Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Alabama Department of
Human Resources
Docket No. A-95-089
Decision No. QC86
DATE: August 9, 1995
DECISION
The Alabama Department of Human Resources (Alabama)
appealed the March 3,
1995 quality control (QC) review
determination of the Regional Administrator
of the
Administration for Children and Families (ACF) that an
Aid to
Families with Dependent Children (AFDC) recipient
1/ was
ineligible for the assistance payment she
received in the review month of
December 1993. ACF
therefore found a payment error in the amount of
$164.
This case turns on whether Alabama's suspension policy
applies to the
facts of this case. ACF determined that,
because the recipient had
earned income which rendered
her ineligible for AFDC for only one month
(October, the
budget month), Alabama's suspension policy applied and
the
recipient's December payment should have been
calculated retrospectively on
the basis of October's
income. Alabama argued that, under its
permissible State
practice (PSP), its suspension policy did not apply to
the facts of this case and therefore the recipient was
eligible for the
December payment based on prospective
budgeting. For the reasons
discussed below, we conclude
that this case is governed by PSP. Under
Alabama's PSP,
suspension was not appropriate, prospective budgeting was
applicable to this case and, thus, the recipient was
eligible for the
December payment. Accordingly, we
reverse ACF's error
determination.
Applicable Authority
Section 402(a)(7) of the Social Security Act (Act)
requires that a state
plan for AFDC determine applicants'
need taking into consideration the
income and resources
of children and relatives required to be included in
the
AFDC assistance unit (AU). Section 402(a)(18) provides
that an
AU is ineligible for AFDC in any month in which
total earned income exceeds
185% of the state's standard
of need.
Eligibility for AFDC must be determined prospectively for
all payment
months. Section 233.33 of 45 C.F.R. provides
" . . . the State
agency shall establish eligibility
based on its best estimate of income and
circumstances
which will exist in the month for which the assistance
payment is made."
If an AU is determined to be eligible for assistance,
income is again
considered in determining the amount of
assistance the AU receives.
The AU's income, less
certain "disregards," is subtracted from the state's
payment standard to arrive at the assistance payment to
the AU.
The amount of assistance may be computed "prospectively"
or
"retrospectively." Prospective budgeting, similar to
prospective
eligibility determination, requires the state
to compute the payment amount
based on its best estimate
of the income and circumstances which will exist
in the
payment month. 45 C.F.R. � 233.31(b)(1). Retrospective
budgeting requires the state to calculate the amount of
assistance for a
payment month based on the recipient's
actual income in a previous "budget"
month. 45 C.F.R. �
233.31(b)(2). States may adopt either
one-month
retrospective budgeting, in which the budget month is the
month immediately preceding the payment month, or two-
month
retrospective budgeting, in which the budget month
is two months prior to
the payment month. 45 C.F.R. �
233.32. Alabama has adopted
two-month retrospective
budgeting.
Under the general rule, AFDC assistance must be
terminated if an AU
becomes ineligible and the AU must
thereafter reapply for assistance.
However, states have
the option of adopting a "suspension" policy for cases
in
which "the agency has knowledge of, or reason to believe
that
ineligibility would be only for one payment month."
45 C.F.R. �
233.34(d)(1). Applying suspension in a two-
month retrospectively
budgeted case, if an AU was
ineligible in the budget month (October), the
payment for
the corresponding payment month (December) would be
"suspended" and the AU would receive no assistance in
December.
The case would then continue to be paid
retrospectively (January's payment
based on November's
income) if "the family's circumstances for the initial
month had not changed significantly from those reported
in the
corresponding budget month, e.g., loss of job."
45 C.F.R. �
233.34(c)(3).
The QC Manual (QCM) addresses the issue of suspension of
cases. It
provides:
[I]f the AU is being retrospectively budgeted and
the period of
ineligibility is expected to last only
one month, the State may choose to
suspend the
payment. States electing the suspension option must
outline the criteria in their written policy
instructions. Under
the suspension policy, if the
AU is ineligible under circumstances specified
by
the State in any month, the State will not recoup
assistance, but
will instead suspend assistance for
the payment month corresponding to the
month of
ineligibility.
QCM � 3430 (emphasis added). However, the QCM directs
the reviewer
to assume termination in cases where
suspension is inapplicable:
If the budget month, intervening month, or review
month's income
and circumstances result in
ineligibility and suspension is not appropriate,
assume termination, revert to prospective budgeting,
and use actual
review month income to determine the
amount of payment for the review
month.
QCM � 3430, 5 (emphasis added).
Alabama has adopted a suspension policy. However,
Alabama's
suspension policy is more limited than the
suspension option set forth in
the federal regulations.
Specifically, Alabama's Assistance Payments
Manual states
that prospective budgeting applies to
The first two payment months following a one month
break in
eligibility when there has been a
significant change in the family's
circumstance
which caused ineligibility originally . . . . For
example, if wages caused ineligibility originally
and the reported
change . . . was loss of job, this
is a significant change in the
circumstances which
caused ineligibility; therefore, prospective
budgeting would apply for the 1st two payment
months.
Assistance Payments Manual � 3101.B.3 (attachment C to
Alabama's appeal
request).
Federal regulations, at 45 C.F.R. � 205.40(a)(12), define
permissible
state practice as follows:
written rules and policies relating to eligibility
and payment that
are in accordance with existing,
approved State plan provisions . . .
Section 3130 of the QCM, governing PSP review, instructs
QC reviewers to
review against the state plan provision
using state instructions, to the
extent such instructions
are consistent with the state plan.
Background
The facts in this case are not disputed. The assistance
unit
consisted of the recipient, TL, and her two
children. 2/
TL was employed at Wal-Mart from
September 8 through October 22, 1993.
She did not report
her wages to the caseworker until December 14,
1993. In
December she was again eligible for AFDC. Her wages
rendered her ineligible for the month of October only.
Alabama
uses two-month retrospective budgeting;
accordingly, October is the budget
month for December,
the review month in this case.
TL's case was selected for QC review for the month of
December
1993. Alabama had paid assistance to TL for
December, budgeted
prospectively based on no income.
Alabama QC found the case correctly
paid. Federal QC
found error, concluding that the December payment
ought
to have been calculated retrospectively and, thus,
suspended based
on ineligibility in the budget month,
October.
Analysis
Alabama and ACF agree that TL was prospectively eligible
for AFDC in the
review month, December 1993, as she had
no income in that month.
Alabama and ACF also agree that
TL was ineligible for AFDC in October 1993,
based on
excess income in that month. Alabama paid TL for both
October and December. It is apparent that TL was
ineligible for
one of these two payments and, thus, one
of them was erroneous. If the
December payment was
erroneous, then Alabama has committed an error for QC
purposes. However, if it is the October payment that was
erroneous, that error is outside the scope of QC review
because the
review month is December. The determination
as to which of the two
payments was erroneous depends
upon whether prospective budgeting or
suspension and
retrospective budgeting applies.
ACF argues that retrospective budgeting applies in this
case because,
according to ACF, Alabama's suspension
policy applies. Suspension, as
opposed to termination
and reapplication, is permitted when the recipient is
expected to be ineligible for only one month. Alabama
has elected
to have a suspension procedure. ACF's
argument, in essence, is that
suspension must be applied
in all cases if the following conditions are
met: (1)
the state has a suspension policy; (2) the recipient was,
in fact, ineligible for only one month; and (3) the state
did not learn
of the recipient's ineligibility until the
recipient had again become
eligible. We disagree with
this position because we conclude that the
question of
whether suspension applies depends upon PSP.
The federal regulation governing suspension permits, but
does not
require, states to adopt suspension. The
regulations provide
that: "A State may suspend, rather
than terminate, assistance" and
continue in a
retrospective budgeting cycle when the local agency "has
knowledge of, or reason to believe that ineligibility
would be only for
one payment month." 45 C.F.R. �
233.34(d)(emphasis added).
Moreover, the QCM is quite
clear that reviewers are to follow PSP to
determine
whether prospective budgeting or suspension and
retrospective
budgeting is appropriate. QCM � 3430.
Alabama argued that it has
adopted a suspension policy
which applies to a more limited range of cases
than might
otherwise be permissible under the federal regulation.
Under Alabama's policy, suspension and continued
retrospective budgeting
are not applied to cases in which
there has been a significant change in the
circumstances
which caused the AU's one-month ineligibility. In such
cases, Alabama's PSP provides that:
Prospective Budgeting Applies [to] . . .[t]he first
two payment
months following a one month break in
eligibility when there has been a
significant change
in the family's circumstance which caused
ineligibility originally . . . . For example, if
wages caused
ineligibility originally and the
reported change . . . was loss of job, this
is a
significant change in the circumstances which caused
ineligibility;
therefore, prospective budgeting
would apply for the 1st two payment
months.
Assistance Payments Manual � 3101.B.3 (attachment C to
Alabama's appeal
request).
We view Alabama's PSP as a limited implementation of the
federal
regulation which permits the local agency to
apply suspension if it
determines that ineligibility is
likely to be for one month only.
Under the terms of
Alabama's PSP, suspension is never applicable when a
recipient begins a regular job paying wages which make
the recipient
ineligible. This is because the event
which would make the recipient
eligible again--loss of
that job after only one month--would be "a
significant
change in the family's circumstance which caused
ineligibility originally." Alabama's PSP, in effect,
requires
caseworkers to assume that if a recipient begins
a regular job which renders
the recipient ineligible,
suspension does not apply and the case must be
terminated. Therefore, under Alabama's PSP, in cases
involving
ineligibility due to regular employment,
termination followed by prospective
budgeting applies,
even where that ineligibility lasts only one month.
We can find no prohibition in the regulations or the QCM
against a state
adopting a suspension policy that would
apply to a more limited number of
cases than would
otherwise be permitted by 45 C.F.R. � 233.34. States
are
not required to have any suspension policy. Rather,
suspension
is an option states may elect so that they can
maintain cases in a
retrospective budgeting cycle.
Therefore, we do not view a state's
decision to craft a
narrower policy as being inconsistent with federal
standards. Further, Alabama's policy is consistent with
its State
plan. Therefore, we conclude that Alabama's
suspension policy, as
contained in its Assistance
Payments Manual, represents PSP.
The facts of this case fall squarely within the
prospective budgeting
policy described in the Assistance
Payments Manual. TL was ineligible
for the month of
October, based on her wages from her job at Wal-Mart.
ACF has not suggested that there was any reason to
believe her job was
temporary, as of the time she began
work. In November, she lost her
job, which represented a
significant change in her circumstances. The
loss of her
job was a change in the circumstance which caused
ineligibility originally. Therefore, according to PSP,
the
caseworker was required to assume termination, and
prospective budgeting is
applicable to the first two
payment months (November and December) following
the one-
month break in eligibility (October). 3/ Moreover,
this result is consistent with the QCM provision which
directs that
prospective budgeting be used following a
month of ineligibility where
suspension is not
appropriate. QCM � 3430, 5.
ACF argues that the use of prospective budgeting in this
case would
inject an element of speculation into the QC
process. ACF acknowledges
that the eligibility worker
would have had the option to terminate AFDC to
the
recipient, had the recipient reported the earnings from
her
job. However, in fact, the recipient did not report
her earnings, the
worker did not terminate AFDC, and the
recipient was ineligible for only one
month. Thus,
according to ACF, QC review cannot speculate, after the
fact, as to what the eligibility worker might have done.
Based on
the facts known in hindsight, the recipient was
ineligible for a single
month and, therefore, suspension
should apply.
We agree with ACF that, to the extent possible, the QC
process should
avoid speculating about what might have
been--but was not--done in a given
case. 4/ However,
where, as here, a written State policy
instruction is
applicable, it is not speculative to assume that the
State worker would apply that instruction. Here,
speculation is
not an issue because the State Assistance
Payments Manual directs the
eligibility worker, in
essence, to treat the case as terminated as of
October
and to budget the case prospectively for November and
December. Budgeted prospectively, the payment for
December was
proper. Therefore we find for Alabama.
Conclusion
For the reasons stated, we reverse ACF's determination
that TL was
ineligible for the AFDC payment she received
in December 1993.
__________________________
Peggy
McFadden-Elmore
__________________________
Maxine
Winerman
__________________________
Leslie
A. Weyn
* * * Footnotes * * *
1. The State QC review
number is 312075.
2. We
refer to the recipient by her initials to
protect her
privacy.
3. Indeed, in a
December 30, 1994 Memorandum to
ACF's Regional Administrator for Region IV,
ACF's
Director of the Office of Family Assistance indicated
that
Alabama's practice was consistent with federal
policy and affirmed that the
QCM was not intended to
include every aspect of program policy.
Attachment F to
Alabama's request for a hearing. However, this
Memorandum is not helpful in the resolution of this case,
in that it
appears to assume a different result in a fact
situation similar to the
present case. In response to a
question from the Panel, Alabama stated
that the result
described in the Memorandum is contrary to Alabama's
interpretation of its policy and that it has not been
able to find out
from ACF the basis for ACF's statements
regarding Alabama's policy.
See Letter dated July 14,
1995 from P.L. Corley to Leslie A.
Weyn.
4. ACF relies on an
April 25, 1988 Memorandum
from the Director of the Office of Family
Assistance to
the Regional Administrator for Region IV in support of
its
contention that application of prospective budgeting
would be speculative in
a Tennessee case involving facts
similar to those of this case. See
ACF Exhibit 2.
However, there is no suggestion that Tennessee had a
written State policy instruction that was equivalent to
that found in
the Alabama Assistance Payments Manual.