owned housing as opposed to those living in public housing, and whose rents would therefore be cheaper. Again no attempt was made to separate a family from Bergen County which might be paying $180 per month for rent from one from Salem County which might be paying $75 per month. Nor were people who needed no special circumstance grants separated from those who had large special needs such as special diets, etc.
The advantages in terms of administrative efficiency to be gained as a result of this flat grant consolidation are readily apparent. A welfare worker no longer had to worry whether a client's rental was reasonable or whether he or she needed special circumstance items and how much should be allotted for them. All the worker had to do was determine the size of the recipient family and then look at the FAM to find out how much that family should receive. The client, too, would know exactly how much he would receive and budget expenditures accordingly. He would not have to, nor would he be able to, run to the Welfare Department every time a need arose.
Benchmark I was partially modified by an Expanded Study conducted after the remand of this case. It was done at the prompting of the Department of Health, Education and Welfare (HEW) which, although accepting the concept of averaging, did not feel that the study conducted pursuant to Benchmark I was extensive enough to ensure the proper averaging of a technically sufficient sample.
The methodology of the Expanded Study was similar to that used in Benchmark I except that instead of only one month's PA3A forms being studied and averaged, samplings of four months were collected. The four months, June 1970, September 1970 and March 1971, in addition to the original December 1970 study, constituted, according to HEW, a more adequate basis for accounting for possible geographic and seasonal factors affecting the averaging process.
Additionally, instead of averaging all payments according to family budget unit size as they were paid prior to July 1, 1971, regardless of all other factors which may have previously been considered in figuring the amount of that payment, certain discriminations were accorded to the averaging process in the Expanded Study. Under Benchmark I the shelter cost for all families in each family size were averaged whether the families were "square" or "non-square".
Since "non-square" families were assisted in payment of rent by the person or persons within their living unit not on welfare, such families' shelter needs under the CABM were proportionately lessened and including them in the averaging process had a tendency to depress the final average. Non-square families were not averaged in the Expanded Study. In Benchmark I figures from all segments, C, F and N were averaged together for all three need categories, whereas in the Expanded Study, the N Segment was eliminated from calculations for personal and household needs and for shelter, although not from special circumstance averages. The rationale for this difference, according to the defendants, was that the N Segment had been wholly financed by the State and assistance criteria for families under its auspices differed from those in the C and F Segments. Special circumstance grants were computed on an individual basis and criteria under all segments did not differ for that category. Another difference between Benchmark I and the Expanded Study was that in the former all special circumstance grants were considered in the averaging, whereas in the latter study four such grants were excluded from the averaging. The four, homemaker service, child care, expenses of training, and emergency assistance will continue to be paid for at cost.
The results of the Expanded Study tended to corroborate the correctness of Benchmark I. Although the average four special circumstance grants rose from forty-eight cents per month per person to seventy-five cents, the only change in final averages was that computed for a family of five, for which it was determined that the proper flat grant payment should be $370 rather than $360 per month. An amendment to this effect in the FAM was instituted by the defendants on July 1, 1972.
Plaintiffs, who allegedly represent those AFDC recipients who receive less money under the FAM than under the CABM, quarrel with both Benchmark I and the Expanded Study both as to technical statistical methodology and as to the component figures used in the averaging process. They claim that Benchmark I was technically deficient mainly for the same reasons that prompted HEW to request the Expanded Study: it was too narrow in scope and the county returns were inconsistent. However, since the present FAM is the product of the Expanded Study, arguments against Benchmark I are moot.
Plaintiffs claim that averaging of shelter across the state is per se illegal since shelter costs vary greatly in different counties. They claim that artificially limited data, such as rent for recipients living in public housing, should not have been figured in the averaging. They further claim that the requirement under the CABM to pay shelter and special circumstance needs at cost contained a built-in cost of living increase requirement, which is now eliminated under the FAM. Plaintiffs contend that averaging of non-recurring special circumstance grants (i.e. moving expenses) is also per se illegal, as is averaging special circumstance grants from certain counties where it appears that figures for such grants were inordinately low and probably improperly distributed. Plaintiffs further contend that determination of a mean through averaging should not be the focus but there should rather be an assessment of typicality. The question should be, according to plaintiffs, what amount does the typical recipient receive, rather than have a mean which is altered by the extremes. In essence, the plaintiffs say that the defendants, in undertaking the project of consolidation from the former components of the CABM into the FAM's flat grant, did not consider the quality of the data used, did not consider significant aspects of the former standard of need, and did not take into account harm to recipients and reductions in needs. In this way they contend that the defendants have violated 42 U.S.C. 602(a) (23) as interpreted by Rosado, supra.
The plaintiffs admit that the Supreme Court in Rosado did allow averaging of grants to AFDC recipients. However, they note that the Court allowed only fair averaging using figures that are fairly priced. Specifically, the Court said:
"Section 402(a) (23) (42 U.S.C. 602(2) (23)) invalidates any state program that substantially alters the content of the standard of need in such a way that it is less than it was prior to the enactment of § 402(a) (23), unless a State can demonstrate that the items formerly included no longer constituted part of the reality of existence for the majority of welfare recipients. We do not, of course, hold that New York may not, consistently with the federal statutes, consolidate items on the basis of statistical averages. Obviously such averaging may affect some families adversely and benefit others. Moreover, it is conceivable that the net payout, assuming no change in the level of benefits, may be somewhat less under a streamlined program. Providing all factors in the old equation are accounted for and fairly priced and providing the consolidation on a statistical basis reflects a fair averaging, a State may, of course, consistently with § 402(a) (23) redefine its method for determining need." 397 U.S. at 419, 90 S. Ct. at 1221, 25 L. Ed. 2d at 459.
Much of the outcome of this case turns on the interpretation given to the above paragraph.
In Rosado, supra, the Supreme Court reviewed an attempt by New York State to convert its prior system of distribution of welfare aid into a flat grant system such as that before this Court. The Rosado Court held that New York violated 42 U.S.C. 602(a) (23) in that it did not include certain special needs in its averaging process and thereby impermissably lowered the content of its prior standard of need.
En route to rendering its decision, the Supreme Court in Rosado explored the legislative history of Section 602(a) (23) and reached some conclusions as to the purpose which Congress intended that section to serve and the interpretation that it should be given in the future.
The Court, noting that Section 602(a) (23) was a child of legislative compromise, Congress having rejected plans to require annual updating of the participating state's standard of need, determined that that section had two main purposes:
"First, to require States to face up realistically to the magnitude of the public assistance requirement and lay bare the extent to which their programs fall short of fulfilling actual need; second, to prod the States to apportion their payments on a more equitable basis." 397 U.S. at 412-413, 90 S. Ct. at 1218.