DAB Decision 86
February 28, 1980 California Department of Social Services; Docket No.
78-161-CA-SSI; Decision No. 86 Mason, Malcolm S.
Charlton G. Holland, Deputy Attorney General, For the State of
California. Mamie McDowelll, Chief, Supplemental Security Income Branch,
and Donald F. Garrett, Attorney, HEW Office of the General Counsel,
Social Security Division, for the Social Security Administration.
DECISION
This case involves a dispute between the State of California and the
Federal government with respect to liability for certain payments made
pursuant to Federal/State agreements providing for Federal
administration of State supplementary payments under Title XVI of the
Social Security Act. The exact amount in dispute depends on the final
establishment of certain figures necessary for the computation formula
but has been estimated by the parties to be approximately $50 million.
The issue in dispute is whether the value of support and maintenance in
kind in the household of another is income for purposes of a statutory
formula, known as the "hold harmless" provision, enacted by Congress
as
a limitation on fiscal liability of States choosing Federal
administration of their supplementary payments. While this issue is
basically a question of statutory interpretation, in which deference
would normally be accorded to the administering agency's interpretation,
there are countervailing considerations in favor of the State in this
appeal which preclude mechanical application of the normal rule. The
State here is not in the position of being a recipient of Federal funds
but is a party to an agreement pertaining primarily to State funds.
Congress, in recognition of the special character of that relationship,
sought through the hold harmless formula to provide some protection to
the States.
Having carefully weighed these considerations, I have nevertheless
concluded, based on the record before me, that the Social Security
Administration's interpretation best reflects Congressional intent with
respect to both the statutory treatment of support and maintenance and
the hold harmless formula. While the Agency appears not to have been
completely consistence in employing various program terms, in substance
it has generally been consistent with Congressional purpose and with the
intent underlying its agreement with the State. There may be certain
instances, discussed below, in which the State paid higher benefits due
to SSA's application of its interpretation, though it is not clear from
the record whether this was not a result the State intended. Any
adjustment for these instances, however, can be sought, by the State as
part of
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its continuing discussions with SSA and, if the issue is not there
resolved a further appeal will then be available.
Background
The Social Security Amendments of 1972, P.L. 92-603, October 30, 1972,
amended Title XVI of the Social Security Act to establish a national
program to provide supplemental security income for the needy aged,
blind, and disabled. The new program (SSI), a system of
Federally-administered cash payments to individuals eligible under
uniform criteria, was scheduled to begin January 1, 1974. SSI benefits
were to be paid generally at statutory levels set forth at Section 1611,
reduced for income not excluded by Section 1612(b). (Citations are to
Title XVI of the Social Security Act, codified at 42 U.S.C. 1381 et seq.
(1974), unless otherwise noted.) For an individual living in another
person's household and receiving support and maintenance in kind from
such person, the SSI benefit specified in Section 1611 was to be reduced
by one-third. Section 1612(a)(2)(A).
Under the SSI program, as originally enacted, a State was permitted, but
not required, to supplement the basic Federal benefit. Section 1616. The
Secretary of HEW was authorized to enter into agreements with States for
Federal administration of these optional State supplementary payments.
Subsequent legislation provided that, as a condition to receiving Title
XIX (Medicaid) funds, a State must pay supplementary benefits, known as
mandatory minimum supplements, to all who had been recipients under the
State programs replaced by SSI to the extent necessary to insure no loss
of income. These payments could also be made by the State through
Federal administration. P.L. 93-66, Section 212, December 31, 1973. (For
a discussion of the background of this provision, see Martin, Public
Assurance of an Adequate Minimum Income in Old Age: The Erratic
Partnership between Social Insurance and Public Assistance, 64 CORRNELL
L. REV. 400, 437 (1979).) As an incentive to States to enter into
agreements for Federal administration of State supplementation, Congress
provided that, for States which chose Federal administration, there
would be a limitation on the State's fiscal liability for supplementary
payments. Section 401, P.L. 92-603; Section 1616 note. This provision
is popularly known as "hold harmless."
On December 5, 1973, at a special session, the California Legislature
passed, and the Acting Governor signed, legislation authorizing State
welfare officials to enter into an agreement for Federal administration
of California supplementary payments. California Welfare and
Institutions Code 512000 et seq. On the same day, California officials
signed a Federal administration agreement based on the 1973 Master
Contract (or Model Agreement), the terms of which had been negotiated
between Federal officials and representatives of the various States.
(For a
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discussion of the negotiation process, sea Martin, Procedures Used in
Forming and Carrying Out Federal-States Agreements under the
Supplemental Security Income Program, Report to the Administrative
Conference of the United States (1970).) Provisions specific to the
state of California were contained in the appendices to the agreement.
This agreement was in effect from January 1, 1974 to June 30, 1974.
Subsequent agreements signed June 12, 1974, and November 1, 1976, were
based on the 1974 and 1976 revisions of the Master Contract
respectively.
Under the disputes clauses of the 1573 and 1974 agreements, (California
appealed on June 18, 1976, a determination by the regional office of SSA
that the amount of the one-third reduction in the situation of an
individual living in the household of another would be considered
unearned income for purposes of calculating the amount to which
California would be entitled under the "hold hopeless" provision.
An
initial determination upholding the regional office's position was
issued on December 6, 1976, by the Associate Commissioner for Program
Operations, and the State requested reconsideration of this
determination on January 5, 1977. The Acting Commissioner of Social
Security affirmed the initial determination and notified the State on
July 7, 1978 that it could request reconsideration by the Secretary of
HEW within 90 days.
By letter dated October 6, 1978, the State appealed the Acting
Commissioner's decision to the Secretary, requesting reconsideration of
the matter by the "Grant Appeals Board" through, if possible, an
expedited process with a hearing before the board Chairman. The
Secretary, by letter dated December 21, 1978, referred the dispute "to
the Chairman of the Departmental Grant Appeals Board, Malcolm S. Mason,
with the authority to rake final disposition of the issues in a manner
consistent with the terms of the agreements and the principles of 45 CFR
Part 16, with such modifications of detail as may be necessary." On
December 22, 1978, the Executive Secretary of the board wrote to the
State, with a copy to the Commissioner of the Social Security
Administration, informing them of the referral and requesting certain
documents. Some, but not all of these documents were submitted by the
State after some delay.
On July 18, 1979, I issued a Notice of Conference, containing a 17-page
analysis of the issues as I tentatively understood them, inviting both
parties to identify other issues and to correct if necessary my
understanding of the facts. Pursuant to this Notice, the parties
submitted further information and documentation. In addition, both
partied file, reconference briefs which were helpful, and both parties
participated in an informal conference, held February 14, 1980, in which
their positions were fully and clearly stated by counsel and assisting
representatives. A transcript has been made and furnished to the
parties, but
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the parties were advised that, on the strength of their written
presentations and very clear oral presentations, I would proceed with
consideration of the matter.
The "Hold Harmless" Calculation
The "hold harmless" provision assures that
The amount payable to the Secretary by a State for any fiscal year
pursuant to its agreement or agreements under section 1616 of the
Social Security Act shall not exceed the non-Federal share of
expenditures as aid or assistance for quarters in the calendar
year 1972 under the plans of the State approved under title I, X,
XIV, and XVI of the Social Security Act....
Section 401(a)(1), P.L. 92-603; Section 1616 note. (Subsequent
amendments to this section are not relevant to this dispute.)
This provision applies only with respect to
"That portion of the supplementary payments... in any fiscal year
which does not exceed in the case of any individual the difference
between
(A) the adjusted payment level under the appropriate approved
plan of such State as in effect for January 1972..., and (B) the
benefits under title XVI of the Social Security Act... plus
income not excluded under section 1612(b) of such act in
determining such benefits, paid to such individual in such fiscal
year.
Section 401(a)(2)
For purposes of this provision, the term "adjusted payment level"
(APL)
is defined to mean, in general, the amount of the money payment which an
individual with no other income would have received under the
appropriate State plan in effect in 1972. Section 401(b)(1). This
amount could be adjusted at State option in a manner not relevant here.
Definitions in the initial program regulation dealing with State
supplementation, Subpart T of Part 416 of 20 CFR, 40 rn 7640, Feb. 21,
1975, expand upon the definitions used in the "hold harmless" provision.
The portions of State payments which do not count toward "hold harmless"
are called "unprotected payments," Sec. 416.2060(d), and "income
not
excluded under 1612(b)" is referred to as "countable income,"
Sec.
416.2025(b). As will be explained below, the total "hold harmless"
calculation must also
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take into account a system of credits debits established by regulation.
With this qualification, the calculation of the protected portion of a
State Supplementary payment (SSP) can be expressed as follows:
Protected payment = APL - (SSI benefit actually paid + countable
income)
In general, when the sum of the protected payments made by a State in
any fiscal year reaches the State's "baseline" (the non-Federal share
of
expenditures as aid or assistance under approved plans in 1972), the
State has reached "hold harmless" status and further protected payments
will be made from Federal funds. Any increase in the amount of
countable income in an individual case would decrease the amount of the
protected payment, thus decreasing the amount added on to help a State
reach its baseline or, if the baseline had been reached, decrease the
amount paid (with Federal rather than State funds.
For example, if the adjusted payment level (AFL) applicable to an
individual recipient is $175, if the Federal SSI benefit paid to him is
$55, and if he has countable income of $45, the protected payment, using
the above equation, would be: $175 - ($55 $45) = $75. Assuming then
that the SSP paid to that recipient was $100, $75 could count toward
reaching the State's baseline or, if the baseline had been reached,
would be paid with Federal funds. The remaining $25 portion of the SSP
would be paid generally with State rather than Federal funds whether the
baseline had been reached or not, i.e. it could be unprotected.
The regulatory exception, mentioned above, to treatment of the $25
excess as unprotected results from application of a system of credits
and debits in States where the payment levels for different categories
of recipients vary so that zone are above an established APT and some
are below. 20 CFR 416. 20680, 40 FR 7644. For instance, the example
given above would result in a $25 debit under the regulatory scheme. If
in another situation, with the same APL, Federal SSI benefit, and
countable income, the SSP were only $50, the total $50 would be
protected anti, in addition, $25 would be considered a credit to the
state, since the State could have paid $25 more without its total SSP
exceeding the difference between the AL and the benefit plus countable
income. Under the regulatory scheme, debits are applied against
credits. If total credits within a category of supplementation exceed
total debits within that category in a fiscal year, the excess will
count toward hold harmless. If total debits exceed total credits, the
amount of the excess will be borne entirely at State expense.
The effect on this calculation of increasing the amount of countable
income can be seen by using the original example (where the SSP was
$100) but increasing countable income from $45 to $95. The protected
payment portion would be reduced to $25, i.e. $175 - ($55 + $95). In
the modified example (where the SSP only $50), only $25 of the SSP would
be protected and the State would be debited $25 instead of being
credited $25.
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Definition of "Income"
The term "income" is not defined separately for purposes of the "hold
harmless" provision. The dispute in this case arises because Section
1612(a) of the Act, captioned "Hearing of Income," provides that,
"for
purpose of this title," income means both earned income and unearned
income, including
Support and maintenance furnished in cash or kind; except that (i)
in the case of any individual (and his eligible spouse, if any)
living in another person's household and receiving support and
maintenance in kind from such person, the dollar amounts otherwise
applicable to such individual (and spouse) as specified in
subsections (a) and (b) of section 1611 shall be reduced by 33-1/3
percent in lieu of including such support and maintenance in the
unearned income of such individual (and spouse) as otherwise
required by this subparagraph... 1612(a)(2)(A).
Both parties rely on placement of the one-third reduction provision in
the statute and on the language of the provision in support of their
interpretations. While SSA argues that Congress would have placed the
one-third reduction provision in Section 1612(b), Exclusions From
Income, if it intended to exclude support and maintenance in the
household of another from income, the State appears to be correct that
such explicit exclusion would no be necessary if Congress has clearly
defined the term "income" to not include such support and maintenance
in
the first instance.
The State is not correct, however, that the definition of income is
plain and unambiguous on its face. It is true that Section 1612(a) does
give the meaning of income for "purposes of this title." Also, the
language of the subparagraph, 1612(a)(2)(A), does clearly provide that
for purposes of determining the amount of the benefit to be paid, in
lieu of including the value of such support and maintenance in income so
as to reduce the benefit, the one-third reduction will apply. The
language does not, however, clearly exempt such support and maintenance
from income all purposes.
Section 1612(a)(2)(A) begins with a statement that "unearned income
includes -- Support and maintenance furnished in cash or in kind" and
this statement is followed by a semicolon. The semicolon separates a
general proposition from a particular exception for "the case-of any
individual... living in another person's household and receiving support
and maintenance in kind..." The dollar amounts otherwise applicable for
determining the benefit to be paid to such an individual are to be
reduced by one-third "in lieu of including such support and support
maintenance
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maintenance in tie unearned income of such individual ... as otherwise
required by this subparagraph... ." There are at least two ways of
reading this,either that I) the subparagraph requires that support and
maintenance in kind in the household of another, in the absence of the
one-third reduction provision, would be included in the definition of
income but because of this provision is not so included (the State's
contention); or 2) the subparagraph requires that such support and
maintenance be included as income otherwise than for purposes of
reducing the benefit to be paid in the way income generally reduces the
benefit the one-third reduction being a substitute for inclusion for
this purpose. Thus, the Provision is ambiguous on its face and
legislative history may properly be consulted as a means of discerning
legislative intent.
Congressional Intent
SSA's position that "the purpose of section 1612(a)(2)(A) is to avoid
difficult valuation problems" is supported by the legislative history of
the section. The language as enacted is substantially the same as that
of the original bill, H.R. 1. The House Report on the bill described
the section as follows:
In determining an individual's edibility and the amount of his
benefits, both his earned and unearned income would have to be
taken into consideration. ... Unearned income would mean all other
forms of income, among which are ... support ... and so forth.
For people who live as members of another person's household, the
value of their room and board would be deemed to be 33-1/3 percent
of the full monthly payment. H.R. REP. 92,31, 92d Cong., 1st Sess.
25 (1971)
The Senate Report states:
In recognition of the Practical problems that would be encountered
in determining the value of room and board for people who live in
the household of a friend or relative, the bill would provide
specific rules for use in these situations. Under the bill, the
value of room and Board, regardless of whether any payment was
made for room and board, would be assumed to be equal to one-third
of the applicable benefit standard. S. REP. 92-1230, 92d Cong., 2d
Sess. 388 (1972); Cf. H.R. REP. 92-231, 92d Cong., 1st Sess. 152
(1971).
The State has pointed to nothing in the legislative history which would
contradict the inference which SSA draws from this stated purpose of the
provision. Special rules are provided for valuing such support and
maintenance, but that deemed value is applied, as other income is, to
reduce the benefit level.
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The Purpose of "Hold Harmless"
A provision similar to "hold harmless" appeared in the original house
bill, but applied to a proposed Family assistance Program as well as the
proposed SSI Program. The Senate committee version dropped this
provision, but a Senate floor amendment was added which provided other
"fiscal relief" to the States. The conferees adopted the Senate
amendment modified so as to basically parallel the original House
provision but to apply only to SSI. CONF. REFP. H.R. REP. 92-1605, 92d
Cong., 2d Sess. 29 (1972). The House Report describes the purpose of
the original provision as follows:
By entering into agreements for Federal administration of their
supplemental payments, States will be losing all administrative
control over the operation oft hose benefits. Your committee
expects that the tight Federal administration and the substantial
improvements in the work and training aspects of the new Federal
benefit programs will bring the expansion of caseloads under
control. It must be recognized, however, that States may not
fully share this confidence an also that patterns of
State-to-State migration could result in an increase in caseloads
for a given State even if national caseloads remain stable or
decrease. Your committee's bill, therefore, includes a "hold
harmless" provision designed to assure the states that their
welfare expenditures will not be increased over 1971 levels
because of the effects of the provisions of this bill (and the
administration of those provisions) on State supplemental payments
which are administered by the Federal government. H.R. REP.
92-231, 92d Cong., 1st Sess. 200-201 (1971); See also, revised
and extended remarks of Rep. Byrne (Wis.) on the House Floor,
Cong. Rec., June 22, 1971 at H5598.
The "hold harmless" formula was thus designed to protect States from
increases in the caseload but not from increases in payment levels.
See, McInnis v. Winberger, 530 F. 2d 55, 57-8 (1st Cir. 1976).
The State acknowledged at the conference that this was the purpose of
the provision but argued unpersuasively that failure to recognize
support and maintenance in kind in the household of another as income in
the "hold harmless" calculation would not contravene this purpose.
Such
support and maintenance did result in reduced payments in the pre-SSI
programs, however, and non-recognition for "hold harmless" purposes
would result in Federal subsidization of increases in payment levels.
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As SSA has pointed out, "the hold harmless" formula is "in essence,
a
comparison of two levels, the pre-SSI level made by the State and the
current Federal SSI level. . ." (Transcript, p. 98). Had Congress
described the comparison that way, i.e. protected payment = APL -
Section 1611 Federal benefit level, the ambiguous phrase "income not
excluded. . ." would not have appeared in the formula. In its
preconference brief, SSA offered a plausible explanation of why Congress
expressed the formula as it did. Individuals whose countable income
exceeds the Section 1611 level do not receive Federal SSI benefits but,
if their countable income does not exceed the applicable State payment
standard, will still receive a State Supplementary Payment (SSP).
congress intended to protect these SSP's only to the extend they brought
the individuals up to the pre-SSI APL. For example, if the Section 1611
level was $130, the individual's countable income was $140 and the APL
was $150, Congress wanted to protect only a $10 SSP. In this situation,
the protected payment would not equal the APL - Section 1611 level
($150-$130) but would equal APL - (SSI benefit actually paid + countable
income) ($150 - (0+$140) = $10). Given this plausible explanation of the
formula, I do not accept as an adequate explanation the Stat's position,
expressed at the conference, that it "assumes" that Congress
deliberately introduced the term "income" into the formula because
there
would be a bonus to States in the form of higher protected payments in
the one-third reduction situation. (Transcript, p. 58.)
SSA Determination of Supplementary Payment Amounts
The State's principal argument here is that SSA's interpretation is
inconsistent with SSA's methods of computing State supplementary
payments (SSP's). The State established the total income levels, or
"payment standards," it considers necessary for various categories
of
recipients according to their living arrangements. A schedule showing
these levels is attached tot he agreement. The State originally argued
that SSA computes the SSP's for all individuals in the on-third
reduction situation by deducting the Federal benefit level as reduced by
one-third from the same Sate payment standard from which it deducts the
unreduced Federal level for other individuals and that this resulted in
higher SSP's for the one-third reduction cases. The Notice of
Conference pointed out that, since the agreement itself identified as a
separate living arrangement "Residing in the Household of Another and
Receiving Room and Board In King" and provided a payment standard
already adjusted downward precisely by the amount of the one-third
reduction for persons in that living arrangement, it would appear that
those persons were generally not receiving higher SSP's. At the
conference, the State admitted that, as suggested in the Notice, SSA's
manner of calculating the SSP's resulted in higher SSP's for one-third
reduction cases only in the relatively infrequent situation where there
was an overlap between the one-third reduction category and one of two
other living arrangements identified in the agreement ("non-medical
board and care" and "disabled minor. . ."). SSA estimates that
these
overlap situations represent only about 5% of all the SSP's.
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Where this overlap occurred, SSA was making higher payments based on its
interpretation of the agreement. Whether this interpretation was
incorrect or was based on the State authorizing statute, Sec. 12200(k),
is a subsidiary issue not raised at the lower levels of this disputes
process. I have heard argument on whether this issue is germane and
have concluded that it is not essential to the resolution of the
principal dispute and that it would be improvident for me to decide it.
The reasons for this conclusion are that the issue appears to be raised
as an afterthought; the briefing does not permit me to have confidence
that, in an area as complex as this, I have a clear enough understanding
of the issues which I see as collateral to the principal one; and in
any case discussions between the parties are necessarily continuing, and
if these issues are not otherwise resolved, a further appeal will then
be available.
With respect tot he issue of SSA's inconsistencies, the State is
focusing on terminology rather than substance. The SSA does treat the
Section 1611(b) benefit level reduced by one-third as a "standard
payment amount" and does calculate SSP's for applicable situations by
deducting that standard payment amount from the payment levels set for
the int he States's agreements. These payment levels I understand have
generally, however, as in the case of California, been adjusted downward
to account for this treatment so that the person in the one-third
reduction situation is receiving an SSP comparable to that of a person
in an independent living arrangement. SSA treats the one-third
reduction as establishing a "Standard" payment amount because the
statute requires a standard reduction in the 1611(b) levels to reflect
the imputed value of the support and maintenance. (See Transcript, p.
88-9). The alternative, always starting with the Section 1611(b) level,
reducing it by the one-third amount and then reducing it for other
countable income, would perhaps be more consistent with the concept that
the one-third reduction represents income. It would, however, add an
unnecessary administrative step, and since the result is always the same
for purposes of calculating the Federal benefit to be paid, and, for
persons identified as in the "household of another" living arrangement,
also the same for purposes of calculating SSP's, SSA was not
unreasonable in using instead a separate standard payment amount as the
starting point.
Treatment by SSA of the one-third reduction as establishing a lower
payment standard did lead to a change in the California statute
authorizing SSP's. A subdivision providing for a corresponding reduction
of State grant levels (for all recipients except those in the
"nonmedical board and care" and the "disabled minor" categories
discussed above is described in the statute as "operative only during
such time that such in-kind support and maintenance, under federal law,
is treated as providing the basis for a lower payment standard rather
than being treated as unearned income." sec 12200(i),
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California Welfare and Institutions Code, Cal. State. 1974, chap. 75, p.
168, Sec. 2, effective March 14, 1974. This State statute relates,
however, only to the grant levels set forth in the agreement. In fact,
this subdivision was added after the agreement had been originally
authorized and signed. The State was provided at several points in this
proceeding an opportunity to explain when it became aware of SA's
treatment of the one-third reduction and to document whether an
interpretation that the one-third reduction would not be income for hold
harmless purposes was a factor in its choice of Federal administration.
The State has responded only with vague generalizations.
Treatment of Analogous Situations
In its treatment of other in kind support and maintenance and of other
imputed income situations, SSA did act consistently with its position
that the one-third reduction reflects income.
The one-third reduction rule applies only when an individual lives in
the household of another and receives both support and maintenance from
that person. To provide for continuity of treatment between the
one-third reduction situation and other closely analogous situations
(such as where an individual is receiving in kind support and
maintenance but not residing in the household of the person providing
the support and maintenance), SSA has devised a "presumed maximum value"
rule. 20 CFR 416.1125. This rule results in reduction of the benefit by
the one-third amount to account for the in kind income unless the
recipient can show that the actual value of the income is less than the
presumed value. This presumed value, which reduces the benefit, is
income for "hold harmless" purposes. In substance, the in kind support
and maintenance in the household of another is not different in nature
and should similarly affect the "hold harmless" calculation.
Inclusion of the one-third reduction (the imputed value of in kind
support and maintenance in the household of another) in income for "hold
harmless" purposes is also consistent with SSA's treatment of other
imputed income,. Section 1611(e)(1)(B)(i) addresses the situation of
certain individuals who receive medical board and care under State
Medicaid plans, providing that, rather than being eligible for SSI
Federal benefits at the Section 1611(b) rates, these individuals will be
eligible for benefits at a rate not to exceed $300 per year ($25 per
month). The practical effect of this provision is the same as if
Congress shad said that such individuals should have their benefits
reduced by the difference between the Section 1611(b) rates and the $300
or had provided that the value of the medical board and care would be
deemed to equal that difference. SSA has stated that, for purposes of
determining protected payment amounts, SSA treats the difference between
the Section 1611(b) rate and the special rate established by Section
1611(e)1)(B)(i) as unearned income. The State has not disputed this.
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Other Considerations
AT an earlier stage of the case, the State argued that "even if the
one-third reduction does, in fact, constitute unearned income, the
treatment itself is invalid because it constitutes an arbitrary
presumption of income." (Wortman Decision, p.5.) The Acting Commissioner
rejected this argument, calling it "irrelevant to the question of
whether support and maintenance must be included in the hold harmless
computation" and "a challenge to the constitutionality of the Social
Security Act which is not properly raised in this dispute . . ."
(Wortman Decision, p.8.) Several cases were cited by the State in
support of its "presumption of income" argument. They were
distinguished by the Acting Commissioner on the ground that the cited
cases dealt with the AFDC program in which both the statute and the
regulations required that only actual income available to the recipient
be counted in determining the AFDC payment, whereas the one-third
reduction in the SSI program is contained in the statute itself.
(Wortman Decision, p.9.) The Acting Commissioner's view of the cited
cases as distinguishable appears to be correct, (See, for example, Coper
v. Swoap, 11 Cal. 3d 856, cert. denied 419 U.S. 1022 (1974)
(invalidating State regulation requiring that income of an individual
acting in the role of spouse be imputed to families on an AFDC grant))
and the State has not chosen to pursue the argument at this level of
review.
The State has also not pursued an argument that if support and
maintenance in kind in the household of another is income for "hold
harmless" purposes it should not necessarily be valued at the one-third
reduction amount for that purpose. Apparently, SSA is correct that
using a current market value rule for such support and maintenance would
typically result in a higher figure for the amount of such income, and ,
therefore, the State would not benefit by use of the actual value rather
than the one-third reduction amount. Furthermore, it would not be
administratively feasible to determine actual value to the recipient of
such support and maintenance solely for "hold harmless" purposes and
it
cannot be supposed that the congress intended that that be done.
Conclusion
The purpose of the "hold harmless" provision was to protect States
choosing Federal administration of their supplementary payments from
possible increases in caseload but not from increases in benefit levels.
To accept the State's interpretation that in kind support and
maintenance in the household of another is not income to be counted in
the "hold harmless" calculation would result, contrary to Congressional
intent, in Federal subsidization of increased benefits for individuals
receiving such support and maintenance. This would create an arbitrary
distinction between beneficiaries receiving such support and maintenance
and those receiving other in kind support and maintenance or imputed
income.
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If the plain meaning of the one-third reduction provision were that such
support and maintenance should not be included in income for any
purpose, this distinction might be considered a clear choice by
Congress. contrary to the State's assertion, however, the language of
the provision is not plain and unambiguous. As the legislative history
of the provision clearly shows, Congress enacted the one-third reduction
provision not because it did not wish to treat such support and
maintenance as income but because it wished to avoid problems associated
with determining the precise value of such support and maintenance.
Congress deemed such support and maintenance to have a certain value
(the one-third amount) and treated that value in the same manner as it
treated the value of other in kind support and maintenance -- as income
to be applied in reducing the benefit level.
The State's argument correctly identifies a weakness in the
draftsmanship of Title XVI but does not seem to me to represent a
realistic reading of the Congress' actual intent or a should workable
approach to the administration of the statute. I therefore sustain on