does not require these deductions in the circumstances set forth in 402(a)(8)(D), New Jersey does not provide for them in any situation where an AFDC applicant is employed.
The Defendants contend that the New Jersey statute substantially complies with 402(a)(8) because the administrative ceilings are approximately one-third higher than need. Thus, say the defendants, the individual is in a better position if he works than if he does not work since he is actually retaining some of his earned income, and the legislative purposes of the "income disregard" section are carried out.
The legislative history reveals the general purpose of section 402(a)(8), and the language of the section is quite specific. It denominates an amount, $30, and a proportion, one-third of the individual's earned income, which must be disregarded before determining need.
If Congress were willing to allow states to devise methods of encouraging employment by developing their own formulae, the statute could have been so written. As it exists today, however, it is a particular directive mandating that states follow a specified formula. No other scheme would comply with the statute.
Only in situations which meet the exceptions of 402(a)(8)(C) and 402(a)(8)(D), can a state fail to disregard the statutory amounts. The exception in 402(a)(8)(D) was provided for precisely the reason the defendants contend New Jersey's section 615 was developed -- to insure that persons whose incomes exceed the "need" standard of a state do not get assistance. New Jersey's decision to allow persons to get one third above "need", as defined by New Jersey, is not the equivalent of thirty dollars plus one third of an individual's earned income. The New Jersey formula may be more advantageous to some than the statutory formula, and less advantageous to others. Nevertheless, the statute requires adherence to the formula it sets forth. The use of the one-third formula in the federal statute relates the amount of the "disregard" to the earning of the individual. The more he earns the more he keeps. This is not so under the New Jersey regulation.
Rosado v. Wyman provides an analogous situation for interpreting a federal statutory requirement. The question in Rosado was whether New York had violated 42 U.S.C. § 602(23), the "cost of living" provision of the Social Security Act. Once the Court arrived at the meaning of the provision, the statute was strictly applied and New York's contentions of administrative convenience and efficiency were rejected.
Furthermore, the administrative ceiling in the New Jersey regulations, though in excess of need, does not provide a work incentive to each member of the family. The particular ceiling applied to a family is the same independent of the number of working persons. If one member of the family works, no other has an incentive. Under the statutory formula the incentive is directly related and proportional to the earned income of each working individual.
In contrast to New Jersey's section 615, the remainder of the regulations for New Jersey's assistance program, as set forth in the Categorical Assistance Budget Manual, properly exclude the "statutory disregards" and related expenses when calculating the amount of assistance. The Budget Manual sets a standard of "need" for different categories of persons, and then determines the "budgetable earned income" available to that family. "Budgetable earned income" is the money remaining from gross income after mandatory payroll deductions, the "statutory disregards", expenses of employment, child care, and several similar items are subtracted. New Jersey Categorical Assistance Manual, section 412.1, section 408.3a. Families whose "budgetable income" is below the applicable standard of need have a "budget deficit" and are entitled to assistance.
The directive of 402(a)(7) was implemented by a regulation of HEW, originally effective July 1, 1967.
In its present form, effective January 29, 1969, the regulation states:
"* * * in establishing financial eligibility and the amount of the assistance payment: * * * (c) 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." 45 C.F.R. § 233.20(a)(3)(ii), 34 Fed. Reg. 1395.
After the Supreme Court decided King v. Smith, supra, HEW promulgated a new regulation which said that in determining eligibility for assistance a state could consider only the "child's step-parent who is ceremonially married to the child's natural or adoptive parent and is legally obligated to support the child under State laws". The regulation further states:
"* * * in the consideration of all income and resources in establishing financial eligibility and the amount of the assistance payment, only such net income as is actually available for current use on a regular basis will be considered, and the income only of the parent described in paragraph (a) [one who is lawfully obligated to support the child under state laws] of this section will be considered available for children in the household in absence of proof of actual contributions." 45 C.F.R. 203.1(b), 33 Fed. Reg. 11290 (Aug. 8, 1968).