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Hausman v. Department of Institutions and Agencies

Decided: January 22, 1974.


For affirmance -- Acting Chief Justice Jacobs, Justices Hall, Sullivan and Pashman and Judges Conford and Collester. For reversal -- None. The opinion of the Court was delivered by Hall, J.


[64 NJ Page 204] This public assistance case arose as the result of a reduction in the monthly amount paid by the Mercer

County Welfare Board for the subsistence of respondent and her child under the Aid to Families with Dependent Children program (ADC), a program authorized and partly financed by the federal government. 42 U.S.C.A. § 601 et seq.; N.J.S.A. 44:10-1 et seq.; see Motyka v. McCorkle, 58 N.J. 165, 168-169 (1971). The reduction came about because of the entry into the household, previously consisting only of the two recipients, of a third person not eligible for such assistance.

The reduced amount was mandated by the regulations of the state Division of Public Welfare (Division) which specify, in a tabular schedule of dollar amounts, a lower per capita standard of need for eligible members of a household when that household consists of both eligible and non-eligible persons, either at the time of initial eligibility or by reason of later changes in the household makeup, than when it is comprised only of eligible persons, N.J.A.C. 10:82-2.3, Schedule I; Division Financial Assistance Manual § 115.*fn1 In New Jersey where benefits are paid to the full extent of the appropriate standard of need figure, that figure, less any income and resources actually available to the eligible recipients, determines the amount of the assistance, which is paid in the form of a flat grant.

In this case, when the household was composed only of respondent and her child, the monthly payment for each of the two eligibles according to the schedule was $107, or a total of $214; after the household was enlarged to three by the addition of the non-eligible person, the schedule called for a reduction of the per capita payment for the mother and

child to $94, or a total of $188.*fn2 Respondent asserted that she had no income and received no financial contribution from the third person. This was not controverted, so we consider it established that the third person neither paid his own share of the household expenses nor contributed anything to those of respondent and her child.

On administrative review, the Director of the Division upheld the reduction of assistance on the thesis that the schedule applies without regard to the financial circumstances of the non-eligible member of the household and whether or not he contributed to the support of the eligible recipients. On appeal to the Appellate Division, respondent challenged the validity of the reduced assistance called for by the schedule as applied to her as being violative of the federal enabling legislation, i.e., the Social Security Act and the regulations of the Department of Health, Education and Welfare (HEW) promulgated thereunder, as well as violative of the equal protection and due process clauses of the federal constitution. That tribunal reversed the agency decision and restored the monthly assistance to the original amount, holding that the schedule, "as applied to the facts of this case," is inconsistent with the Social Security Act and the federal regulations. 124 N.J. Super. 139 (1973). We granted appellant's petition for certification. 63 N.J. 554 (1973).

While we agree with the conclusion reached by the Appellate Division, we think its holding should be clarified in view of the broad importance of the underlying issue involved.

Although state participation in a federally supported categorical assistance program, such as ADC, is voluntary, a state choosing to participate must comply with the terms of the federal legislation and regulations promulgated by HEW and must secure HEW approval of its plan for implementation

of the program. A state plan must "[s]pecify a statewide standard, expressed in money amounts, to be used in determining (a) the need of applicants and recipients and (b) the amount of the assistance payment." 45 CFR 233.20(a)(2). The standard of need is a per capita money amount considered by the state to be sufficient to finance the purchase of those goods and services -- food, clothing, shelter and the like -- which are essential for minimal physical health and safety. It is used to measure who is eligible for benefits and in New Jersey, as we have said, also represents the benefits paid. While states are free to fix their own standards of need and their own level of benefits, the federal regulations require that state plans must provide "that the determination of need and amount of assistance for all applicants and recipients will be made on an objective and equitable basis * * *," 45 CFR 233.20(a)(1). While a state shall "take into consideration any other income or resources of any child or relative claiming aid * * *," 42 U.S.C.A. § 602(a)(7), "in establishing financial eligibility and the amount of the assistance payment: * * * (c) only such net income as is actually available [to the recipient] for current use on a regular basis will be considered, and only currently available resources will be considered * * *," 45 CFR 233.20(a)(3)(ii). See generally King v. Smith, 392 U.S. 309, 88 S. Ct. 2128, 20 L. Ed. 2 d 1118 (1968); Rosado v. Wyman, 397 U.S. 397, 90 S. Ct. 1207, 25 L. Ed. 2 d 442 (1970); Dandridge v. Williams, 397 U.S. 471, 90 S. Ct. 1153, 25 L. Ed. 2 d 491 (1970); Lewis v. Martin, 397 U.S. 552, 90 S. Ct. 1282, 25 L. Ed. 2 d 561 (1970); Jefferson v. Hackney, 406 U.S. 535, 92 S. Ct. 1724, 32 L. Ed. 2 d 285 (1972); Motyka v. McCorkle, supra (58 N.J. 165).

The state's theory to support the lower per capita standard of need and benefits prescribed in the schedule when the household is composed of eligible and non-eligible individuals rather than entirely of eligibles is that some so-called "economies of scale" come about merely by reason of the ...

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