Christensen v. Lightbourne

15 Cal.App.5th 1239

223 Cal.Rptr.3d 779

Angie CHRISTENSEN, Plaintiff and Respondent,

v.Will LIGHTBOURNE, as Director, Etc., Defendants and Appellants.

A144254

Court of Appeal, First District, Division 2, California.

Filed October 6, 2017

Kamala D. Harris, Attorney General, Xavier Becerra, Attorney General, Julie Weng-Gutierrez, Senior Assistant Attorney General, Susan M. Carson, Supervising Deputy Attorney General, Jennifer A. Bunshoft, Deputy Attorney General, for Appellants

Legal Aid Society of San Mateo County, Hope G. Nakamura, Redwood City, Trinh Phan, Western Center on Law & Poverty, Sacramento, Stephanie E. Haffner, Richard A. Rothschild, Los Angeles, for Respondent

Miller, J.

This appeal presents a narrow question about what counts as family income when determining a family's eligibility for cash aid under the California Work Opportunity and Responsibility to Kids Act (CalWORKs) program. ( Welf. & Inst. Code, §§ 11200 et seq. )¹

Here, a CalWORKs applicant, Angie Christensen, lives with her husband and her children. Her husband is the noncustodial parent of additional children, and court-ordered child support is garnished from his income for the benefit of these children who do not live in the applicant's home. Counting the garnished amounts as nonexempt income to the applicant's family, San Mateo County determined the family's income was too high to qualify for CalWORKs cash aid and denied the application. Following an administrative appeal, the California Department of Social Services (Department) affirmed the denial decision.

The applicant then petitioned for writ of mandate challenging the Department's policy of counting child support paid to benefit children who live outside the home as nonexempt income for purposes of CalWORKs ( Code Civ. Proc., § 1085 ) and for writ of administrative mandate seeking to overturn the Department's denial decision ( Code Civ. Proc., § 1094.5 ). She also sought declaratory relief. The trial court granted the petition for writ of administrative mandate and the request for declaratory relief. The trial court found the Department's policy of counting child support payments as nonexempt income was invalid on the grounds it was contrary to regulation, and it resulted in improper "double counting" of income among recipients of aid.

The Department and its Director, Will Lightbourne, (together "appellants") appeal. We conclude that no statute or regulation required the exemption of the husband's garnished child support from the income of applicant's family and, therefore, the Department properly treated such amounts as income in determining the applicant's family's eligibility for CalWORKs cash aid. We reverse the judgment.

BRIEF OVERVIEW OF CALWORKS

We begin with a brief history of the CalWORKs program, including a discussion of the concepts of income and exemptions relevant to this case.

Welfare Reform

In 1996, Congress passed what is commonly referred to as the Welfare Reform Act. Under this law, the federal program Aid to Families with Dependent Children (AFDC) was replaced by Temporary Aid to Needy Families (TANF), which provides states with block funding to distribute to needy families as each state sees fit.

( Sneed v. Saenz (2004) 120 Cal.App.4th 1220, 1231, 16 Cal.Rptr.3d 563 ( Sneed ).)

"In 1997, as part of a comprehensive review and overhaul of its welfare system, California created CalWORKs through which it administers TANF block grants. [Citations.] ... Like the former AFDC program, CalWORKs provides cash grants to families with minor children who meet certain requirements, including limited income and resources, and are deprived of the support of one or both parents due to factors such as absence, disability or unemployment." ( Sneed , supra , 120 Cal.App.4th at p. 1231, 16 Cal.Rptr.3d 563.) The Legislature adopted the CalWORKs program through Assembly Bill No. 1542 (AB 1542). ( Ibid . )

Under CalWORKs, the Welfare and Institutions Code establishes a schedule of maximum aid payments, with maximum payments varying according to the number of eligible needy persons in the family and by the region of California in which the family lives. (See §§ 11450, 11450.12, 11450.018, 11452.018.) The amount of a family's CalWORKs aid payment is calculated by taking the applicable maximum aid payment for the eligible family members and subtracting the family's nonexempt income.² (Ibid .)

The Legislature's purpose in enacting CalWORKs was "to increase personal responsibility and encourage financial self-sufficiency for families." ( Sneed , supra , 120 Cal.App.4th at p. 1242, 16 Cal.Rptr.3d 563.) Compared with the previous welfare program, "CalWORKs provides increased education and training, greater work incentives and time limits on aid."³ ( Ibid . ) Among the changes made, the Legislature adopted a new method for calculating cash aid amounts, which was "designed to motivate welfare recipients to increase their work efforts. Under the new system, enacted in 1997 and still in effect, aid recipients who increase their work efforts and obtain greater employment income may retain more of the increased income before cash aid is affected." ( Id. at p. 1232, 16 Cal.Rptr.3d 563.)

Specifically, section 11451.5, subdivision (a), allows a family to exempt from its income up to the first $225 of its earned income, plus 50 percent of any remaining earned income.⁴ This is a more generous earned-income exemption than existed prior to CalWORKs. (See Sneed , supra , 120 Cal.App.4th at p. 1242, 16 Cal.Rptr.3d 563.) The AFDC program (which CalWORKs replaced) allowed a family to exempt only the first $30 and one-third of any remaining earned income. The intent "was to provide a greater, more advantageous work incentive, one that rewards additional work efforts and gives welfare recipients a better understanding of the impact that increased earnings have on the income of the family and the amount of the grant payment." ( Id . at p. 1240, 16 Cal.Rptr.3d 563.)

Also as part of welfare reform, "the Legislature reviewed various statutes adopted during the time the AFDC program was in effect and either repealed, amended or continued those laws as part of the new CalWORKs program." ( Sneed , supra , 120 Cal.App.4th at p. 1240, 16 Cal.Rptr.3d 563.)

Each county administers CalWORKs under the supervision of the Department. ( Smith v. Los Angeles County Bd. of Supervisors (2002) 104 Cal.App.4th 1104, 1109, 128 Cal.Rptr.2d 700 ( Smith ); § 10600.) The Department has adopted regulations and standards to implement CalWORKs, which are found in its Manual of Policies and Procedures (MPP), Eligibility and Assistance Standards. ( Smith , at p. 1109, 128 Cal.Rptr.2d 700.)⁵

Income and Exemptions Under CalWORKs

As we have mentioned, section 11451.5 provides an exemption of up to the first $225 of earned income, plus half of any remaining earned income. (§ 11451.5, subd. (a).) The statute defines "earned income" as "gross income received as wages, salary, employer-provided sick leave benefits, commissions, or profits from activities such as a business enterprise or farming in which the recipient is engaged as a self-employed individual or as an employee." "Unearned income" is any income that is not classified as either earned income or DBI.⁶ (Id ., subds. (b)(1) & (3).)

MPP section 44–101(a) defines income for purposes of administering CalWORKs as follows: "Income, generally, is any benefit in cash or in-kind which is reasonably anticipated to be available to the individual or is received by him/her as a result of current or past labor or services, business activities, interests in real or personal property, or as a contribution from persons, organizations or assistance agencies. To be considered in determining the cash aid payment, income must be reasonably anticipated to be available to needy members of the family in meeting their needs during the ... Payment Period. Subject to this limitation and the exemptions and exclusions, as specified in Section 44–111 of this chapter, such benefits are taken into consideration as income in evaluating the need of the recipient and in determining the amount of cash aid to which the recipient is entitled."

Exemptions from income are provided by statute and regulation. For example, in addition to section 11451.5's DBI/earned-income exemption, MPP section 44–111 lists types of payments or benefits that are exempted or excluded, in whole or in part, from consideration as income for purposes of the CalWORKs program.⁷

All County Letter No. 97-59: The Department's Policy of Counting Child Support for Children Who Live Outside the Payer's Assistance Unit as Nonexempt Income

No statute or regulation specifically addresses how to treat child support payments paid by a member of an assistance unit for the benefit of children who live outside the assistance unit. Since 1997, however, the Department has taken the position that such child support payments are not exempted from income.

The Department's position is set forth in All County Letter (ACL) No. 97-59, dated October 14, 1997, a letter to all county welfare directors and AFDC program managers. The purpose of the letter was "to provide counties with the instructions they requested for implementing the new grant structure and aid payment provisions of [AB 1542]," the newly-enacted CalWORKs program. (ACL No. 97-59, p. 1.) Under prior law, a family could disregard (i.e., exempt) court-ordered child support paid by family members for children living outside the home. (ACL No. 97-59, p. 3.) ACL No. 97-59 explained that this child-support exemption and other "existing income disregards" were eliminated by AB 1542 and replaced with new exemptions.⁸ The letter described in particular the "new income disregard," which "exempts the first $225 of any disability-based unearned income and/or earned income plus 50 percent of any remaining earned income." (ACL No. 97-59, p. 3)

Repeal of Pre-CalWORKs Regulation on Child Support

Consistent with its understanding of the...