Court Opinion

ID: 9551400
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:52:44.189414+00
Date Added: 2024-06-11T15:23:42.116274
License: Public Domain

BURKE, J.
I dissent. The solution of this case and its companion, Waits v. Swoap, post, page 887 [115 Cal.Rptr. 21, 524 P.2d 117], simply requires the application of common sense. The Legislature, acting pursuant to the mandate of federal law,1 has specified that the amount of a welfare grant payable to an AFDC recipient must be reduced by the amount of any “income” or “resources” available to him. (Welf. & Inst. Code, §§ 11450, subd. (a), 11008.) For example, if an aid recipient regularly receives $50 in cash each month from a friend or relative, that amount must be deducted from his grant—the majority presumably would concede this is so. The obvious reason for requiring the deduction of “income” or “resources” from a recipient’s grant is to assure that the state’s limited welfare funds are allocated only to those who truly are in need of aid. It seems unquestionable to me that this is a legitimate, rational state interest which must be given effect by the Department of Social Welfare and this court.
The Legislature, however, has made no attempt to define the term “income,” other than to state that it includes “the value of currently used resources.” (Welf. & Inst. Code, § 11008.) Instead, the Legislature has entrusted the department (not this court) with the task of establishing regulations “not in conflict with the law” which fix statewide standards for the administration of all state or federally assisted aid programs. (Id., § 10604, subd. (b)), and which “implement, interpret, or make specific” the applicable statutory provisions (id., § 10554). Accordingly, the department has enacted various regulations designed at defining and implementing the broad terms “income” and “resources” used by the Legislature.
*874These regulations acknowledge the undisputed economic fact that a person has “income” or “resources” when he receives something of value besides cash, something which gives him a financial advantage over another and reduces his economic needs. (See, e.g., Treas. Reg. 1.61-1 (a).) Thus, Regulation 44-101 defines “income” as any benefit in cash or in kind which is in fact available to the individual, and Regulation 44-101.8 defines “in-kind income” as any benefit received other than in cash, including the value of need items provided at no charge. And Regulation 44-115.9 sets forth the department’s estimated in-kind income value of housing, utilities, food and clothing furnished to an aid recipient, for purposes of fixing uniform values for such need items.2
In Waits v. Swoap, supra, post, page 887, the “something of value” sought to be taken into consideration by the department was free housing regularly furnished to children living with nonneedy relatives. In the instant case, what is involved is reduced housing expense attributable to a shared expenses arrangement with other welfare recipients. In both cases, as in the hypothetical case involving a regular $50 cash gift, aid recipients are receiving economic benefits which directly reduce their cost of living and which, under any rational system, should be taken into consideration in determining the size of the assistance grant. The majority’s refusal to acknowledge that noncash economic benefits such as free or reduced rent constitute “income” underscores the appropriateness of their reliance (ante, p. 871) upon Humpty Dumpty’s. admonition to Alice that “When I use a word, it means just what I choose it to mean—neither more nor less.” In my view, “income” is realized in all three situations, and our only concern should be to assure that the department’s regulations accurately calculate the amount of income to be deducted from the grant in each situation.
As indicated above, I have no difficulty characterizing as “income” or “resources” the actual economic benefits obtained by AFDC recipients whose living expenses are paid, in whole or in part, by other persons, including recipients of other categorical aid. For example if an AFDC *875family subleased a room in their home for $50 a month, unquestionably some, if not all, of that amount could be considered “income” which could be deducted from the AFDC grant. In the instant case, the AFDC recipient family members share housing and utilities expenses with recipients of “adult aid,” thereby presumably reducing the amount of funds the former recipients otherwise would require to meet these expenses. Since AFDC recipients living with recipients of adult aid constitute a general class of persons who have economic advantages which other AFDC recipients do not have, the department properly may characterize this economic advantage as a “resource” for purposes of computing the grant.3
The majority, disputing that “resources” or “income” exist in this situation, claim that under California’s present “flat grant” system whereby aid is paid to needy persons in accordance with a table of maximum grants without regard to individual recipient needs (Welf. & Inst. Code, § 11450), the Legislature has already considered and “averaged” into these grant figures possible shared housing arrangements. The majority assert that since the Legislature has taken into account such arrangements in computing the maximum grants, the department’s regulation in effect accomplishes a double reduction in grant size. On the other hand, the department disputes the assertion that the Legislature considered shared housing arrangements; according to the department, it is more likely that the maximum grant schedules were prepared on the assumption of “independent living arrangements.” Although the legislative history is inconclusive on the question, I think it is significant that the Legislature expressly required that “income” (defined to include “resources” under § 11008) be deducted from the maximum grant figure, without attempting to narrow the scope of the quoted terms, and without expressly excluding such income-generating devices as shared housing.
Thus, the United States Supreme Court has recently noted that, “From the inception of the Act, Congress has sought to ensure that AFDC assistance is provided only to needy families, and that the amount of assistance actually paid is based on the amount needed in the individual case after other income and resources are considered. Congress has been careful *876to ensure that all of the income and resources properly attributable to a particular applicant be taken into account, and this individualized approach has been reflected in the implementing regulations.” (Fn. omitted, Shea v. Vialpando, 416 U.S. 251, 261 [40 L.Ed.2d 120, 129-130, 94 S.Ct. 1746].)
The majority rely upon language in section 11006 of the Welfare and Institutions Code that money paid to an aid recipient “is not for the benefit of any other person,” and “shall not be construed as income to any person other than the recipient. . . .” Yet the challenged regulation does not assume that any part of the grant paid to a recipient of adult aid constitutes income to the AFDC recipient family members; the regulation, properly construed, only comes into play when grant funds are subsequently used by the adult aid recipient to pay housing and utilities expenses which otherwise the AFDC recipients would be required to meet.
For example, assume that an ATD recipient actually gave $50 of his aid funds to assist an AFDC family in meeting their own expenses. Clearly, that amount properly could be considered “income” or a “resource” of the AFDC family, and deducted from the AFDC grant, despite the origin of those funds. Similarly, when an ATD recipient contributes a portion of ATD funds in a shared expenses arrangement with an AFDC family, it seems reasonable to consider at least part of the contribution a “resource” of the AFDC family, if the contribution results in an actual savings to that family.
Finally, the majority overlook the evident implication of section 11010 of the Welfare and Institutions Code that the department properly may consider, in determining the amount of the AFDC assistance grant, voluntary contributions or grants from “public sources, private agencies, friends or relatives” if the service to be provided by such contributions or grants (such as housing and utilities expenses) are covered by an AFDC assistance allowance. Housing and utilities are needs which are included within the AFDC assistance allowance (Welf. & Inst. Code, § 11452).
I would hold, therefore, that the department had the authority to assign a reasonable value to the “resource” created by a shared expenses arrangement.4 On the other hand, it appears that, in certain of its applications, the *877department’s regulation may result in an impermissible overvaluation of that resource. Referring to the facts in the instant case, apparently Mrs. Cooper’s actual contribution to the family’s housing expenses was only $14, yet the regulation required a grant deduction of $31. It seems evident that “income” or “resources” in the amount of $31 could not have been generated by a $14 contribution, and that accordingly the regulation’s formula has substantially overvalued the “resource” available to the AFDC recipients by reason of the shared expenses arrangement. A simple calculation will verify that such overvaluation occurs only when the AFDC recipients’ hypothetical “allowance” for housing and utilities expenses exceeds the total amount paid by the combined ATD-AFDC family for these items.
In reality, therefore, Regulation 44-115.8 may operate to penalize an AFDC family for its thrift and its ability to spend less AFDC funds for housing and utilities than the department has allocated to it for these items. In other words, at least part of the grant reduction may be attributable to the family’s reduced spending, rather than the existence of “income” or “resources.” Yet, under the express terms of section 11450, the full AFDC grant must be paid to eligible needy persons, without regard to their actual expenditures for particular need items; the department’s sole authority for making a deduction from that grant would be the existence of “income” or “resources.” Therefore, in order to comply with state statutory provisions, under no circumstances should the amount of the grant reduction exceed the amount actually contributed by the adult aid recipient to defray the AFDC recipients’ expenses.
It is arguable, of course, that Mrs. Cooper’s situation is not typical, and that ordinarily an AFDC-ATD family will be unable to obtain housing at a cost substantially lower than the department’s “allowance,” which itself is an estimate of the minimum necessary to fulfill that need. For example, had the Cooper family spent $102 per month, rather than $84, on housing and utilities, the grant reduction ($16) would not exceed the amount ($17) *878contributed by Mrs. Cooper from ATD funds as her one-sixth share of actual cost.5
Yet even in a situation wherein the grant deduction does not exceed the amount contributed by the adult aid recipient, the regulation may overvalue the “resource” derived from shared expenses. The department has argued that “All these regulations do is recognize the economies of scale, i.e., the more individuals that reside in a given living unit the lower the per individual cost. [t[] Or to phrase it in its most familiar terms, ‘two can live as cheaply as one.’ Strictly speaking this bromide is not wholly accurate, but ‘economies of scale’ is a valid description of the realities at the heart of the cost of living.” (Italics added.) The reason, of course, why the “bromide” is inaccurate in a shared housing situation is that the presence in the home of an additional “cost-sharer” such as Mrs. Cooper might well increase the costs which must be shared; the presence of an additional person could require a larger house at a higher rent, and could lead to increased utilities expense as well. (See People v. Gilbert, 1 Cal.3d 475, 478, fn. 1 [82 Cal.Rptr. 724, 462 P.2d 580].) Thus, it is not necessarily reasonable to assume that the entire contribution of an adult aid recipient toward shared expenses constitutes a “resource” óf the AFDC recipient members—some allowance reasonably should be made to account for any increased costs attributable to the shared expenses arrangement.6 Yet, unlike the regulation involved in Waits v. Swoap, post (dependent children living with nonneedy relatives), the instant regulation makes no express provision for a showing of such increased costs.7
*879Thus, I would conclude that plaintiffs have established that, as applied to certain families, the regulation at issue may overvalue the resource of shared housing. On the other hand, it seems evident that, as applied to many families, the regulation will not result in an improper evaluation. As a general rule, the same principles of construction which apply to statutes likewise govern the construction of administrative rules and regulations. (Cal. Drive-in Restaurant Assn. v. Clark, 22 Cal.2d 287, 292 [140 P.2d 657, 147 A.L.R. 1028].) One such principle is that, to the extent possible, we must give effect to a statute, “and the fact that it may not be possible to give it effect in one class of cases is no reason for not giving it effect in other cases where it is possible.” (Hodge v. McCall, 185 Cal. 330, 335 [197 P. 86].) A statute or regulation may be invalid as applied to one set of facts, yet valid as applied to another. (Ferrante v. Fish & Game Commission, 29 Cal.2d 365, 373 [175 P.2d 222].) I believe it would be proper, in the instant case, to sustain Regulation 44-115.8 to the extent it does not result in an improper overvaluation of the resource in question.
Accordingly, I would hold that Regulation 44-115.8 is valid on its face but may not be applied in such a manner as to achieve a reduction of the AFDC grant in excess of the net contribution of the adult aid recipient family member. By “net contribution,” I mean the actual cash contribution to housing and utilities expenses less any increased housing and utilities costs attributable to the presence of the adult aid recipient in the home.8 For example, in Mrs. Cooper’s case, the ÁFDC grant reduction would be limited to $14, assuming that the evidence discloses that this was the amount of her actual contribution toward housing and utilities. The Cooper family would have the opportunity of showing that Mrs. Cooper’s presence in the home resulted in increased housing and utilities expenses which justify an appropriate credit to the $14 grant deduction.
McComb, J., concurred.

Under federal law, a state AFDC plan must take into consideration any nonexempt income and resources of an aid recipient. (42 U.S.C. § 602, subd. (a), subsec. (7).) HEW regulations implementing this provision state that “only such net income as is actually available for current use on a regular basis will be considered, and only currently available resources will be considered . . .” in establishing eligibility and the amount of the assistance payment. (45 C.F.R. § 233.20, subd. (a), subsec. (3)(ü)(c).)

Contrary to the majority, these figures are neither “fictitious” nor “arbitrary.” Instead, they represent the department’s estimates of actual value, based upon actual costs developed by a 1970 survey and prorated on the basis of the total maximum aid payments specified in section 11450, subdivision (a) of the Welfare and Institu-1 tions Code. Thus, of the total maximum AFDC aid of $117 per month available for one needy person under section 11450, the department has allocated $55 for housing, $12 for utilities, $29 for food and $9 for clothing. (The remaining $12 presumably represents incidental- items not included for purposes of evaluating in-kind income.) Certainly, the department is entitled, for purposes of administrative convenience, to make a reasonable, uniform estimate of the value of need items furnished to aid recipients, and plaintiffs have not asserted that these figures are unreasonably large.

Principles of equal protection would not prohibit the state, in allocating its limited welfare funds, from drawing rational distinctions based upon the differing needs of various classes of recipients and adjusting the size of its grant payments accordingly. As stated in Jefferson v. Hackney, 406 U.S. 535, 546-547 [32 L.Ed.2d 285, 296, 92 S.Ct. 1724], “(s]o long as its judgments are rational, and not invidious, the legislature’s efforts to tackle the problems of the poor and the needy are not subject to a' constitutional straightjacket. The very complexity of the problems suggests that there will be more than one constitutionally permissible method of solving them.”

The majority also point out that (1) at some time prior to 1971 the department had adopted a regulation, now repealed, to the effect that shared living costs do not represent “income” to an aid recipient, and (2) in 1971 the Legislature failed to pass proposed legislation (the so-called “Burgener Bill") to reduce the grant to AFDC families residing with adult aid recipients. Similar factors led us to invalidate an *877“in-kind income” regulation which would have reduced the AFDC grant to pregnant mothers. (California Welfare Rights Organization v. Brian, 11 Cal.3d 237 [113 Cal.Rptr. 154, 520 P.2d 970].) In Brian, however, the department had formerly adopted a long-standing and controversial administrative policy of treating the unborn child as a “person” for purposes of computing the AFDC grant; the Legislature’s repeated i efusals to reverse this long-standing policy confirmed our conclusion that the department’s new regulation (treating the mother’s body as a “resource” of the fetus) violated probable legislative intent. The instant case involves no abrupt change of long-standing policy, and the defeat of the “Burgener Bill" is not conclusive evidence' of a contrary state policy, given the existing legislative mandate to consider “income” and “resources” of an aid recipient (Welf. & Inst. Code, §§ 11008, 11450).

Under Regulation 44-115.8, the Cooper children’s five-sixth share of the $102 monthly expense would be $85. As the department’s “allowance” for such expenses is $101 for five persons, the difference ($16) would be deducted from the AFDC grant.

The Gilbert case, supra, supports this view. In Gilbert, defendant was charged with fraudulently obtaining excess AFDC aid, based on the fact that she failed to report certain contributions made to her by one Branch, who lived with her. We noted that, under the department’s own regulations, “To be considered in determining the AFDC payment, income must, in fact, be currently available to needy members of the family in meeting their needs during the budget period.” (Reg. 44-101.) Accordingly, we noted that “Branch’s presence in the household had forced defendant to move to a larger, more expensive apartment. Since defendant’s share of the rent at the new apartment almost equalled her rent at the old apartment, Branch’s ‘contribution’ to the rent afforded no income to defendant, but was payment by Branch of an additional expense incurred by defendant on his behalf.” (1 Cal.3d at p. 478, fn. 1.)

In Waits, the department’s regulations assume that the entire contribution by nonneedy relatives of housing and utilities (valued by the department’s “allowance” tables in Reg. 44-115.9) should be deducted from the AFDC grant to dependent children in the care of those relatives, but additionally permitted the relatives a credit against the reduction for any increased costs attributable to the child’s presence in their home. (Reg. 44-115.611.)

As I suggested in my dissent in Waits v. Swoap, supra, post, pages 901-902, it is reasonable to place the burden of establishing such increased costs upon the aid recipients themselves, rather than upon the department, since such information is more readily available to them. (See also People v. Gilbert, supra, 1 Cal.3d 475, 484, and fn. 14.)