Opinion ID: 6938518
Heading Depth: 3
Heading Rank: 1

Heading: afdc.

Text: In 1935, Congress established the Aid to Families with Dependent Children (“AFDC”) program. AFDC is a cooperative federal-state program which provides monetary assistance to needy, dependent children. The federal government prescribes eligibility criteria for AFDC recipients and provides states with matching funds for distribution. The states administer the program according to plans approved by HHS. See 45 C.F.R. §§ 201.2 & 233.10(b)(1); 42 U.S.C. § 601. In 1955, the Secretary of the Department of Health, Education and Welfare (“DHEW”), HHS’s predecessor, began imposing income and resource limitations on the states. See Hazard v. Shalala, 44 F.3d 399, 402 (6th Cir.1995). Under the regulations effective before 1975, families could qualify for AFDC benefits if they had less than $2000 in property. See Brown v. Secretary of Health and Human Servs, 46 F.3d 102, 104 (1st Cir.1995). These early regulations exempted the value of one automobile, regardless of its value, from the calculation of family resources. Id. In 1975, the Secretary of DHEW issued a regulation that for the first time placed a cap on the automobile exemption. The regulation provided, that to the extent that a ear’s market value exceeded $1200, the difference would count toward a family’s overall resource limit of $2000. Id. The District of Columbia Circuit struck down the regulation in National Welfare Rights Org. v. Mathews, 533 F.2d 637, 647-48 (D.C.Cir.1976), because the regulation failed to consider encumbrances on automobiles and because the administrative record gave no empirical basis for the limits the Secretary had chosen. As a result of the decision in National Welfare Rights, the automobile exemption reverted to the previous regulation which allowed the exemption of one car, regardless of its value. See Brown, 46 F.3d at 104. In the Omnibus Budget Reconciliation Act of 1981 (“OBRA”), Congress for the first time imposed a statutory limitation on the amount of resources that an AFDC family may have. Pub.L. No. 97-35 § 2302, 95 Stat. 357, 844-5 (codified at 42 U.S.C. § 602(a)(7)(B)). OBRA amended the AFDC provisions, reducing the overall resource limit from $2000 to $1000 per family. The statute also provides that any state may exempt “so much of the family member’s ownership interest in one automobile as does not exceed such amount as the Secretary may prescribe.” 42 U.S.C. § 602(a)(7)(B)(i) (emphasis added). In 1982, HHS adopted a regulation that set the automobile equity limit at $1500. 45 C.F.R. § 233.20(a)(3)(i)(B)(2). Under the regulation, an AFDC family can have only up to $1500 in equity in a car, and any amount over this equity limit is counted towards the $1000 statutory resource limit. The $1500 automobile equity limit was based on data from a 1979 survey of food-stamp recipients contained in a report submitted to Congress in 1981. The Secretary of HHS has not adjusted the $1500 equity limit for inflation since its adoption in 1982.