406 U.S.

535
92 S.Ct. 1724
32 L.Ed.2d 285

Ruth J. JEFFERSON et al., Appellants,

v.
Burton G. HACKNEY, Commissioner of Public Welfare, et al.
No. 705064.
Argued Feb. 22, 1972.
Decided May 30, 1972.
Rehearing Denied Oct. 10, 1972.

See 93 S.Ct. 178.

Syllabus
Appellants, recipients of Aid to Families With Dependent Children
(AFDC), challenge the system whereby Texas, in order to allocate its
fixed pool of welfare money among persons with acknowledged need,
applies a percentage reduction factor to arrive at a reduced standard of
need, the factor being lower for AFDC than for other categorical
assistance programs. Appellants assert that the State's method of applying
this factor to recipients with outside income contravenes 402(a)(23) of
the Social Security Act, which required adjustment, by July 1, 1969, of
'amounts used . . . to determine the needs of individuals' to reflect
increases in living costs, because this method does not increase the
welfare roles to the same extent as would an alternative procedure used by
some other States. They also make an equal protection claim on the
grounds that the distinction between the aid programs is not rational and
that the Texas system racially discriminates against the proportionately
larger number of minority groups in AFDC than in the other programs.
Held:
1. The Texas scheme does not contravene 402(a)(23) of the Social
Security Act, which does not require use of a computation procedure that
maximizes individual eligibility for subsidiary benefits. Pp. 539545.
2. The challenged system does not violate the Equal Protection Clause of
the Fourteenth Amendment. Pp. 545551.

(a) The fact that there are more members of minority groups in the AFDC
program than in other categories does not indicate racial discrimination,
absent any proof of racial motivation in the Texas scheme. There was no
such proof here. Pp. 547549.
(b) Texas' decision to provide somewhat lower welfare benefits for AFDC
recipients than for the aged and infirm who are in other categories is not
invidious or irrational, and there is no constitutional or statutory
requirement that relief categories be treated exactly alike. Pp. 549551.
Affirmed.
Steven J. Cole, New York City, for appellants.
Pat Bailey, Austin, Tex., for appellees.
Mr. Justice REHNQUIST delivered the opinion of the Court.

Appellants in this case challenge certain computation procedures that the State
of Texas uses in its federally assisted welfare program. Believing that neither
the Constitution nor the federal welfare statute prohibits the State from
adopting these policies, we affirm the judgment of the three-judge court below
upholding the state procedures.

* Appellants are Texas recipients of Aid to Families With Dependent Children

(AFDC). They brought two class actions, which were consolidated in the
United States District Court for the Northern District of Texas, seeking
injunctive and declaratory relief against state welfare officials. A three-judge
court was convened pursuant to 28 U.S.C. 2281.

The Texas State Constitution provides a ceiling on the amount the State can
spend on welfare assistance grants.1 In order to allocate this fixed pool of
welfare money among the numerous individuals with acknowledged need, the
State has adopted a system of percentage grants. Under this system, the State
first computes the monetary needs of individuals eligible for relief under each
of the federally aided categorical assistance programs.2 Then, since the
constitutional ceiling on welfare is insufficient to bring each recipient up to this
full standard of need, the State applies a percentage reduction factor3 in order to
arrive at a reduced standard of need in each category that the State can
guarantee.
Appellants challenge the constitutionality of applying a lower percentage

Appellants challenge the constitutionality of applying a lower percentage

reduction factor to AFDC than to the other categorical assistance programs.
They claim a violation of equal protection because the proportion of AFDC
recipients who are black or Mexican-American is higher than the proportion of
the aged, blind, or disabled welfare recipients who fall within these minority
groups. Appellants claim that the distinction between the programs is not
rationally related to the purposes of the Social Security Act, and violates the
Fourteenth Amendment for that reason as well. In their original complaint,
appellants also argued that any percentage-reduction reduction system violated
402(a)(23) of the Social Security Act of 1935, as amended, 81 Stat. 898, 42
U.S.C. 602(a)(23), which required each State to make certain cost-of-living
adjustments to its standard of need.

The three-judge court rejected appellants' constitutional arguments, finding that

the Texas system is neither racially discriminatory nor unconstitutionally
arbitrary. The court did, however, accept the statutory claim that Texas'
percentage reductions in the AFDC program violate the congressional
command of 402(a)(23). 304 F.Supp. 1332 (ND Tex.1969).

Subsequent to that judgment, this Court decided Rosado v. Wyman, 397 U.S.
397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970). Rosado held that, although
402(a)(23) required States to make cost-of-living adjustments in their standard of-need calculations, it did not prohibit use of percentage-reduction systems
that limited the amount of welfare assistance actually paid. 397 U.S., at 413, 90
S.Ct., at 1218. This Court then vacated and remanded the first Jefferson
judgment for further proceedings consistent with Rosado. 397 U.S. 821, 90
S.Ct. 1517, 25 L.Ed.2d 807 (1970).

On remand, the District Court entered a new judgment, denying all relief. Then,
in a motion to amend the judgment, appellants raised a new statutory claim.
They argued for the first time that although a percentage-reduction system may
be consistent with the statute, the specific procedures that Texas uses for
computing that reduction violate the congressional enactment. The District
Court rejected this argument and denied without opinion appellants' motion to
amend the judgment. This appeal under 28 U.S.C. 1253 then followed, and
we noted probable jurisdiction. 404 U.S. 820, 92 S.Ct. 115, 30 L.Ed.2d 47
(1971).

II
8

Appellants' statutory argument relates to the method that the State uses to
compute the percentage reduction when the recipient also has some outside
income. Texas, like many other States,4 first applies the percentage-reduction

factor to the recipient's standard of need, thus arriving at a reduced standard of

need that the State can guarantee for each recipient within the present
budgetary restraints. After computing this reduced standard of need, the State
then subtracts any nonexempt 5 income in order to arrive at the level of benefits
that the recipient needs in order to reach his reduced standard of need. This is
the amount of welfare the recipient is given.
9

Under an alternative system used by other States, the order of computation is

reversed. First, the outside income is subtracted from the standard of need, in
order to determine the recipient's 'unmet need.' Then, the percentage-reduction
factor is applied to the unmet need, in order to determine the welfare benefits
payable.

10

The two systems of accounting for outside income yield different results.6
Under the Texas system all welfare recipients with the same needs have the
same amount of money available each month, whether or not they have outside
income. Since the outside income is applied dollar for dollar to the reduced
standard of need, which the welfare department would otherwise pay in full, it
does not result in a net improvement in the financial position of the recipient.
Under the alternative system, on the other hand, any welfare recipient who also
has outside income is in a better financial position because of it. The reason is
that the percentage-reduction factor there is applied to the 'unmet need,' after
the income has been subtracted. Thus, in effect, the income-earning recipient is
able to 'keep' all his income, while he receives only a percentage of the
remainder of his standard of need.7

11

Each of the two systems has certain advantages. Appellants note that under the
alternative system there is a financial incentive for welfare recipients to obtain
outside income. The Texas computation method eliminates any such financial
incentive, so long as the outside income remains less than the recipient's
reduced standard of need.8 However, since Texas' pool of available welfare
funds is fixed, any increase in benefits paid to the working poor would have to
be offset by reductions elsewhere. Thus, if Texas were to switch to the
alternative system of recognizing outside income, it would be forced to lower its
percentage-reduction factor, in order to keep down its welfare budget.
Lowering the percentage would result in less money for those who need the
welfare benefits the mostthose with no outside incomeand the State has
been unwilling to do this.

12

Striking the proper balance between these competing policy considerations is,
of course, not the function of this Court. 'There is no question that States have
considerable latitude in allocating their AFDC resources, since each State is

free to set its own standard of need and to determine the level of benefits by the
amount of funds it devotes to the program.' King v. Smith, 392 U.S. 309, 318
319, 88 S.Ct. 2128, 2134, 20 L.Ed.2d 1118 (1968) (footnotes omitted).9 So
long as the State's actions are not in violation of any specific provision of the
Constitution or the Social Security Act, appellants' policy arguments must be
addressed to a different forum.
13

Appellants assert, however, that the Texas computation procedures are contrary
to 402(a)(23):

14

'(a) A State plan for aid and services to needy families with children must

15

'(23) provide that by July 1, 1969, the amounts used by the State to determine
the needs of individuals will have been adjusted to reflect fully changes in
living costs since such amounts were established, and any maximums that the
State imposes on the amount of aid paid to families will have been
proportionately adjusted.'

16

Recognizing that this statutory language, by its terms, hardly provides much
support for their theory, appellants seek to rely on what they perceive to have
been the broad congressional purpose in enacting the provision.

17

In Rosado v. Wyman, supra, the Court reviewed the history of this section and
rejected the argument that it had worked any radical shift in the AFDC
program. Id., 397 U.S., at 414 and n. 17, 90 S.Ct., at 1218. AFDC has long been
referred to as a 'scheme of cooperative federalism,' King v. Smith, 392 U.S., at
316, 88 S.Ct., at 2133, and the Rosado Court dismissed as 'adventuresome' any
interpretation of 402(a)(23) that would deprive the States of their traditional
discretion to set the levels of payments. 397 U.S., at 414415 and n. 17, 90
S.Ct., at 12181219. Instead, the statute was meant to require the States to
make cost-of-living adjustments to their standards of need, thereby serving 'two
broad purposes':

18

'First, to require States to face up realistically to the magnitude of the public

assistance requirement and lay bare the extent to which their programs fall short
of fulfilling actual need; second, to prod the States to apportion their payments
on a more equitable basis.' Id., at 412413, 90 S.Ct., at 1218.

19

Texas has complied with these two requirements. Effective May 1, 1969, the
standard of need for AFDC recipients was raised 11% to reflect the rise in the
cost of living, and the State shifted from a maximum-grant system to its present

percentage-reduction system. In this way, the State has fairly recognized and
exposed the precise level of unmet need, and by using a percentage-reduction
system it has attempted to apportion the State's limited benefits more equitably.
20

Although Texas has thus responded to the 'two broad purposes' of 402(a)(23),
appellants argue that Congress also intended that statute to increase the total
number of recipients of AFDC, so that more people would qualify for the
subsidiary benefits that are dependent on receipt of AFDC cash assistance.10
The Texas computation procedures are thought objectionable since they do not
increase the welfare rolls to quite the same extent as would the alternative
method of recognizing outside income.

21

We do not agree that Congress intended 402(a)(23) to invalidate any state

computation procedures that do not absolutely maximize individual eligibility
for subsidiary benefits. The cost-of-living increase that Congress mandated
would, of course, generally tend to increase eligibility,11 but there is nothing in
the legislative history indicating that this was part of the statutory purpose.
Indeed, at the same time Congress enacted 402(a)(23) it included another
section designed to induce States to reduce the number of individuals eligible
for the AFDC program.12 Thus, what little legislative history there is on the
point, see Rosado v. Wyman, 397 U.S., at 409412, 90 S.Ct., at 12161218,
tends to undercut appellants' theory. See Lampton v. Bonin, 304 F.Supp. 1384,
1391 1392 (E.D.La.1969) (Cassibry, J., dissenting). See generally Note, 58
Geo.L.J. 591 (1970).

22

Appellants also argue that the Texas system should be held invalid because the
alternative computation method results in greater work incentives for welfare
recipients.13 The history and purpose of the Social Security Act do indicate
Congress' desire to help those on welfare become self-sustaining. Indeed,
Congress has specifically mandated certain work incentives in 402(a) (8).
There is no dispute here, however, about Texas' compliance with these very
detailed provisions for work incentives. Neither their inclusion in the Act nor
the language used by Congress in other sections of the Act supports the
inference that Congress mandated the States to change their incomecomputation procedures in other, completely unmentioned areas.

23

Nor are appellants aided by their reference to Social Security Act 402(a) (10),
42 U.S.C. 602(a)(10), which provides that AFDC benefits must 'be furnished
with reasonable promptness to all eligible individuals.' That section was enacted
at a time when persons whom the State had determined to be eligible for the
payment of benefits were placed on waiting lists, because of the shortage of
state funds. The statute was intended to prevent the States from denying

benefits even temporarily, to a person who has been found fully qualified for
aid. See H.R.Rep.No.1300, 81st Cong., 1st Sess., 48, 148 (1949); 95 Cong.Rec.
13934 (remarks of Rep. Forand). Section 402(a)(10) also prohibits a State from
creating certain exceptions to standards specifically enunciated in the federal
Act. See, e.g., Townsend v. Swank, 404 U.S. 282, 92 S.Ct. 502, 30 L.Ed.2d 448
(1971). It does not, however, enact by implication a generalized federal
criterion to which States must adhere in their computation of standards of need,
income, and benefits.14 Such an interpretation would be an intrusion into an
area in which Congress has given the States broad discretion, and we cannot
accept appellants' invitation to change this longstanding statutory scheme
simply for policy consideration reasons of which we are not the arbiter.
III
24

We turn, then, to appellants' claim that the Texas system of percentage

reductions violates the Fourteenth Amendment. Appellants believe that once
the State has computed a standard of need for each recipient, it is arbitrary and
discriminatory to provide only 75% of that standard to AFDC recipients, while
paying 100% of recognized need to the aged, and 95% to the disabled and the
blind. They argue that if the State adopts a percentage-reduction system, it must
apply the same percentage to each of its welfare programs.

25

This claim was properly rejected by the court below. It is clear from the
statutory framework that, although the four categories of public assistance
found in the Social Security Act have certain common elements, the States were
intended by Congress to keep their AFDC plans separate from plans under the
other titles of the Act.15 A State is free to participate in one, several, or all of the
categorical assistance programs, as it chooses. It is true that each of the
programs is intended to assist the needy, but it does not follow that there is only
one constitutionally permissible way for the State to approach this important
goal.

26

This Court emphasized only recently, in Dandridge v. Williams, 397 U.S. 471,
485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970), that in 'the area of economics
and social welfare, a State does not violate the Equal Protection Clause merely
because the classifications made by its laws are imperfect.' A legislature may
address a problem 'one step at a time,' or even 'select one phase of one field and
apply a remedy there, neglecting the others.' Williamson v. Lee Optical Co.,
348 U.S. 483, 489, 75 S.Ct. 461, 465, 99 L.Ed. 563 (1955). So long as its
judgments are rational, and not invidious, the legislature's efforts to tackle the
problems of the poor and the needy are not subject to a constitutional
straitjacket. The very complexity of the problems suggests that there will be

more than one constitutionally permissible method of solving them.

27

The standard of judicial review is not altered because of appellants' unproved

allegations of racial discrimination. The three-judge court found that the
'payment by Texas of a lesser percentage of unmet needs to the recipients of the
AFDC than to the recipients of other welfare programs is not the result of racial
or ethnic prejudice and is not violative of the federal Civil Rights Act or the
Equal Protection Clause of the 14th Amendment.' The District Court obviously
gave careful consideration to this issue, and we are cited by its opinion to a
number of subsidiary facts to support its principal finding quoted above. There
has never been a reduction in the amount of money appropriated by the
legislature to the AFDC program, and between 1943 and the date of the opinion
below there had been five increases in the amount of money appropriated by
the legislature for the program, two of them having occurred since 1959.16 The
overall percentage increase in appropriation for the programs between 1943 and
the time of the District Court's hearing in this case was 410% for AFDC, as
opposed to 211% for OAA and 200% for AB. The court further concluded:

28

'The depositions of Welfare officials conclusively establish that the defendants

did not know the racial make-up of the various welfare assistance categories
prior to or at the time when the orders here under attack were issued.'

29

Appellants in their brief in effect abandon any effort to show that these findings
of fact were clearly erroneous, and we hold they were not.

30

Appellants are thus left with their naked statistical argument: that there is a
larger percentage of Negroes and Mexican-Americans in AFDC than in the
other programs,17 and that the AFDC is funded at 75% whereas the other
programs are funded at 95% and 100% of recognized need. As the statistics
cited in the footnote demonstrate, the number of minority members in all
categories is substantial. The basic outlines of eligibility for the various
categorical grants are established by Congress, not by the States; given the
heterogeneity of the Nation's population, it would be only an infrequent
coincidence that the racial composition of each grant class was identical to that
of the others. The acceptance of appellants' constitutional theory would render
suspect each difference in treatment among the grant classes, however lacking
in racial motivation and however otherwise rational the treatment might be.
Few legislative efforts to deal with the difficult problems posed by current
welfare programs could survive such scrutiny, and we do not find it required by
the Fourteenth Amendment.18
Applying the traditional standard of review under that amendment, we cannot

31

Applying the traditional standard of review under that amendment, we cannot

say that Texas' decision to provide somewhat lower welfare benefits for AFDC
recipients is invidious or irrational. Since budgetary constraints do not allow
the payment of the full standard of need for all welfare recipients, the State may
have concluded that the aged and infirm are the least able of the categorical
grant recipients to bear the hardships of an inadequate standard of living. While
different policy judgments are of course possible, it is not irrational for the
State to believe that the young are more adaptable than the sick and elderly,
especially because the latter have less hope of improving their situation in the
years remaining to them. Whether or not one agrees with this state
determination, there is nothing in the Constitution that forbids it.19

32

Similarly, we cannot accept the argument in Mr. Justice MARSHALL'S dissent

that the Social Security Act itself requires equal percentages for each
categorical assistance program. The dissent concedes that a State might simply
refuse to participate in the AFDC program, while continuing to receive federal
money for the other categorical programs. See post, at 577. Nevertheless, it is
argued that Congress intended to prohibit any middle groundonce the State
does participate in a program it must do so on the same basis as it participates in
every other program. Such an all-or-nothing policy judgment may well be
defensible, and the dissenters may be correct that nothing in the statute
expressly rejects it. But neither does anything in the statute approve or require
it.20

33

In conclusion, we re-emphasize what the Court said in Dandridge v. Williams,

397 U.S., at 487, 90 S.Ct., at 11621163:

34

'We do not decide today that the (state law) is wise, that it best fulfills the
relevant social and economic objectives that (the State) might ideally espouse,
or that a more just and humane system could not be devised. Conflicting claims
of morality and intelligence are raised by opponents and proponents of almost
every measure, certainly including the one before us. But the intractable
economic, social, and even philosophical problems presented by public welfare
assistance programs are not the business of this Court. . . . (T)he Constitution
does not empower this Court to second-guess state officials charged with the
difficult responsibility of allocating limited public welfare funds among the
myriad of potential recipients.'

35

Affirmed.

36

Mr. Justice DOUGLAS, with whom Mr. Justice BRENNAN concurs,

dissenting.

37

I would read the Act more generously than does the Court. It is stipulated that
87% of those receiving AFDC aid are blacks or Chicanos. I would therefore
read the Act against the background of rank discrimination against the blacks
and the Chicanos and in light of the fact that Chicanos in Texas fare even more
poorly than the blacks. See L. Grebler, J. Moore, & R. Guzman, The MexicanAmerican People, pts. 2 and 3 (1970); J. Burma, Mexican-Americans in the
United States 143199 (1970); Schwartz, State Discrimination Against
Mexican Aliens, 38 Geo.Wash.L.Rev.1091 (1970); U.S. Commission on Civil
Rights, The Mexican American (1968); U.S. Commission on Civil Rights,
Mexican Americans and the Administration of Justice in the Southwest (1970).
In Rosado v. Wyman, 397 U.S. 397, 413, 90 S.Ct. 1207, 1218, 25 L.Ed.2d 442,
we said that in administering such a program a State 'may not obscure the actual
standard of need.' Texas does precisely that by manipulating a mathematical
formula.

38

In Rosado, we described how some States establish upper limits or maximums

of aid, while others, like Texas, 'curtail the payments of benefits by a system of
'ratable reductions' whereby all recipients will receive a fixed percentage of the
standard of need.' Id., at 409, 90 S.Ct., at 1216. Then in footnote 13 we
described what that meant: 'A 'ratable reduction' represents a fixed percentage
of the standard of need that will be paid to all recipients. In the event that there
is some income that is first deducted, the ratable reduction is applied to the
amount by which the individual or family income falls short of need.' Id., at
409 n. 13, 90 S.Ct., at 1216 (emphasis added).

39

If Texas first deducted outside income and then made its ratable reduction, the
welfare recipient would receive a somewhat more generous payment, as the
opinion of the Court illustrates in footnote 6 of its opinion. Not only does the
Texas system avoid this generous approach, but it also impermissibly constricts
the standard of need in conflict with Rosado, Dandridge v. Williams, 397 U.S.
471, 90 S.Ct. 1153, 25 L.Ed.2d 491, and Townsend v. Swank, 404 U.S. 282, 92
S.Ct. 502, 30 L.Ed.2d 448. Under Texas' method of computation, a family
otherwise eligible for AFDC benefits but with nonexempt income greater than
the level of benefits and less than the standard of needis denied both AFDC
cash benefits and other noncash benefits such as medicaid.1 It seems
inconceivable that Congress could have intended that noncash benefits be
denied those with incomes less than the standard of need solely because that
income was earned rather than from categorical assistance. Yet this is precisely
the result sanctioned by the Court today because eligibility for these programs
is tied to the receipt of cash benefits.2

40

One of the stated purposes of the AFDC program is 'to help such parents or

relatives (of needy dependent children) to attain or retain capability for the
maximum self-support and personal independence.' 42 U.S.C. 601 (emphasis
added). The Senate Finance Committee has stated, 'A key element in any
program for work and training for assistance recipients is an incentive for
people to take employment.' S.Rep.No.744, 90th Cong., 1st Sess., 157 (1967),
U.S.Code Cong. & Admin.News 1967, p. 2994 (emphasis added). The majority
acknowledges that '(t)he history and purpose of the Social Security Act . . .
indicate Congress' desire to help those on welfare become self-sustaining.'
Ante, at 544. But it nonetheless ignores the explicit congressional policy in
favor of work incentives and upholds a system which provides penalties and
disincentives for those who seek employment.3
41

The California Supreme Court in Villa v. Hall, 6 Cal.3d 227, 98 Cal.Rptr. 460,
490 P.2d 1148 struck down the system this Court approves today, where
California used a statutory maximum of payments rather than a ratable
reduction. The California Supreme Court quite properly said that what the State
was attempting was inconsistent with Rosado. Moreover, it had an additional
reason:

42

'The conclusion that the Social Security Act requires outside income to be
subtracted from standards of need rather than from statutory maximums or
ratable reductions is also founded on a strong public policy of encouraging
welfare recipients to become constantly more self-supporting. Yet deducting
income from statutory maximums makes gainful employment significantly less
attractive to the recipient. This follows because all nonexempt income will be
offset directly against the amount of the grant and not against the standard of
need to determine actual need; for every nonexempt dollar earned, the amount
of aid will therefore be decreased one dollar. Since the grant is always less than
the standard of need, in many instances the system adopted by the Welfare
Reform Act will result in an individual's need not being met even after adding
both exempt and nonexempt income to the AFDC payment. Such recipients
will be forced to exist below the bare minimum necessary for adequate care,
even though they have commenced, by obtaining employment, to break free
from the debilitating 'welfare syndrome.' The practice thus conflicts with the
stated federal policy to provide incentives to obtain and maintain an
employment status.' Id., at 235236, 98 Cal.Rptr., at 465466, 490 P.2d, at
11531154.

43

Moreover, Townsend v. Swank, 404 U.S. 282, 92 S.Ct. 502, 30 L.Ed.2d 448,
calls for a reversal in the present case. It is conceded that plaintiff Maria T.
Davilla and 2,470 other families are denied aid in Texas by reason of its new
formula, see 304 F.Supp. 1332, at 1343, despite the fact that their income is

below the standard of need and that of those receiving AFDC aid only 75% of
their needs is met.4
44

When this action was instituted, Texas' AFDC percentage level of benefits was
only 50% of the standard of need. During the course of this litigation, Texas
increased the AFDC level of benefits to 75% of need.

45

Under 402(a)(10) of the Social Security Act (which governs AFDC) 'aid to
families with dependent children shall be furnished with reasonable promptness
to all eligible individuals.' 42 U.S.C. 602(a)(10). In Townsend children 18
through 20 years of age who attended high school or vocational training were
eligible for AFDC benefits but such children in college were not eligible. We
held that 'a state eligibility standard that excludes persons eligible for assistance
under federal AFDC standards violates the Social Security Act and is therefore
invalid under the Supremacy Clause.'5 404 U.S., at 286, 92 S.Ct., at 505.

46

What Texas does here is to exclude large numbers of AFDC beneficiaries by

application of a state eligibility test that is narrower than the one we approved
in Rosado. While a State has some discretion in its use of federal funds, it may
not manipulate by its own formula groups of 'needy' claimants. The decision to
participate or not in the federal program is left to the States. Townsend v.
Swank, supra, at 290291, 92 S.Ct., at 507508. When, as here, federal and
state funds are in short supply, the problem is not to lop off some categories of
those in 'need' but to design a way of managing the system of 'need' so as not to
raise equal protection questions.6 Id., at 291, 92 S.Ct., at 508.

47

Section 402(a)(10) of the Social Security Act provides that AFDC shall be
furnished with reasonable promptness to all eligible individuals. The House
Report in commenting on it said:

48

'Shortage of funds in aid to dependent children has sometimes, as in old-age

assistance, resulted in a decision not to take more applications or to keep
eligible families on waiting lists until enough recipients could be removed from
the assistance rolls to make a place for them. . . . (T)his difference in treatment
accorded to eligible people results in undue hardship on needy persons and is
inappropriate in a program financed from Federal funds.' H.R.Rep.No.1300,
81st Cong., 1st Sess., 48 (1949).

49

As the Court said in Dandridge v. Williams, 397 U.S., at 481, 90 S.Ct., at 1159,
'So long as some aid is provided to all eligible families and all eligible children,
the statute itself is not violated.' It is violated here because nearly 2,500

families that satisfy the requirements of 'need' are denied any relief.7
50

Mr. Justice MARSHALL, with whom Mr. Justice BRENNAN joins, and with
whom Mr. Justice STEWART joins as to Part I only, dissenting.

51

Appellants, recipients of Aid to Families With Dependent Children (AFDC) in

Texas, brought this action to challenge two distinct aspects of the Texas AFDC
program. First, appellants challenge the manner in which Texas arrives at the
amount it will pay to persons who are needy. Second, they urge that Texas acts
illegally in providing more money for persons receiving aid under other social
welfare legislation than for persons receiving AFDC aid. The Court rejects both
claims. I dissent.

52

Before proceeding to explain why I disagree with the Court, I would like to
illustrate what the disputes in this case are all about. If a State is unable or
unwilling to establish a level of AFDC payments to meet all the needs of all
recipients, federal law permits the State to use a percentage-reduction factor as
a method of reducing payments in a somewhat equitable manner. Texas has
adopted a system in which the percentage-reduction factor is applied against the
standard of need before outside income is deducted. Appellants contend that
federal law requires the State to deduct outside income before the percentagereduction factor is applied. While describing the differences between the two
alternatives is a Herculean task, the figures themselves are not difficult to
comprehend. Footnote 6 of the Court's opinion, for example, demonstrates that
the Texas system provides less aid to a family with outside income than the
alternative system. It is also immediately obvious that under the Texas system,
as soon as the family's income reaches $150, it no longer receives anything
from the State, whereas under the alternative, a family earning the same $150
would continue to receive some state funds. Hence, the Texas method of
computation contracts the class of families eligible to receive state aid.
Appellants contend that the characteristics of the Texas system are inconsistent
with federal legislation and that only the alternative system comports with the
intent of Congress. I agree.

53

Appellants also claim that the percentage-reduction factor employed by Texas

is illegal, irrespective of the method of computing payments, because it is lower
than the factor used in other social welfare programs that have participants with
identical standards of need. I also agree with appellants on this point, but for
slightly different reasons from those they have urged.

54

* A. In considering the question whether Texas' method of computing

eligibility for AFDC payments comports with the federal statute, 42 U.S.C.
601 et seq., it is important to keep in mind the words of Mr. Justice Cardozo:
'When (federal) money is spent to promote the general welfare, the concept of
welfare or the opposite is shaped by Congress, not the states.' Helvering v.
Davis, 301 U.S. 619, 645, 57 S.Ct. 904, 910, 81 L.Ed. 1307 (1937). Mr. Justice
Harlan reiterated this point in Rosado v. Wyman, 397 U.S. 397, 422423, 90
S.Ct. 1207, 12221223, 25 L.Ed.2d 442 (1970), when he stated that
irrespective of the policies that a State might wish to pursue by utilizing AFDC
money in one way or another, the ultimate question to be answered in each case
is whether the action of the State comports with the requirements of federal
law.
55

The Court concludes in the instant case that there is no general congressional
policy violated by Texas' choice between the alternative methods of applying a
percentage-reduction factor to its determined standard of need, and also that no
specific statutory provision prohibits Texas from choosing one alternative
rather than the other. In concluding that the legislative history is inconclusive
and that 'what little legislative history there is on the point, . . . tends to
undercut appellants' theory,' the Court has, in my opinion, taken only a
superficial look into the history of the statute and has ignored the intent of
Congress in various sections of the AFDC legislation as interpreted by this
Court in prior cases.

56

B. I begin by considering the impact of 402(a)(23) of the Social Security Act

of 1935, as amended, 81 Stat. 898, 42 U.S.C. 602(a)(23), on appellants'
argument. That section provides that

57

'(a) A State plan for aid and services to needy families with children must

58

'(23) provide that by July 1, 1969, the amounts used by the State to determine
the needs of individuals will have been adjusted to reflect fully changes in
living costs since such amounts were established, and any maximums that the
State imposes on the amount of aid paid to families will have been
proportionately adjusted.'

59

Consideration of this section must, of course, begin with Rosado v. Wyman,

supra, where we examined the derivation of this section in great detail.

60

The relevant facts in Rosado are concisely stated in 397 U.S., at 416, 90 S.Ct.,
at 1220. New York State had changed its AFDC program so that it no longer
determined need on an individualized basis, but instead substituted a system

fixing maximum family allowances based on the number of individuals per

family. The result was a drastic reduction in overall payments. New York State
welfare recipients brought the suit in Rosado, claiming that by changing its
AFDC system from an individualized-grant program to a maximum-grant
program, New York had violated 402(a)(23).
61

Despite our recognition that '(t)he background of 402(a)(23) reveals little

except that we have before us a child born of the silent union of legislative
compromise,' 397 U.S., at 412, 90 S.Ct., at 1218, we determined to discover
what Congress had in mind in adding the section to the pre-existing AFDC
legislation. We concluded that two general purposes could be ascribed to the
section:

62

'First, to require States to face up realistically to the magnitude of the public

assistance requirement and lay bare the extent to which their programs fall short
of fulfilling actual need; second, to prod the States to apportion their payments
on a more equitable basis.' 397 U.S., at 412413, 90 S.Ct., at 1218.

63

These conclusions led us to reject the holding of the District Court, 304 F.Supp.
1354, 1377, that Congress intended to prevent any reduction whatever in AFDC
payments, and to reject the argument of the welfare recipients that if payments
could be reduced 402(a)(23) would be meaningless. We decided that 'a State
may, after recomputing its standard of need, pare down payments to
accommodate budgetary realities by reducing the percent of benefits paid or
switching to a percent reduction system, but it may not obscure the actual
standard of need.' 397 U.S., at 413, 90 S.Ct., at 1218 (emphasis in original). Far
from emasculating the statute, our reading recognized that the statute had at
least three specific salutary effects, and that these were the effects that
Congress intended in enacting the legislation:

64

'It has the effect of requiring the States to recognize and accept the
responsibility for those additional individuals whose income falls short of the
standard of need as computed in light of economic realities and to place them
among those eligible for the care and training provisions. Secondly, while it
leaves the States free to effect downward adjustments in the level of benefits
paid, it accomplishes within that framework the goal, however modest, of
forcing a State to accept the political consequence of such a cutback and
bringing to light the true extent to which actual assistance falls short of the
minimum acceptable. Lastly, by imposing on those States that desire to
maintain 'maximums' the requirement of an appropriate adjustment, Congress
has introduced an incentive to abandon a flat 'maximum' system, thereby
encouraging those States desirous of containing their welfare budget to shift to

a percentage system that will more equitably apportion those funds in fact
allocated for welfare and also more accurately reflect the real measure of public
assistance being given.' Id., at 413414, 90 S.Ct., at 1218.
65

Thus, it is clear that we based our decision in Rosado, a decision that

interpreted 402(a)(23) to permit a decrease in actual AFDC payments, largely
on the conclusion that Congress wanted, not to bar decreases, but to accomplish
other objectives. The fact is that the Court today undermines each of those
objectives and destroys the premise on Which Rosado was decided.

66

One specific congressional goal we saw in 402(a)(23) was that '(r)

ecalculation of need may serve to render eligible for benefits families which
may appear under unadjusted standards marginally to have attained selfsufficiency, but which in fact are unable to subsist at the present cost of living.'
Memorandum for the United States as Amicus Curiae in Rosado v. Wyman,
No. 540, O.T.1969, p. 8. In other words, we read the section as expressing
Congress' willingness to permit reductions in actual payments in return for the
addition of more families to the rolls of AFDC recipients. Accord, Lampton v.
Bonin, 304 F.Supp. 1384 (ED La.1969), vacated and remanded for
reconsideration in light of Rosado, 397 U.S. 663, 90 S.Ct. 1408, 25 L.Ed.2d
644 (1970); Alvarado v. Schmidt, 317 F.Supp. 1027 (WD Wis.1970). As I have
pointed out above, the Texas sysem limits the number of AFDC recipients and
eliminates marginal cases. This is directly contrary to the intent of Congress as
we saw it in Rosado.

67

A second legislative aim that we saw in the section was to force States to
realize the political consequences of reducing welfare payments. It must be
clear that the Texas system of administering AFDC payments effectively
undermines this aim by enabling the State to maintain a constant percentage
reduction factor so that the system on its face appears to contain no reductions
in payments. Welfare reductions are surreptitiously accomplished by
eliminating those persons who have marginal income from eligibility for
AFDC payments. While the congressional intent may not be totally
emasculated by this system, it is certainly not well served.

68

The third and final purpose that we found that Congress had specifically in
mind in enacting 402(a)(23) was to provide an incentive to States to abandon
a flat 'maximum' system. Even though Texas does not now use such a system,
the Court's approval of the system that Texas does use will effectively remove
the incentive from the statute. A State that uses a flat maximum system was
required by 402(a)(23) to adjust the maximums upward to reflect a rise in the
cost of living. Since a State that uses a percentage-reduction system may avoid

the strains cost-of-living adjustments place on the budget simply by lowering

the percentage that it chooses to pay, the statute encouraged abandonment of
flat maximums in favor of the more equitable percentage reductions. The Court
undermines the incentive by offering States a way to circumvent the cost-ofliving adjustments under the flat maximum system. In order to maintain the
maximums without increasing expenditures, States could, under the Court's
opinion, begin to use the maximum to determine AFDC eligibility rather than
the standard of need. The result of this approach would be to reduce the number
of persons eligible for assistance and to reduce the grants of anyone with any
outside income. Rather than serve as an incentive to States to change to a
percentage-reduction system, as Congress intended, 402(a)(23) may now be a
powerful incentive to States to maintain or revert to maximum grants.
69

70

The manner in which the incentive that Rosado saw in 402(a)(23) is stifled
can be illustrated by another look at the family having an income of $100 and a
need of $200. Footnote 6 of the Court's opinion demonstrates that under the
Texas percentage-reduction system, even if the family had no income, the
maximum amount of aid that the family could obtain would be $150. Let us
assume that Texas maintained a maximum grant system and that prior to the
enactment of 402(a)(23), the maximum grant for a family with $200 need
was $100. We assumed in Rosado that the following computation would be
made.
Need......................... $200
Income....................... $100
--------Unmet Need................... $100
Maximum Grant................ $100
--------Total Family Funds........... $200

71

Section 402(a)(23) required an increase in the standard of need and the level of
maximum grants to reflect the rise in the cost of living. Assuming that a 20%
increase was mandated by the rise in living costs, it is obvious that if the
number of families remained stable and if income were stable, the costs of
AFDC to the State would increase by 20%. There was an incentive to change to
a percentage-reduction system to avoid this. Until recently, no one thought that
the State could change to the following system in order to reflect the rise in the
cost of living:

72

New Need.................. $240

--------New Maximum Grant......... $120
Family Income............. $100
--------State Aid..................$ 20

73

To state it more simply, the maximum grant is similar to, and designed to serve
the same purposes as, the percentage reduction factor. If the percentagereduction factor can be applied to need before income is subtracted, it is
impossible to see why income could not be set off against maximum grants.
True, Texas did not choose this alternative, but it is available under today's
decision. A State can, by changing the manner in which it sets off income,
absorb an increase in maximums and end up paying less. Where is the incentive
now to adopt percentage-reduction systems?

74

This illustration is much more than mere speculation as to what might happen
under today's decision. The illustration represents what at least one State
Californiahas already done, or tried to do. Only very recently, the California
Supreme Court struck down the State's AFDC scheme for noncompliance with
the federal statute. Villa v. Hall, 6 Cal.3d 227, 98 Cal.Rptr. 460, 490 P.2d 1148
(1971).

75

The California Supreme Court, having been referred to the District Court
opinion in the instant case as support for California's system, took the position
that neither the California nor the Texas system could stand in light of Rosado.
I agree. Indeed, the United States in its Memorandum as Amicus Curiae in this
case (p. 5) concedes that if Rosado represents 'a binding construction of the
Act, appellants are thus entitled to prevail.' The Government proceeds to argue
that the question presented here was not before us in Rosado. Ibid. I must agree
with appellants that the Government's argument is disingenuous, at best. See
Brief for Appellants 80. The question of what 402(a)(23) means was most
certainly before us in Rosado. It was, in fact, all that was before us. In that case
we rejected the broad construction that the District Court had given the section,
but we endeavored as best we could to extract some meaning from its muddled
history. The United States seeks here to have us do what we explicitly said we
would not do in Rosado, i.e., interpret the section in such a way that it is
nothing more than a 'meaningless exercise in 'bookkeeping." 397 U.S., at 413,
90 S.Ct., at 1218. If we were not making a 'binding construction' of the statute

in Rosado, it is impossible for me to ascertain what we were doing. Hence, I

agree with the Government that appellants are entitled to prevail.
76

Surprisingly enough, the Court makes even shorter shrift of Rosado than does
the Government. In a footnote, the Court states that widened eligibility and the
other effects that Rosado said were intended by Congress when it enacted
402(a)(23) were merely possible effects of the statute, not necessary ones. I
submit that this cavalier treatment of Rosado is completely unwarranted.
Rosado was not an easy case. The absence of a clear legislative history forced
us to examine the 'muted strains' of the congressional voice and to struggle to
'discern the theme in the cacophony of political understanding.' 397 U.S., at
412, 90 S.Ct., at 1218. Unlike the Court in this case, which simply looks to see
if the legislative history is distorted enough to be ignored, the Court in Rosado
carefully scrutinized every aspect of the history in order to perceive the
congressional intent. That was a difficult task, but not an impossible one. The
balance that we saw Congress striking in reducing payments while increasing
eligibility has already been described. We relied on this balance to decide
Rosado. We were not merely speculating as to the intent of Congress; we were
holding that there was a specific intent that was binding in that case. That
decision, in my view, is also binding here. This is my first disagreement with
the majority.

77

C. The second provision in the AFDC legislation that I believe is relevant is

402(a)(8) of the Social Security Act, as amended, 81 Stat. 881, 42 U.S.C.
602(a)(8), which was added to the AFDC statute along with 402(a)(23) in
1968. The purpose of this section is to encourage AFDC recipients to seek
private employment and to end their need for public assistance.
H.R.Rep.No.544, 90th Cong., 1st Sess. (1967); S.Rep.No.744, 90th Cong., 1st
Sess. (1967); U.S.Code Cong. & Admin.News, p. 2834. To accomplish this
objective the statute provides that all of the earned income of each dependent
child receiving AFDC aid who is a full- or part-time student, and a portion of
the earned income of certain other relatives, will be disregarded in the State's
determination of need. We only recently had occasion to consider the effect of
this provision in Engelman v. Amos, 404 U.S. 23, 92 S.Ct. 181, 30 L.Ed.2d 143
(1971).

78

In Engelman we considered a New Jersey scheme for administering AFDC

funds that established income ceilings for families. When the families' incomes
exceeded the ceilings they no longer were eligible for AFDC aid. The District
Court analogized Engelman to Rosado v. Wyman, supra, and determined that
the State's system was inconsistent with the federal Act. 333 F.Supp. 1109. The
District Court recognized that the 1968 amendments to the AFDC legislation

were designed to increase eligibility for AFDC aid, not to decrease it. Because
the District Court viewed 402(a)(8) as requiring a State to disregard certain
kinds of in come in determining eligibility for aid, the District Court struck
down the New Jersey scheme, in effect holding that New Jersey could not
evade the income disregard by imposing an income ceiling not contemplated by
Congress. Families that exceeded the State's income ceilings were still entitled
to AFDC aid so long as their income, excluding income covered by 402(a)(8),
did not exceed the State's standard of need. The effect of the decision was to
increase the class of persons eligible for AFDC aid. We affirmed the decision
without even hearing argument.
79

Both 'the New Jersey and the Texas provisions . . . appear to have been
animated by the same desire . . ..' Memorandum for the United States as
Amicus Curiae 11. Both seek to limit the number of AFDC recipients, and both
violate the federal statute. Indeed, the very purpose of 402(a)(8)to
encourage people to work by permitting them to continue to draw AFDC funds
shows that Congress wanted as many needy people as possible to be part of
the program.

80

The Texas scheme certainly does not violate 402(a)(8) in the way that the
New Jersey scheme did, for as far as we know, Texas excludes income as
required by the statute when computing eligibility. But, as the opinion of the
Court indicates, the Texas system has a fault not found in New Jersey: i.e.,
Texas discourages recipients from earning outside income. This is why I
believe that Texas violates the spirit of the federal statute.

81

It might be argued that Congress only sought to encourage certain AFDC

recipients to earn income and only in a certain amountthe persons and
amounts specified in 402(a)(8). This argument might be persuasive but for
one factCongress never had any idea that a State would attempt to employ a
system such as that used by Texas. Nowhere in the legislative history is there
any mention of such a system. See, e.g., House Committee on Ways and Means,
Section-By-Section Analysis of H.R. 5710, 90th Cong., 1st Sess. (Comm. Print
1967). Congress was, in fact, informed by HEW that a different standard from
that used by Texas was required. See Hearings on H.R. 12080 before the Senate
Committee on Finance, 90th Cong., 1st Sess., pt. 1, pp. 255265 (Testimony
of Wilbur Cohen). Until very recently, every indication by HEW was that the
Texas system would be unlawful. In light of the state of ignorance in which
Congress found itself, it is not surprising that there is no specific rejection of
the Texas system in the 1968 amendments. But 402(a)(8) and everything in
the legislative history certainly indicate that Congress had a strong desire to
encourage AFDC recipients to work. Because the Texas program is inconsistent

with this desire, I believe it is illegal.

82

This is the second reason for my disagreement with the Court.

83

D. Another section of the statute that must be examined is 402(a)(10) of the

Social Security Act, 64 Stat. 550, as amended, 42 U.S.C. 602(a)(10), which
requires that a state AFDC plan shall

84

'provide . . . that all individuals wishing to make application for aid to families
with dependent children shall have opportunity to do so, and that aid to families
with dependent children shall be furnished with reasonable promptness to all
eligible individuals.'

85

The Court states that the primary purpose of this section was to outlaw the use
of waiting lists as a means of minimizing a State's welfare expenditures. There
is clearly support for this view, as the Court noted in Dandridge v. Williams,
397 U.S. 471, 481 n. 12, 90 S.Ct. 1153, 1159, 25 L.Ed.2d 491 (1970). Before
the Court in Dandridge was the question whether maximum-grant limitations
were inconsistent with the federal statute. The Court upheld the maximums, but
said in the course of so doing: 'So long as some aid is provided to all eligible
families and all eligible children, the statute itself is not violated.' Id., at 481, 90
S.Ct., at 1159. This is plainly dictum, but I believe that it is well-considered
dictum that should be followed in this case.

86

It must be remembered that Dandridge and Rosado were decided on the same
day. Thus, the Court assumed in Dandridge that the 1968 amendments to the
AFDC legislation expanded the list of eligible recipients in the manner
suggested in Rosado The Court was also aware in Dandridge that 402(a)(7) of
the Social Security Act, as amended, 53 Stat. 1379, 42 U.S.C. 602(a)(7), had
been part of the AFDC statute since 1939. That section provides that

87

'except as may be otherwise provided (in 402(a)(8), discussed, supra) . . . the

State agency shall, in determining need, take into consideration any other
income and resources of any child or relative claiming aid to families with
dependent children . . ..'

88

The Court assumed, therefore, that in offering aid a State would first set a
standard of need and then examine the income levels of applicants for aid.
Anyone whose income was less than the standard of need would be eligible for
assistance, or so the Court assumed. Dandridge, of course, established that the
aid that might be forthcoming did not have to equal need and that large families

could get proportionately less aid than small families. Just as in Rosado, the
Court in Dandridge viewed the intent of Congress to be to aid as many needy
people as possible, rather than to offer as much aid as possible to a lesser
number of people. In light of this, I believe that today's decision violates the
spirit of Dandridge, as well as the holding of Rosado.
89

Moreover, in my view, 402(a)(7) tells the States how to compute eligibility,

and that section does not allow for the Texas scheme. Despite the position of
the Government in this case, I find support for my reading of 402(a)(7) in
HEW's own regulations, expecially 45 CFR 233.20(a)(2), 233.20(a)(3)(ii),
which indicate to me that income is to be subtracted from the standard of need
before any determination is made as to how much aid the State will give.

90

Because I believe the Texas system violates 402(a)(7), it seems to me that

eligible persons are being denied aid in violation of 402(a)(10), which
requires that aid be furnished to all eligible persons promptly. For me, this case
is no different from King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d
1118 (1968) (striking down substitute-father regulation) or Townsend v.
Swank, 404 U.S. 282, 92 S.Ct. 502, 30 L.Ed.2d 448 (1971) (striking down
restriction on receipt of aid by college students). The State procedure denies
eligible persons aid and, regardless of the State's purposes, the procedure
cannot stand in conflict with the federal statute.

91

I disagree with the Court a third time.

92

E. The last portion of the federal statute that I believe should be considered is
that portion dealing with the social services that are available to AFDC
recipients. See, e.g., 42 U.S.C. 602(a)(14), (15) (assistance in family
planning and child-welfare services; assistance in entering the work force and
reducing the incidence of births out of wedlock); 42 U.S.C. 602(a)(19), 632
(employment training programs); 42 U.S.C. 1396a(10) (medical assistance).
Congress keyed all of these provisions to persons or families that were
receiving aid. By limiting the number of such persons and families receiving
aid, Texas has also limited the availability of these social services. At least one
other court has concluded that

93

'. . . Congress's major concern was the provision of family counseling and
rehabilitation services, work incentives, and family planning programs to
reduce out-of-wedlock births, for all persons in the family, in order to promote
self-support and child development and to strengthen family life. . . . By
making those with marginal incomes eligible for AFDC by raising the standard

of need, more persons would be eligible for such services, which Congress
considered vital to cut down in the long run the numbers dependent on welfare.'
(Citation omitted.) Lampton v. Bonin, 304 F.Supp., at 1389.
94

We suggested the same thing in Rosado, 397 U.S., at 413, 90 S.Ct., at 1218.
While the Court recognizes that the Texas system deprives persons with an
'unmet need' of an opportunity to utilize these services (n. 10) and thus relegates
these persons to perpetual dependence on welfare, the realization is apparently a
source of no concern. But it was a source of tremendous concern to Congress.
The value of medical assistance alone to an average Texas AFDC family is in
the range of $50$60 per month. Memorandum for the United States as
Amicus Curiae 7 n. 5. Since needy families are rendered more needy by Texas'
system, their ability to escape the confines of the welfare rolls is substantially
impaired. At the same time, the goals of Congress as described in the preceding
quotation are also impaired. There is no reason, nor any justification, for
reading the statute this way.

95

Since I believe that Congress intended that as many needy persons as possible
be permitted to avail themselves of the various services provided or improved in
the 1968 amendments, I again disagree with the conclusions of the Court.

96

F. In concluding my analysis of this aspect of Texas' percentage-reduction

system, I add one final note. Thus far I have confined myself to examining the
specific provisions of the AFDC legislation. In attempting to focus on each
section individually in order to determine its role in the statutory scheme,
something of the general flavor of the overall legislation is undoubtedly lost.
That flavor, it seems to me, is to assist needy families to maintain strong family
bonds and to assist needy individuals to realize their potential as unique human
beings by providing them with the basic necessities of life, along with
incentives and training to encourage them to work to help themselves. The
Texas system negates the salutary aspects of the legislation by deterring the
needy from working, by depriving the needy of social services, and by
excluding some needy from any AFDC aid whatsoever. There is no
conceivable reason to permit Texas to subvert the aims of Congress in this way.

II
97

Appellants also challenge the percentage-reduction figure itself. It is agreed

that Texas has established an identical standard of need for the four social
welfare programs that it administersOld Age Assistance (OAA), Aid to the
Blind (AB), Aid for the Permenently and Totally Disabled (APTD), and
AFDC. But Texas provides 100% of recognized need to the aged and 95% to

the disabled and the blind, while it provides only 75% to AFDC recipients. It is
this disparity to which appellants also object.
98

A. Appellants base their primary attack on the Fourteenth Amendment; they

argue that the percentage distinctions between the other welfare programs and
AFDC reflect a racially discriminatory motive on the part of Texas officials.
Thus, they argue that there is a violation of the Equal Protection Clause. I
believe that it is unnecessary to reach the constitutional issue that appellants
raise, and, therefore, I offer no opinion on its ultimate merits. I do wish to make
it clear, however, that I do not subscribe in any way to the manner in which the
Court treats the issue.

99

If I were to face this question, I would certainly have more difficulty with it
than either the District Court had or than this Court seems to have. The record
contains numerous statements by state officials to the effect that AFDC is
funded at a lower level than the other programs because it is not a politically
popular program. There is also evidence of a stigma that seemingly attaches to
AFDC recipients and no others. This Court noted in King v. Smith, 392 U.S., at
322, 88 S.Ct., at 2136, that AFDC recipients were often frowned upon by the
community. The evidence also shows that 87% of the AFDC recipients in
Texas are either Negro or Mexican-American. Yet, both the District Court and
this Court have little difficulty in concluding that the fact that AFDC is
politically unpopular and the fact that AFDC recipients are disfavored by the
State and its citizens, have nothing whatsoever to do with the racial makeup of
the program. This conclusion is neither so apparent, nor so correct in my view.

100 Moreover, because I find that each one of the State's reasons for treating AFDC
differently from the other programs dissolves under close scrutiny, as is
demonstrated, infra, I am not at all certain who should bear the burden of proof
on the question of racial discrimination. Nor am I sure that the 'traditional'
standard of review would govern the case as the Court holds. In Dandridge v.
Williams, supra, on which the Court relies for the proposition that strict
scrutiny of the State's action is not required, the Court never faced a question of
possible racial discrimination. Percentages themselves are certainly not
conclusive, but at some point a showing that state action has a devastating
impact on the lives of minority racial groups must be relevant.
101 The Court reasons backwards to conclude that because appellants have not
proved racial discrimination, a less strict standard of review is necessarily
tolerated. In my view, the first question that must be asked is what is the
standard of review and the second question is whether racial discrimination has
been proved under the standard. It seems almost too plain for argument that the

standard of review determines in large measure whether or not something has

been proved. Whitcomb v. Chavis, 403 U.S. 124, 149, 91 S.Ct. 1858, 1872, 29
L.Ed.2d 363 (1971); Gomillion v. Lightfoot, 364 U.S. 339, 81 S.Ct. 125, 5
L.Ed.2d 110 (1960).
102 These are all complex problems, and I do not propose to resolve any of them
here. It is sufficient for me to note that I believe that the constitutional issue
raised by appellants need not be reached, and that in choosing to reach it, the
Court has so greatly oversimplified the issue as to distort it.
103 B. Appellants also challenge the distinction between programs under Title VI of
the 1964 Civil Rights Act, 42 U.S.C. 2000d:
104 'No person in the United States shall, on the ground of race, color, or national
origin, . . . be subjected to discrimination under any program or activity
receiving Federal financial assistance.'
105 Only last Term in Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28
L.Ed.2d 158 (1971), we had occasion to strike down under Title VII of the
1964 Act, 42 U.S.C. 2000e, employment practices that had a particularly
harsh impact on one minority racial group and that could not be justified by
business necessity. We indicated in that case that 'good intent or absence of
discriminatory intent does not redeem employment procedures or testing
mechanisms that operate as 'built-in headwinds' for minority groups.' Id., at
432, 91 S.Ct., at 854. We said, in fact, that 'Congress directed the thrust of the
Act to the consequences of employment practices, not simply the motivation.'
Ibid. (emphasis in original). That decision even placed the burden on the
employer 'of showing that any given requirement must have a manifest
relationship to the employment in question.' Ibid.
106 There has been a paucity of litigation under Title VI, and I am not prepared at
this point to say whether or not a similar analysis to that used in Griggs should
be used in Title VI cases. This is a question of first impression in this Court, and
I do not think we have to reach it in this case. I include this section only to
make plain that I do not necessarily reject the argument made by appellants; I
simply do not reach it.
107 C. This brings me to what I believe disposes of the question presented: the
disparity between the various social welfare programs is not permissible under
the federal statutory framework.

108 The four social welfare programs offered by Texas are funded in part by the
Federal Government. Each program is governed by a separate statute: OAA, 42
U.S.C. 301 et seq.; AFDC, 42 U.S.C. 601 et seq.; AB, 42 U.S.C. 1201 et
seq.; APTD, 42 U.S.C. 1351 et seq. No State is compelled to participate in
any program, and any State that wants to participate can choose to do so in one,
several, or all of the programs.
109 There is no doubt that States are free to choose whether or not to participate in
these programs, and it is also clear that each State has considerable freedom to
allocate what it wants to one or more programs by establishing different
standards of need to compute eligibility for aid. King v. Smith, 392 U.S., at 318
319, 88 S.Ct., at 21332134. It is also true, however, that the basic aims of the
four programs are identical. Indeed, when Congress first enacted the programs
in 1935, it viewed them all as necessary to provide aid to families unable to
obtain income from private employment. The beneficiaries of the various
programs shared the basic characteristics of need and dependence. H.R.Rep.No.
615, 74th Cong., 1st Sess., 3. While the programs as they now exist go well
beyond merely furnishing financial assistance as they did originally they still
maintain similar goals.
110 Moreover, all four programs were simultaneously amended in 1956 to provide
for social and rehabilitative services to enable all needy individuals to attain the
maximum economic and personal independence of which they were capable.
Each program now requires a State to describe, in its plan for each social
welfare program it administers, the services it offers to accomplish this
objective. See 42 U.S.C. 302(a)(11); 602(a)(14); 1202(a)(12); 1352(a)(11).
111 Congress has given the States authority to set different standards of need for
different programs. But where, as here, the State concludes that the standard of
need is the same for recipients of aid under the four distinct statutes, it is my
opinion that Congress required that the State treat all recipients equally with
respect to actual aid. In other words, as I read the federal statutes, they are
designed to accomplish the same objectives, albeit for persons disadvantaged
by different circumstances.
112 States clearly have the freedom to make a bona fide determination that blind
persons have a greater need than dependent children, that adults have a higher
standard of need than children, that the aged have more need than the blind, and
so forth.
113 But, in this case, Texas made an independent determination of need, and it

determined that the need of all recipients was equal. In this circumstance, I find
nothing in the federal statute to enable a State to favor one group of recipients
by satisfying more of its need, while at the same time denying an equally great
need of another group. The purposes and objectives of the statutes are the same,
those eligible for aid are suffering equally, and Congress intended that once a
State chose to participate in the programs similarly situated persons would be
treated similarly.
114 Everything in this record indicates that the recipients of the various forms of aid
are identically situated. Although the District Court accepted the State's
contentions that there are differences between AFDC children and other
recipients which warranted different treatment under the federal statutes, I find
each of the reasons offered totally unpersuasive.
115 First, Texas argues that AFDC children can be employed, whereas recipients of
other benefits cannot be. Assuming arguendo that this is true, it is an argument
that falls of its own weight. Whatever income the children earn is subtracted
from need, or it is excluded from consideration under 402(a)(8) to encourage
self-help. Thus, income is already reflected in the computation of payments, or
it is excluded in order that a specific legislative goal may be furthered. Thus,
income is irrelevant in any explanation of the differences between the
percentage reductions applied to the various programs. It should also be noted
that a recipient's income is also taken into consideration in programs other than
AFDC. See 42 U.S.C. 302(a)(10)(A); 1202(a)(8); 1352(a) (8).
116 Second, the State maintains that AFDC families can secure help from legally
responsible relatives more easily than recipients under other programs.
Assuming again for purposes of discussion that this is true, it should be plain
that any support from any relatives is subtracted from the State's grant.
Moreover, appellants properly point out that recipients of aid in non-AFDC
programs often have a source of aid unavailable to AFDC recipientsthe
federal old age insurance, 42 U.S.C. 201 et seq. Thus, there is no substance to
this argument.
117 Third, Texas points to the likelihood of future employment for AFDC
recipients, a likelihood that it says is non-existent for older persons and others
who receive aid. Federal law provides that a State may only consider income
that is currently available in allocating funds. 45 CFR 233.20(a)(3) (ii). This
contention is therefore irrelevant.
118 The State makes only two other arguments. One has already been rejected.

Texas urges that the purposes of the federal programs differ, but the history
belies this contention. The other is that the numbers of AFDC recipients is
rising and this program should therefore bear the burden of monetary
limitations. The obvious problem with this argument is that one fundamental
purpose of AFDC aid is to enable people to escape the welfare rolls. But, under
the Texas system, the aid is presently insufficient, people are unable to escape
from dependency, and the rolls become larger. Had Texas not funded AFDC at
a lower level than other programs, it is possible that the number of recipients
would not have grown so large. The State's argument is a self-fulfilling
prophecy on which it cannot rely to penalize AFDC recipients. Furthermore,
there is nothing in the federal legislation to indicate that aid is to be reduced in
a program merely because the number of beneficiaries of that program
increases at a more rapid rate than in other programs. On the contrary,
Congress has indicated that increased eligibility for AFDC is desirable, see 42
U.S.C. 602(a)(23); Rosado v. Wyman, supra. It would be extreme irony if
AFDC recipients were penalized by a State because their numbers grew in
accordance with congressional intent.
119 The conclusion that I draw from the statutes is that Congress intended equal
treatment for all persons similarly situated. Congress left to the States the
determination of who was similarly situated by permitting States to determine
levels of need. Since Texas has decided that AFDC recipients have precisely
the same need as recipients of other social welfare benefits, it is my opinion
that the federal legislation requires equal treatment for all.
120 This conclusion finds support in the legislative history of the 1950 amendments
to the social welfare legislation. In those amendments Congress made clear its
intent to put AFDC recipients on a par with recipients of other welfare aid.
121 'Today more than 1.1 million children under 18 years of age are receiving aid to
dependent children through the State-Federal program because one or both of
their parents are dead, absent from the home, or incapacitated. These children,
regardless of the State in which they now live, will someday find their place in
the productive activities of the Nation and, should the necessity arise, will take
part in defending our Nation. Many of these children will be seriously
handicapped as adults because in childhood they are not receiving proper and
sufficient food, clothing, medical attention, and the other bare necessities of
life. The national interest requires that the Federal Government provide for
dependent children at least on a par with its contributions toward the support of
the needy aged and blind.' S.Doc.No. 208, 80th Cong., 2d Sess., 105 (emphasis
added).

122 Congress recognized that 'families with dependent children need as much in
assistance payments as do aged and blind persons.' Id., at 106. It concluded that
sound national policy was 'for the States to provide payments for aid to
dependent children comparable to those for the needy aged and blind.' Ibid. It is
evident that Congress rejected the notion that where AFDC recipients had the
same need as other welfare beneficiaries, they should get less money. As
Senator Benton said on the floor of the Senate:
123 'There seems no reasonable basis for such inequitable treatment of mothers and
of children by the Federal Government.
124 'All of us with children know that it costs as much if not more to rear children in
health, decency, and self-respect than to maintain an adult. It is surely no less
important to make this investment in our future citizens than it is to provide
decently for those who have retired. . . .' 96 Cong.Rec. 88138814.
125 In the 1950 amendments, Congress increased the federal funding of AFDC so
that its beneficiaries would receive treatment equivalent to that received by
beneficiaries of the other federal-state social welfare legislation. Where the
needs of the people receiving aid under the various programs differed,
Congress recognized that the amount of aid forth-coming should also differ.
But where need was determined by the State to be equal for all recipients,
Congress intended that all should receive an equal amount of aid. S.Doc. No.
208, 80th Cong., 2d Sess., 108. There is absolutely no indication in any
subsequent congressional action that the intent of Congress has changed.
126 Accordingly, I would reverse the judgment of the District Court and remand the
case for formulation of relief consistent with this opinion.

Originally, the Texas Constitution prohibited all welfare programs. Section 51

of Art. III of the Constitution, Vernon's Ann.St., provided that the legislature
'shall have no power to make any grant or authorize the making of any grant of
public moneys to any individual, association of individuals, municipal or other
corporations whatsoever . . ..' However, beginning in 1933, exceptions to this
rule were added to the state constitution in 51a, which now allows
participation in the federal welfare programs, but limits state financing to the
sum of $80,000,000. The legislature cannot exceed this welfare budget without
a state constitutional amendment.

Old Age Assistance (OAA), 42 U.S.C. 301 et seq.; Aid to Families with

Dependent Children (AFDC), 42 U.S.C. 601 et seq.; Aid to the Blind (AB),
42 U.S.C. 1201 et seq.; Aid for the Permanently and Totally Disabled
(APTD), 42 U.S.C. 1351 et seq.
3

At the present time these factors are: OAA100%; AB95%; APTD95%;

and AFDC75%. At the time this suit was instituted the AFDC percentage
was 50%, but it was raised to 75% following a recent amendment of 51a.
See n. 1, supra.

Nineteen of the 26 States that use a percentage-reduction system follow the

Texas procedure of accounting for outside income. See Memorandum for the
United States as Amicus Curiae 8, 1516.

A certain portion of earned income must be exempted as a work incentive. See

42 U.S.C. 602(a)(8).

Assuming two identical families, each with a standard of need of $200, and
outside, nonexempt income of $100, the two systems would produce these
results:
Texas System

Alternative System

$ 200 (need)
$ 200 (need)
X .75 (% reduction factor)
100 (outside income)
150 (reduced need)
$ 100 (unmet need)
100 (outside income)
X .75 (% reduction
factor)
$ 50 (benefits payable)
$ 75 (benefits payable)

Assuming two families with identical standards of need, but only one with
outside income, the alternative system leaves more money in the hands of the
family with outside income:
Outside Income
$ 200 (need)
100 (outside income)
$ 100 (unmet need)
x .75 (% reduction factor)
$ 75 (benefits payable)
TOTAL INCOME (outside
income plus benefits
payable) =$175

No Outside Income
$ 200 (need)
0 (outside income)
$ 200 (unmet need)
x .75 (% reduction factor)
$ 150 (benefits payable)
TOTAL INCOME (outside
income plus benefits
payable) = $150

Under the Texas system, once the income rises above the reduced standard of
need the individual no longer receives any cash assistance. He then would have
a financial incentive, since his income would be rising above the maximum he
could expect from the welfare system.

For a general review of the statutory scheme, see Rosado v. Wyman, 397 U.S.
397, 407412, 90 S.Ct. 1207, 12151218, 25 L.Ed.2d 442 (1970).

10

Certain care-and-training provisions of the Social Security Act are available

only to those who receive money payments under the categorical assistance
programs. See 42 U.S.C. 602(a)(14), (15); 42 U.S.C. 602(a) (19), 632; 42
U.S.C. 1396a(a)(10). Under the Texas computation procedures, those whose
income exceeds their reduced standard of need receive no cash benefits and
thus do not qualify for these subsidiary benefits, although they do have 'unmet
need' qualifying them for aid under the alternative computation procedure.

11

The Court in Rosado recognized this as one of several effects attributable to

402(a)(23). 397 U.S., at 413, 90 S.Ct., at 1218. See also id., at 409 n. 13, 90
S.Ct., at 1216. The Court did not, however, hold that each one of these effects
was intended by Congress. In fact, the Rosado holding as to the 'two broad
purposes' of Congress was stated above, and the Texas system is perfectly
consistent with it. The Court mentioned widened eligibility simply as one of
several possible effects that might follow from the statute as so construed.

12

Act of Jan. 2, 1968, Pub.L.No. 90248, Tit. II, 208, 81 Stat. 894, repealed,
83 Stat. 45.

13

See n. 7, supra.

14

Appellants' reliance on language from Dandridge v. Williams, 397 U.S. 471,

480481, 90 S.Ct. 1153, 11591160, 25 L.Ed.2d 491 (1970), is misplaced.
The Court there explicitly failed to reach the State's argument that the purpose
of 402(a)(10) was primarily to prevent the use of waiting lists. Id., at 481 n.
12, 90 S.Ct., at 1159.

15

Each categorical assistance program is embodied in a separate title of the Social

Security Act, see n. 2, supra, and requires a state plan independent of the plans
under the other titles. In 1962, however, Congress enacted 42 U.S.C. 1381
1385, which for the first time enabled States to combine their plans, but only
for the non-AFDC programs. Thus, while Congress has now enabled States to
adopt a common plan for the other programs, it considered AFDC sufficiently
different so as to require an independent plan.

16

Since the original opinion below, there has been an additional increase.
Following a constitutional amendment, see n. 3, supra, the appropriation has
risen from $6,150,000 to $23,100,000.

17

Program

Year

Percentage of Negroes
and Mexican-Americans

Percentage of
White-Anglos

Num
Reci

OAA

1969
1968
1967

39.8
38.7
37.0

60.2
61.3
63.0

APTD

1969
1968
1967

46.9
45.6
46.2

53.1
54.4
53.8

AB

1969
1968

55.7
54.9

44.3
45.1

AFDC

1969
1968
1967

87.0
84.9
86.0

13.0
15.1
14.0

18

In James v. Valtierra, 402 U.S. 137, 91 S.Ct. 1331, 28 L.Ed.2d 678 (1971), it
was contended that a California referendum requirement violated the
Fourteenth Amendment because it imposed a mandatory referendum in the case
of an ordinance authorizing low income housing, while referenda with respect
to other types of ordinances had to be initiated by the action of private
individuals. The Court responded:
'But of course a lawmaking procedure that 'disadvantages' a particular group
does not always deny equal protection. Under any such holding, presumably a
State would not be able to require referendums on any subject unless
referendums were required on all, because they would always disadvantage
some group. And this Court would be required to analyze governmental
structures to determine whether a gubernatorial veto provision or a filibuster
rule is likely to 'disadvantage' any of the diverse and shifting groups that make
up the American people.' Id., at 142, 91 S.Ct., at 1334.

19

Just as the State's actions here do not violate the Fourteenth Amendment, we
conclude that they do not violate Title VI of the Civil Rights Act of 1964, 42
U.S.C. 2000d et seq. The Civil Rights Act prohibits discrimination in
federally financed programs. We have, however, upheld the findings of
nondiscriminatory purpose in the percentage reductions used by Texas, and
have concluded that the variation in percentages is rationally related to the
purposes of the separate welfare programs. The Court's decision in Griggs v.
Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971), is
therefore inapposite. In Griggs, the employment tests having racially
discriminatory effects were found not to be job-related, and for that reason were
impermissible under the specific language of Title VII of the Civil Rights Act.
Since the Texas procedure challenged here is related to the purposes of the
welfare programs, it is not proscribed by Title VI simply because of variances
in the racial composition of the different categorical programs.

20

Mr. Justice MARSHALL's dissent cites the 1950 amendments to the Social
Security Act as support for its novel statutory theory that States must provide
equal aid levels in each welfare category. The 1950 amendments included 'a
revised method of determining the Federal share of assistance costs,' 95
Cong.Rec. 13932, so that the Federal Government would pay a substantially
equal percentage of matching funds to state plans in each of the categorical
assistance programs. See S.Doc. No. 208, 80th Cong., 2d Sess., 101. But this
revision of the grant-in-aid formula in 403 of the Act was not accompanied
by any corresponding amendment of 402, the section of the Act dealing with
congressional limitations on state AFDC programs. Indeed, proponents of the
1950 amendments explicitly recognized and endorsed the longstanding policy
that the Federal Government sets only minimum AFDC standards, while
leaving the States 'wide discretion both in determining policies and in setting
standards of need.' S.Doc. No. 208, supra, at 101. The enactment of a modified
grant-in-aid formula hardly suggests Congress' intent to engage in 'extensive
alteration of the basic underlying structure of an established program.' Rosado
v. Wyman, 397 U.S., at 414 n. 17, 90 S.Ct., at 1219.

The Court's acknowledgment that '(t)he Texas computation method eliminates

any . . . financial incentive (for welfare recipients to obtain outside income), so
long as the(ir) outside income remains less than the(ir) . . . reduced standard of
need,' ante, at 541, understates the effect of the Texas system on the recipients.
The Texas system not only fails to provide an incentive for those on the welfare
rolls to break the cycle of poverty by obtaining employment, butin certain
casesit also penalizes those who seek employment. The family with
nonexempt income equal to Texas' level of benefits stands in much the same
cash position as the AFDC recipient, but solely because that family has earned
that last marginal dollar that makes it no longer eligible for categorical
assistance it also is denied medical assistance, social services, and training. The
Solicitor General tells us that the value of the medical services alone is worth
$50$60 per month to the average Texas AFDC family. Memorandum for the
United States as Amicus Curiae 7 n. 5.

Eligibility for family development services is keyed to the 'recei(pt) (of) aid to
families with dependent children,' 42 U.S.C. 602(a)(14); so too, with
employment assistance, id., at 602(a)(15)(A) ('receiving aid under the plan');
protection against child's neglect or abuse, id., at 602(a)(16) ('receiving aid');
plans to establish paternity and secure support, id., at 602(a)(17)(A)(i) and (ii)
('receiving aid,' 'receiving such aid'); work incentive programs, id., at 602(a)
(19)(A)(i) ('receiving aid to families with dependent children'); and medical
assistance plans, id., at 1396a(a)(10) ('individuals receiving aid or
assistance').

Would Congress have tied needy families' eligibility for these programs to the
receipt of cash benefits had it foreseen that this Court would disregard the
statutory mandate 'that aid to families with dependent children shall be
furnished with reasonable promptness to all eligible individuals'? 42 U.S.C.
602(a)(10).
3

The rationale which the Court uses to reach this result is at odds with
timehonored rules of statutory interpretation. First, the Court gives but a
grudging interpretation to the recital in 401 of the Act, 42 U.S.C. 601, that
one of Congress' purposes was to encourage welfare recipients to become selfsupporting. The Court in effect disregards the rule that recitals embody 'the
general purposes which . . . Congress undertook to achieve.' Carter v. Carter
Coal Co., 298 U.S. 238, 297, 56 S.Ct. 855, 866 867, 80 L.Ed. 1160. And see
Coosaw Mining Co. v. South Carolina, 144 U.S. 550, 563, 12 S.Ct. 689, 692,
36 L.Ed. 537; United States v. Fisher, 2 Cranch 358, 386, 2 L.Ed. 304. Second,
the Court attributes to Congress the purpose of providing work incentives, e.g.,
42 U.S.C. 602(a)(8), while at the same time allowing the imposition of
penalties and disincentives for obtaining employment. The Court departs from
the principle that '(i)n the exposition of statutes,' various sections of the same
act 'are supposed to have the same object,' Kohlsaat v. Murphy, 96 U.S. 153,
159160, 24 L.Ed. 844, and holds instead that Congress was working at crosspurposes in different subsections of 402, 42 U.S.C. 602. Finally, by giving
the Social Security Act a miserly interpretation, the Court disregards the canon
that remedial legislation, such as the Social Security Act, is to be interpreted
liberally to effectuate its purposes. E.g., Peyton v. Rowe, 391 U.S. 54, 65, 88
S.Ct. 1549, 1555, 20 L.Ed.2d 426.

The percentages of need that will be met by Texas under the various heads are
as follows:
Old Age Assistance.......... 100%
Aid to the Blind............. 95%
Aid to the Permanently and
Totally Disabled............ 95%
Aid to Families with Dependent
Children.................... 75%

To the same effect is our recent decision in Engelman v. Amos, 404 U.S. 23, 92
S.Ct. 181, 30 L.Ed.2d 143 (1971), aff'g sub nom. X v. McCorkle, 333 F.Supp.
1109 (D.C.N.J.1970). There, relying on Rosado v. Wyman, 397 U.S. 397, 90
S.Ct. 1207, 25 L.Ed.2d 442, the District Court held inconsistent with the Social

Security Actand thus unconstitutional under the Supremacy Clause a state

provision which denied AFDC cash payments and ancillary benefits to those
whose nonexempt income was less than the standard of need established by the
State. We unanimously affirmed that decision. To be sure, Engelman dealt with
federal provisions different from those presently in issue (42 U.S.C. 602(a)
(8)(A)(ii); 45 CFR 233.20(a)(3)(ii)), but that does not distinguish the case.
Rather, it merely emphasizes that which until todaywas the broad scheme of
the Social Security Act: those whose nonexempt income was below the
standard of need established by the State and who met the other nonfinancial
criteria for eligibility were to receive benefits. See 42 U.S.C. 602(a)(10).
6

To be sure, '(t)here is no question that States have considerable latitude in

allocating their AFDC resources, since each State is free to set its own standard
of need and to determine the level of benefits by the amount of funds it devotes
to the program.' King v. Smith, 392 U.S. 309, 318319, 88 S.Ct. 2128, 2134,
20 L.Ed.2d 1118 (footnotes omitted). Accommodation of a State's limited
financial resources, however, is to be made in setting the level of benefits and
not by gerrymandering the standard of need. Rosado v. Wyman, supra, 397
U.S., at 413, 90 S.Ct., at 1218. Here, the 'reduced standard of need' which the
majority recognizes to be the consequence of the Texas computation
procedures, ante, at 543 n. 10, violates 402(a)(23) of the Social Security Act,
42 U.S.C. 602(a)(23), and our decision in Rosado. Section 402(a)(23)
mandated an upward revision of the standard of need, and the 'reduced standard
of need' Texas applies to certain of its needy violates this requirement.

45 CFR 233.10(a)(1)(ii) provides:

'The groups selected for inclusion in the plan and the eligibility conditions
imposed must not exclude individuals or groups on an arbitrary or unreasonable
basis, and must not result in inequitable treatment of individuals or groups in
the light of the provisions and purposes of the public assistance titles of the
Social Security Act.'