Fredericks v. Commonwealth, Department of Public Welfare

OriNiorr by Judge MacPhail, Nancy L. Fredericks (Petitioner) has appealed from the final order of the Department of Public Welfare (Department) which affirmed the decision of a hearing examiner that court-ordered support payments made by Petitioner’s husband to his children by a previous marriage, must be included as income to Petitioner’s household for food stamp purposes. The facts in this case, as found by the hearing-examiner, are undisputed. Petitioner, the mother of four minor children, received food stamps for her five person household in the monthly amount of $188 through March 31, 1981. The County Assistance Office (CAO) discontinued the household’s food stamps effective April 1, 1981, however, due to its recalculation of the household’s income following the return of Petitioner’s husband to the household. According to the CAO’s calculation, the household now has a net monthly income of $891, which includes Petitioner’s husband’s earnings as well as AFDC assistance received for Petitioner’s children. Since this amount — 317 — exceeds the $825 maximum allowable net monthly income for a household of six under the food stamp program, the CAO determined that Petitioner’s household no longer qualified for food stamps. The fact which gives rise to the insitant appeal is that Petitioner’s hushand pays approximately $150.50 per month in court-ordered child support for his three children by a previous marriage. This money is deducted directly from his gross pay pursuant to a wage assignment which Petitioner’s husband voluntarily executed. Petitioner contended below that the amount paid by her husband for child support should be excluded from the computation of the household’s income for food stamp purposes. The hearing examiner found that Department regulations do not provide for the exclusion or deduction of child support payments from income and that all of the wages earned by Petitioner’s husband must be treated as income to the household. The Office of Hearings and Appeals affirmed the hearing examiner’s decision and the instant appeal Was taken. Two issues have been raised for our consideration: 1) Whether or not moneys used for court-ordered child support payments must be included for food stamp purposes as income to the household which makes the payments and 2) whether or not the treatment of such moneys as income violates the household members’ due process and equal protection rights under the United States Constitution. With regard to the first issue, Department regulations provide that all payments received by a household are considered to be income for food stamp purposes unless specifically excluded by the regulations. 55 Pa. Code §523.3(a). Petitioner contends that child support payments are excluded fr'om income by the following Department regulation: — 318 — Only tlie following payments received by household members will not be considered income to the household: (8) Funds for nonhousehold member. Monies received and used for the care and maintenance of a third-party beneficiary who is not a household member. 55 Pa. Code §523.3 (c) (8). This provision implements Section 2014(d)(6) of the federal Food Stamp Act of 1977 (Act).1 The legislative history of Section 2014 (d)(6) states that: [T]his section would exclude moneys received by a household, but used for the care and maintenance of another person who is no.t a household member, for example, a relative’s pension check that goes to and is cashed by the household and then is used to support that relative in an institution. (Emphasis added.) H.R. Rep. No. 464, 95th Cong., 1st Sess. (1977), reprinted in, [1977] 2 U.S. Code Cong. & Ad. News 2013. Although brief, this legislative history leads us to conclude that court-ordered child support payments were not intended to be excluded from income under Section 2014(d)(6). We think there is a definite distinction to be drawn between the example provided by the legislative history and the instant case. The pension check, as indicated in the example, would be received by the household on behalf of the third-party beneficiary relative. Thus, the household would act merely as a conduit through which the money would flow from the payor to the relative. Since the Act defines income as all payments received, it is clearly — 319 — necessary to exclude such, identifiable funds from the income of a household which receives such funde but is not entitled to their use because, in fact, they are for the use and benefit of a specific non-household member. In the instant case, on the other hand, the moneys used to pay child support are initially earned by Petitioner’s husband and then are paid from his gross income. We believe that the child support obligation here is similar to other household debts and the fact that the money paid is used for the care of non-household members does not, in our opinion, trigger the Section 2014(d) (6) exclusion. We are aware that recent case law interpretations of Section 2014(d) (6) can logically be read to support Petitioner’s position that court-ordered child support payments must be excluded from income. In Carter v. Blum, 493 F. Supp. 368, 372 (S.D.N.Y.1980) the District Court stated that: Both the regulations and the legislative history envision household receipt of funds that are used to .support an identifiable third person who is not a member of the household. (Footnote omitted.) A different interpretation of Section 2014(d)(6) was recently suggested by the District Court for the Northern District of New York in McCoy v. Bergland, 519 F. Supp. 796, 801 (N.D.N.Y.1981): [A] more appropriate discussion of this exclusion would appear to focus not upon the intended beneficiaries of contested moneys, but the constraints, if any, that are placed upon the actual recipients of the moneys, namely the food stamp applicants. . . . [T]he inquiry concerns whether an applicant has available income to spend on food: if an applicant has a duty to spend money only on behalf of another person, the money, is plainly unavailable for the appli — 320 — cant’s own needs and is consequently not considered as income available to the applicant. While the decisions in Garter and McCoy dealt specifically with, the issue of whether AFDC allowances for unborn children must be excluded from income under Section 2014(d)(6),2 the reasoning in those decisions would appear to support Petitioner’s position in the instant case. We think it is important to note, however, that both decisions rely upon the Courts’ interpretations of the legislative history of Section 2014(d) (6) quoted above. Our interpretation of that history has lead us to conclude that child support payments may not be excluded under Section 2014(d)(6). We note in support of our conclusion, that federal and Department regulations specifically include as income to a household, child support payments received by that household from a nonhousehold member. 7 C.F.R. §273.9(b) (2) (iii); 55 Pa. Code §523.3(b)(2) (v). If moneys paid for child support were intended to be similarly excluded from a paying household’s income, we believe the regulations would have done so specifically. Furthermore, our research regarding the possibility that court-ordered child support payments might be deducted, rather than excluded, from income convinces us that moneys paid for child support be treated as income under the Act. Prior to 1977, federal regulations provided for itemized deductions to be used in calculating net income for food stamp purposes. Among the itemized deductions allowed was one for court-ordered support payments. See 2 U.S. Code Cong. & Ad. News at 2026. — 321 — The legislative history of the Act explains that the itemized deduction process had become both complex and error-prone. As a solution to those and other problems, the Congress provided for a standard deduction in the Aot to replace the itemized deductions previously allowed. See 7 U.S.C. §2014(e). The legislative history clearly acknowledges that the standard deduction might result in a smaller total deduction for certain households. The new . . . standard deduction does not purport to cover each and every household’s situation of past itemized deductions. It is intended to replace that system and could not effectively do so if every participating household were to be held harmless against the impact of the change from itemization to standardization. 2 U.S. Code Cong. & Ad. News at 2038. We think it is clear, therefore, that while Petitioner’s household is entitled to a standard deduction, it is not entitled to any additional exclusion or deduction for child support payments made by Petitioner’s husband. In fact, the calculation of net monthly income in the instant case included a standard deduction of $85. We also find Petitioner’s constitutional claims to be without merit. We have previously held that use of the standard deduction instead of an itemized deduction for child support payments does not violate due process or equal protection rights of a food stamp applicant. Madison v. Department of Public Welfare, 54 Pa. Commonwealth Ct. 318, 421 A.2d 495 (1980). As we understand it, Petitioner’s final argument is that the computation of her household’s net income using the standard deduction creates an irrebuttable presumption that the remaining net income is actually available to meet the household’s food needs. Petitioner argues that this violates due process since there was evidence that a portion of the net income must be — 322 — used to pay child support and therefore is not actually available to meet the household’s needs.3 We must reject this argument. We do not believe that the standard deduction creates an irrebuttable presumption. Bather, it reflects the reasonable judgment of Congress that use of a standard deduction is an acceptable method for dealing with certain necessary nonfood expenditures. See Knebel v. Hein, 429 U.S. 288 (1977). We repeat our holding in Madison that use of the standard deduction in place of itemized deductions “does not contravene due process of law in any substantive or procedural sense. Congressional action of this sort, to minimize abuse and waste of public funds is reasonable.” Id. at 319, 421 A.2d at 496. Order affirmed. Order It is ordered that the final order of the Department of Public Welfare, dated April 16, 1981, case number 30270-R, is hereby affirmed. Footnotes [1] Pub. L. No. 95-113, 91 Stat. 962 (1977) (current version at 7 U.S.C.A. §2014(d)(6) (1982 Supp.)). The relevant federal regulation is located at 7 C.F.R. §273.9(c) (6). [2] The Courts tu Oa/rter and McOoy concluded that AFDC allowances for unborn children must be treated as income to the household for food stamp purposes. [3] One oí the eases relied upon by Petitioner to support her argument on this point was recently reversed by our Supreme Court. See Molyneaux v. Department of Public Welfare, 44 Pa. Commonwealth Ct. 111, 403 A.2d 634 (1979), rev’d, Pa. , 445 A.2d 730 (1982).