(D.C. Civil Action No. 879-71) APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
Before: VAN DUSEN and ROSENN, Circuit Judges.
This appeal raises the important question whether administrative changes instituted in 1971 by New Jersey in its program of Aid to Families with Dependent Children (AFDC) violated federal statutory requirements. The United States District Court for the District of New Jersey held that the state did not violate Social Security Act § 402(a)(23), 42 U.S.C. § 602(a)(23), when it converted its method of evaluating family needs from a case-by-case cost to a flat grant state-wide average method.*fn1 We affirm.*fn2
In an attempt to reform the state's welfare system, improve its efficiency and eliminate inequities, New Jersey converted in 1971 to a system which evaluated recipient needs on the basis of a state-wide average of family needs. Basically, what the state did was to compute the average need of a random sample of welfare recipients in the state with use of the data it had compiled in the past on family-by-family needs. The result was a flat grant sum, which varied from family to family with respect only to family size. The inevitable result of such an averaging was that the state's calculated need for some families decreased, while the calculated need for other families increased. Also as a result of the averaging process, some families with incomes previously eligible for welfare became ineligible, and conversely previously ineligible families became eligible. As New Jersey pays eligible recipients 100% of need, the result was also to increase some AFDC families' welfare payments while decreasing others.
Appellants contend the methods used by New Jersey in calculating the flat grant needs were contrary to the statutory mandate of 42 U.S.C. § 602(a)(23):
[The States shall] provide that by July 1, 1969, the amounts used by the State to determine the needs to individuals will have been adjusted to reflect fully changes in living costs since such amounts were established, and any maximums that the State imposes on the amount of aid paid to families will have been proportionately adjusted.
In an opinion which carefully and extensively examined the legislative history of § 602(a)(23), Justice Harlan, in Rosado v. Wyman, 397 U.S. 397, 25 L. Ed. 2d 442, 90 S. Ct. 1207 (1970), found "two broad purposes" in the statute:
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 412-13. Consistent with those broad purposes, the Court said, conversion to a flat grant system, such as New Jersey's, was permissible for purposes of administrative efficiency, if that purpose was not achieved "at the expense of significantly reducing the content of the standard of need." The Court explicated what it considered a significant reduction in the standard of need by detailing the statute's requirements when a state consolidates items on the basis of statistical averaging:
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.
Appellants attack the New Jersey consolidation of needs in two basic respects. They argue that they demonstrated in the district court both (1) that some factors of need accounted for prior to 1971 were left out of the equation in calculating the FAM flat grants; and (2) that the methodology used by the state was not a "fair" averaging based on "fairly priced" data.
With respect to appellants' first major contention, the district court could find in the great mass of oral and written evidence no indication that in averaging shelter and special circumstance needs, ...