Opinion ID: 2002823
Heading Depth: 2
Heading Rank: 3

Heading: inclusion of foster care payments and foster children in calculation of food stamp allotments

Text: The primary issue in this case is: Should foster care maintenance payments be included in the calculation of food stamp allotments? This question also necessarily involves the inclusion of foster children in the food stamp household, as the size of such households is a key factor in determining the allotments. Current federal regulations (7 C.F.R. § 273.9(b)(2)(ii) (1987)) now apparently direct the states of this Nation to require inclusion of foster care payments as unearned income. The effect of this, in practice, is to reduce the food stamp benefits allotted to households which enter the foster care program; a curious result, it could be rationally reasoned. Two very recent federal district court decisions provide well-reasoned authority for the proposition that foster care payments should not be reported as unearned income for food stamp purposes, and foster children should not be included as members of food stamp households. See Foster v. Celani, 683 F.Supp. 84 (D.Vt.1987); Murray v. Lyng, 667 F.Supp. 668 (D.Minn.1987). The substance of these cases is that the federal regulations requiring such inclusions in unearned income are contrary to Congressional intent (to safeguard the health and well-being of the Nation's population by raising levels of nutrition among low-income households) as expressed in the Food Stamp Act (7 U.S.C. § 2011 (1982)), and have no reasonable basis in law. Murray, 667 F.Supp. 668, involved a challenge to state and federal food stamp regulations very similar to the present case. The analysis in Murray, id. at 672-74, began with the statutory definition of the food stamp household. The Food Stamp Act currently defines a household as: (1) an individual who lives alone or who, while living with others, customarily purchases food and prepares meals for home consumption separate and apart from the others, or (2) a group of individuals who live together and customarily purchase food and prepare meals together for home consumption; except that parents and children, or siblings, who live together shall be treated as a group of individuals who customarily purchase and prepare meals together for home consumption even if they do not do so, unless one of the parents, or siblings, is an elderly or disabled member.... In no event shall any individual or group of individuals constitute a household if they reside in an institution or boarding house, or else live with others and pay compensation to the others for meals. 7 U.S.C. § 2012(i) (1982). The current definition stresses common purchase and preparation of food consumed at home, as is apparent above. The original act contained no specific reference to foster children. See Food Stamp Act of 1964, Pub.L. No. 88-525, § 3(e), 78 Stat. 703 (1964). This was changed in 1971, when Congress redefined the household as a group of related individuals (including... legally assigned foster children), Pub. L. No. 91-671, § 2(a), 84 Stat. 2048 (1971). This new definition was struck down by the United States Supreme Court for reasons not relevant here. See United States Dep't of Agriculture v. Moreno, 413 U.S. 528, 93 S.Ct. 2821, 37 L.Ed.2d 782 (1973). When Congress rewrote the stricken section in 1977, it deleted the reference to foster children, and added the language specifically excluding from food stamp households individuals who live with others whom they compensate for meals. See Food and Agriculture Act of 1977, Pub.L. No. 95-113, § 1301, 91 Stat. 913, 960 (1977); see also Murray, 667 F.Supp. at 672-73. The Murray Court examined foster care placements and concluded that they closely resembled boarding relationships in several important respects. Both include a significant financial element. In the case of foster placements, the state makes payments to foster parents to cover costs of care provided. Murray, 667 F.Supp. at 674. Foster children do not live with their foster parents in the traditional sense, because the relationship is heavily regulated by the state, and foster care placements tend to be of short duration, subject to frequent change. Murray, id. As nonhousehold members, the foster children may be classified as third-party beneficiaries, payments for whom are not includable in household income for food stamp purposes. Murray, id. (citing 7 U.S.C. § 2014(d)(6)). Where an applicant has a duty to spend money only on behalf of another person, the money is plainly unavailable for the applicant's own needs and is consequently not considered income available to the applicant. McCoy v. Bergland, 519 F.Supp. 796, 801 (N.D.N. Y.1981). The Murray Court alternatively reasoned that foster care maintenance payments could be excluded as reimbursements which do not exceed expenses actually incurred and which do not represent a gain or benefit to the household under 7 U.S.C. § 2014(d)(5) (1982). Murray, 667 F.Supp. at 674 n. 9. In sum, the Murray Court concluded that foster children were not members of the food stamp household, and payments made on their behalf are not income reportable for food stamp purposes. Murray, id. Indirect support for this interpretation is supplied by a South Dakota regulation which specifies that foster care payments are not to be considered income for the purposes of Aid to Dependent Children (ADC) grants because [t]his foster care payment shall be considered sufficient to meet the needs of the foster child only and shall not result in any significant income or profit available to the foster parent. A.R.S.D. § 67:12:05:24. The Internal Revenue Code similarly excludes foster payments from a foster parent's income. 26 U.S.C. § 131 (1982). In Foster v. Celani, 683 F.Supp. 84 (D.Vt.1987), the same result classifying foster children as boarders not automatically included in the food stamp household was reached, though that court preferred not to rely on the income exclusions of 7 U.S.C. § 2014, mentioned in Murray. It held that the maintenance payments of foster children were already excluded under 7 C.F.R. § 273.1(c)(5) (1986), as resources of the foster children boarders. Foster v. Celani, 683 F.Supp. at 89. The Foster Court, however, further held that the payments the foster family received, in effect, from the foster children, should be counted as self-employment income, part of which is included in household income under 7 C.F.R. § 273.11(b) because the household realized a gain. Id. This latter holding is doubtful when considered in the light of A.R.S.D. § 67:12:05:24 and the similar recent exclusion of foster care maintenance payments from the calculations of AFDC benefits in the Tax Reform Act of 1986, § 1883(b)(10), Pub.L. No. 99-514, 100 Stat. 2917 (codified at 42 U.S.C. § 678), cited in Murray, 667 F.Supp. at 674 n. 10. Further support for the separation of foster care considerations from food stamp determinations can be found in Owens v. Heckler, 753 F.2d 675 (8th Cir.1985). There, the Eighth Circuit Court of Appeals evaluated a statutory tangle akin to the present case. Heckler involved the issue of whether Old Age, Survivors, and Disability Insurance (OASDI) extended student benefits were to be deemed income for AFDC purposes. The Eighth Circuit decisively rejected the government argument for inclusion: The Secretary's interpretation however faithful it may be to the letter of the law, totally defeats the spirit of the law, and serves only a sterile administrative purpose. [citations omitted].... In this case, the Court does not believe that Congress could have intended by one project to aid OASDI recipients... and then by another program to reduce the amount of benefits paid on behalf of dependent children of that OASDI recipient. It amounts to the federal government holding out a promise of aid for education with one hand and at the same time with the other hand having the state government, spurred by federal regulations, destroying that promise of aid. The Court finds that Congress has provided two assistance programs aimed at two distinct needs. Assistance for the one need ... should not be reduced because a separate need ... is also present at the same time. Owens, 753 F.2d at 681 (quoting Elam v. Hanson, 384 F.Supp. 549, 553 (N.D.Ohio 1974)). The parallels to the present case are striking, if not exact. Rios accepted foster children into her home, whose expenses are covered by government payments. We cannot include such payments in considering Rios' food stamp eligibility without undercutting the purposes of the food stamp program. The foster care payments are for the benefit of the foster children, and the food stamps for the Rios household. Food stamps are unnecessary for the foster children, as their needs are taken care of by the government payments. This rationale also requires the exclusion of foster children from being counted as members of food stamp households. Two needs; two programs. While 7 C.F.R. § 273.1(c) (1987) gives food stamp households the choice between including boarders as members, in which cases boarder income is counted as household income, or excluding them and their income, this section should have no application in the foster care setting. The inclusion of foster children in the food stamp household, and the attendant inclusion of their maintenance payments as income for the household, is clearly contrary to the intent of Congress that such payments are for the support of the foster children alone. 42 U.S.C. § 675(4) (1982). We believe the circuit court could not offer Rios this choice. The circuit court is reversed on the last issue. Therefore, we remand this case to the circuit court to enter a judgment in accordance with the holding herein which would direct the DSS to implement said holding. WUEST, C.J., and MORGAN, J., concur. SABERS and MILLER, JJ., dissent.