JEFFERSON v. HACKNEY

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Argument of Steven J. Cole

Chief Justice Warren E. Burger: 70-5064 Jefferson against Hackney.

Mr. Cole you may proceed whenever you’re ready.

Mr. Steven J. Cole: Thank you.

Mr. Chief Justice Burger and may it please the Court.

With the Court’s permission I would like to save five minutes of my time for rebuttal.

Chief Justice Warren E. Burger: Very well.

Mr. Steven J. Cole: The State of Texas provides public assistance to four groups of its needy residence and receives over 350 million dollars a year from United States for this purpose.

The four groups are the children deprived of parental care and support because of the absence, death, or incapacity of the parent.

Persons over age 65, the disabled and the blind, these are the persons both Congress and the State of Texas have identified as needing financial assistance because they do not have a breadwinner in the household.

Texas has established the welfare program covering all four groups in its Public Welfare Act of 1941 pursuant to a single provision of the Texas Constitution.

There are two separate issues presented by this appeal.

The first is whether the Equal Protection Clause and Title VI of the 1964 Civil Rights Act permits Texas to pay AFDC recipients eight-ninths of whom are black and Mexican-American, 50% of the amount Texas has determined to be their minimum required needs while it pays all other welfare recipients, those receiving aid under the old age, aid to the blind and aid to the disabled programs, three-fifths of whom are white 95% or a 100% of the same minimum needs.

The statutory issue presented today is whether Texas may consistent with the Social Security Act as construed by this Court in Rosado versus Wyman determine eligibility for AFDC and the amount of AFDC payments by subtracting outside income from 50% of the standard of need rather than from the standard of need itself.

Both issues must be decided by the Court since a victory on either one to the appellants will still leave the other in dispute.

The starting point for understanding both issues is the standard of need.

This has been referred to by the Court in Rosado with the yardstick to determining who is eligible for public assistance.

The standard is a dollar amount which represents the state’s judgment as to what is necessary to provide a subsistence level living in that particular state.

In Texas, the items included in the standard or personal needs which include food, clothing, and personal incidentals shelter cause and a few special need items.

Texas uses a single standard for all welfare recipients in the state regardless of the category under which the recipient receives as assistance.

Unknown Speaker: In other words, children under the AFDC have the same standard of need as blind adults or disabled adults or people over 65?

Mr. Steven J. Cole: No, that’s not exactly right, Your Honor.

What happens is Texas has a standard budgetary allowance.

So for example shelter needs are budgeted according to the household size and not according to the category.

Similarly, personal needs are budgeted according to age.

Adults in the ADC Program, the caretaker, the mother caring for children receive the same budget and needs not receive but are budgeted for the same needs as adults in the Aid to the Blind Program or Old Age Assistance program.

Children, the dependents of an old age recipient or dependents of an ADC mother are budgeted for the same amount in each program.

Texas has made a judgment and we do not challenge it in this case.

The children require less per month than an adult to supply the same minimum needs.

But we have not challenged that in this lawsuit.

An example of how this work is at page 41 and 42 of our brief that might be helpful if I refer to that.

In table one, we have set forth an age couple both receiving old age assistance, that’s at page 41, and the state has determined that for each month that couple needs a $172.00 per month for a personal and shelter needs.

On page 42 at table two, is a mother and three children who received AFDC from the State of Texas.

Their monthly needs have been defined by the State of Texas now to be $182.00 a month or just slightly more than the two-person family receiving OAA.

Now, these amounts for both families are approximately $2,100.00 a year and ask the Court to bear in mind that this standard is far from generous.

The United States defined the official poverty levels about $3,900.00 a year for a family or poor and the Bureau of Labor Statistics, level of living budget is over $6,500.00 a year.

In any case, we are not challenging in this lawsuit, the fact that Texas defines the needs of a family of four with three children to be only slightly greater than the needs of the family of two.

We accept that judgment.

Texas has made it.

We are not questioning it.

We also are not questioning the fact that that standard for both of those families is defined so inadequately.

That’s not an issue in this lawsuit.

We again accept that judgment.

Our position is that having determined the subsistence needs of both families.

Texas may not discriminate in the percentage of those needs that chooses to meet for the various groups of recipients.

In practical term, what has happened is that Texas has called the family in table one that since they are needy and since they are dependent because they are old, the state will guarantee them whatever they need to purchase a subsistence diet and adequate shelter according to Texas’ judgment in any case.

While at the same time, the state has hold the children in table two that since they are equal need and their dependence is cause by the death or absence or incapacity of their father.

The state will only have them purchase 50% of what the state says they need to survive.

At the outset, we wish to make clear for the Court that the discrimination in the percent of needs pay is not related to any differences in the requirements of the various recipients.

As we have mentioned, the percentage reduction is applied after the standard of need is a computed.

Therefore if there are any differences in need in these particular families for instance, economies of scale because there a lot more members of the household, or maybe a blind recipient needs to seeing live again and of course an AFDC family normally would not.

Those will be reflected in the standard of need before the percentages are thought.

We’re dealing with families that Texas has said after it computes the standard or equally needy.

As the Department of Health Education and Welfare pointed out a brief in the District Court of Alabama which I submitted to this Court in Whitfield versus King.

The percentage reduction as applied is essentially a physical measure.

It is unrelated to the needs of the various recipients.

We also ask the Court to bear in mind that the percentage reduction in this case has nothing to do with the availability or none availability of other sources of income.

When income is actually available to a particular recipient whether it be an OAA recipient or an AFDC recipient, for example, child support to the ADC mother, social security benefits for the OAA family, that income is subtracted from the grant.

There aren’t any double benefits we are contending with here.

So the percentage reduction has nothing to do with that.

In fact, the way Texas applies to percentage reduction to do the AFDC family actually operates as a work disincentive.

Unlike no in the Dandridge versus Williams case involving family maximums that this Court decided.

Texas does not encourage an AFDC recipient to seek nonwelfare sources of income.

Since it’s impossible for the Texas AFDC family to use that income to get closer and closer to the standard of need because the way Texas applies the percentage reduction is it applies it for the standard first and then it subtracts outside income.

No AFDC family in Texas could ever end up with more than 50% of its needs.

So it has, it does not have that work incentive feature the Maryland Family maximum and indeed the Supreme Court of California unanimously decided in case Villa versus Hall which we’ve also supplied to this Court.

The Court noted that this too was a work disincentive feature and specifically referred to the Texas budgetary method which is similar to California.

It is this aspect that the percentage reduction is used by Texas which gives rise to a Social Security Act claim.

And with the Court’s indulgence, I’d like to finish the statement of the case with the facts they gave rise to a statutory claim and then returned to the argument.

Prior to May 1969, the family described in table two receiving AFDC was determined by Texas to need approximately $165.00 per month under the Texas standard of need.

Since at that time, Texas used that standard to determine the amount of payment and eligibility for payments or all person families with income less than this amount receive some benefits.

The precise amount depends on whether or not there are budget deficits.

The standard of need minus their available income exceeded the maximum grant level then in effect in Texas.

If it did, they only receive the maximum.

Effective May 1, 1969, consistent with one of the mandates of Section 402 (a) 23 which is the subject of the Court in Rosado decision, Texas adjusted its standard of need by 11%.

The cost of living increased since that standard was last priced in 1965.

We are not challenging the adequacy of that adjustment in this case.

As a result, the family in table two now is determined by Texas to need $17.00 per month more or now $182.00 per month.

Additional families therefore, those with income below this new standard of a $182.00 but above the pre May 1969 Standard of a $165.00 have now been determined by the State of Texas to be in need of public assistance.

But on that day, Texas stopped using its standard of need as the AFDC yardstick against which income would be compared and that --

Unknown Speaker: Are you saying that before 1965 when the standard of need was al $165.00, a family before received a $165.00?

Mr. Steven J. Cole: No, I am not Your Honor.

The family before May 1969 received when they changed the new policy and adjust the standard received the full difference between the standard of need and their available income limited --

Unknown Speaker: As one earns $100.00 a month and the standard of need with $165.00, they got $65.00?

Mr. Steven J. Cole: They got $65.

Right!

The only limitation was there was a family maximum on grants which in Texas at that time was a $123.00.

So if there budget deficit was greater than $123.00, they only receive the $123.00.

That was the system that was upheld in Dandridge versus Williams.

Unknown Speaker: What’s the difference where you said that it gets $65.00 difference between $100.00 and $165.00?

What’s the situation today where one still earns a hundred?

Mr. Steven J. Cole: Okay.

Now, the standard has been raised.

The standard now is $182.00.

Unknown Speaker: Yes.

Mr. Steven J. Cole: But at time the suit was brought the percentage factor was 50%, so let’s use that figure.

The 50% is multiplied against the $182.00 which results it in an item which Texas called recognizable needs even though the standard of need is a $182.00 and that recognizable need is $91.00.

The family with income of $100.00 now, receives no benefits.

Not only does it receive no benefits but the family since it’s not receiving a cash welfare grant loses complete Medicaid coverage.

There was Medicaid in the State of Texas and in half the States is condition on the receipt of public assistance.

Unknown Speaker: And this change you say was made May 1969?

Mr. Steven J. Cole: It was made May 1, 1969 and it was the policy that’s now being challenged by amended complaint in this lawsuit.

By the way, the Medicaid consequences which I refer to are not minimum.

The Solicitor General has told the Court that for the average of AFDC family it amounts to about $50.00 to $60.00 per month.

Unknown Speaker: And why is it that you say they lose those benefits?

Mr. Steven J. Cole: Congress has mandated in Title 19 of the Social Security Act that Medicaid assistance be provided only to those persons receiving aid under one of the Cash Welfare Programs.

Since that person is now still needy, they’re not receiving a dollar grant and they lose Medicaid eligibility.

Unknown Speaker: That is the one who earns a hundred entitled only to 91 gets nothing?

Mr. Steven J. Cole: That’s right.

Unknown Speaker: And therefore he also gets no Medicaid?

Mr. Steven J. Cole: That’s exactly right.

Unknown Speaker: Where as back in where they have the $165.00 or they get $65.00 and also get Medicaid?

Mr. Steven J. Cole: Yes.

Your Honor, we are not maintaining in this lawsuit that Texas must pay full needs.

I’d like to make that clear.

Texas could establish any presented reduction it wishes under the Rosado decision as long as it pays some benefits to those families with a need.

That is if it wants to pay only 10% of benefits but it applies that to the budget deficit after it subtracts the income then the Medicaid consequences would not attach because the family will get some dollar benefits.

What happen in Texas beginning May 1969 is that 2500 family who were previous families who were previously receiving AFDC became ineligible by the operation of the new system that was stipulated by the state and of course the new families who were rendered needy by the adjustment to the standard of need, those marginal income families were kept off the rolls.

It is this that gives rise to a statutory claim since Texas managed to cancel out the one practical effect.

Unknown Speaker: Well, in my hypothetical of family earning a hundred is now entitled to nothing.

It would be better for them, I gather simply the quick work then get the 91 plus Medicaid, is that it?

Mr. Steven J. Cole: Yes, sir.

Absolutely or at least only earn 90 if they could manage that or only receive 90.

There are other factors other than work.

The father is deciding whether they support their families.

Every dollar of support goes to the State Treasury as opposed to helping that family reach the standard of need.

And let’s remember the standard of need is what Texas defines as that basic requirement to subsistence living.

So families below that standard --

Unknown Speaker: Does Medicaid for your family enable to -- you said it runs about $50.00 to $60.00 a month?

Mr. Steven J. Cole: The Solicitor General has told the Court that the average AFDC family receives $50.00 to $60.00 a month Medicaid.

I don’t think I have to belabor the point that medical care could mean like itself and if we are dealing after all what families who don’t even have enough to supply under Texas’ own terms enough food, clothing and shelter to their families.

Justice William H. Rehnquist: Mr. Cole, I believe that the respondent in his brief makes a point that all of the parties’ appellant presently in the case have not lost their eligibility as a result of what you claim to be Texas’ violation of the statute, Mrs. Davilla having been dismissed as an appellant in October 1969.

What is your answer to that contention?

Mr. Steven J. Cole: Mr. Justice Rehnquist, first of all, this is a class action and there’s stipulation, there are 2500 families in Texas eligibility was effective by this, that’s number one and Mrs. Davilla was a plaintiff in a consolidated case.

The reason she did not appeal is not available to me.

I don’t know the reasons.

It’s perhaps because the Jefferson point this appeal and she thought she was protected but more important than that, one of the appellants that is before the Court Mr. Vasquez is presently earning income.

He was not when the complaint was filed.

He is now receiving some disability benefits.

Now, but they weren’t enough to defeat his eligibility.

The manner of computing the payment affects him seriously because if the percentage were applied after his income is subtracted, he would receive the much higher grant.

It’s our contention that Mr. Vasquez even if you don’t want to consider the unnamed members of the class who were not before the Court now that Mr. Vasquez has an interest in the computation method and he is raising the eligibility consequences since if the Court agrees with this on that point, we’ll have to strike the Texas method and he will get an increase grant as a result.

Justice William H. Rehnquist: Do you say his interest is sufficient to enable you to raise the point?

Mr. Steven J. Cole: Yes, sir.

I’d like to conclude on this factual statement by pointing out that this effect of making these additional needy families eligible was precisely what Mr. Justice Harlan referred to in the Rosado opinion is the one practical effect in his statute under which we’re litigating to make this largely needy families eligible for the care and training provisions of the act.

With respect to our equal protection claim, our position is that the District Court incorrectly measured the discrimination against AFDC recipients according to the traditionally lenient equal protection test.

Frankly, we believe that the treatment of AFDC recipient has a racial purpose to it.

In light of the enormous racial imbalance in the various welfare categories, the law of history of restrictive measures against AFDC recipient in Texas which are borne most heavily on blacks in the program, the States decision to allocate funds as it has with this little room for any other inference, this is particularly so when appellees almost frivolous explanation to add it to the picture.

I’d like to discuss them in a moment.

Our case however, does not depend in this Court’s finding a racial purpose to the discrimination.

In Dandridge, the Court said that even if the State Welfare Regulation is not drawn on its face in racial terms but if shown to have a racially discriminatory effect it will be inherently suspect and subject to restrict judicial review by the Court.

This is just such a case, I first like to set out a very briefly to Court the racial impact of what Texas has done and then review the explanations put forth to the huge disparities.

Of a total of 389,000 welfare recipients in the state, 46% of them are white, 54% of them are black or Mexican-American.

In comparison, the racial and ethnic distribution within each category strike an AFDC, it’s not 54% black or Mexican-American; it’s 87% black and Mexican-American.

The old age program is --

Unknown Speaker: Divided how?

Mr. Steven J. Cole: I’ll have to refer to the record Your Honor.

Our record at page --

Unknown Speaker: [Voice overlap] for about half and half or --

Mr. Steven J. Cole: Well, I have a right here at page 72 of the record.

The AFDC program is – yes, it’s about 44.6% black, 40% Mexican of the 85% or 86%.

Yes, so the black and Mexicans are evenly divided, yes, sir.

Unknown Speaker: Thank you.

Mr. Steven J. Cole: The OAA program is not a majority black or Mexican as we might have expected but its 63% white.

In setting its payment levels, Texas has selected a one classification that enables the most whites to be benefited by the States allocation while at the same time the greatest number of blacks and Mexicans are disadvantaged.

Unknown Speaker: Are there other States who have followed this types of problems?

Mr. Steven J. Cole: Yes sir, in the appendix to our brief, we have set forth two trials.

One, as of October 1970 which was the latest published information we had from the Department Health, Education, and Welfare, we list about 20 States that have a percentage of disparity.

In appendix B, we have selected those States disparities as great as Texas was 25% as of today.

Unknown Speaker: What page is it?

Mr. Steven J. Cole: At 1 (b) of our brief, it’s the very last page of the brief and if you’ll notice those seven States whose percentage disparity as great as Texas is, five of those States present a racial disparity very similar to Texas.

With this racial impact in mind, we asked the Court to consider Texas’ justification for selecting the AFDC recipients to bear the sole grant of the state physical limitations.

We think their justification is so rational that the Court to decide this case in our favor using the traditional test.

There are three sets of explanations, there’s a practical one in the record, there’s a lawyer’s justification and there’s the one that District Court use.

The practical justification is this, the three-judge court below asked counsel whether there was anything in the record that would support this discrimination.

The Attorney General’s response was and I quote, it’s at page 71 of the oral argument.

“We’ve got just so much money in each of this program to spend.”

Well, this is undoubtedly true.

But what we are challenging here is the legislature’s allocation of the money.

Now, that takes the question before the Court.

Now, we remind the Court that since 1965, the Texas Constitution has given the legislature complete flexibility and appropriations.

It has only a total sealing.

Unknown Speaker: Well, are you suggesting that if they wanted to spend no more than they now spend, they can level out the percentage for all four categories say at 60%?

Mr. Steven J. Cole: Yes sir and I don’t think it would have to be at 60%.

[Voice Overlap] The reason I say that Your Honor is because there are twice as many old age recipients as AFDC recipients.

So very -- but yes, sir.

Unknown Speaker: I gather your premise is, it would not be a 100% across the board?

Mr. Steven J. Cole: No, unless the Texas Constitution was amended, it would not be a 100% across the board but they do have flexibility before 65 they didn’t.

The Texas constitution said a certain limited amount for ADC and a certain limited amount for Old Age Assistance.

That is no longer the case.

Justice William H. Rehnquist: Mr. Cole, you’re not challenging on Federal Constitutional ground the overall Texas sealing?

Mr. Steven J. Cole: No, sir.

Justice William H. Rehnquist: Then if you prevail basically the AFDC people will get more out of common fund and the other categorical grants would get less, is that right?

Mr. Steven J. Cole: If the Texas Constitution state as it is, that would be the result, yes.

Justice William H. Rehnquist: And you’re not challenging the Texas constitution?

Mr. Steven J. Cole: No, but frankly Your Honor, we do believe and this is not a legal judgment to be made either by us or the Court that if that question is put to the Texas people, the constitutional sealing will be raise.

But it’s true that if we win, we’re not requiring the state to spend more money and it would be a reallocation.

Justice William H. Rehnquist: I take it from the stipulations on file that this would result in a lowering of the benefits received from the categorical -- in the other categorical grant, the Old Age Assistance, and blind assistance.

Mr. Steven J. Cole: Right, the stipulations make clear that Texas is fully spending its appropriation on the other categories and then you have to come from somewhere.

Justice William H. Rehnquist: No effort was made either by the respondent or by you to join any representative members of this other classes who would suffer if your contention prevails?

Mr. Steven J. Cole: We do not know.

Justice William H. Rehnquist: Do you have any position as to whether under Rule 19 may or should have enjoined?

Mr. Steven J. Cole: Your Honor, my position would be that they stand in the same position as the favorite class in almost every equal protection case that’s before the Court.

I think the thing that’s troubling you is, we’re dealing here with a pot of money not eligibility for public housing or a regulation of business but it’s always true that the favorite class stand to lose its favorite treatment if the disfavored class wins the lawsuit.

And under Rule 19, I don’t think this Court has ever required that disfavored class to be brought before the Court.

Unknown Speaker: However, in this case you have all the aspects of a common fund that seems to me a limited amount of money that you haven’t had and some of those other cases.

Mr. Steven J. Cole: I suppose that’s right to the extent that the Texas Constitution limits the present Texas Constitution limits the total expenditure.

I would say this, Your Honor, that the suit obviously had widespread precedent State of Texas was well known in the State of Texas and I think it would be wrong to say that the suit would come as a surprise if the appellants before this Court should win and will become a surprise to the old age recipients in the state.

Justice William H. Rehnquist: But how can you say that?

This is a group scattered widely over Texas not represented by anyone so far as we are informed on this record?

Mr. Steven J. Cole: Your Honor, that is really one of the points that goes to the heart of why Texas has done what they’ve done.

25% of all the people over 65 in the State Texas receive Old Age Assistance that’s an astounding figure.

The appellees have testified quite candidly that it was their political clout that is basically encouraged the legislature to appropriate as it has.

Mr. Bond (ph) who is the Chairman of Public Welfare testified that OAA touches nearly every home.

AFDC doesn’t touch as many people and the OAA people have the votes.

Now, I would think the legislatures have been responsive to them and they must have some input in to the process.

I point that that the AFDC children represent less than 3% of the state’s population of children under 18 compared to the OAA percentage.

I really have no other response to the fact that they have not been formally brought before the Court.

I will point that the State of Texas is never made any motions to bring them before the Court either for whatever that’s worth.

I’d like to point out that the record shows that the Welfare officials would equalize if the legislature appropriated at a lump sum.

Mr. Bond’s deposition again indicated that.

So, there is no welfare related reason for this.

The welfare expert says, if you give me a lump sum that’s what I would do.

I’d have a percentage across the board but they haven’t given him a lump sum even though the constitution permits it.

The lawyer’s justification was that the discrimination is justified because AFDC children and mothers well, today employable are more likely to be come employable in the future and also because they’re more likely to get support from relatives.

Well, future employability potential obviously has no bearing on the rationality of current payment disparities.

The welfare programs are designed to meet current needs and maybe that would justify in the running training programs by AFDC recipients but it certainly won’t justify current AFDC grants.

And surely, Texas won’t suggest that paying 50% of needs in OAA would be fair in light of the fact that a majority of OAA recipients receives social security, it just has nothing to do with the question before Court.

The District Court viewed the program as completely separate programs.

Whatever you do in OAA, you don’t have to do an ADC because they’re separate because we see an ADC the purpose is to strengthen family life and the purpose of the other program is self-care.

The fact is that Texas Constitution and the Texas Statutes makes no such distinction.

The purposes are single-minded, financial aid and rehabilitative services.

Now, I would suppose that a blind person may need a different kind of social service that an ADC mother who’s husband just pasted away but I would suggest that those differences don’t justify a difference in the financial assistance you give to the family.

With respect to the statutory claim, Section 402 (a) 23 required each state by July 1969 to adjust the amounts used in that state to determine a family’s needs for AFDC and also to proportionally adjust any maximums that the state may have.

Before this Court Rosado vs. Wyman, the petitioners argued that that section contemplate an increase in all AFDC payments by July 1969.

They urged that any other construction would it render the statute of meaningless bookkeeping exercise.

Chief Justice Warren E. Burger: Mr. Cole, let me interrupt you.

You said you wanted to reserve five minutes but you’ve used up three minutes of your five that you were reserving already.

If you want to reserve any you have –-

Mr. Steven J. Cole: Okay.

I’ll finish the statutory claim, and if I have the time after to rebuttal, thank you.

Chief Justice Warren E. Burger: Mr. Bailey.

Argument of Pat Bailey

Mr. Pat Bailey: Mr. Chief Justice and may it please the Court.

I think counsel has stated that there are initially to questions presented in this case.

Your first a constitutional question involving the Equal Protection Clause of the Fourteenth Amendment.

This is based upon the manner and which the Texas legislature has allocated the money available between the various categories of welfare assistance in Texas, the aged, the blind and totally disabled and the dependent children.

The statutory claim deals with whether the allocation of the money between these categories by the legislature violates the Civil Rights Act of 1964.

Also, the Federal statutory issue of whether the Texas method of determining eligibility violates the Social Security Act and in particular 42 U.S.C. Section 602 (a) 23.

Also, I think we have in this case an additional issue of an old age by the appellants and that is whether there is any just issue controversy appellant and appellees as to the statutory grounds allege.

I think that it would help the Court somewhat if we look a little in the background of these welfare programs in Texas.

The Texas Constitution prohibits gifts to individuals.

This welfare program that Texas has had been authorized by amendments to the constitution which allows these grants to be made to needy individual.

These amendments have all ways which authorized these grants have always put a limit upon how much money that legislature of Texas been appropriate to pay these grants and packed up until 1965.

They even put a limit on how much they could appropriate for various wants of the program.

However, in 1965 this was gone away with before the legislature could appropriate different varying sums, as they solved it, between the various categories were in operation.

Unknown Speaker: Do you say there’s a constitutional limitation on the total amount?

Mr. Pat Bailey: Yes, sir.

At the time this suit began it was $60 million during the course of the litigation and in fact, shortly after the initial judgment was entered, the people of the state raised its ceiling to $80 million.

The bulk of which went to the AFDC program.

Unknown Speaker: And that is in the state constitution, that $80 million?

Mr. Pat Bailey: Yes sir.

Now, --

Unknown Speaker: As a figure, it is not a pointer --

Mr. Pat Bailey: No sir, it’s an actual figure.

It has been gradually going up somewhat stop the time, I believe the last attempt before the one it was passed was defeated.

So, at least if not always passed the vote of people.

Unknown Speaker: This is done by referendum?

Mr. Pat Bailey: Its own general election [Voice overlap] the legislature’s constitutional amendments to the people and they vote on them either passing them or reject it.

Unknown Speaker: A majority vote?

Mr. Pat Bailey: Yes, sir.

Now, the legislature in Texas meets only ever two years except on special session and normally the money is appropriated on a two-year basis or two-year period.

Now, the constitutional amendments can only be submitted pursuant to a regular session which means if we get in a process financial wise we can’t call a special session and submit a constitutional amendment and get more money.

We’re on sort of a two-year basis.

Now, Texas in the late 60’s and starting really about 1968 like many other States had various regulations dealing with add-ons like a man-in-the-house, maximum grants, and certain rest of performance.

The Court decisions that began to come about in this period of time resulted in a dramatic increase in welfare rolls but mainly in AFDC, the category that this litigation is directed at.

Now, the result or consequence of this was that we had it constitutionally fixed the amount of money to spend.

We had two-year appropriation to work with.

There was no way to rapidly it meant the state constitution or any assurance it’s a voters would to make more money available.

There was no way or there is no way to transfer appropriations between these categories unless the legislature does it.

The only thing that could happen was it grants and some of the categories have to be lowered, the ones that arose or raising it rapidly in.

We have the added problem that this time is it the cost of living increase required by the Social Security Act became effective July 1, 1969.

Texas faced with its problem went to the solution at some States were using in one that the Department of HEW was authorizing that up going to a ratable reduction method where we recognized this standard of living inquiries but we can only pay a percentage of this.

Texas had to reduce some of the grants as a result of using this rightful reduction system and it was because of this the either reduction of some of the individual’s grants or the fact that they did not increase that actually triggered this lawsuit.

Now, let’s initially look at the constitutional claim.

They are complaining that the allocation of the legislature of Texas that made between this various categories of assistance is in violation the Fourteenth Amendment.

It’s really a two-fold crust, I think in here.

One is that, we are not saying the same percentage of need between the various categories and they say there should be no various.

Now, in the aged program, we paid a 100% as to the blind and disabled 95%.

At the time of this lawsuit, 50% in AFDC.

This is about --

Unknown Speaker: But who fixed those percentages?

Mr. Pat Bailey: The Welfare Department, Your Honor, on the basis that they have to figure how much money they had and how much they were going to pay at?

Unknown Speaker: But did the legislature say that AFDC shall have “X” dollars out of 80 million.

Mr. Pat Bailey: Yes, sir.

Unknown Speaker: Old checks dollars out of 80 million, is that the way it was done?

Mr. Pat Bailey: The legislature did this and the welfare department of course then has to take the money that’s in the program and say, we’ve got so many people, 24 months --

Unknown Speaker: Does the legislature said out of the 80 million, 40 million shall go to the AFDC? What you’re telling is I gather that they could not pay more than 50% of need and stay within 40 million.

Mr. Pat Bailey: Within the budget, yes, Your Honor.

Now, this because of the constitutional amendment, it was pass raising the 60 million and 80 million.

We have since been able to increase the percentages from 50% to 75% prior to time and will shortly after this suit commenced.

Unknown Speaker: And the others stated a 100%, do they?

Mr. Pat Bailey: No, sir.

They stated the blind and disabled were stayed at 95% and the Old Age Assistance remained at 100%.

Unknown Speaker: (Inaudible)

Mr. Pat Bailey: The appellants have also raised the allegation that this allocation found between the category has some form of racial motivation or effect.

Now, as to the contentions, the court below has twice rejected it.

I think that as to this initial argument that King v. Smith and Dandridge v. William have already decided this initial issue adversely to the appellants.

The Court is recognized in these cases that the state have considerable latitude in allocating their AFDC resources.

I think this Court has said that each state is free to set its own standard of need and to determine the level of benefits by the amount affirms it devotes to the program.

I don’t believe that the Court could make it much clear that the States can use their discretion as to what particular problem in the welfare area that the state wants to concentrate upon and use their limited funds to do the best job they can.

I think the court below recognized this when they saw that Texas only had a limited amount of money and they felt that it was the duty of the legislature of the state to use its judgment in the manner in the amount the available money should be divided.

I think that the court below possibly look to this Court’s warning in Dandridge v. Williams where the Court stated that the constitution does not empower the Court to second guess state officials charged with the difficult responsibility of allocating limited public welfare funds among the merit of potential recipients.

We feel that to do otherwise really would put the Court down in the position of exercising a legislative rather than a judicial function.

Now, I think that without commenting at length upon them, there are numerous reasons which are constitutionally sufficient for spending less in one program unless you just look at the AFDC program as opposed to other programs.

The Courts have long recognized that these are different programs with different objectives.

Secondly, the aged, the blind and the disabled are not luckily going to improve their condition, in many cases, will only worsen.

These people are also quite frequently the recipients of larger amounts of drugs or medical needs.

I think that this is one that the legislature could have considered as wanting to devote more of their energy, more of the available funds in this area as opposed to another and not necessarily feeling that the child or the blind or someone else should suffer but realizing that they couldn’t create a utopia either with the money that they had.

Unknown Speaker: You’re talk about more of the public funds for the aged or for the blind or for the disabled.

In fact, is that true?

How much of the $80 million goes to AFDC now?

Mr. Pat Bailey: About $23 million, a little over $23 million.

So it would be a somewhere around close to 30% in our record --

Unknown Speaker: That $23 million goes to AFDC --

Mr. Pat Bailey: Out of the $80 million, I believe in the last appropriation.

Unknown Speaker: And about how much goes to each of the others?

About I --

Mr. Pat Bailey: I would have to look Your Honor.

I believe there is around $50 million goes to the Old Age Assistance program.

The blind program is rather small --

Unknown Speaker: They’re not many people who are blind?

Mr. Pat Bailey: Yes, sir and in APTD is also risen some but not too much although this is rapidly growing one.

But the remainder of the money about the $7 million about approximately remaining is divided between the blind and the disabled.

Unknown Speaker: So that $50 million out of the $80 million goes to Old Age Assistance?

Mr. Pat Bailey: Yes, sir.

Unknown Speaker: And the fact is, as your brother said I guess it’s at 25% of everybody over 65 in Texas gets Old Age Assistance?

Mr. Pat Bailey: I think it’s probably correct, I have --

Unknown Speaker: One of every four people over 65 in the state?

Mr. Pat Bailey: Now, the --

Unknown Speaker: Mr. Bailey you’ve been making -- I gather these are constitutional?

Mr. Pat Bailey: Yes, sir.

Unknown Speaker: It’s so constitutional, are you going to get to the statutory?

Mr. Pat Bailey: Yes, sir.

Unknown Speaker: Because I gather if this system conflicts with any requirement of the Federal Statute then it can’t stand, is that right?

Mr. Pat Bailey: This is correct sir either one is a correct.

Now, the appellants in this case have also questioned the use of the traditionally equal protection test by the court below rather than a compelling interest test.

I think that Dandridge v. Williams decides the question that unless there are some showing or in the rule of a regulation and there’s a racial motivation or fact that the compelling interest statute should not come in to play unless this is shown.

This I think brings us both to this question into the civil rights question.

The appellants have contended that this allocation is because of some racial intent.

I think the undisputed facts in the record before this Court show that this allegation is with out merit in the court below has on two in occasions so held.

I think we have to look at it a little bit of the facts since here.

They’ve never been a reduction in AFDC (Inaudible).

The amount of increase is over the last 28 years have almost been equal from the standpoint of every time some of the adult categories were raised in money, so with the AFDC program.

Unknown Speaker: And you say there’s never been a reduction in AFDC; you’re talking about total money appropriated?

Mr. Pat Bailey: Yes sir, in total.

Unknown Speaker: But there has, has it not or am I mistaken been a reduction in the percentage given to --

Mr. Pat Bailey: The AFDC?

Unknown Speaker: To units based on percentage of standard of need, there has been a reduction on that, hasn’t it?

Mr. Pat Bailey: Yes, Your Honor, there have been over the history of these programs reductions and practically every one of them at one time or another either by the legislature not appropriating money and the programs growing there have to be some reductions from time to time but never in the total amount of money spent for the programs.

Unknown Speaker: Total money spent.

Mr. Pat Bailey: Since 1943, the AFDC program has been growing about twice as fast as the adult programs.

The majority of the families receiving actually an increase under this ratable reduction theory that Texas went to in 69 were actually large families which were predominantly they grow in Mexican-American.

Under this proposed amendment which passed increase the money available sum $20 million of the amount that was appropriated by the legislature.

The AFDC got almost $12 million out of the $15 million available.

Also, the Court looking at the depositions of the welfare department officials said that these people didn’t even know what the racial make ups of the various category was until after this suit commenced and they were required to do certain studies and come up with certain statistics.

Another thing that we get in to here if we talk about leveling this out, if we took and these are stipulations in this case, if we took this money and leveled it out, it would not have a racial effect as the appellants seem to contend.

It would mean that practically and equal amount of racial groups in the adult program, the aged, the blind, and the disabled would have their grants lowered to in turn it raised about the same amount of individuals in this ethnic groups in the AFDC program.

Now, if this was not the case, they might be some merit to appellant’s contention but leveling this out has no racial connotation because they’re going to be as many people in the Mexican-American and the negroes that will have their grants lower than this other programs as well have them raised in AFDC and I think this itself shows the lack of merit in appellants’ contention.

Unknown Speaker: Mr. Bailey, you’re speaking in terms know of absolute numbers, are you not rather than the percentages?

I take it that the appellants’ response would be that although the absolute numbers might be the same the percentages are a good deal different?

Mr. Pat Bailey: I have and not a word in the record nor I have really looked to see what the percentage difference it would be but when we’re talking about people.

You’re having about as many heart as you’re having held among the latitudes.

I think that King and Dandridge show us that the States have a lot of latitude in the way they allocate this money.

We submit also that there was no racial motivation or effect in what has been done in the allocation.

There are some four other cases the Lampton out of Louisiana, the Ward case in Mississippi, the Goodwin case out of New York, the Stanley case out of Virginia which all got percentages about the sign are very strikingly similar.

And to date, I am not aware of the Court saying that this show racial effect or motivation.

Now, as to the statutory question, the initial attack in this case was at the ratable reduction of paying only a percentage of this recognize need was paid.

However, before this case rates this Court, the issue was resolved by Rosado.

Now, there was no pleadings or proof or allegations in the trial on the first appeal about anything that Texas was doing wrong in its method of determining eligibility.

It was only after the Court, this Court sent the case back for the entry of a new judgment and after the Court had entered the judgment denying both the constitutional and statutory relives of by the appellants that they raised for the first time this question of whether or not Texas was properly determining eligibility.

There were no amended pleadings efforts to amend their pleadings.

None of the appellants before this Court were affected by the way eligibility was determined.

The only party which could’ve been affected was the party Davilla but she didn’t even appeal from the first judgment entered by the Court and was no longer a party to the case when it was sent back for the entry for a new judgment or when this issue as to determining eligibility was first raised in a motion to amend the judgment entered by the Court.

Unknown Speaker: What’s the respective which you suggest that an eligibility has not been determined that is required by the Federal statute?

Mr. Pat Bailey: Well, Your Honor we feel that none of these people in this case.

Unknown Speaker: I know.

What do you understand these appellants to say?

Is the effect in determination of eligibility in light of the Federal requirement?

Mr. Pat Bailey: All that I can understand by what they have said here Your Honor, is that the possibility that some day in the future this person might become ineligible.

This shows no controversy.

The only thing that I believe counsel said is that if the Court could let this issue get in here, this person might have a --

Unknown Speaker: Does that possibly relate to the ineligibility for Medicaid for at least for the operation of new computation?

Mr. Pat Bailey: None of these particular appellants, Your Honor are ineligible for any of the medical assistance programs in Texas.

And this is the issue that we raise here is that we feel that none of these people have been in anyway affected.

Unknown Speaker: Well, how about the class?

I gather the --

Mr. Pat Bailey: None of the class Your Honor that they represent has been affected and I think that counsel and the appellants are in most unusual position here.

They are arguing for a position which if granted by this Court will actually lower their benefits.

Now, this is a most strange position I think for the appellants to be in because if a great many more people were put only welfare rolls in Texas, these particular appellants would have to have their benefits reduced and I think this is a somewhat unique situation for the appellants to come in the Court arguing.

Unknown Speaker: You mean the absolute dollar amount would be --

Mr. Pat Bailey: Yes sir, AFDC will result in the --

Unknown Speaker: [Voice overlap] the dollar amount?

Mr. Pat Bailey: Their dollar amounts would have to go down because if we have more people on the rose, we’re going to have the same amount of money is going to have to go further, so everyone that’s an appellant before this case.

It would have their grants.

Unknown Speaker: But still I gather they’d be getting percentage wise if they prevail, the same percentage as the other categories of need?

Mr. Pat Bailey: This might be true Your Honor but I think we came back again of the fact if there’s really no controversy as to this issue between the parties before this Court.

What they’re really doing is this.

They’ve lost –- the Rosado caused them to lose their statutory issue on this ratable reduction and the only thing they got left now, that they try to jump in at the lightest as many here, is the fact that this -- the way we’re determining eligibility, that something that would never in the case until the second judgment was entered.

They got an issue --

Unknown Speaker: Do you understand the appellants’ statutory requirement to be limited to a claim that eligibility determinations contravene the eligibility of the determination requirements under Federal Law?

Mr. Pat Bailey: Yes sir, what they’re saying in here is that what Texas does?

They apply this ratable reduction factor to the standard of need.

Let’s just say it is $75.00 and there’s a $100.00 worth of need.

It would be $75.00 for a particular individual.

If they have income of more than $75.00 then they are ineligible.

What the appellants would like to have happen here would be for their eligibility to be determined on the four recognized need.

This would in turn put them showing a small amount of unmet need.

This would then put them in the welfare rolls at a small grant opening up some certain benefits.

Unknown Speaker: Opening up Medicaid to sick?

Mr. Pat Bailey: Yes, Your Honor.

Now, I think that one of the problems that we run into here when did this is that we are letting or putting on the welfare rolls certain people who are very marginally eligible to get certain benefits.

But the result is, is that we’re having to penalize the people who need the help the most because it’s the people that have no outside income who have larger in needs that are going ultimately have to have their grant reduced to put this marginally needy people on the rolls.

Now, I did not think that it was the intent of Congress in this Act to penalize the most needy.

Unknown Speaker: Mr. Bailey, on the case or controversy point, I understood Mr. Cole to say that appellant Vasquez was sufficiently effective by the eligibility determinations so as to enable them to properly raise that would be actual parties they have before this Court.

Mr. Pat Bailey: I don’t see how, Your Honor because he is receiving a welfare grant and he is receiving medical benefits.

Now, if he was not, if he had been terminated and no longer could get a grant, could no longer get the medical assistance, then I think Your Honor they would have a proper party before this Court but they don’t have one yet.

They wanted to change horses here but they haven’t got anybody who will fit the saddle of this new horse that they’ve got.

I think that really that they have tried -- the appellants have tried to read in to this portion of the Social Security Act, that portion requiring this cost of living adjustment.

A whole lot more than Congress ever intended to put there.

The Court in Rosado recognized that the purpose of this was to make the States recognized that cost of living increases had occurred, that the state should adjust to them, that in turn it might prove the States to spend more money in this area.

But I think that really what they’re asking here is that something new be read into this step that the eligibility requirements be change, the way that the States determine eligibility and I think that if Congress have intended this to be the purpose, they would have written in the end a whole lot clearer than this and not let to adopt a hope that some litigant might discover this hidden among this statute that this was the purpose of it.

I think that in conclusion that the question of whether to help the more at a cost of the many really, and this is the argument that they’re making in this case, is the business of the legislative branch not the judicial.

I think that the arguments and hopes of the appellants in this case are ones that should be pursued in the legislative and congressional halls rather than in the Courts.

I think that really what they would like to do is when you strip all the argument in the rhetoric and the clichés that are used is that they would really like this Court to judge the wisdom and the propriety of the way the legislature of Texas has decided it would spend the money had available in the welfare area and turn these appellants this satisfaction with this plan and possibly, if they can get the Court to agree with them in to some form of constitutional or statutory prohibition.

I think that the path of this Court is clear and that is to sustain the judgment of the court below.

Thank you.

Chief Justice Warren E. Burger: Thank you Mr. Bailey.

Mr. Cole, you have one minute left.

Rebuttal of Steven J. Cole

Mr. Steven J. Cole: Your Honor, first of all, I would like to remind the Court that there are 2500 families that Texas has stipulated as eligibilities been terminated as a result of the method used here.

Secondly, Mr. Vasquez whose eligibility has not been terminated has lost approximately $40.00 a month by the method of computation which streaked him because of its eligibility consequences he would gain $40.00 per month.

In recital, the Court said at page 413 that 402 (a) 23 has the effect of requiring the States to recognize and accept the responsibility for those additional individuals whose income fall short of the standard need is computed in light of economic realities and to place them amongst those eligible for the care and training provisions of the Act.

The Court said this because HEW came to the Court and told the Court, that’s 402 (a) 23 meant and if you’ll look at the amicus brief for this Solicitor General in recital, you will find those words.

The Solicitor General in this case says that yes the Court said it but that was dictum and he didn’t really mean to say it and I think if the Court looks at the basis for the decision in the New York case in light throughout New York’s program, you will realize it wasn’t dictum at all.

Thank you.

Unknown Speaker: Mr. Cole.

Mr. Steven J. Cole: Yes, Your Honor.

Unknown Speaker: Can I ask you one hopefully final question about something Mr. Bailey raised.

At least, a couple of your client here, Mrs. Jefferson, Mrs. Gibson are and are presently eligible under the Texas standard and as I understand his contention, you’re arguing that these eligibilities standard should be broadened in such a way that more people would become eligible for what a fixed amount of money and that therefore this particular clients of yours would not gain but lose financially if your contention is sustained.

What’s your response to that?

Mr. Steven J. Cole: They are all competing interests amongst the class which was when the suit was brought to find these all AFDC recipients in the state.

The original contentions in the suit were indeed that payments had to increase for everybody.

That was rejected in recital.

Of course when payments had to increase, so did eligibility that flowed with it.

On remand, when the payments increased question which no longer a viable question because of recital there was diverging claims I supposed and --

Unknown Speaker: No thought was given to getting separate counsel?

Mr. Steven J. Cole: Your Honor, I can’t, I personally can’t respond to that because I was not a District Court level in this case.

Chief Justice Warren E. Burger: Thank you, Mr. Cole.

Thank you, Mr. Bailey.

The case is submitted.