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Baylor v. New Jersey Department of Human Services

Decided: June 26, 1989.


On appeal from a final decision of the Director, Division of Public Welfare, Department of Human Services.

Petrella, Shebell and Landau. The opinion of the court was delivered by Shebell, J.A.D. Petrella, P.J.A.D., dissenting.


Appellant, Dorothy Baylor, appeals from the Final Decision of the State Division of Public Welfare (the Division) affirming the calculation of Aid to Families with Dependent Children (AFDC) benefits which her family receives. In calculating the benefits paid, the Passaic County Board of Social Services (Board) failed to apply the $50 "disregard" for "child support" under the federal AFDC statute (the disregard provision), to the Title II Social Security Dependents' Insurance benefits (dependents' benefits) received by appellant's children.

On December 10, 1987, appellant requested a fair hearing to determine whether the AFDC benefits received by her family had been properly calculated. On March 21, 1988, a fair hearing was conducted by an Administrative Law Judge (ALJ). On April 15, 1988, the ALJ rendered her Initial Decision, ruling

that Social Security dependents' benefits constitute "child support" subject to the "disregard" under N.J.A.C. 10:82-4.17, and that the Board had improperly failed to disregard the first $50 of those benefits when calculating the family's monthly AFDC benefits. The ALJ ordered that appellant's benefits be recalculated retroactively. The June 1, 1988 Final Decision of the Director of the Division rejected the ALJ's decision, and held that the Board correctly calculated appellant's AFDC benefits without the disregard.

Appellant and her two minor children have been long-standing recipients of monthly AFDC benefits. A 1983 court order against the father required him to pay child support. The father, now a disabled person receiving Title II Social Security Disability Insurance benefits, lives apart from appellant and their children. As dependents of a disabled person, each child receives monthly dependents' benefits of $31. In calculating monthly AFDC benefits for the family, the Board has reduced the benefits by the full $62 of dependents' benefits the children receive.

In its Final Decision, the Division stated, "[r]eview of the code of Federal Regulations at 45 CFR 302.51(b) reveals clearly that only amounts collected as support by the IV-D Agency are subject to the $50 disregard. Accordingly, the recommended decision by the ALJ cannot be accepted." An agency's final decision will not be set aside unless it is shown that "it was arbitrary, capricious or unreasonable, or that it lacked fair support in the evidence, or that it violated legislative policies express or implied in the relevant statute." East Windsor Reg'l. Bd. of Ed. v. State Bd. of Ed., 172 N.J. Super. 547, 552 (App.Div.1980). Here, the facts are undisputed and we need only determine if the Division's conclusion is in accord with relevant federal and state statutes and regulations. Any agency's determination of a question of law is subject to de novo review by the reviewing court. Grancagnola v. Planning Bd., 221 N.J. Super. 71, 75 n. 5 (App.Div.1987), citing

Mayflower Securities v. Bureau of Securities, 64 N.J. 85, 93 (1973).

Neither state nor federal regulations define "child support;" therefore, it is necessary to review the federal statutory and regulatory scheme and case law before concluding whether the dependents' benefits received by petitioner's two children are subject to the $50 disregard.

AFDC is a public assistance program created and financed by the federal government under Title IV of the Social Security Act of 1935, 42 U.S.C.A. § 301 et seq., Motyka, et al. v. McCorkle, et al., 58 N.J. 165, 168 (1971). Although state participation in the AFDC program is voluntary, those that choose to participate must comply with the terms of the Social Security Act and regulations. Shea v. Vialpando, 416 U.S. 251, 253, 94 S. Ct. 1746, 1750, 40 L. Ed. 2d 120, 125 (1974); Barrera v. Dept. of Institutions and Agencies, 150 N.J. Super. 41, 45 (App.Div.1977). "A 'state plan' consists of all the statutes and regulations which create and provide for the administration of programs of assistance." Communications Workers v. Union Cty. Welfare Bd., 126 N.J. Super. 517, 524 (App.Div.1974).

Under the scheme prescribed by federal law, state AFDC plans must provide that all income and resources available to any child or relative claiming AFDC benefits be considered in determining the applicant's need level. 42 U.S.C.A. § 602(a)(7). However, some forms of "income" must be "disregarded," or not counted as family income, when the state makes a "need" determination. 42 U.S.C.A. § 602(a)(8)(A). "Once the state has made this need determination, a benefit award is calculated, and AFDC payments are made to the AFDC recipient." Todd v. Norman, 840 F.2d 608, 609 (8th Cir.), reh'g and reh'g en banc den., 840 F.2d 608 (8th Cir.1988).

In enacting the Deficit Reduction Act of 1984, Pub.L. No. 98-369, § 2640, 98 Stat. 494, 1145-1146 (1984), Congress created the following child support disregard provision at issue in

this appeal, 42 U.S.C.A. § 602(a)(8)(A)(vi) ("the federal disregard provision"):

A State plan for aid and services to needy families with children must --

(8)(A) provide that . . . in making the determination under paragraph (7), the State agency --

(vi) shall disregard the first $50 of any child support payments. . . with respect to the dependent child or children in any family applying for or receiving aid to families with dependent children (including support payments collected and paid to the family under section 657(b) of this title). . . . [Emphasis supplied].

This requires state AFDC plans to provide that the first $50 of "child support" be disregarded when determining an applicant's need for assistance pursuant to § 602(a)(7).

Under N.J.S.A. 44:10-3(c), the Commissioner of the Department of Human Services is directed

[t]o provide that, in determining eligibility for financial assistance and the amount of assistance to be granted, there shall be taken into consideration all other income and resources of the dependent child and of the parent, parents, or other relatives with whom such child is living, except that, in making such determination, there shall be disregarded the amounts of income and resources required by Federal law as a condition of Federal financial participation. . . . [Emphasis supplied].

The state "child support" disregard provision is found at N.J.A.C. 10:82-4.17:

The first $50.00 of any child support payments received on behalf of a dependent child or children by any family applying for or receiving AFDC shall be disregarded. Such child support payments shall include disregarded child support (DCS) payments paid the family through the child support and paternity process and direct support payments received by the eligible unit which represent a current monthly support obligation. These monies are disregarded in determination of initial eligibility, maximum income eligibility, prospective needs test, and the grant computation. The total amount of child support disregarded shall not exceed $50.00 per month per eligible unit. [Emphasis supplied].

The Division found that "only amounts collected as support by the IV-D Agency are subject to the $50 disregard," citing 45 C.F.R. § 302.51(b). A "IV-D" agency is a state agency created pursuant to Part D of the federal AFDC statute, 42 U.S.C.A. §§ 651-665. Part D establishes the federal scheme for, among other things, state collection of child and spousal support for persons receiving AFDC. 42 U.S.C.A.

§ 652(a)(1). Under that scheme, the State must designate an agency to administer the state plan; the plan itself must provide that the State will undertake to collect "assigned" child support from legally liable persons. 42 U.S.C.A. § 654(3) and § 654(4)(B). As a prerequisite to eligibility, AFDC recipients must assign to the State any rights they might have to support from any other person. 42 U.S.C.A. § 602(a)(26); 45 C.F.R. § 232.11(a)(1). In New Jersey, an application for AFDC benefits operates as such an assignment. N.J.S.A. 44:10-2. Child support payments assigned to the State are collected by the state IV-D agency. Child support collected by the IV-D agency must be paid to the State for distribution as prescribed in 42 U.S.C.A. § 657. 42 U.S.C.A. § 654(5)(A); 45 C.F.R. § 302.50(a).

Title 42, U.S.C.A. § 657(b) itself gives directions for the distribution of those support payments collected by the IV-D agency, indicating in pertinent part that the first $50 of the child support collected by the agency be paid to AFDC families without affecting their eligibility for AFDC benefits. This instruction is repeated in the corresponding federal regulation, 45 C.F.R. § 302.51(b), which states in relevant part:

The State plan shall provide as follows:

(b) The amounts collected as support by the IV-D agency pursuant to the State plan for children and the parents of such children who are current recipients of aid under the State's title IV-A plan and for whom an assignment under § 232.11 of this title is effective shall be distributed as follows:

(1) Of any amount that is collected in a month which represents payment on the required support obligation for that month, the first $50 of such amount shall be paid to the family. [Emphasis supplied].

Title 45, C.F.R. § 232.11(a)(1) codifies the statutory requirement that as a condition of eligibility for AFDC, applicants must assign to the State "any rights to support from any other person. . . ."

Hence, in citing the above regulation in its decision, the Division essentially posited that only child support payments

assigned to and collected by the State were subject to the federal disregard. Thus, it follows that the federal disregard provision would not apply to Social Security dependents' benefits because, (1) under 42 U.S.C.A. § 407, the right to those benefits are not transferable or assignable and (2) they are not collected by the IV-D agency, but paid directly to the dependents.

This issue has not been raised previously in New Jersey. The parties agree that the term "child support" is not defined in the state public assistance regulations (N.J.A.C. 10:81-1.1 et seq.) or the federal AFDC statutes or regulations (42 U.S.C.A. § 601 et seq., 45 C.F.R. § 205 et seq.).

Terms used in an AFDC act should be given their ordinary and well-understood meaning. See State v. Pleva, 203 N.J. Super. 178, 188 (App.Div.), certif. den. 102 N.J. 323 (1985); accord 3A Sands, Sutherland Statutory Construction, § 72.03 at 582 (4th ed. 1986) ("Statutory Construction"). If it is clear and unambiguous, no further construction is required. Sutherland Statutory Construction, supra, § 72.03 at 582.

Appellant contends that the Division's interpretation of the federal disregard provision is contrary to the plain language of 42 U.S.C.A. § 602(a)(8)(A)(vi), which requires states to disregard "the first $50 of any child support payments . . . received . . . with respect to the dependent child or children . . . (including support payments collected and paid to the family under section 657(b) of this title). . . ." It argues that the federal disregard provision by its specific language applies to "any child support payments" received with respect to children receiving AFDC benefits.

While we agree with the conclusion of the Division's Final Decision, its reasoning conflicts with its own regulation which states that the "child support payments" subject to the disregard "shall include disregarded child support (DCS) payments paid the family through the child support and ...

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