GAB Decision 692
September 16, 1985
Vermont Department of Social Welfare;
Ballard, Judith A.; Teitz, Alexander G. Ford, Cecilia Sparks
Docket No. 83-210
DECISION
The Vermont Department of Social Welfare (State) appealed determinations
by the Social Security Administration (SSA) disallowing a total of
$156,884 claimed as Aid to Families with Dependent Children (AFDC) under
title IV-A of the Social Security Act (Act). /1/ The State had claimed
FFP in payments made from January 1975 through June 1982 under its
General Assistance (GA) program to individuals whom the State
subsequently determined were eligible for AFDC. The Agency found that
the State failed to comply with section 5214 of Part IV of the Handbook
of Public Assistance Administration (HB-IV-5214), which requires a prior
or simultaneous authorization of award, i.e., that there be a
determination at the time of payment that the individual to whom the
payments are made meets the eligibility requirements for AFDC.
Proceedings in this case were suspended pending the Board's decision in
an earlier appeal by another state involving the applicability of
HB-IV-5214. Following that decision (New York Department of Social
Services, Decision No. 585, November 16, 1984), in which the Board(2)
held that HB-IV-5214 was a binding federal policy but did not fully
adopt the Agency's interpretation of that provision, the Agency asserted
that other requirements for federal financial participation (FFP) in
AFDC payments were also not met. As discussed below, we find that
HB-IV-5214 was not a bar to payment of the State's claims. We further
find that other requirements for FFP cited by the Agency were satisfied.
However, it is unclear from the record whether the State treated, or was
required to treat, the GA payment in each case as income which must be
deducted from the amount of AFDC to which the individual would otherwise
have been entitled and in which the State may claim FFP. If that was
so, then FFP is not available in amounts greater than the amount
actually paid after the individual was determined eligible for AFDC.
Accordingly, as discussed in the conclusion below, we have established a
procedure to resolve this issue expeditiously.
This decision is based on the written record and includes the parties'
responses to requests by the Board for information or briefing.
Factual Background
In the individual cases in which the payments in question here were
made, separate applications for both ANFC, the State's name for the AFDC
program, and the State's GA program had been completed. The State
initially issued payments under the GA program in the form of checks
payable to the recipients. /2/ At the time the GA payments were made,
information was not available to conclusively demonstrate AFDC
eligibility. During the month in which the applications for GA and AFDC
had been filed, the State determined that the applicants were eligible
for AFDC; the State then issued AFDC payments for that month
retroactive(3) to the date of application for assistance. The amount
then paid to each recipient was reduced by the amount of the GA payment
already issued. The Notice of ANFC Eligibility which the State
submitted as the prototype for similar notices issued to each of the
individuals to whom the GA payments in question here were made, states
as follows:
You have been found eligible for assistance under the Aid to Needy
Families with Children (ANFC) program effective 9/4/81. You will
receive $455 per month. The enclosed check dated 9/17/81 in the amount
of $361 plus the $49 worth of General Assistance which you have already
received, covers your assistance for the period 9/4/81 through 9/30/81.
(State's brief dated December 15, 1983, Exhibit D) The State claimed FFP
in the total amount it paid during that month, making in most cases a
retroactive claim for FFP in the GA payment. The Agency disallowed that
portion of the State's claims which represented the GA payments based on
the requirement in HB-IV-5214 for a prior or simultaneous authorization
of award.
Application of HB-IV-5214
It seems clear in the instant case that the GA payments were not
preceded by AFDC authorizations as described in Decision No. 585, since
the State admitted that, at the time those payments were made, all
information needed to establish AFDC eligibility was not available.
Nevertheless, our inquiry does not end here since there is no question
that AFDC payments were properly authorized during the month of
application. Decision No. 585 held that payments made prior as well as
subsequent to an AFDC authorization can be properly claimed as AFDC
notwithstanding HB-IV-5214 as long as the time period covered by the
payments could properly be covered by an AFDC payment under 45 CFR
234.120 (1973). (Decision No. 585, p. 22) Accordingly, HB-IV-5214 is
not a bar to payment of the State's claims.
Moreover, the GA payments were for time periods which could have been
covered by an AFDC payment under section 234.120. That regulation
provides:
Federal financial participation is available in assistance payments
made under a State plan under title . . . IV-A . . . of the Social
Security Act to any family or individual for periods beginning with
the(4) month in which they meet all eligibility conditions under the
plan and in which an application has been received by the agency.
In each case the individual applied and was determined eligible for AFDC
in the same month for which the State now seeks FFP in the GA payment.
Scope of AFDC Authorization: The GA Payments As Income
The issue which remains here is whether the amount of the GA payments
was covered by an AFDC authorization, even if the GA payments were made
before that authorization. Under section 234.120 and HB-IV-5214, the
State could have authorized a payment for the month involved here based
on the full amount of the regular monthly AFDC payment to which the
individual was entitled ($455 in the sample Notice of ANFC Eligibility).
The key question in our view is why the State reduced the amount paid to
the individual by the amount of the GA payment. If the State was
treating the GA payment as income, then the only AFDC payment authorized
for the month of application is the regular monthly payment minus the GA
amount. If, on the other hand, the State authorized payment in the
application month of the full amount of the regular monthly payment, but
reduced the disbursement to the individual in order to recoup the GA
payment (perhaps transferring the GA amount from the AFDC fund to the GA
fund), disbursement of the full amount was made pursuant to an AFDC
authorization and is subject to FFP.
The Agency asserted for the first time in its most recent submission
that the GA payments constituted income which reduced the amount of
assistance available as AFDC. (Agency's response to Order to Develop
Record, dated July 12, 1985, p. 3) The regulations at 45 CFR 233.20
(1975) provide that an individual's income shall be considered for
purposes of determining need and the amount of the assistance payment.
(See section 233.20(a)(1)(i) and (a)(3)(ii)(B)) /3/ Although the Agency
provided no support(5) for its position that the GA payments were income
and the State did not address this issue, it appears likely that the
Agency is correct. The Agency apparently concluded that the State
reduced the amount of an AFDC payment by the amount of the GA payment
already received because the GA payment was regarded as income. The
other possibility, noted above, is that the individual was no longer
entitled to the GA payment once he was found eligible for AFDC and that
the reduction was taken in lieu of recouping the GA payment and
reissuing it as AFDC. However, if the latter was the case, then it
stands to reason that the State would have thereafter included the
amount of the GA payment in its claim for FFP under title IV-A.
Instead, except with respect to some more recent claims, the State made
separate claims for FFP in the amount of the GA payments some time after
its submission of claims for FFP in the amount actually paid after the
individual had been found eligible for AFDC. Thus, the State's actions
are inconsistent with a reading of the Notice of ANFC Eligibility as
recouping the amount of the GA payment rather than as deducting it as
income.
It is also possible that the GA payments were required to be treated as
income under 45 CFR 233.20(a)(3)(vii), which provides that "assistance
from other agencies and organizations" must be deducted in determining
the amount of assistance to be paid as AFDC if "duplication" exists
"between such other assistance and that provided by the public
assistance agency." (The subsection implies that the state may choose
whether to treat other assistance as income if no duplication exists.)
Although Vermont law provides that the Department of Social Welfare is
responsible for the administration of both the GA program and the ANFC
program (33 Vermont Statutes Annotated, sections 2702 and 3004), it also
provides that "town service officers" under contract with the State
may
grant funds for emergency general assistance. (33 Vermont Statutes
Annotated, section 3002) Thus, it is arguable that the GA payments
constituted "assistance from other agencies and organizations" which
must be deducted as income, although we would not reach this conclusion
without further development of the record. (It is clear that the GA
payments duplicated the AFDC payments within the meaning of section
233.20(a)(3)(vii), or else there would be no basis for the State's
effort here to reclassify the former as the latter.)
Furthermore, Vermont law regarding the ANFC program states that "(t)he
amount of aid to which an eligible person is entitled shall be
determined with due regard to the income, resources and maintenance
available to him. . . ." The term(6) "resources" is defined as
"income
and property available from whatever source." (Vermont Statutes
Annotated, sections 2703(a) and 2701(6)) It is possible that the State
interpreted this as requiring the treatment of the GA payments as
income, although this is not evident from the record.
Thus, the evidence before us regarding whether the State treated, or was
required to treat, the GA payments as income is not conclusive. In view
of the fact that this represents a new basis for the Agency's
disallowance raised in the last of several submissions by the Agency,
and that the State did not have a formal opportunity to respond, we
think it is appropriate for the Agency to first consider this question
in accordance with the terms stated at the conclusion of this decision.
Other Requirements For FFP
The Agency also argued that FFP was not available since two conditions
for AFDC eligibility were not met by the individuals to whom the GA
payments were made.
Specifically, the Agency argued that the individuals could not have
complied with the requirement at section 402(1)(19)(A) of the Act for
registration for the WIN program since WIN is available only to
individuals receiving assistance under the AFDC program. (Agency's
response to Order to Develop the Record, dated July 12, 1985, p. 2) The
Agency also argued that there had been no allegation by the State that
the individuals to whom the GA payments were made had assigned to the
State any rights to child support as required by section 402(a)(26) of
the Act. (Id.) However, these eligibility requirements were clearly met
by the individuals in question during the month for which FFP in the GA
payments is sought since the determination that they were eligible for
AFDC, made in the same month, was necessarily based on a finding that
these requirements had been met.
The Agency also argued that the GA payments were not properly
reclassified as AFDC payments because they were not money payments as
specified in section 406(b) of the Act and 45 CFR 234.11 (1971). The
Agency based this assertion on the fact that the State had indicated
that the GA payments were designated for food, although the State had
not stated what form the designation took. (Agency's response to Order
to Develop the Record, dated July 12, 1985, p. 2) The(7) statute and
regulations provide for FFP under title IV-A only in "money payments,"
defined in section 234.11(a) as:
payments in cash, checks, or warrants immediately redeemable at par,
made to the recipient or his legal representative with no restrictions
imposed by the agency on the use of funds by the individual.
(Emphasis added) However, in response to a subsequent inquiry by the
Board regarding the form which the designation took, the State indicated
that the designation was made by the State only for purposes of
determining the amount of the payment and that there was no notice to
the recipient indicating that use of the funds was restricted. (State's
letter to Board and Agency dated August 12, 1985) Thus, the GA payments
were money payments within the meaning of section 234.11(a).
The Agency also asserted that GA payments for shelter were made to
vendors without compliance with the special conditions imposed by 45 CFR
234.60 (1975) and thus were improperly claimed as AFDC payments.
(Agency's response to Order to Develop the Record, dated July 12, 1985,
pp. 2, 3) However, as indicated in n. 2 of this decision, there is no
evidence that any of the payments in question here were vendor payments
for shelter.
Conclusion
For the foregoing reasons, we conclude that FFP is not available under
title IV-A in the amount of the GA payments unless the State shows that
the GA payments did not constitute income which was deducted from the
amount of AFDC to which the individuals in question would otherwise have
been entitled. The State has 30 days for the date of this decision in
which to furnish the Agency with relevant information and documentation.
If the Agency determines, based on such information and documentation,
that the GA payments did not constitute income, the Agency's
disallowances are reversed. If the State fails to provide any such
information and documentation, the Agency's disallowances are sustained.
If the Agency determines, after review of any information and
documentation submitted by the State, that the GA payments constituted
income, the State (if it continues to contest the disallowances) may
return to the(8) Board for review of this determination only, but must
do so within thirty days after receiving the Agency's determination.
/1/ The amount in dispute consists of $145,130 disallowed by the
Commissioner, SSA, on August 30, 1983 and $11,754 disallowed by the
Acting Commissioner, SSA, on December 30, 1983. The State indicated in
its brief dated December 15, 1983 that it was appealing the disallowance
of both amounts, although at that time the Acting Commissioner had not
yet ruled on the State's request for reconsideration of a determination
by the Regional Commissioner, SSA, disallowing the $11,754. (The Acting
Commissioner's decision affirming the Regional Commissioner's $11,754
disallowance is dated December 30, 1983.) The Agency agreed that the
$11,754 was properly included in the amount in dispute. (Agency's
response to Order to Develop Record, dated July 12, 1985, p. 1)
/2/ The disallowance determination of the Commissioner, SSA, stated that
the GA payments were made for shelter and food or for food only. In an
affidavit submitted by the State, however, the affiant, Director of
Income Maintenance for the Vermont Department of Social Welfare, stated
that "(t)o the best of my knowledge all of the cases involved in this
appeal are only cases in which FFP is being requested for payments that
were made under the General Assistance program for food." (Affidavit of
Vasili Bellini, dated July 8, 1985, p. 3) The Agency did not provide any
evidence to contradict this statement. /3/ Although this issue
was not raised in Decision No. 585, it is clear that New York did not
treat its Home Relief payments as income for purposes of determining the
amount of the AFDC payment since State policy required social service
districts which administered both that program and AFDC to "use the
Federal program if the applicant is eligible. . . ." (Decision No. 585,
p. 22, n. 13) This made eligibility for Home Relief payments in effect
contingent on ineligibility for AFDC. Thus, to the extent that New York
ever reduced the amount of the AFDC payment by the amount of a prior
Home Relief payment, the reduction would recoup the amount of the Home
Relief payment in accordance with this requirement.
JANUARY 14, 1986