.  (Id. at p. 6.)  
In short, “if a parent is not employed full-time for a reason other 
than the recipient child’s IHSS needs . . . that parent would not 
qualify as a paid parent IHSS provider.”  (Id. at p. 4.)  
Second, even assuming Reilly’s IHSS compensation 
represents her wages, this does not mean that providing in-
home care to her child is “an employment for all purposes.”  
(Basden v. Wagner, supra, 181 Cal.App.4th at p. 940.)  In Basden 
v. Wagner, the Court of Appeal recognized certain duties — such 
as the state being responsible for the provider’s unemployment 
compensation, workers’ compensation, federal and state income 
tax and the like — that would suggest providing IHSS full-time 
could be considered an employment.  The court, however, 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
25 
pointed out that “the Legislature defined IHSS providers as 
employees for limited circumstances, but undisputedly not for 
all circumstances.  More significantly, nothing in the statutes 
even remotely suggests the Legislature defined the provision of 
in-home, full-time, IHSS funded care by a parent to a child as 
full-time employment . . . .”  (Ibid., italics omitted.)  The question 
here is whether a parent’s compensation for providing in-home 
care is “specifically excluded” from the definition of annual 
income for purposes of the HUD regulation.  (24 C.F.R. 
§ 5.609(a)(3), (c)(16) (2020).)  As explained above, we conclude 
that IHSS compensation to a parent provider is excluded from 
income.  (See ante, at pp. 14–15.)   
Nevertheless, the dissent maintains that “[u]nlike funds 
that reimburse a family’s expenditures, funds provided by the 
state to compensate for the family’s caregiving activities are 
available to meet the family’s daily needs.  That is their 
purpose.”  (Dis. opn., post, at p. 25, italics added.)  This 
characterization gravely misconstrues the nature and scope of 
IHSS services.   
Under the IHSS program, the main focus is on assessing 
the disabled individual’s “service needs and authorizing service 
hours to meet those needs.”  (§ 12301.2, subd. (a)(1).)  A 
caregiver will be compensated only for those authorized service 
hours and nothing more.  As previously explained (see ante, at 
p. 21), because many tasks are discrete and completed 
throughout the day, a provider might not be compensated for 
time spent waiting in between those tasks.  Contrary to the 
dissent’s suggestion, excluding a parent’s IHSS compensation 
from income would not artificially reduce a family’s income and 
thereby increase any resulting rent subsidy.  At best, a parent’s 
IHSS compensation will offset a portion of the costs of keeping 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
26 
a developmentally disabled family member at home, and would 
not go far in meeting the family’s daily needs. 
The dissent’s related assertion — i.e., family providers 
“are effectively selling their labor to the state, and the resulting 
income is indistinguishable, in its impact on the family’s 
standard of living, from money earned working outside the 
home” (dis. opn., post, at p. 25) — is likewise long on conclusion 
but short on facts.   (See ibid. [“to receive funds from IHSS a 
parent must accept their disabled child’s care as, in effect, their 
job”].)  In the case of Reilly’s daughter, K.R., for example, she 
required protective supervision that is “only available” if “a need 
exists for twenty-four-hours-a-day of supervision in order for the 
recipient to remain at home safely.”  (MPP, § 30-757.173(a).)  A 
person needing 24-hour supervision would require a provider’s 
services for 720 hours in a 30-day month.  However, an IHSS 
provider is limited to a statutory cap of 283 hours of 
compensation.  (§§ 12303.4, 14132.95, subd. (g).)  The 
discrepancy between a parent provider’s actual hours of service 
and compensation belies any assertion that IHSS payments, at 
least with respect to protective supervision, are intended to 
represent wages the parent would have earned outside the 
home, where compensation would be based on every hour 
worked.   
 Finally, we find it significant that the IRS also treats in-
home care payments — whether the provider is related or 
unrelated to the disabled individual — as excludable from a 
provider’s income under Internal Revenue Code section 131. (26 
U.S.C. § 131; see Rev. Proc. 2014-7, 2014-4 I.R.B. 445.)  In 2014, 
the IRS explained that Medicaid waiver payments to states, 
which are used to fund IHSS payments through the state Medi-
Cal program (see ante, at pp. 5–6 & fn. 2), should be excluded 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
27 
from a provider’s gross income.  (Rev. Proc. 2014-7, 2014-4 I.R.B. 
445.)  It equated these payments to foster care payments, which 
are considered “difficulty of care” payments excludable from a 
provider’s income under Internal Revenue Code section 131.   
(26 U.S.C. § 131(a) [“Gross income shall not include amounts 
received by a foster care provider . . . as qualified foster care 
payments”].)  “The programs share the objective of enabling 
individuals who otherwise would be institutionalized to live in a 
family home setting rather than in an institution, and both 
difficulty of care payments and Medicaid waiver payments 
compensate for the additional care required.”  (Rev. Proc. 2014-
7, 2014-4 I.R.B. 445 [these foster parents “ ‘are saving the 
taxpayers’ money by preventing institutionalization of these 
children’ ”].)  As relevant here, the IRS makes no distinction 
between care provided by a parent or by a third party — the 
exclusion for Medicaid waiver payments “will apply whether the 
care provider is related or unrelated to the eligible individual.”  
(Ibid., italics added.)    
 
Seeking to downplay any impact an IRS interpretation has 
on a HUD regulation, MHA notes that HUD has indicated that 
the “tax rules are different from the HUD program rules.”  
(HUD, HUD Handbook 4350.3: Occupancy Requirements of 
Subsidized Multifamily Housing Programs (Nov. 2013) ¶ 5-1.)  
Be that as it may, we do not conclude that the IRS’s 
interpretation is dispositive or compels the outcome in this case.  
We do, however, acknowledge that it provides persuasive 
insight, one that is consistent with the rulemaking record of the 
HUD regulation (24 C.F.R. § 5.609(c)(16) (2020)).  (See ante, at 
pp. 11–13) 
 
For example, though payments to foster parents and in-
home care payments are both considered “difficulty of care” 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
28 
payments excludable from a provider’s taxable income, these 
payments would receive unequal treatment under MHA’s 
interpretation of the regulation.  Under 24 Code of Federal 
Regulations part 5.609(c)(2) (2020), “[p]ayments received for the 
care of foster children or foster adults (usually persons with 
disabilities, unrelated to the tenant family, who are unable to 
live alone)” are excluded from income for purposes of Section 8 
housing.  If a family takes into their home an unrelated disabled 
adult who is unable to live alone, and receives payment from the 
State for providing care to that adult, such payments are 
excluded from the family’s income.  However, if that same family 
receives payment for providing the same care but to a 
developmentally disabled family member, those payments 
would not be excluded from income.  To ascribe this 
interpretation to HUD, which would impose a financial penalty 
on a family simply because the care is given to a disabled family 
member rather than a disabled stranger, would not only be 
inconsistent with the IRS’s treatment of both payments, there is 
no evidence in the regulation’s rulemaking record that HUD 
intended different treatment. 
E. HUD’s position 
 
At our request, HUD filed an amicus brief in this matter.  
We first note that at oral argument HUD’s counsel indicated 
that the agency did not request we give deference to its 
interpretation of the regulation because it believed the plain 
language controlled.  (See Kisor v. Wilkie (2019) 588 U.S. ___ 
[139 S. Ct. 2400, 2415] [“If uncertainty does not exist, there is 
no plausible reason for deference.  The regulation then just 
means what it means — and the court must give it effect”].)  
Urging us to affirm the Court of Appeal’s judgment, HUD opines 
that the IHSS payments Reilly receives must be treated as 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
29 
income under the regulation because that “compensation 
substitutes for income Reilly would otherwise earn for working 
outside the home.”  HUD essentially echoes the reasoning of the 
Court of Appeal below.   
Though deference is generally accorded an agency’s 
interpretation of its own regulation in the face of ambiguity (see 
Auer v. Robbins (1997) 519 U.S. 452; Skidmore v. Swift & Co. 
(1944) 323 U.S. 134, 140), we conclude that such deference is not 
compelled here.  (See United States v. Mead Corp. (2001) 533 
U.S. 218, 228 [“[t]he fair measure of deference to an agency 
administering its own statute has been understood to vary with 
circumstances”].)  Courts should defer to an agency’s 
interpretation unless an “ ‘alternative reading is compelled by 
the regulation’s plain language or by other indications of the 
[agency’s] intent at the time of the regulation’s promulgation.’ ”  
(Thomas Jefferson Univ. v. Shalala, supra, 512 U.S. at p. 512, 
italics added.)  
 
 As explained above (see ante, at pp. 12–13), we conclude 
that HUD’s clearly expressed intent at the time it added the 
exclusion for homecare payments (24 C.F.R. § 5.609(c)(16) 
(2020)) was to encourage families to provide in-home care to, and 
avoid institutionalization of, developmentally disabled family 
members.  This contemporaneous intent is fully realized only 
when in-home payments for services needed to keep the 
developmentally disabled member at home — are excluded from 
income for purposes of the Section 8 program, i.e., whether those 
payments are ultimately made to a family member or to a third 
party provider.  This interpretation is consistent with 
exclusion’s language, which places no restrictions on who the 
provider of services can be.  (24 C.F.R. § 5.609(c)(16) (2020).)   
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
30 
 
Contrary to MHA’s suggestion, we do not perceive any 
intent by HUD to treat families with a developmentally disabled 
member and families with a medically disabled member the 
same, or to consider a parent’s outside income the same as a 
parent’s IHSS compensation.  We will not pursue parity for 
parity’s sake, especially if such pursuit runs counter to the 
language and purpose of the exclusion.  Including a parent’s in-
home care payments as income to determine a family’s Section 
8 eligibility will have the perverse effect of making it harder for 
a family to maintain a home in which to care for the child.   
 
In the end, we refuse to adopt a crabbed interpretation 
that does little to advance the tandem goals of offering 
affordable housing to low income families and of supporting 
families 
who 
themselves 
provide 
in-home 
care 
for 
developmentally disabled members. We cannot endorse a 
construction that yields a result antithetical to our nation’s “goal 
of providing families of children with disabilities with the 
support they need to raise their children at home.”  (42 U.S.C. 
§ 15091(c).)  We conclude a parent’s IHSS compensation to 
provide care to keep a developmentally disabled child at home 
is excluded from income under 24 Code of Federal Regulations 
part 5.609(c)(16) (2020). 
 
 
REILLY v. MARIN HOUSING AUTHORITY 
Opinion of the Court by Chin, J. 
 
31 
CONCLUSION 
 
We reverse the Court of Appeal’s judgment and 
remand the matter for further proceedings consistent with this 
opinion.  
CHIN, J. 
We Concur: 
LIU, J. 
CUÉLLAR, J.  
GROBAN, J.  
 
1 
REILLY v. MARIN HOUSING AUTHORITY 
 
S249593 
 
 
Dissenting Opinion by Chief Justice Cantil-Sakauye  
 
The federal Housing Choice Voucher program, 42 
U.S.C. section 1437f (hereafter Section 8), provides housing 
assistance to low-income families, with the amount of the 
assistance determined by the family’s annual income.  Under 
24 Code of Federal Regulations part 5.609(c) (2020),1 certain 
funds are excluded from the calculation of annual income.  
Among the funds excluded from that calculation are state 
payments to a family providing at-home care to a 
developmentally disabled family member if those payments 
“offset the cost of services and equipment needed to keep the 
developmentally 
disabled 
family 
member 
at 
home.”  
(§ 5.609(c)(16).)  The majority adopts an expansive 
interpretation of part 5.609(c)(16), holding that, in addition 
to excluding the state’s reimbursement of out-of-pocket 
expenses, the regulation also covers the compensation paid to 
parents who are hired by the state to provide full-time care 
to their developmentally disabled children.  Every other 
appellate court to consider part 5.609(c)(16) — the United 
                                        
1  
Hereafter part 5.609(c) — and, when referred to in a 
citation parenthetical, § 5.609(c).  (See California Style 
Manual (2000) § 2:44.) 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
2 
States Court of Appeals for the Fifth Circuit, the Minnesota 
Supreme Court, and our Court of Appeal — has adopted a 
narrower construction, limiting the exclusion to those state 
payments that reimburse a family’s expenditures.  In 
contrast, these courts have held that compensation to parents 
for their labor in caring for a developmentally disabled child, 
which constitutes genuine income to the family, is outside the 
scope of the exclusion. 
The conclusion reached by these other appellate courts 
is the most straightforward reading of the relevant 
regulatory language, which is restricted to payments made 
“to offset the cost of services and equipment.”  (§ 5.609(c)(16).)  
And this interpretation fully serves my understanding of the 
purpose underlying the regulation, which is to ensure that 
families caring for a developmentally disabled family 
member are not disadvantaged in their receipt of Section 8 
housing assistance by their acceptance of state help in 
keeping the family member at home.  Significantly, the 
narrower interpretation is the one urged on us by the United 
States Department of Housing and Urban Development 
(HUD), the federal agency that drafted the regulation. 
The majority’s more expansive construction of the 
regulation relies on a strained reading that disregards the 
actual language, and it will have unfortunate and selective 
public policy consequences.  First, the majority’s ruling will 
introduce unintended and unwarranted inequities into the 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
3 
administration of Section 8.  Second, the majority’s 
misreading will siphon scarce housing assistance from 
California’s other low-income families, inevitably reducing 
the number of families who will benefit from the Section 8 
program.  In light of the misguided, if well-intentioned, 
nature of the majority’s analysis, I respectfully dissent. 
I.  BACKGROUND 
A.  Plaintiff’s Circumstances 
 
Plaintiff Kerrie Reilly and her adult daughter, K.R., 
live together in a three-bedroom apartment in Marin County.  
Due to a severe developmental disability, K.R. requires 
around-the-clock 
supervision. 
 
Under 
the 
In-Home 
Supportive Services program (IHSS; Welf. & Inst. Code, 
§ 12300 et seq.), the state pays plaintiff to provide full-time 
home care and supervision to her daughter.  Without such 
care, K.R. would likely be placed in an institution.  At the 
time of the trial court proceedings, the family’s annual 
income exceeded $52,000, comprised of K.R.’s social security 
benefits of $11,000 and more than $41,000 in IHSS 
compensation to plaintiff. 
 
Plaintiff is a long-time participant in Section 8.  In 
2004, plaintiff’s second daughter, R.R., moved from the 
family’s apartment to attend college.  For the next five years, 
plaintiff falsely represented in annual, sworn certifications to 
the Marin Housing Authority (Authority), the agency 
responsible for administering her Section 8 benefits, that 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
4 
R.R. continued to live with her.2  After the Authority learned 
the 
truth, 
plaintiff 
admitted 
that 
she 
made 
the 
misrepresentations because she was concerned that she and 
K.R. would be required to move from their three-bedroom 
apartment if she disclosed R.R.’s move.  Plaintiff’s false 
representations also caused her to be granted, the Authority 
concluded, a larger Section 8 housing voucher than she would 
have 
received 
had 
the 
Authority 
known 
the 
true 
circumstances.  When the Authority confronted plaintiff, she 
agreed to repay more than $16,000 in excess subsidies under 
a payment schedule.  Unfortunately, plaintiff was often 
unable to make the scheduled payments.  The Authority’s 
patience ran out in 2015, when it terminated her 
participation in the Section 8 program. 
As the Authority informed the trial court in explaining 
its decision to terminate plaintiff, its implementation of 
Section 8 is severely constrained by limited funding.  In 2015, 
more than 5,000 families in Marin County eligible for 
Section 8 housing assistance were on a waiting list because 
the Authority was unable to help them.  At the time, the 
Authority was authorized to grant vouchers to only 2,153 
families; in practice, it provided rent vouchers only to 1,957 
                                        
2  
The majority’s statement that plaintiff “did not inform” 
the Authority of R.R.’s departure (maj. opn., ante, at p. 2) is 
a charitable but misleading characterization of plaintiff’s 
repeated and knowing falsehoods. 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
5 
families due to insufficient funding.  The Authority decided 
to terminate plaintiff because, it explained, although it “has 
been grappling with the possibility of terminating hundreds 
of compliant families from the Section 8 Program, [plaintiff] 
has made it a practice to violate rules of the Section 8 
Program and her contractual obligations.”  Contrary to 
majority’s claim (maj. opn., ante, at p. 2), the termination did 
not require plaintiff’s eviction from her apartment, although 
she would become responsible for paying the entire rent. 
In this mandate action challenging her termination, 
plaintiff argued that the Authority had improperly included 
her IHSS payments when calculating her annual income 
under Section 8, causing the Authority to understate the 
housing subsidy due her.  The trial court disagreed, 
sustaining the Authority’s demurrer without leave to amend 
upon concluding that the IHSS payments were properly 
included in plaintiff’s income calculation.  The Court of 
Appeal affirmed in a published decision.  (Reilly v. Marin 
Housing Authority (2018) 23 Cal.App.5th 425, 439 (Reilly).)  
The Supreme Court now reverses the Court of Appeal. 
B.  Governing Law 
1.  Section 8 
The Section 8 voucher program “is funded by HUD and 
administered by state and local public housing authorities 
. . . in accordance with regulations promulgated by HUD.  
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
6 
When a rent payment exceeds a specified percentage of a 
family’s monthly income, the federal program pays the 
balance.”  (Inclusive Communities Project, Inc. v. Lincoln 
Property Co. (5th Cir. 2019) 920 F.3d 890, 900.)  As HUD 
characterizes the program in an amicus curiae brief, 
“Section 8 is not an entitlement program; Congress 
appropriates only a fixed sum for vouchers . . . each year, and 
not every otherwise qualified family receives a voucher.”3  
Each administering agency is assigned a maximum number 
of annual vouchers and has a fixed budget.4  Yet Congress 
has underfunded the program in recent years, requiring 
                                        
3  
If the Authority’s experience is any guide, HUD’s 
concession that “not every otherwise qualified family receives 
a voucher” is a gross understatement.  More than 7,000 
families in Marin County are eligible for assistance under 
Section 8, but fewer than 2,000 are actually provided 
vouchers. 
4  
See Congressional Research Service, An Overview of 
the Section 8 Housing Programs: Housing Choice Vouchers 
and Project-Based Rental Assistance, No. RL32284 (Feb. 7, 
2014). 
 
A 
copy 
of 
the 
report 
can 
be 
found 
at 
<https://www.everycrsreport.com/reports/RL32284.html#:~:t
ext=The%20voucher%20program%20is%20funded,an%20an
nual%20budget%20from%20HUD.> (as of Aug. 28, 2020).  All 
Internet citations in this opinion are archived by year, docket 
number, and case name at <http://www.courts.ca.gov/ 
38324.htm>. 
 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
7 
these agencies to operate at only 85 percent of their assigned 
budgets.5 
Each subsidized family is required to contribute to its 
rent payment an amount equal to “thirty percent of the 
tenant family’s monthly ‘adjusted income’ or ten percent of 
its monthly gross income, whichever is greater.”  (Hayes v. 
Harvey (3d Cir. 2018) 903 F.3d 32, 36, citing 42 U.S.C. 
§ 1437f(o).)  “Adjusted income” for this purpose is a family’s 
“annual income,” minus certain expenses and allowances.  
(24 C.F.R. § 5.611 (2020); DeCambre v. Brookline Housing 
Authority (1st Cir. 2016) 826 F.3d 1, 9 (DeCambre).)  The 
calculation of annual income therefore determines the 
proportion of its monthly rent that a family participating in 
Section 8 must pay. 
For purposes of Section 8, “annual income” constitutes 
“all amounts, monetary or not” that “[g]o to, or on behalf of, 
the family head or spouse . . . or to any other family member.”  
(24 C.F.R. § 5.609(a)(1), (3) (2020); DeCambre, supra, 826 
F.3d at p. 9.)  Among other things, this includes “[t]he full 
amount, before any payroll deductions, of wages and 
salaries, . . . and other compensation for personal services.”  
(24 C.F.R. § 5.609(b)(1) (2020).)  Subpart (c) of part 5.609 lists 
                                        
5  
Eligibility Team, How the Housing Choice (Section 8) 
Voucher 
Program 
is 
Funded 
(Jan. 
22, 
2016) 
<https://eligibility.com/section-8/how-the-housing-choice-
section-8-voucher-program-is-funded#> (as of Aug. 28, 2020). 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
8 
16 exclusions from annual income.  In addition to the 
exclusion on which plaintiff relies, part 5.609(c)(16), which 
excludes certain payments to a family providing at-home care 
to a developmentally disabled family member, these include 
payments received “for the care of foster children” 
(§ 5.609(c)(2)), payments “for, or in reimbursement of, the 
cost” of medical expenses (§ 5.609(c)(4)), students’ financial 
aid 
(§ 5.609(c)(6)), 
certain 
nonrecurring 
payments 
(§ 5.609(c)(3), (9)), and student earnings and adoption 
assistance payments “in excess of $480” (§ 5.609(c)(11), (12)). 
2.  IHSS 
The purpose of the IHSS program is “to avoid 
institutionalization of incapacitated persons.  It provides 
supportive services to aged, blind, or disabled persons who 
cannot perform the services themselves and who cannot 
safely remain in their homes unless the services are provided 
to them.  The program compensates persons who provide the 
services to a qualifying incapacitated person.”  (Basden v. 
Wagner (2010) 181 Cal.App.4th 929, 931 (Basden).)  IHSS is 
administered by the state’s counties (Skidgel v. California 
Unemployment Ins. Appeals Bd. (2018) 24 Cal.App.5th 574, 
578–579), which either hire a caregiver for the recipient or 
pay the recipient directly to cover the costs of a caregiver.  
(Basden, at p. 934; Welf. & Inst. Code, §§ 12302, 12304, subd. 
(a).)  Counties are required to give preference to a care 
provider selected by the recipient, and some IHSS care 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
9 
recipients are entitled to select and hire their own provider.  
(Welf. & Inst. Code, §§ 12303.4, subd. (b); 12304, subd. (a), 
12304.1; Skidgel, supra, 24 Cal.App.5th at p. 579.) 
The state may hire parents to care for their children 
under IHSS, but only “when the [parent] leaves full-time 
employment or is prevented from obtaining full-time 
employment because no other suitable provider is available.”  
(Welf. & Inst. Code, § 12300, subd. (e); see generally, Basden, 
supra, 181 Cal.App.4th at pp. 939–940.)  Of the 535,000 IHSS 
care providers in California, about 70 percent are a relative 
or spouse of the recipient, and about one-quarter of those are 
a parent.  Slightly less than half of IHSS providers — 250,000 
persons — are, like plaintiff, relatives of the person for whom 
they provide care and live in the same home.6 
Plaintiff’s claim that her IHSS payments should be 
excluded from the calculation of her Section 8 annual income 
is premised on part 5.609(c)(16), which excludes “[a]mounts 
paid by a State agency to a family with a member who has a 
developmental disability and is living at home to offset the 
cost of services and equipment needed to keep the 
                                        
6  
The State Department of Social Services reports a wide 
range of monthly data regarding participation in the IHSS 
program.  The information cited in this paragraph is from a 
table of data for June 2020, maintained at IHSS Program 
Data <https://www.cdss.ca.gov/inforesources/ihss/program-
data> (as of Aug. 28, 2020).  The cited data is available under 
a tab labeled “Provider Details,” which does not appear to be 
accessible through a separate URL. 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
10 
developmentally disabled family member at home.”  The 
Authority and HUD interpret the phrase “[a]mounts paid . . . 
to offset the cost of services and equipment” to cover only 
payments by the state to compensate for a family’s actual 
expenditures on services or equipment.  (§ 5.609(c)(16.)  
Because plaintiff’s IHSS compensation was not used to pay 
for the costs of services or equipment purchased by the family 
to care for K.R., the Authority explains, it did not exclude 
plaintiff’s IHSS payments when calculating her annual 
income.  Plaintiff contends, however, and the majority holds, 
that the phrase “[a]mounts paid . . . to offset the cost of 
services and equipment” (ibid.) should be construed to cover 
any payment made to a family by the state in connection with 
the in-home care of a developmentally disabled family 
member, regardless of whether the payment offset an 
expenditure by the family or compensated a family member 
hired by the state to care for the disabled person.   
II.  DISCUSSION 
A. The Language of Part 5.609(c)(16) Precludes 
the Majority’s Interpretation 
We review questions of statutory interpretation de 
novo.  (Christensen v. Lightbourne (2019) 7 Cal.5th 761, 771.)  
Under “our familiar principles of statutory construction,” 
“ ‘[w]e start with the statute’s words, which are the most 
reliable indicator of legislative intent.’  [Citation.]  ‘ “We 
interpret relevant terms in light of their ordinary meaning, 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
11 
while also taking account of any related provisions and the 
overall structure of the statutory scheme to determine what 
interpretation best advances the Legislature’s underlying 
purpose.” ’  [Citations.]  ‘If we find the statutory language 
ambiguous or subject to more than one interpretation, we 
may look to extrinsic aids, including legislative history or 
purpose to inform our views.’ ”  (In re A.N. (2020) 9 Cal.5th 
343, 351–352 (A.N.).)  We take the same approach when 
interpreting administrative regulations.  (Centinela Freeman 
Emergency Medical Associates v. Health Net of California, 
Inc. (2016) 1 Cal.5th 994, 1011.)  Based on the ordinary 
meaning of its language, we should conclude that the 
part 5.609(c)(16) exclusion is limited to state payments that 
compensate a family’s actual expenditures for services and 
equipment to keep a developmentally disabled family 
member in their home. 
As noted above, part 5.609(c)(16), excludes from a 
Section 8 family’s annual income “[a]mounts paid by a State 
agency to a family . . . to offset the cost of services and 
equipment needed to keep the developmentally disabled 
family member at home.”  According to Merriam-Webster, 
the verb “offset” means “to serve as a counterbalance for : 
COMPENSATE.” (Merriam-Webster Dict. Online (2020) 
 [as of 
Aug. 28, 2020]; see, e.g., Steinmeyer v. Warner Cons. Corp. 
(1974) 42 Cal.App.3d 515, 518 [“An ‘offset’ may be defined as 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
12 
a claim that serves to counterbalance or to compensate for 
another claim”].)  Part 5.609(c)(16) therefore excludes 
payments by the state to a family that are made to 
“counterbalance” the cost of services and equipment needed 
to keep the developmentally disabled family member at 
home.  Necessarily, this language anticipates that an 
equivalent cost has been or will be paid by the family for 
those services or equipment, since there would be nothing to 
counterbalance in the absence of such an expenditure. 
If HUD, the agency that drafted part 5.609(c)(16), had 
intended the regulation to bear the broader meaning imposed 
by the majority, it could have used a more inclusive phrase, 
such as amounts paid by the state “for services and 
equipment,” instead of requiring the excluded payments to 
“offset the cost” of services and equipment.  This is the 
approach taken by HUD in drafting the only part 5.609(c) 
exclusion that undoubtedly bears the breadth bestowed on 
subpart (c)(16) by the majority.  Part 5.609(c)(2) excludes 
“[p]ayments received for the care of foster children or foster 
adults (usually persons with disabilities, unrelated to the 
tenant family, who are unable to live alone),” leaving no 
uncertainty about its meaning.7  (Italics added.)  By imposing 
                                        
7  
The parenthetical presumably explains the reason for 
the breadth of the exclusion:  To provide a benefit to low-
income families that care for unrelated persons who are in 
 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
13 
a similar breadth on part 5.609(c)(16), the majority’s reading 
renders pointless the use of the term “offset” because its 
reading is not restricted to the exclusion of payments that 
“offset the cost” of services and equipment.  It is an 
elementary principle of statutory interpretation that “ ‘[a]n 
interpretation that renders statutory language a nullity is 
obviously to be avoided.’ ”  (Tuolumne Jobs & Small Business 
Alliance v. Superior Court (2014) 59 Cal.4th 1029, 1039.)  The 
majority’s expansive approach also defies the general 
interpretive principle that exceptions to a statute are to be 
construed narrowly.  (Mathews v. Becerra (2019) 8 Cal.5th 
756, 771; Simpson Strong-Tie Co. v. Gore (2010) 49 Cal.4th 
12, 22.) 
HUD has confirmed this understanding in an amicus 
curiae brief, arguing that it intended the regulation to reach 
only state payments that reimburse a family’s expenditures.  
As HUD reasons, this narrower reading “accords with the 
                                        
distressed circumstances.  The majority contends that 
interpreting subpart (c)(2) differently from subpart (c)(16) 
“would be unreasonable” because both families are providing 
“the same care.”  (Maj. opn., ante, at p. 28.)  The different 
approaches, however, are readily explained.  HUD could 
reasonably have concluded that the familial connection 
required by part 5.609(c)(16) makes it unnecessary to bestow 
this type of benefit on families covered by that exclusion.  In 
any event, the distinctly different language in the two 
exclusions suggests that they should be interpreted 
differently. 
 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
14 
basic policy objectives of the regulation.  [Citation.]  As HUD 
has explained, in promulgating [part] 5.609(c)(16), the 
exclusion exists because ‘families that strive to avoid 
institutionalization should be encouraged, and not punished.’  
[Citation.]  The regulation pursues this goal in part by 
ensuring that families that choose different means of keeping 
the developmentally disabled family member at home are 
treated evenhandedly.”8
  
Plaintiff argues that the term “cost” could cover more 
than a monetary expenditure.  In ordinary parlance, “cost,” 
admittedly, can refer not simply to the price paid for 
something, but more broadly to “the outlay or expenditure 
(as of effort or sacrifice) made to achieve an object” or the 
“loss or penalty incurred especially in gaining something.”  
(Merriam-Webster 
Dict. 
Online 
(2020) 
 [as of 
Aug. 28, 2020].)  In this connection, plaintiff invokes the 
economic concept of an “opportunity cost,” that is, the 
opportunities foregone when a person makes a particular 
                                        
8  
Leaving aside debate about the precise degree of 
deference to be accorded HUD’s interpretation under 
Yamaha Corp. of America v. State Bd. of Equalization (1998) 
19 Cal.4th 1, 7–8, the administrative agency’s interpretation 
undoubtedly deserves serious consideration.  Although the 
majority does address HUD’s views, its explanation for 
rejecting them amounts to little more than a disagreement 
with HUD over which interpretation best serves HUD’s 
goals.  (Maj. opn., ante, at pp. 28–30.) 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
15 
economic choice.  Here, the argument goes, “cost” refers to the 
employment opportunities that plaintiff has foregone in order 
to provide care under IHSS.  The payments therefore “offset” 
the cost to plaintiff of not having other employment.  This is 
hardly the “ordinary meaning” of the language HUD chose to 
use.  (A.N., supra, 9 Cal.5th at p. 351.)  We typically refer to 
a payment for services as “compensation” or, more simply, 
“payment” for the work performed.  We do not refer to 
compensation for providing a service as “offsetting the cost” 
of the service provider’s own effort, much less the service 
provider’s decision to take this job, rather than a different 
hypothetical job. 
The majority takes a different tack in justifying its 
interpretation, suggesting that because much of the IHSS 
compensation paid to plaintiff will ultimately be spent on 
costs associated with supporting K.R. in the family home, 
that compensation is paid to “offset the cost of services and 
equipment needed to keep [K.R.] at home.”  (§ 5.609(c)(16); 
see Maj. opn., ante, at p. 10 [“Whether a family uses homecare 
payments to support itself so that it may care for a 
developmentally disabled member at home, or instead uses 
the funds to pay a third party to provide care for some of the 
time, these payments do no more than ‘offset’ the ‘cost’ of 
services 
and 
equipment 
needed 
to 
avoid 
institutionalization”].) 
 
This 
rationale 
fails 
for 
two 
independent reasons.  First, while it finds a role for the term 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
16 
“offset,” it disregards other aspects of the regulatory 
language.  Part 5.609(c)(16) excludes only state payments 
that offset expenditures for “services and equipment.”  As 
rationalized above, the majority’s reading necessarily 
stretches the exclusion to cover any cost related to K.R.’s 
presence in the home, including food, clothing, and rent.  
These are not normally viewed as “services and equipment.”9  
By restricting the exclusion to the costs of “services and 
equipment,” HUD signaled its intent to exclude only costs 
related to the family member’s disability, rather than the 
ordinary, if necessary, expenses of daily life.  Second, the 
regulation excludes “[a]mounts paid by a state agency . . . to 
offset the costs of services and equipment.”  (§ 5.609(c)(16).)  
As discussed above, the IHSS compensation is paid by the 
state to compensate plaintiff for her labor in caring for her 
daughter.  While it may be used by plaintiff to cover the costs 
of supporting her daughter, it is not paid by the state to offset 
those costs. 
The restrictive view of part 5.609(c)(16) has been 
adopted by all other appellate courts that have considered the 
issue.  The plaintiff in Anthony v. Poteet Housing Authority 
                                        
9  
Indeed, because the majority reads the regulation to 
exclude the entirety of plaintiff’s IHSS compensation on this 
basis, it construes “the costs of services and equipment” to cover 
the cost of anything plaintiff chooses to spend her compensation 
on.   
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
17 
(5th Cir. 2009) 306 Fed. Appx. 98, the first decision to address 
this issue, lived with her developmentally disabled adult 
child.  Under a state-funded program in Texas, she was 
employed by a private entity to care for the child and, like 
plaintiff, contended that the income she earned in this role 
should be excluded from her Section 8 income under 
part 5.609(c)(16).  The court was willing to accept that her 
payments, despite being provided by a private employer, 
constituted payments by the state.  It rejected her argument 
that the payments should be excluded from the calculation of 
her Section 8 income under part 5.609(c)(16), however, upon 
concluding that the exclusion applies only to reimbursements 
for costs paid for care by third-party providers.  As the court 
explained, “One must incur costs before they can be offset.”  
(Anthony, at p. 101.) 
The Court of Appeal below reached a similar conclusion 
after a more extensive analysis.  It declined to equate “offset” 
with “reimburse,” but the distinction it found between the 
two terms was quite narrow and is inconsequential in these 
circumstances.  As the court explained, part 5.609(c)(16) 
“appears to reach money paid to a family so that the family 
can go out and hire services or purchase equipment necessary 
for the developmentally disabled family member.  Such 
payments ‘offset the cost of services and equipment’ that 
would otherwise fall on the family.  But they are not 
reimbursement for out-of-pocket expenses if the family 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
18 
receives payment before, rather than after, incurring the 
expense.”10  (Reilly, supra, 23 Cal.App.4th at p. 434.)  The 
appellate court below also rejected plaintiff’s argument that 
the IHSS payments should be excluded because “the services 
she provides are necessary for her daughter to live at home, 
and the IHSS payments offset the costs of those services.”  
(Id. at p. 432.)  The court rightly accepted plaintiff’s 
contention that her services were necessary to keep K.R. at 
home, but it found the language of the regulation inconsistent 
with plaintiff’s argument that it excludes any payment for 
necessary services.  As the court explained, part 5.609(c)(16) 
refers to payments “ ‘to a family . . . to offset the cost of 
services . . . .’ ”  (Reilly, at p. 434.)  “If a payment is to ‘offset 
the cost of services,’ the payment must go to the same entity 
that incurs the cost of those services.  Otherwise the payment 
does not counterbalance or compensate for the cost of 
services. . . .  This means that the costs these payments offset 
must be costs that the family itself incurs.”  (Ibid.) 
Most recently, the Minnesota Supreme Court reached 
the same conclusion in In re Ali (Minn. 2020) 938 N.W.2d 835 
(Ali).  In that case the plaintiff lived at home with her 
developmentally disabled son.  Under a Minnesota state 
                                        
10  
The majority contends that “ ‘offset’ as used here does 
not necessarily reflect th[e] same meaning” as “reimburse” 
(maj. opn., ante, at p. 10), but it does not clearly articulate 
what the difference might be. 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
19 
program, she was provided with a budget for the services and 
equipment needed to keep him in the home, some of which 
she allocated to herself as compensation for her services as a 
caregiver.  (Id. at p. 837.)  In concluding that the sums 
allocated to plaintiff were not excluded from her Section 8 
income under part 5.609(c)(16), the court held that the word 
“cost” should be interpreted as “price.”  (Ali, at p. 839.)  It 
rejected the argument that the word should be given a 
broader definition for three independent reasons.  First, 
referring to the entirety of the phrase “to offset the cost of 
services and equipment,” the court reasoned that “[t]he ‘and’ 
between the words services and equipment suggests that the 
same measurement is used for each.  Typically, the cost of 
equipment is calculated in monetary terms — such as the cost 
to buy or lease.”  (Ibid.)  Second, like the appellate court 
below, Ali cited the use of the word “cost” elsewhere in part 
5.609, where it clearly refers to “a monetary expense.”  (Ali, 
at p. 839.)  Finally, the court noted that “when the regulators 
wanted to exclude amounts paid to family members for their 
own services, they knew how to do so — and did so 
unambiguously.”  (Ibid.)  Ali cited in support two other 
subparts of part 5.609(c), in both of which the regulatory 
language, unlike part 5.609(c)(16), unambiguously excludes 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
20 
state payments made to the Section 8 family.11  (Ali, at 
p. 839.) 
B.  Extrinsic Aids to Interpretation Weigh 
Against the Majority’s Approach 
I do not agree with the majority that the interpretation 
it has imposed on the language of part 5.609(c)(16) is 
sufficiently reasonable to create a statutory ambiguity, but 
there is no need to debate the issue.  The available extrinsic 
aids to interpretation also weigh against the majority’s 
reading.  Its interpretation assigns an unfounded purpose to 
the part 5.609(c)(16) exclusion that will seriously distort the 
intended operation of the annual income calculation for 
families receiving caregiving income under IHSS.  In turn, 
this distortion will not only introduce unintended inequities 
among Section 8 families, but it is also likely to materially 
reduce the funds available to support housing subsidies for 
other low-income families in California.  These unfortunate 
consequences weigh strongly against the majority’s ruling. 
1. The rulemaking history does not support the 
majority’s reading 
The majority finds support for its interpretation in 
commentary on part 5.609(c)(16) published by HUD around 
                                        
11  
In addition to addressing part 5.609(c)(2), discussed 
above, which excludes payments to foster families, Ali cited 
part 5.609(c)(12), which excludes from annual income 
“[a]doption assistance payments in excess of $480 per 
adopted child.”  (Ali, supra, 938 N.W.2d at p. 839.)   
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
21 
the time of its adoption.  (Maj. opn., ante, at pp. 11–16.)  
Reviewing the same materials, the Court of Appeal found 
them “unhelpful in resolving the interpretive issue before 
us,” and I agree.  (Reilly, supra, 23 Cal.App.5th at p. 436.)  As 
quoted by the majority (maj. opn., ante, at p. 12), the 
commentary never expressly addresses the issue before us — 
the distinction between state payments made to reimburse a 
family’s expenditures for services and those made to 
compensate the family’s own provision of services — and does 
little more than parrot the language of the regulation.  The 
commentary does use the term “homecare payments,” but it 
characterizes those payments in the language of the 
exclusion itself.  That is, “homecare payments,” as the term 
is used by HUD, are payments made “to offset the cost of 
services and equipment needed to keep a developmentally 
disabled family member at home, rather than placing the 
family member in an institution.”  (60 Fed.Reg. 17388, 17389 
(Apr. 5, 1995).)  HUD’s use of the term is therefore of no help 
in resolving the question before us. 
The majority’s contrary conclusion is based on circular 
reasoning.  Beginning with its assumption that “homecare 
payments” means any payment made by the state in 
connection with the care in the home of a developmentally 
disabled person, the majority concludes that by joining that 
term with the regulatory language HUD signaled its 
agreement with the majority’s broad interpretation.  The 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
22 
conclusion that “homecare payments” refers to any payment 
by the state, however, rather than only those intended to 
offset family expenditures, is unsupported by anything in the 
commentary.  In fact, the commentary clearly uses “homecare 
payments” merely as a synonym for the type of payments that 
are excluded by part 5.609(c)(16).  Its use therefore confirms 
the majority’s interpretation only if one assumes that the 
regulation should be interpreted in the manner adopted by 
the majority.  In reality, the HUD commentary simply does 
not address the question before us. 
The policy argument advanced by the majority in 
connection with HUD’s commentary is, in essence, that 
because payments made by the state to compensate a family 
for caregiving services may be critical in keeping a 
developmentally disabled family member in the home, they 
must be included within the part 5.609(c)(16) exclusion.  The 
flaw in this logic, as the Court of Appeal noted in rejecting 
the same argument below (Reilly, supra, 23 Cal.App.4th at 
p. 434), is that it ignores the language of the regulation.  
Merely because these payments are important in keeping a 
developmentally disabled family member in the home does 
not alone mean that they “offset the costs of service and 
equipment” necessary to that task.  As explained above, to 
reach the majority’s conclusion it is necessary to read the 
phrase “offset the costs” as synonymous with “for,” a different 
and broader term.  Because it is the regulation’s language 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
23 
that must guide our interpretation, we are required to 
respect HUD’s word choice. 
2.  The majority’s interpretation misunderstands the 
limited 
function 
of 
the 
part 5.609(c)(16) 
exclusion 
The impetus underlying the majority’s interpretation of 
part 5.609(c)(16) seems to be to maximize the Section 8 
subsidy for persons in plaintiff’s situation, given the 
difficulties of their circumstances.  In other words, if some 
subsidy is good, more is better.  Because the purpose of the 
exclusion is to help burdened, low income families, it is 
difficult to argue with the sentiment.  Yet our interpretation 
must be guided not by our own view of proper public policy, 
but by the views of Congress and HUD, the agency tasked 
with administering the Section 8 program.  In implementing 
the congressional plan, HUD is required to balance a wide 
variety of pertinent policy and equity considerations, not the 
least of which is the allocation of very limited public 
resources among many needy families.  Its policy choice is 
reflected in the language of part 5.609(c)(16), which limits 
the exclusion to out-of-pocket expenses.  As discussed below, 
HUD’s choice is consistent with the foundational concerns of 
Section 8.  The majority’s more expansive view upsets the 
balance struck by Section 8, will create unintended inequities 
in its implementation, and will ultimately lead to a 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
24 
diminution in the housing assistance available to other low-
income Californians. 
The purpose of the part 5.609(c)(16) exclusion is to 
ensure that the acceptance of state financial help by families 
who keep a developmentally disabled family member at home 
does not place the families at a disadvantage in receiving 
Section 8 housing assistance; they are to be “ ‘encouraged, 
and not punished.’ ”  (Maj. opn., ante, at p. 12 [quoting HUD 
explanation].)  To accomplish this, part 5.609(c)(16) excludes 
from the families’ annual income funds provided by the state 
that the family spends on services and equipment to support 
at-home care of the disabled family member.  By excluding 
this type of payment, the regulation ensures that the 
acceptance of state aid by families maintaining a 
developmentally disabled family member does not inflate 
their annual income and result in a diminished Section 8 
subsidy.  Instead, the family receives the same housing 
subsidy as other Section 8 families having a similar 
disposable income. 
There is no indication in the language of the regulation 
itself or the limited regulatory history that, in adopting 
part 5.609(c)(16), HUD intended to go further and provide 
affirmative advantages to families with a developmentally 
disabled member at home.  HUD did not say such families 
should be preferentially benefitted, and not punished.  Yet 
such a preferential benefit is the consequence of the 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
25 
majority’s interpretation of part 5.609(c)(16), since it affords 
families who are paid to provide at-home care of a 
developmentally disabled family member substantially 
greater Section 8 housing subsidies than to other low-income 
families with the same family income. 
Section 8 housing subsidies are determined by a 
participating family’s income — that is, the funds available 
to the family to pay for rent and other daily needs.12  The 
part 5.609(c)(16) 
exclusion 
is 
necessary 
because 
the 
regulations defining “annual income” for purposes of Section 
8 are very broad, including “all amounts, monetary or not” 
that “[g]o to, or on behalf of, the family head or spouse . . . or 
to any other family member.”  (24 C.F.R. § 5.609(a)(1) (2020).)  
Given this comprehensive definition, any payments made by 
the state to a family for the care of a developmentally 
disabled family member are included in annual income under 
part 5.609(a), even if the payments are not available to the 
family to pay for rent and other daily needs because they 
merely offset family expenditures for at-home care.  Properly 
understood, part 5.609(c)(16) prevents a family’s annual 
income from being inflated by payments covering such out-of-
                                        
12  
Literally, it is not the subsidy that is determined by a 
family’s income.  Rather, annual income determines the 
amount the family is required to contribute to its rent 
payment.  The subsidy is then the difference between this 
contribution and the family’s actual rent.  For purposes of 
this analysis, the difference is immaterial. 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
26 
pocket expenses, recognizing that those payments should not 
be treated as income because they do not increase the 
resources available to the family for daily expenses.  In the 
absence of the exclusion, the acceptance of such aid would 
reduce the family’s Section 8 subsidy without improving its 
standard of living — in the words of HUD, such families 
would be “punished.” 
This highlights the fundamental difference, for 
purposes of Section 8, between IHSS funds that are given to 
reimburse expenditures by a family and funds that 
compensate a family for the care of the disabled family 
member.  Unlike funds that reimburse a family’s 
expenditures, funds provided by the state to compensate for 
the family’s caregiving activities are available to meet the 
family’s daily needs.  That is their purpose.  In accepting 
compensation 
for 
their 
caregiving 
activities, 
IHSS 
participants are effectively selling their labor to the state, 
and the resulting income is indistinguishable, in its impact 
on the family’s standard of living, from money earned 
working outside the home.  For that reason, HUD has 
determined that this compensation is properly characterized 
as income under Section 8. 
This is particularly true of parents who are hired to 
provide caregiving responsibilities under IHSS.  As noted 
above, the state precludes a parent’s acceptance of full-time 
work outside the home if the parent is receiving IHSS 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
27 
compensation; such funding is available to parents only if 
“the [parent] leaves full-time employment or is prevented 
from obtaining full-time employment because no other 
suitable provider is available.”  (Welf. & Inst. Code, § 12300, 
subd. (e).)  In other words, to receive funds from IHSS a 
parent must accept their disabled child’s care as, in effect, 
their job.  Plaintiff is an example.  So far as the appellate 
record reveals, caring for her daughter is her full-time 
activity, and IHSS compensation is her only income. 
The 
majority 
argues 
that 
the 
acceptance 
of 
compensation from IHSS is not “ ‘an employment for all 
purposes.’ ”  (Maj. opn., ante, at p. 24.)  The issue here, 
however, is not whether IHSS “employs” caregivers for all 
purposes.  As defined by part 5.609, “annual income” includes 
any “compensation for personal services,” not just income 
from formal employment.  (24 C.F.R. § 5.609(b)(1) (2020).)  
The issue is therefore whether the compensation received 
from IHSS by persons like plaintiff should be treated the 
same as income received by Section 8 participants from other 
types of compensable labor.  By limiting the exclusion of 
part 5.609(c)(16) to offsetting payments, HUD has declared 
that it should.  The majority may disagree with HUD’s policy 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
28 
choice, but it is HUD’s choice, not that of the majority, that 
must govern our interpretation.13 
Excluding IHSS compensation from a Section 8 family’s 
annual income, as the majority requires, artificially reduces 
the family’s income and, consequently, increases the family’s 
housing subsidy above the level justified by its actual income.  
The effect can be substantial.  Take, as an example, plaintiff.  
As noted above, a Section 8 family is ordinarily required to 
contribute 30 percent of its annual income toward rent.  The 
remainder of its rent is paid by the program.  Plaintiff’s 
family income in the latest year for which we have 
information was more than $52,000, consisting primarily of 
plaintiff’s $41,000 income from IHSS; the remainder was 
$11,000 in disability payments to K.R.  If plaintiff’s IHSS 
compensation is included in her annual income for purposes 
of Section 8, the family would be expected to contribute 
$1,300 toward its monthly rent.  Here, the majority would 
exclude plaintiff’s $41,000 in IHSS compensation from the 
                                        
13  
The majority also finds support in the exclusion of in-
home care payments from “income” under the Internal 
Revenue Code.  (Maj. opn., ante, at pp. 26–27.)  Because 
Section 8 and the Internal Revenue Code are quite different 
statutes with very different aims, there is no reason why the 
exclusion of IHSS payments from federal taxable income 
should weigh in favor of their exclusion from “annual income” 
under Section 8. 
 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
29 
family’s annual income.  Plaintiff’s family will therefore be 
treated as though it had an annual income of $11,000, 
although it was living on an actual income of $52,000 per 
year.  As a result, the family’s expected rent contribution will 
be reduced to $275.14  The remaining $1,005 of the family’s 
monthly rent payment, an annual gap of more than $12,000, 
must be made up from the Authority’s Section 8 funds.  It is 
noteworthy that the majority nowhere acknowledges, let 
alone attempts to explain or justify, that its interpretation 
will treat a family with an annual income exceeding $52,000, 
more than three times the federal poverty level for a family 
of two, as though it were living far below the poverty line.15  
Yet that is the clear and unavoidable import of its decision. 
Low-income families caring for a developmentally 
disabled family member at home face daily challenges 
                                        
14  
This assumes the resulting subsidy does not exceed the 
maximum permitted.  Section 8 housing subsidies are capped 
by a “payment standard,” which is determined by local rental 
conditions.  (See Nozzi v. Housing Authority (9th Cir. 2015) 
806 F.3d 1178, 1184–1185; 24 C.F.R. § 982.503(b) (2020); 42 
U.S.C. § 1437f(o)(2).)  The appellate record does not contain 
sufficient information from which we may determine whether 
plaintiff’s subsidy, as re-jiggered by the majority, would be 
capped. 
15  
The 2020 federal poverty level for a family of two is an 
annual income of $17,240.  (See U.S. Dept. Health & Human 
Services, 
Poverty 
Guidelines 
(Jan. 2020) 
 [as of Aug. 28, 
2020].)   
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
30 
unknown to the rest of us.  Few would begrudge such families 
a generous housing subsidy, above and beyond that provided 
to other low-income families with a similar income — if there 
was evidence that Congress or HUD intended to provide 
them 
such assistance. 
 
But 
as 
noted 
above, 
the 
part 5.609(c)(16) exclusion was intended to ensure that 
families receiving aid from IHSS are simply treated the same 
as, not better than, other families — to ensure that they were 
not punished, rather than to preferentially benefit them. 
3. The majority’s interpretation will introduce 
unintended 
inequities 
into 
Section 8 
implementation and reduce the availability of 
Section 8 housing assistance in California 
As discussed above, the majority’s reading of the 
part 5.609(c)(16) exclusion is contrary to its language and 
achieves the result, unintended by HUD, of granting IHSS 
participants like plaintiff substantially greater Section 8 
subsidies than are justified by their actual income.  That 
alone, of course, would be sufficient to reject the reading.  But 
we should be particularly wary of imposing a rule HUD did 
not write, given the serious public policy consequences that 
will follow. 
As explained below, these consequences are of two 
types.  First, the interpretation adopted by the majority will 
create inequities among families participating in the IHSS 
and Section 8 programs.  Families that are paid through 
IHSS to care at home for a developmentally disabled person 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
31 
will receive a far larger housing subsidy than families of 
similar income that (1) IHSS funds to hire a third party to 
care for a developmentally disabled family member in their 
home or (2) receive IHSS funds to care for a medically 
disabled family member.   
Second, and just as important, the majority’s 
interpretation will reduce, by an unknown but potentially 
sizable amount, the number of families that can obtain 
Section 8 housing assistance in California.  The majority’s 
decision will not increase by a single dollar the Section 8 
funds reaching California.  Yet it will require the state’s 
counties to steer a significantly larger portion of their Section 
8 housing funds to families that receive IHSS compensation 
for caring for a disabled member in the home.  These 
increased subsidies can come from only one place:  The funds 
available to other low-income families who are, or would have 
been, receiving housing assistance under Section 8.  The 
majority’s expansive interpretation will come at the cost of 
assistance to other families in need.  
First the inequities.  IHSS provides families with the 
funds necessary to maintain a developmentally disabled 
family member in their home.  The Authority or the family 
can use these funds to hire a third-party caregiver or, 
alternatively, a member of the family for the same role.  Both 
approaches 
serve 
the 
purposes 
of 
IHSS 
and 
the 
part 5.609(c)(16) 
exclusion 
by 
(1) keeping 
the 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
32 
developmentally disabled family member out of an 
institution and (2) ensuring that the family is not 
disadvantaged in the receipt of Section 8 funds by doing so.  
So far as appears, neither HUD nor IHSS favors one option 
over the other; certainly there is no language in either 
Section 8 or IHSS reflecting a preference, as the majority 
acknowledges.  (Maj. opn., ante, at p. 21 [“despite no 
expressed preference for family providers per se”].)  Yet 
under the majority’s reading a family that provides its own 
compensated care will receive a far larger Section 8 housing 
voucher than the family that uses IHSS funds to hire a 
nonfamily member to provide the same care, even if both 
families have identical incomes.  This occurs because, under 
the majority’s interpretation, some or all of the income of the 
first family, consisting of compensation received from IHSS, 
is excluded from the annual income, while the income of the 
second family, earned outside the home, is fully included.  
Assuming both families end up with similar disposable 
income, the first family will receive a far larger subsidy under 
Section 8 due to the exclusion of a significant portion of its 
disposable income.  (See Reilly, supra, 23 Cal.App.5th at 
pp. 437–438.)  There is no indication in the language of 
part 5.609(c)(16) or the regulatory history to suggest that 
HUD intended this result; in its amicus curiae brief, HUD 
expressly disavows such an intent. 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
33 
The majority seeks to explain away this disparity by 
claiming that persons needing 24-hour care “ ‘are more likely 
to receive better continuous care from relatives living with 
them whose care is more than contractual.’ ”  (Maj. opn., ante, 
at pp. 21, quoting Miller v. Woods (1983) 148 Cal.App.3d 862, 
870.)  Neither Miller nor our appellate record contains 
evidence to support the proposition that third-party 
caregivers provide substandard care, compared to family 
members.16  But more to the point, the majority cites no 
evidence that HUD believed this to be true or that it crafted 
part 5.609(c)(16) based on any assumptions about the relative 
competence of family members versus third-party caregivers.  
Much of the majority’s policy justification for its 
interpretation is a recognition of the importance and 
difficulty of the work done by persons who care for a 
developmentally disabled family member at home.  And I 
agree, there is no doubt that this work is difficult and 
important.  If preferentially benefitting families who care for 
developmentally disabled members themselves, rather than 
                                        
16  
The majority notes that IHSS does not pay for 24-hour 
care.  (Maj. opn., ante, at p. 26.)  Although true, that is of no 
policy consequence here.  Families that hire a third-party to 
provide care for a developmentally disabled family member 
in their home must provide the same type of uncompensated 
off-hours care for the dependent as families that receive IHSS 
compensation. 
 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
34 
retain a third-party caregiver, were actually a motive 
underlying part 5.609(c)(16), however, one would expect 
some express indication that HUD intended to favor family 
care over care by third-party providers.  As noted above, there 
is no such indication.  In fact, the regulation is entirely silent, 
and therefore presumably neutral, on that issue.17 
The majority’s interpretation will create a similar 
inequity between families that receive IHSS compensation to 
care for a developmentally disabled family member and 
families that receive IHSS funds to care for a medically 
disabled family member.  (See Reilly, supra, 23 Cal.App.5th 
at p. 438.)  Like families maintaining a developmentally 
disabled member in the home, families that maintain a 
medically disabled family member in the home can receive 
IHSS reimbursement for expenditures necessary to keep that 
person at home as well as compensation for caregiving by a 
family member.  The Section 8 exclusion covering families 
with a medically disabled member, however, allows the 
                                        
17  
The majority also claims that if IHSS compensation is 
not excludable under part 5.609(c)(16), the two programs, 
IHSS and Section 8, will be at “cross-purposes,” presumably 
because accepting IHSS compensation will reduce a family’s 
Section 8 subsidy.  (Maj. opn., ante, at p. 23.)  Accepting IHSS 
compensation, however, is no more at cross-purposes with 
Section 8 than is employment generally, since all income 
reduces a family’s Section 8 subsidy to the same degree.  In 
any event, there are no cross-purposes.  The supplement to a 
family’s income from accepting IHSS compensation far 
exceeds any corresponding decline in its Section 8 subsidy. 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
35 
exclusion from annual income only of “[a]mounts . . . that are 
specifically for, or in reimbursement of, the cost of medical 
expenses . . . .”  (§ 5.609(c)(4).)  Although families caring for a 
medically disabled family member face challenges similar to 
those of families caring for a developmentally disabled family 
member, the enhanced Section 8 subsidy made available by 
the 
majority’s 
interpretation 
of 
part 5.609(c)(16) 
is 
unavailable to families with a medically disabled member.  
Such families will also receive a materially reduced Section 8 
subsidy compared to families that benefit from the majority’s 
interpretation of part 5.609(c)(16). 
The majority responds that this disparity “is inherent 
in the federal regulation itself” because part 5.609(c)(4) 
permits recovery only of payments to third-party providers.  
(Maj. opn., ante, at p. 19.)  The argument misses the point.  
Part 5.609(c)(16) has a materially wider scope than 
part 5.609(c)(4) only because the majority has interpreted it 
that way.  If “offset the cost of services and equipment” is 
interpreted to cover only the reimbursement of out-of-pocket 
expenditures, the two exclusions have a similar scope.  It is 
not “the federal regulation itself,” but the majority’s 
interpretation of it, that creates an inequity.  The majority 
otherwise fails to explain what possible public policy supports 
giving families with a developmentally disabled member far 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
36 
more advantageous treatment under Section 8 than families 
with a medically disabled family member.18 
The second unfortunate policy consequence of the 
majority’s interpretation of part 5.609(c)(16) is its inevitable 
diminution of the funds available to other low-income 
participants in the Section 8 program.  In an ideal world, the 
majority’s award of greater Section 8 housing subsidies to 
low-income families receiving state compensation to care for 
disabled family members at home would be financed by 
additional congressional appropriations for the Section 8 
program.  In our real world, it does not work that way.  
Already, Section 8 housing subsidies are available only to a 
relatively small subset of all eligible families.  The Authority, 
for example, is authorized to serve less than one-third of the 
families that qualify for its help.  Yet even that does not fully 
capture the inadequacy of the program.  Presumably because 
                                        
18  
The majority’s claim that HUD believes that families 
with a developmentally disabled member would “receive 
unfair treatment” if they were not allowed to exclude income 
(maj. opn., ante, at p. 20) is based entirely on HUD’s comment 
that such families should be “ ‘encouraged, and not 
punished’ ” (ibid., italics omitted).  Because no other class of 
Section 8 participants, besides foster parents, is able to 
exclude 
such 
income, 
restricting 
the 
exclusion 
to 
reimbursement 
of 
expenditures 
hardly 
constitutes 
punishment.  The majority argues that such families will be 
punished if their income is not excluded because they might 
not qualify for Section 8 subsidy.  (Ibid.)  Again, the same is 
true of all other families who have too much income to qualify 
for Section 8; it is not a punishment.   
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
37 
of congressional underfunding, the Authority actually 
provides vouchers to only 1,957 families, rather than the 
2,153 it is authorized to help.   
The majority’s generosity toward plaintiff and similar 
IHSS participants does not come without cost, and that cost 
will likely be borne by other low-income families in 
California.  The funding available to the Authority will not 
be increased by $12,000 per year merely because the majority 
has decreed that plaintiff must receive an additional annual 
subsidy of $12,000.  Instead, given the fixed and inadequate 
budgets available under Section 8, it is likely that every 
additional dollar of subsidy provided to families with a 
developmentally disabled member at home will come directly 
from the funds available to subsidize the housing of other 
low-income families that are, or could have been, served by 
the Authority.  By skewing the allocation of Section 8 housing 
subsidies to families receiving IHSS compensation, contrary 
to HUD’s express intent, the majority’s misinterpretation of 
the regulation will likely lead to a reduction in the housing 
subsidies available to other low-income families in California, 
and these will likely be reduced in an amount equal to the 
REILLY v. MARIN HOUSING AUTHORITY 
Cantil-Sakauye, C. J., dissenting 
 
38 
enhanced subsidies given by the majority to IHSS 
participants.19 
If the language of part 5.609(c)(16) required this result, 
we would be duty-bound to implement it.  In fact, the result 
is eminently avoidable.  To bring it about, the majority 
stretches the language of the regulation and fails to account 
for the serious public policy implications weighing against its 
decision.  Further, the dubious end result is to require the 
Authority to treat a family with an income of more than 
$50,000 as though it were living on $11,000.  In the process, 
the majority will divert the Authority’s all-too-scarce low-
income housing assistance away from other needy families.  
Every other court to consider the issue has avoided this 
result, and this court should as well. 
 
CANTIL-SAKAUYE, C. J. 
We Concur: 
CORRIGAN, J. 
KRUGER, J.
                                        
19  
We lack the evidence necessary to estimate the financial 
impact of the majority’s interpretation, but the limited 
information available suggests that it could be substantial.  
According to the state data cited above (see ante, fn. 6), there are 
currently 250,000 “live-in relative providers” caring for a 
disabled family member under IHSS.  If just a tiny proportion 
of those live-in relatives care for a developmentally disabled 
person, participate in the Section 8 program, and receive IHSS 
compensation similar to that of plaintiff, the majority’s ruling 
will divert millions of dollars in Section 8 housing subsidies from 
other low income families state-wide. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Reilly v. Marin Housing Authority   
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding  
Review Granted XX 23 Cal.App.5th 425   
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S249593  
Date Filed:  August 31, 2020 
__________________________________________________________________________________ 
 
Court:  Superior    
County:  Marin    
Judge:  Paul M. Haakenson      
 
__________________________________________________________________________________ 
 
Counsel: 
 
Law Offices of Frank S. Moore, Frank S. Moore; Autumn M. Elliott, Ben Conway and Deborah Gettleman 
for Plaintiff and Appellant. 
 
Morgan, Lewis & Bockius, Thomas M. Peterson and Jordan Mundell for Association of Regional Center 
Agencies, Autism Society of Los Angeles, CASHPCR, Disability Voices United, Fairview Families and 
Friends, Inc., Housing Choices, Jewish Los Angeles Special Needs Trust (JLA Trust), National Disability 
Rights Network, Professor Alison Morantz and Public Counsel as Amici Curiae on behalf of Plaintiff and 
Appellant. 
 
Munger, Tolles & Olson and Michael E. Soloff for National Housing Law Project and Western Center on 
Law and Poverty as Amici Curiae on behalf of Plaintiff and Appellant. 
 
Ilya Filmus; WFBM, Randall J. Lee, Anne C. Gritzer; Wilson Elser Moskowitz Edelman & Dicker and 
Robert Cooper for Defendant and Respondent. 
 
Paul Compton, Miniard Culpepper, David M. Reizes, Alexandra N. Iorio, Joseph H. Hunt, Alisa B. Klein, 
Melissa N. Patterson and Brad Hinshelwood for United States as Amicus Curiae on behalf of Defendant 
and Respondent. 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Autumn M. Elliott 
Disability Rights California 
350 S. Bixel Street, Ste. 290 
Los Angeles, CA 90017 
(213) 213-8000 
 
Robert Cooper 
Wilson Elser Moskowitz Edelman & Dicker LLP 
555 S. Flower Street, Suite 2900 
Los Angeles, CA 90071 
(213) 443-5100 
 
Brad Hinshelwood 
U.S. Department of Justice 
950 Pennsylvania Avenue NW 
Washington, DC 20530 
(202) 514-7823