MARGARET M. HECKLER, SECRETARY OF HEALTH AND HUMAN SERVICES, PETITIONER v. SANDRA TURNER, ET AL. No. 83-1097 In the Supreme Court of the United States October Term, 1983 The Solicitor General, on behalf of the Secretary of Health and Human Services, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Ninth Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit PARTIES TO THE PROCEEDING In addition to the parties named in the caption, Debra Scruggs and Jerrylean Baker were appellees in the court of appeals. Kyle McKinsey, Deputy Director of the California Department of Social Services, and Mary Ann Graves, Director of the California Department of Finance, were appellants in the court of appeals. TABLE OF CONTENTS Opinions below Jurisdiction Statute and regulations involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-28a) is reported at 707 F.2d 1109. The opinion of the district court (App., infra, 29a-56a) is reported at 559 F. Supp. 603. JURISDICTION The judgment of the court of appeals (App., infra, 57a) was entered on June 10, 1983. A petition for rehearing was denied on September 7, 1983 (App., infra, 58a-59a). On November 18, 1983, Justice Rehnquist extended the time for filing a petition for a writ of certiorari to and including January 5, 1984. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTE AND REGULATIONS INVOLVED Section 402(a)(7) of the Social Security Act, 42 U.S.C. (Supp. V) 602(a)(7), provides in relevant part: A State plan for aid and services to needy families with children must * * * (7) except as may be otherwise provided in paragraph (8) or (31) and section 615 of this title, provide that the State agency -- (A) shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid to families with dependent children, or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid * * * . Section 402(a)(8) of the Social Security Act, 42 U.S.C. (Supp. V) 602(a)(8), provides in relevant part: (A) * * * (I)n making the determination under paragraph (7), the State agency -- (i) shall disregard all of the earned income of each dependent child receiving aid to families with dependent children who is (as determined by the State in accordance with standards prescribed by the Secretary) a full-time student or a part-time student who is not a full-time employee attending a school, college, or university, or a course of vocational or technical training designed to fit him for gainful employment; (ii) shall disregard from the earned income of any child or relative applying for or receiving aid to families with dependent children, or of any other individual (living in the same home as such relative and child) whose needs are taken into account in making such determination, the first $75 of the total of such earned income for such month (or such lesser amount as the Secretary may prescribe in the case of an individual not engaged in full-time employment or not employed throughout the month); (iii) shall disregard from the earned income of any child, relative, or other individual specified in clause (ii), an amount equal to expenditures for care in such month for a dependent child, or an incapacitated individual living in the same home as the dependent child, receiving aid to families with dependent children and requiring such care for such month, to the extent that such amount (for each such dependent child or incapacitated individual) does not exceed $160 (or such lesser amount as the Secretary may prescribe in the case of an individual not engaged in full-time employment or not employed throughout the month); and (iv) shall disregard from the earned income of any child or relative receiving aid to families with dependent children, or of any other individual (living in the same home as such relative and child) whose needs are taken into account in making such determination, an amount equal to the first $30 of the total of such earned income not already disregarded under the preceding provisions of this paragraph plus one-third of the remainder thereof * * * ; and (B) provide that (with respect to any month) the State agency -- (ii)(I) * * * (II) in the case of the earned income of a person with respect to whom subparagraph (A)(iv) has been applied for four consecutive months, shall not apply the provisions of subparagraph (A)(iv) for so long as he continues to receive aid under the plan and shall not apply such provisions to any month thereafter until the expiration of an additional period of twelve consecutive months during which he is not a recipient of such aid. 45 C.F.R. 233.20(a)(6)(iv) provides: With reference to commissions, wages, or salary, the term "earned income" means the total amount, irrespective of personal expenses, such as income-tax deductions, lunches, and transportation to and from work, and irrespective of expenses of employment which are not personal, such as the cost of tools, materials, special uniforms, or transportation to call on customers. 45 C.F.R. 233.20(a)(3)(ii)(D) provides in relevant part: (I)n determining need and the amount of the assistance payment, after all policies governing the reserves and allowances and disregard or setting aside of income and resources * * * have been uniformly applied: * * * * * (D) Net income, * * * and resources available for current use shall be considered; income and resources are considered available both when actually available and when the applicant or recipient has a legal interest in a liquidated sum and has the legal ability to make such sum available for support and maintenance. QUESTION PRESENTED Whether amounts withheld for taxes on earned income received by beneficiaries of the Aid to Families with Dependent Children (AFDC) Program must be deducted or disregarded from "income" in Section 402(a)(7) of the Social Security Act, 42 U.S.C. (Supp. V) 602(a)(7), in determining eligibility and benefits under AFDC. STATEMENT This case involves the proper computation of benefits payable under Subchapter IV, Part A, of the Social Security Act, Aid to Families with Dependent Children (AFDC), 42 U.S.C. (& Supp. V) 601 et seq. In particular, the case presents the question whether net income (after mandatory deductions for Social Security, local, state and federal income taxes) or gross income is to be utilized by the states in calculating AFDC benefits under Section 402(a)(7) of the Act, 42 U.S.C. (Supp. V) 602(a)(7). 1. The AFDC program, created in 1935 (49 Stat. 620), is a joint federal/state public assistance program. The federal government reimburses the states for a percentage of the funds they expend aiding families with needy children. 42 U.S.C. (& Supp V) 603. In return, the states administer their assistance programs pursuant to a "state plan." 42 U.S.C. (& Supp. V) 602. State plans establish the level of benefits that will be paid to eligible families by setting a "standard of need," which is "the amount deemed necessary by the State to maintain a hypothetical family at a subsistence level." Shea v. Vialpando, 416 U.S. 251, 253 (1974). See 45 C.F.R. 233.20; Rosado v. Wyman, 397 U.S. 397, 409 (1970); King v. Smith, 392 U.S. 309, 318-319 (1968). The amount of the AFDC grant is determined by comparing a family's income, as computed according to Section 402(a)(7) of the Social Security Act, 42 U.S.C. (Supp. V) 602(a)(7), with the state standard of need. If a family's income under Section 402(a)(7) "is less than the predetermined statewide standard of need, the applicant is eligible for participation in the program and the amount of the assistance payments will be based upon that difference." Shea, 416 U.S. at 254. In its earliest formulation, Section 402(a)(7) required state agencies to "take into consideration any * * * income and resources of any child claiming aid to dependent children." Social Security Act Amendments of 1939, ch. 666, Section 401(b), 53 Stat. 1379-1380 (1939). In 1962 this directive was amended so that, in addition to "income and resources," all "expenses reasonably attributable to the earning of any such income" were taken into account in determining need. Public Welfare Amendments of 1962, Pub. L. No. 87-543, Section 106(b), 76 Stat. 188 (1962). This amendment "made mandatory the widespread but then optional practice of deducting employment expenses from total income in determining eligibility for assistance." Shea, 416 U.S. at 260. As of 1962, therefore, AFDC benefits were calculated by comparing the total income and resources of a family, as reduced by the expenses reasonably related to the earning of that income, with a state's standard of need. No other steps were involved. In 1968, numerous important changes were made in the AFDC statute. Social Security Amendments of 1967, Pub. L. No. 90-248, Section 202(b), 81 Stat. 881. Although Section 402(a)(7)'s directive regarding expenses reasonably related to the earning of income was not altered, Congress made that directive subject to the provisions of a new section, Section 402(a)(8), 42 U.S.C. (Supp. V) 602(a)(8). Section 402(a)(8), as originally enacted, created several new deductions (or "disregards") from "earned income" that were intended to encourage AFDC grant recipients to seek employment. One such "work incentive" required state agencies to disregard, with respect to any month, the first $30 of "earned income" plus one-third of the remainder (81 Stat. 881); another required the states to disregard the "earned income" of full-time students (ibid.); a third permitted income to be set aside for the future needs of a dependent child (ibid.). That same year, pursuant to 42 U.S.C. (Supp. V) 1302, the Secretary of Health, Education, and Welfare (the predecessor agency of the Department of Health and Human Services) issued a regulation defining the term "earned income" in Section 402(a)(8). That regulation, which has remained essentially unchanged since 1969, provides that "earned income" is "the total amount (of income), irrespective of personal expenses, such as income tax deductions, lunches, and transportation to and from work, and irrespective of expenses of employment which are not personal, such as the cost of tools, materials, special uniforms, or transportation to call on customers." 45 C.F.R. 233.20(a)(6)(iv). 2. From 1968 to 1981 the AFDC statutory scheme did not change in any respect relevant to this case. In calculating AFDC benefits a state considered total income and resources, then deducted from "earned income" the various disregards of Section 402(a)(8), and finally deducted the expenses reasonably related to the earning of income under Section 402(a)(7). During this period, state, federal and Social Security taxes were regarded by the Secretary and by most states as expenses related to the earning of income within the meaning of Section 402(a)(7). See Shea, 416 U.S. at 254-255; Bell v. Hettleman, 558 F. Supp. 386, 392 n.8 (D. Md. 1983). In 1981, the Omnibus Budget Reconciliation Act (OBRA), Pub. L. No. 97-35, 95 Stat. 357, radically changed the AFDC program. While keeping intact the language in Section 402(a)(7) that instructs states to take into account a family's income and resources, Congress eliminated the requirement that states also consider the expenses reasonably related to the earning of income. 42 U.S.C. (Supp. V) 602(a)(7). At the same time, Congress amended Section 402(a)(8) to create a $75 work expense disregard, to be taken from an individual's "earned income." 42 U.S.C. (Supp. V) 602(a)(8)(A)(ii). Congress also established an additional disregard for child care expenses (42 U.S.C. (Supp. V) 602(a)(8)(A)(iii)) and limited to four consecutive months the previously open-ended monthly disregard of the first $30 of earned income plus one-third of the remainder (42 U.S.C. (Supp. V) 602(a)(8)(A)(iv) and (B)(ii)). In light of the above statutory changes, the Secretary advised state agencies that mandatory payroll deductions were to be considered as work expenses subject to the newly created $75 work expense disregard of Section 402(a)(8). Similarly, because of Congress's deletion of the deduction for expenses related to the earning of income, the term "income" in Section 402(a)(7) was to be construed as gross income. California published regulations implementing these instructions. EAS Section 44-113.21, 44-113.212 to 44-113.213. /1/ It is not disputed that, under the new formula, the average AFDC grant to the approximately 45,000 AFDC families within the State of California will be reduced. 3. Respondents, a class of all past, present and future AFDC recipients in California, brought this suit in the United States District Court for the Northern District of California to challenge the California regulations implementing the Secretary's instructions. /2/ Respondents asserted that, despite the changes wrought by OBRA, Congress intended that net income rather than gross income be considered by the states in calculating the needs of AFDC grant recipients, and that mandatory payroll withholding therefore should be subtracted from gross pay before the $75 work disregard of Section 402(a)(8) is applied. The district court agreed with respondents, holding that Congress did not intend the term "income" in Section 402(a)(7) to include mandatory payroll deductions. Accordingly, the court granted respondents' motion for summary judgment and enjoined the State of California from implementing its new regulations (App., infra, 48a). The court also enjoined the Secretary from terminating the provision of federal matching funds to the State (ibid.). 4. The court of appeals affirmed. The court recognized that no provision of the Social Security Act of 1935, or of the amending Acts of 1939, 1962, 1968, or 1981 defined the word "income" in Section 402(a)(7) (App., infra, 9a). The court also concluded that the literal language of Section 402(a)(7) was of little aid in resolving the question of congressional intent (App., infra, 9a). The court, therefore, examined at some length the legislative history of Title IV of the Social Security Act. Its inquiry, however, focused almost entirely on the intentions of pre-OBRA Congresses (id. at 9a-22a). The court of appeals noted that the legislative history of Title IV evidenced a strong congressional desire to promote employment as an alternative to the AFDC program (App., infra, 14a-19a). The court then reasoned that the Secretary's construction of Section 402(a)(7) would discourage employment, because under that approach some AFDC recipients could increase their disposable income by refusing employment in order to receive full AFDC grants (App., infra, 24a-26a). The court also stated that the Secretary's construction of Section 402(a)(7) was inconsistent with an agency regulation (45 C.F.R. 233.20(a)(3)(ii)(D)) which provides that "net income" shall be utilized in determining need (App., infra, 19a). Relying primarily on its perception of the intent of pre-OBRA Congresses to avoid financial disincentives to employment, the court concluded that mandatory payroll deductions "are not income for purposes of AFDC calculations performed pursuant to 42 U.S.C. Sections 602(a)(7) and 602(a)(8)" (App., infra, 26a). REASONS FOR GRANTING THE PETITION 1. The decision below conflicts with the decision of the Third Circuit in James v. O'Bannon, 715 F.2d 794 (1983), and the decision of the Fourth Circuit in Bell v. Massinga, No. 83-1227 (Nov. 14, 1983). The Third Circuit in James specifically disapproved of the Ninth Circuit's rationale in this case and held that the Secretary was correct in instructing the states to construe the term "income" in Section 402(a)(7) as gross income. The Third Circuit found that Congress had clearly provided for such a result by eliminating the deduction in Section 402(a)(7) for expenses reasonably related to the earning of income and substituting, instead, the $75 work expenses disregard of Section 402(a)(8). 715 F.2d at 801-802. The Fourth Circuit in Massinga agreed with the Third Circuit, observing that "(w) ecan add nothing new to the discussion. Nor can we resolve the conflict between the two circuits." Slip op. 6. This sharp conflict in the circuits, as well as in the district courts, /3/ has produced a significant disparity in the treatment of AFDC beneficiaries, depending solely upon whether the AFDC grant recipient resides in one jurisdiction rather than another. Because the question presented by this case affects the amount of benefits many AFDC recipients are entitled to receive, and in some cases determines entitlement itself, it is of crucial importance to the millions of Americans who are currently receiving, or believe themselves eligible to receive, AFDC benefits. The decision below, moreover, increases significantly the cost of the AFDC program. /4/ This Court should resolve the disagreement over the interpretation of an important federal statute. 2. Review also is required because the decision of the court of appeals is incorrect. Section 402(a)(7) requires that "any * * * income and resources" of an AFDC beneficiary be considered in determining need, "except as * * * otherwise provided in (Section 402(a)(8))" (42 U.S.C. (Supp. V) 602(a)(7)). Section 402(a)(8), by its express terms, applies to "earned income" (42 U.S.C. (Supp. V.) 602(a)(8)), which is an obvious subset of the more inclusive term "income" utilized by Congress in Section 402(a)(7). "Earned income," moreover, has been consistently construed by the Secretary as "the total amount (of wages or salary), irrespective of personal expenses, such as income-tax deductions" (45 C.F.R. 233.20(a)(6)(iv)). Thus, in calculating the amount of an AFDC grant, the Social Security Act plainly requires the states to consider, first, the gross wages or "earned income" of an AFDC beneficiary, as well as any other income available to the applicant. The states are then required to consider the various "disregards" authorized by Congress in Section 402(a)(8). As modified by OBRA in 1981, that Section permits the states to disregard up to $160 in child care expenses as well as a flat $75 deduction "in lieu of itemized work expenses" (S. Rep. 97-139, 97th Cong., 1st Sess. 435 (1981)). 42 U.S.C. (Supp. V) 602(a)(8)(A)(ii) and (iii). Prior to OBRA, the Secretary and the states generally treated mandatory payroll deductions for income and Social Security taxes as itemized work expenses. See Shea, 416 U.S. at 254-255; Bell v. Hettleman, 558 F. Supp. at 392 n.8. In light of the above statutory scheme, the proper outcome of this litigation is apparent. The AFDC benefit calculation begins with gross -- not net -- income, and the payroll deductions disputed by respondents are subsumed within the Section 402(a)(8) "work expenses" disregard. The lower courts reached the contrary result by ignoring the plain legislative intent behind OBRA, by contorting Congress's and the Secretary's past construction of the term "income" in Section 402(a)(7), and by failing to give Section 402(a)(8) its proper scope. a. The decision below fails to give effect to the significant changes in the AFDC program enacted by Congress in 1981. The OBRA amendments preserved the requirement that the states take into account the "income and resources" of a family in determining need, but removed from Section 402(a)(7) any requirement that they account for "expenses reasonably attributable to the earning of any such income" in making that determination. Instead, Congress created the $75 work expense disregard of Section 402(a)(8), which is to be deducted from "earned income" each month. 42 U.S.C. (Supp. V) 602(a)(8)(A)(ii). This disregard was designed to apply "in lieu of itemized work expenses" (S. Rep. 97-139, supra, at 435), and hence was clearly intended to supplant all previous deductions for expenses related to the earning of income -- including income taxes. The court of appeals failed to acknowledge that the OBRA amendments worked this significant change in the manner in which AFDC benefits are to be calculated. Instead, the court focused on the policy objectives of past Congresses and construed Section 402(a)(7) so as to avoid penalizing employed AFDC recipients. The legislative history of OBRA indicates, however, that the 97th Congress was well aware that it was substantially modifying prior financial incentives to employment. In discussing the budgetary impact of the 1981 amendments, the Senate Report states (S. Rep. 97-139, supra, at 552 (IV Budgetary Impact of Finance Committee Amendments)): These proposals (standardized work expense disregard, 4 month limit to $30 plus one-third, and others) would, however, increase the work disincentives found in the current AFDC program. Currently, AFDC families, on the average, are able to retain about 50 percent of their earned income. Under the proposed changes, AFDC families would be able to retain only about 20 percent of their earned income. There was also ample testimony before Congress emphasizing the view that substitution of the flat $75 disregard in Section 402(a)(8) for the open-end deduction in Section 402(a)(7) was unreasonable. See, e.g., Spending Reduction Proposals: Hearings Before the Senate Comm. on Finance, 97th Cong., 1st Sess. Pt. 1, at 227 (1981) (statement of Marian Wright Edelman); Administration's Proposed Savings in Unemployment Compensation, Public Assistance, and Social Services Programs: Hearings Before the Subcomm. on Public Assistance and Unemployment Compensation of the House Comm. on Ways and Means, 97th Cong., 1st Sess. 88-89 (1981) (statement of Christine Pratt-Marston). Therefore, in amending Title IV of the Social Security Act in 1981, Congress clearly recognized that it was creating the financial "disincentives" found unacceptable by the court of appeals. It nevertheless enacted OBRA. The significance of the above legislative history apparently escaped the court below, but not the Third Circuit. That court observed that, while "Congress continues to embrace the fundamental goal of encouraging self-sufficiency of AFDC recipients, it has largely abandoned the financial incentives approach which the 87th Congress had embraced." James, 715 F.2d at 809. /5/ Although the Ninth Circuit noted that there are "two Congresses and two sets of intentions at issue here" (App., infra, 23a), it failed to give any effect to the most recent -- and controlling -- expression of the legislative will. b. The court of appeals also erred by holding that Congress and the Secretary have always construed the term "income" in Section 402(a)(7) to mean net rather than gross income. At least since the 1968 amendments to the Social Security Act, the term "income" in Section 402(a)(7) has meant gross income -- the amount, in other words, from which all deductions provided by Congress are to be made. Indeed, this Court, in construing the previous Section 402(a)(7) adjustment for expenses reasonably related to the earning of income, recognized that the term "income" in that section means gross income. As the Court noted in Shea, 416 U.S. at 254: "(A)ny expenses reasonably attributable to the earning of income are deducted from gross income." /6/ c. In any event, as the Third Circuit held in James, 715 F.2d at 805-808, the pivotal provision here is not Section 402(a)(7) and its language concerning "income" and "resources," but Section 402(a)(8). Section 402(a)(7) is applicable "except as may be otherwise provided in (Section 402(a)(8))." 42 U.S.C. (Supp. V) 602(a)(7). Section 402(a)(8) deals with "earned income" and contains a flat $75 work expense disregard from such income. 42 U.S.C. (Supp. V) 602(a)(8). And, since 1969, when the "earned income" language first appeared in the statute, the Secretary has defined this term as "the total amount, irrespective of personal expenses such as income-tax deductions, lunches, and transportation to and from work, and irrespective of expenses of employment which are not personal, such as the cost of tools, materials, special uniforms, or transportation to call on customers." 45 C.F.R. 233.20(a)(6)(iv). Thus, when Sections 402(a)(7) and 402(a)(8) are read together, the proper construction of the term "income" in Section 402(a)(7) is plain. Because Section 402(a)(7) is subject to the provisions of Section 402(a)(8), and because that latter section relies upon gross income, the AFDC benefit calculation begins with gross, not net, income. Moreover, contrary to the court of appeals' conclusion, the income tax deduction sought by respondents is subsumed within the flat "work expense" disregard provided by Congress in Section 402(a)(8). As the Third Circuit succinctly stated in James, 715 F.2d at 804: "(S) ection (4)02(a)(8), which details the disregards to be subtracted from gross monthly earnings, must be construed and interpreted in light of the regulations that preceded the OBRA amendments and that consistently, since at least 1969, to the present have treated income tax withholdings as a work-related expense." /7/ CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. REX E. LEE Solicitor General RICHARD K. WILLARD Acting Assistant Attorney General KENNETH S. GELLER Deputy Solicitor General RICHARD G. WILKINS Assistant to the Solicitor General WILLIAM KANTER RICHARD A. OLDERMAN Attorneys JANUARY 1984 /1/ The California regulations provide in relevant part: Section 44-113.21 -- Computation of Net Nonexempt Earned Income for Aid to Families with Dependent Children .211 Determine the total amount of commissions, wages or salary earned as an employee during or applicable to the month (i.e., total income irrespective of expenses, voluntary or involuntary deductions). * * * * * .212 Determine the total profit from self-employment by a recipient whose earnings are not exempted under Section 44-111.22 by offsetting the business expenses against the gross income from self-employment. a. Personal expenses such as income tax payments, lunches, entertainment and transportation to and from work are not classified as business expenses and shall not be deducted from gross income in determining total profit earned from self-employment. * * * * * .213 For each recipient, combine any total earnings determined in .211 above with any total profit determined in .212. /2/ The Secretary was brought into the action by the State of California as a third-party defendant. /3/ See, e.g., RAM by Benjamin v. Blum, 564 F. Supp. 634 (S.D.N.Y. 1983); Dickenson v. Petit, 569 F. Supp. 636 (D. Me. 1983), appeal pending, No. 83-1676 (1st Cir.); Williamson v. Gibbs, 562 F. Supp. 687 (W.D. Wash. 1983), appeal pending, No. 83-3725 (9th Cir.); Nishimoto v. Sunn, 561 F. Supp. 692 (D. Hawaii 1983), appeal pending, No. 83-2214 (9th Cir.) /4/ HHS has estimated that the lower court's construction of Section 402(a)(7), if applied on a nationwide basis, would increase federal AFDC expenditures by $57 million annually. /5/ The Third Circuit noted in James that Congress enacted various work programs as part of OBRA to encourage acquisition and retention of employment. 715 F.2d at 809, citing S. Rep. 97-139, supra, at 502-503. /6/ For a court to rule -- as did the court below -- that the term "income" in Section 402(a)(7) has always meant net income, it would have to demonstrate that the deductions considered in Shea never encompassed mandatory payroll deductions. Yet, it is plain that mandatory payroll deductions were traditionally regarded by the Secretary and the states as falling within the definition of expenses attributable to the earning of income. See, e.g., Shea, 416 U.S. at 254; James, 715 F.2d at 807; Bell v. Hettleman, 558 F. Supp. at 392 n. 8; Connecticut State Department of Public Welfare v. Department of HEW, 448 F.2d 209, 216 (2d Cir. 1971). /7/ The court below found that the above construction of Section 402(a)(7) "is in flat contradiction with the regulatory interpretation of (that section) embodied in 45 C.F.R. Section 233.20(a)(3)(ii)(D)" (App., infra, 19a). That regulation provides that, in determining need, net income and "resources available for current use shall be considered." 45 C.F.R. 233.20(a)(3)(ii)(D). Despite the apparent inconsistency alleged by the court of appeals, the regulation, when read as a whole, does not conflict with the Secretary's position in this case. The regulation relied upon by the court below comes into play only "after all policies governing the reserves and allowances and disregard or setting aside of income and resources referred to in this section have been uniformly applied." Ibid. Moreover, 45 C.F.R. 233.20(a)(7)(i), which sets forth the method to be used by a state when it disregards earned income, provides that "(t)he applicable amounts of earned income to be disregarded will be deducted from the gross amount of 'earned income,' and all work expenses, personal and non-personal, will then be deducted. Only the net amount remaining will be applied in determining need * * * ." Thus, 45 C.F.R. 233.20(a)(3)(ii)(D) merely provides that, after all allowances provided by Congress have been made, the net income remaining is to be evaluated to determine need. The regulation, therefore, is entirely consistent with the Secretary's current position. APPENDIX APPENDIX MATERIAL IS NOT AVAILABLE ON JURIS.