GALSTER v. WOODS

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

Mireya Dulce GALSTER et al., Appellants, v. Marion J. WOODS, etc., et al., Respondents.

Mireya Dulce GALSTER et al., Petitioners, v. SUPERIOR COURT OF HUMBOLDT COUNTY, Respondent; Marion J. WOODS, etc., et al., Real Parties in Interest.

A021109, A020975.

Decided: October 24, 1984

Redwood Legal Assistance, Stephen R. Nielson, Jacob J. Smith, Eureka, Community Advocates/Legal Aid Society, Sheryl Studley, Eleanor Eisenberg, John M. Maraldo, Watsonville, for appellants and petitioners. John K. Van de Kamp, Atty. Gen., Richard D. Martland, Deputy Atty. Gen., Thomas E. Warriner, Asst. Atty. Gen., Charlton G. Holland, Winifred Y. Smith, Deputy Attys. Gen., San Francisco, for respondents and real parties in interest.

The question posed on this appeal and petition for writ of mandate is whether state officials charged with implementing and administering the Aid to Families with Dependent Children (AFDC) program may, consistently with federal and state law, deem a property interest held by an applicant or recipient to be “available” for support and maintenance, and hence countable in computing dollar-amount “resource” limits governing eligibility for benefits, when the applicant or recipient has demonstrated that, despite diligent and good faith efforts to sell or otherwise gain access to that resource, the resource is not actually “available.”   Specifically at issue is the policy of respondents whereby a property interest is deemed an available resource so long as there is no legal impediment to its liquidation and without regard to its practical or actual availability.   Pursuant to that policy, each of the four applicants/recipients herein was deemed to have an available real or community property interest resource valued at over $1,000, the current resource limitation, and was therefore denied AFDC benefits notwithstanding claimed actual unavailability of those resources.   All four applicants/recipients timely appeal from a judgment of the superior court denying their request for a preliminary injunction.  (Code Civ.Proc., § 904.1, subd. (f).)  Pending appeal, they have also petitioned for mandamus relief.   For sake of simplicity, they are referred to herein as appellants, and respondents/real parties in interest as respondents.

BACKGROUND

The following facts as to each appellant appear from the record.

Mireya Dulce Galster separated from her husband in June 1982, leaving the family residence and taking with her her six children.   Finding herself without income, funds from her husband or any other means to meet the needs of herself and the children, she applied in Humboldt County for AFDC benefits but was denied them because her community property interest in the family home that she no longer occupied was nonexempt and exceeded $1,000 in value.1  She promptly challenged denial of her application by requesting, on August 16, 1982, a hearing by the Department of Social Services (DSS) (see Welf. & Inst.Code, § 10950 et seq.), and a hearing was scheduled for September 23.   Meanwhile, she obtained legal counsel, who made a written request for the basis of the denial and received in response copies of three documents from DSS or county welfare departments outlining a policy of assuming the availability of community property interests absent a legal barrier such as a court-ordered restraint on their disposition pending dissolution proceedings.2  Counsel subsequently confirmed, by a telephone conversation with DSS legal counsel, that the action taken on Mrs. Galster's application was consistent with current state policy which was then under review and which had not yet been promulgated as a formal written regulation.

The record does not reveal that DSS took formal action on Mrs. Galster's request for hearing.   However, appellate counsel represents that Mrs. Galster filed for dissolution of her marriage in late September 1982 and obtained a court order restricting disposition of the community property, thereby rendering her interest in that property unavailable by respondents' criteria.   (See fn. 2, ante.)

The remaining appellants share a common background.   Each of their families received AFDC benefits until, in May and July of 1982, those benefits were terminated following county level determinations that each possessed excess, nonexempt real property resources.   Each requested and obtained a hearing to review those terminations, but all three proceedings resulted in proposed decisions recommending denial of their claims.   Respondent Marion J. Woods, as director of DSS,3 adopted the proposed decisions on June 16 and 24, and on September 7, 1982.

Appellant Jo Anna Kronsperger-Smith was found ineligible because she owned an unimproved lot in Lake County assessed by the county assessor's office at $1,819.   The lot is inaccessible from paved roads, lies in mountainous terrain and, due to its small size—about 5,400 square feet—was subject to county restrictions forbidding the installment of a septic tank or well.   She, along with her husband and two young children, had lived on the lot, apparently in an eight-by-ten foot metal shed without running water or electricity, from June 1980 to March 1982, when she was informed by a representative of a child protective services agency that her living environment was inappropriate for the children.   Shortly thereafter the family moved off the lot to Mendocino County, and appellant had her AFDC grant transferred to that county.   She was notified on June 3rd that AFDC benefits would be discontinued due to her interest in the Lake County lot.

After her benefits were denied, she sought a hearing, maintaining that the lot was uninhabitable and, moreover, unsalable despite unsuccessful attempts since April 1981 to sell it at market price.   A letter from a realtor with whom she had listed the property for sale stated that the land was unusable and that one would be fortunate to get $1,000 for it.   Letters from a second realtor, whose office was not taking listings in that area “because they are almost impossible to sell,” stated that there was no present market for the property and that it would be hard to sell for over $1000.   The hearing officer's proposed decision recognized the claim of unsalability but nevertheless sustained the county's action since Mrs. Kronsperger-Smith's property was assessed at more than $1,000 and was free of offsetting encumbrances.

Appellant Rohana Williams had been receiving AFDC benefits in Santa Cruz County as the sole caretaker parent for two children when, in April 1982, she received notification that her benefits would be terminated due to her ownership of an unimproved parcel of land in Siskiyou County having a market value of $7,100 as shown on a 1978–1979 tax statement.   At her hearing challenging the benefits termination, Ms. Williams evidently presented evidence that she had tried unsuccessfully to sell the property at prices as low as $6,500.   However, the hearing officer concluded that, even assuming that that lower value were fair and that there were encumbrances totaling as much as $1,000, the property exceeded the maximum eligibility limitation, and the county therefore properly discontinued benefits.   The hearing officer did find, however, that Ms. Williams “had made continuous good faith efforts to sell the property, both by listing that property with realtors, attempting to sell it herself through advertisements in the newspaper, and attempting to sell the property by posting signs and other indicia that the property was for sale.”

Appellant Robyn Burros was receiving AFDC benefits in Santa Cruz County for a household consisting of herself, her husband and their two sons.   She received notice of discontinuance of benefits effective April 30, 1982, based on her ownership of land in Oregon, where the family had previously lived until January 1979, when they had moved due to a lack of work prospects in that area.   The hearing officer in her case found that the property “consists of approximately four and one-half acres of isolated property.   There is a cabin on the property, which has been repeatedly vandalized.   The claimant had made repeated good faith efforts to sell the property on an intermittent basis” beginning in 1975, at prices of $18,000, $25,000 and, most recently, at between $15,000 and $17,000 since 1981.   The hearing officer concluded that, based on a property value of $15,000 less $2,000 in encumbrances, the net market value exceeded $1,000, and Mrs. Burros was “ineligible for AFDC benefits, despite her good faith efforts to sell that property.”

On September 20, 1982, appellant Galster initiated the instant proceedings by filing, both as an AFDC applicant and as a taxpayer, a complaint and petition in Humboldt County Superior Court, seeking injunctive and declaratory relief and a writ of mandate.   The court denied a requested temporary restraining order on September 28, finding the issue essentially moot as to Galster because she had in the meantime become eligible once again for benefits due to having obtained an order restraining the transfer of her community property pending dissolution proceedings, but the court nevertheless scheduled a hearing on the preliminary injunction.

Amendments to the pleadings were filed on October 4, adding Williams, Burros and Kronsperger-Smith as parties (plaintiffs and petitioners), adding allegations as to them and seeking administrative mandamus review (Code Civ.Proc., § 1094.5) of their final DSS-adopted determinations.   The matter of the preliminary injunction was heard and submitted on November 18 and the court filed its ruling denying the injunction on December 10, 1982.   Implicit in that ruling was also a denial of mandamus relief.   Notice of appeal was filed on January 18, 1983.

On January 24, 1983, appellants petitioned for extraordinary relief in this district court, seeking mandamus and a temporary stay of the trial court's judgment.   Division Three (Poche, J., dissenting) summarily denied the petition on February 7, and appellants thereafter petitioned for a hearing in the Supreme Court.   By an order filed April 6, that court granted their petition, transferred the matter to itself, “stayed” respondents' denial of AFDC benefits to “any applicant” pending final disposition, and retransferred the matter to this court.4  We consider the writ petition along with the appeal since each poses the identical issues.

DISCUSSION

I

It is helpful at the outset to borrow the following ground-laying excerpts from Justice Reynoso's recent opinion for the California Supreme Court in Vaessen v. Woods (1984) 35 Cal.3d 749, at pages 754 to 756, 200 Cal.Rptr. 893, 677 P.2d 1183:  “AFDC was established by the Social Security Act of 1935.  (42 U.S.C. § 601 et seq.)   It is jointly funded by the federal government and the states and is administered by the states in a scheme of ‘cooperative federalism.’  [Citation.]  While state participation is elective, federal funding is conditioned on program compliance with the Social Security Act (Act) and applicable federal regulations.  (See 45 C.F.R. § 233.10 et seq.)   California participates under the terms of Welfare and Institutions Code section 11200 et seq.  [¶] One of four categorical assistance programs established by the Act, AFDC provides financial assistance to families in which a dependent child is in need of financial support because of the absence, disability or unemployment of a parent.  (See 42 U.S.C. §§ 606(a), 607, 608;  Welf. & Inst.Code, §§ 11250, 11251.)  [¶] ․ [¶] In determining a family's need for financial assistance, the federal statute requires the states to consider income and resources other than AFDC payments which are available to the needy child or relative claiming aid.  (42 U.S.C. § 602(a)(7).)”

The last cited provision of the Social Security Act mandates in part that an administering or supervising state agency such as the DSS “shall determine ineligible for aid any family the combined value of whose resources (reduced by any obligations or debts with respect to such resources) exceeds $1,000 or such lower amount as the State may determine, ․”  (42 U.S.C. § 602(a)(7)(B).)  California has opted for the full authorized exemption of $1,000.  (Welf. & Inst.Code, §§ 11155 and 11257.) 5

Section 233.20(a)(3)(ii)(D) of the Code of Federal Regulations currently implements the federal act in this language:  “Net income ․ and resources available for current use shall be considered;  income and resources are considered available both when actually available and when the applicant or recipient has a legal interest in a liquidated sum and has the legal ability to make such sum available for support and maintenance․” 6  (Emphasis added.)   The controversy in this case centers on disagreement over the meaning of the italicized language.   Adopting a narrow interpretation, respondents contend that a legal interest in property must be deemed available for support and maintenance once it is shown to be legally available, despite any practical obstacles to its “current” or “actual” availability.   Appellants contend that “current” or “actual” availability remains an overriding requirement in federal and state policy which precludes respondents' interpretation.

Appellants do not challenge any state or federal statute or regulation;  they simply seek to invalidate, as inconsistent with those expressions of policy, respondents' apparently recently begun practice of looking solely to “legal” availability when determining eligibility.   Also not challenged is the question of valuation;  that is, appellants do not deny that their property interests were correctly valued at over $1,000 and do not contend that the evidence of practical inaccessibility or unsalability which they presented should have been recognized as countering those valuations.7  Further, appellants emphasize that they are not seeking to tie the term “available” with the term “liquidated sum” under the federal regulation and state statute, and therefore implicitly concede that a non-liquid asset (see definition of “liquid assets” in 45 C.F.R. § 233.20(a)(3)(ii)(E)) such as unsold realty, stocks, bonds, etc., may be deemed available.8  Finally, appellants vigorously deny claiming “that they should be allowed to hold their resources indefinitely or until they can sell them at a profit, at market value, or even at below market value”;  they state, rather, that they are willing to comply with “any reasonable regulation” which would require them to take action to render their resources available [whether] by sale, by institution of divorce [sic] proceedings, or by any other available actions.”   The essence of their contention is that applicants and recipients must be given some opportunity to show that their excess real property resources are, despite the absence of formal legal barriers, not actually available to meet their current needs and maintenance.

As will be seen, we will agree with appellants that respondents' policy was invalid as inconsistent with federal and state law policy manifest at the time of the proceedings here under review;  the trial court's denial of administrative mandamus relief was therefore error.   However, we will further conclude that very recent federal statutory amendments now in effect provide a clear directive to respondents as to future action and thus make inappropriate the prospective injunctive relief sought as a taxpayer by appellant Galster and the original writ relief sought post-appeal.

II

 The income and resources language under the federal act and regulations has often been interpreted by the courts, albeit usually in disputes as to the proper inclusion or exclusion of items from the category of “net income” rather than “resources.”   As noted above, the AFDC program is designed primarily to provide assistance to families in which a dependent child is in need of support.   To this end, the states have broad discretion in allocating AFDC funds and are free to set their own standards of need.  (Shea v. Vialpando (1974) 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120;  King v. Smith (1968) 392 U.S. 309, 318, 88 S.Ct. 2128, 2133, 20 L.Ed.2d 1118;  Vaessen v. Woods, supra, 35 Cal.3d 749, 755, 200 Cal.Rptr. 893, 677 P.2d 1183.)   However, “[t]he courts have uniformly and repeatedly protected recipients from false assumptions that money the states believe should be available to meet living expenses is in fact actually available for such use.   [Citations.]”  (Emphasis added, Vaessen v. Woods, supra, 35 Cal.3d at p. 757, 200 Cal.Rptr. 893, 677 P.2d 1183;  Woods v. Woods (1982) 133 Cal.App.3d 954, 958–959, 184 Cal.Rptr. 471.)

 Because state compliance with the mandates of federal law is a condition of receiving federal grants, California, as an AFDC participant, “must therefore administer its program in compliance with the federal eligibility standards established by the [Social Security] Act, as interpreted and implemented by regulations promulgated by [the Department of Health & Human Services] HHS.  [Citations.]”  (Darces v. Woods, supra, 35 Cal.3d 871, 880, 201 Cal.Rptr. 807, 679 P.2d 458.)   While a court will not superimpose its own policy judgment on that of a state administrative agency which acts in a quasi-legislative capacity, “the latitude which an administrator has in implementing a state and federal statutory scheme is not unlimited.   It is well settled that a state welfare administrator may not operate welfare programs which alter, impair, or impede their statutory schemes [citations], and it is this court's obligation to strike down regulations effectuating such welfare operations.  [Citation.]  Thus, to the extent that [a] regulation is inconsistent with controlling state and federal statutes, fundamental principles of administrative law require that it be declared invalid, and its further operation may properly be enjoined.  [Citation.]”  (Garcia v. Swoap (1976) 63 Cal.App.3d 903, 908–909, 134 Cal.Rptr. 137.)

Respondents argue that the fundamental and time honored policy of ensuring that states do not make assumptions of availability and of requiring that income and resources be in fact available for current needs is applicable to income determinations, where there is greater uncertainty as to what funds will be actually made available to the family rather than used for some other purpose, but inapplicable to resources such as realty, which are always “available” in the sense that the property itself is the resource and not the proceeds from the sale of those resources.

The attempted distinction is without substance.   The federal and state provisions define both “income” and “resources” in the same words with respect to their availability.   Moreover, ownership of realty as a resource is not necessarily more certain, in terms of providing for a needy child on a day to day basis, than is the assumption that income will find its way into the family budget.   The chances of converting realty into support and maintenance are perhaps more certain in the long run, but such resources are far less certain to be available soon enough to meet current, day to day needs.

 Next, respondents argue broadly that amendments to the AFDC program brought about by enactment of the Omnibus Budget Reconciliation Act of 1981 (OBRA) (Pub.L. No. 97–35, 95 Stat. 357) indicate a decision by Congress to reduce or eliminate benefits for all but those “ ‘completely without resources—persons or households that have available other sources of income or resources with which to support themselves.’ ․”  (Turner v. Prod (9th Cir.1983) 707 F.2d 1109, 1121, cert. granted sub nom. Heckler v. Turner (1984) 465 U.S. 1064, 104 S.Ct. 1412, 79 L.Ed.2d 739, quoting Philadelphia Citizens in Action v. Schweiker (3d Cir.1982) 669 F.2d 877, 879.)   However, even if that observation is accepted (and the Ninth Circuit in Turner questioned it as unsupported by authority), it does not follow that Congress, by reducing resource limits, intended to retreat from its prior policy regarding availability.   We conclude that while OBRA was unquestionably designed to curb federal spending by, among other things, imposing the income and resources ceiling of $1,000 discussed above, it left unchanged more than 40 years of consistent agency policy and practice in determining when income and resources are deemed available.  (Bell v. Massinga (4th Cir.1983) 721 F.2d 131, 132–133;  see discussion in Turner v. Prod, supra, 707 F.2d 1109, 1115–1116, 1121–1122.)

Respondents also rely on HHS comments published in the Federal Register to the effect that non-liquid resources, such as realty, may be deemed available despite effort required to dispose of them.9  As explained above, however, appellants concede that a non-liquid resource may be considered actually available (see fn. 8, ante ).   The question then remains:  When is a non-liquid resource (e.g., an unsold lot) available for current use?   The cited HHS comment does not answer the question.

 The only “authority” directly supporting respondents' contention that their own policy conforms to federal policy is an apparently unpublished letter from HHS Regional Commissioner Jane Presley internally addressed to respondent Woods.   The letter, a response to a question posed by an AFDC employee, confirms that, under the federal income and resources language (45 C.F.R. § 233.20(a)(3)(ii)(D)), an estranged spouse's “community share of real property is considered an available resource if it is legally available under state law․”  That letter, however, is not a binding interpretation of an administrative regulation, nor does it purport to reflect a uniform interpretation acted upon over a long period of time.   It is therefore not entitled to any great deference, especially when weighed against the firm and consistent policy to the contrary noted above.  (Howard v. Madigan (D.S.Dak.1973) 363 F.Supp. 351, 354;  see Clemons v. United States (6th Cir.1957) 245 F.2d 298, 301;  Carleson v. Superior Court (1972) 27 Cal.App.3d 1, 7, fn. 8;  compare Campos v. Employment Development Dept. (1982) 132 Cal.App.3d 961, 967–968, 183 Cal.Rptr. 637.)

 In conclusion, we find no persuasive federal or state support for respondents' administrative practice of, in essence, conclusively presuming that property interests whose disposition is not legally barred are resources which are actually available to meet the family's current needs.   That practice contradicts consistent and long standing policies of the federal government and this state.   The paramount goal of providing assistance to needy children and their families is hindered by a practice which denies an applicant or recipient the opportunity to demonstrate that unliquidated resources are not actually available despite diligent and good faith efforts to convert those resources and apply them to family needs.   Finally, Welfare and Institutions Code section 11150 expresses our state Legislature's intent that, in formulating and administering regulations with regard to property qualifications, “consideration shall be given to the ability and circumstances of the applicant or recipient in order that undue hardship is not imposed upon [them] in making plans to comply” with code provisions.   (Steilberg v. Lackner (1977) 69 Cal.App.3d 780, 788, 138 Cal.Rptr. 378.) 10  Respondents' practice simply ignores hardship.

III

Having concluded that the practice of respondents contravenes state and federal policy, we examine a very recent amendment to the Social Security Act occasioned by enactment of the Deficit Reduction Act of 1984 (DRA) (Pub.L. No. 98–369 (July 18, 1984) 98 Stat. 494, 1984 U.S.Code Cong. & Admin.News, Nos. 6A–6B).   Effective October 1, 1984, states are required to exclude from the AFDC's 1,000-dollar resource limit, “for such period or periods as the Secretary [of HHS] may prescribe, real property which the family is making a good-faith effort to dispose of, ․”  (Emphasis added, Pub.L. No. 98–369, § 2626, 98 Stat. 1136, amending 42 U.S.C. § 602(a)(7)(B).)   The amendment conditions AFDC aid on eventual disposal of the property, at which time such aid is recoverable by the state as overpayment.11  (Ibid.)   Interim final regulations, also effective October 1, amend section 233.20(a)(3) of the Code of Federal Regulations, title 45, by requiring that states respect a family's good faith disposition efforts for a period of at least six months and, at the state's option, up to three months more.  (49 Fed.Reg. 35599–35600 (Sept. 10, 1984).) 12  The amended regulation applies to both applicants and current recipients.  (49 Fed.Reg. 35590 (Sept. 10, 1984).)

 These federal statutory and regulatory amendments, in our view, make prospective relief in the form of the preliminary injunction and original writ sought here inappropriate.   The federal scheme is now clearly expressed and implemented, it is now binding on respondents in their subsequent actions toward even “current recipients,” and respondents' practice of basing eligibility on bare “legal” availability is obviously incompatible with that scheme—at least in the first six months of each case.   Of course, it is foreseeable that after a six-or nine-month period of unsuccessful but good faith efforts to dispose of realty, respondents might then resort to their “legal” availability criteria.   However, the federal scheme, by placing limits on the period of time in which the state is obligated to work with the family and by requiring state recoupment of aid where the property is not disposed of within that time (see fn. 12, ante ), necessarily envisions and even prescribes an eventual cut-off of state efforts and AFDC benefits perhaps not inconsistent with respondents' practice.   But in any event, it is too soon to tell what respondents' post-DRA practice will be.13

Having examined the DRA, we incidentally reject respondents' suggestion that its' provisions, by setting up the good-faith-efforts amendment as an “exception” within a general rule of ineligibility (see text of amended section in fn. 11, ante ), shows that Congress' pre-DRA intent must have been to deem nonexempt real property interests to be currently available despite practical difficulties in disposing of them.

First, settled principles of statutory construction generally prevent deducing the intent behind one act of Congress from implications of a second act passed years later, (Penn Mutual Co. v. Lederer (1920) 252 U.S. 523, 537–538, 40 S.Ct. 397, 402, 64 L.Ed. 698.)   Even where the later enactment specifically purports to clarify prior legislative intent—and here the DRA provision does not 14 —that expression of intent is not binding but is merely one factor for a court to consider.  (Eu v. Chacon (1976) 16 Cal.3d 465, 470, 128 Cal.Rptr. 1, 546 P.2d 289;  Bd. of Soc. Welfare v. County of L.A. (1945) 27 Cal.2d 90, 97, 162 P.2d 635.)

Second, as an illustration of why that rule of construction exists, this case demonstrates that such deductions are frequently two-sided and hence inconclusive.   Respondents view the good-faith-efforts amendment as Congress' first departure from a priorly inflexible rule of presuming current availability;  but appellants will view the amendment as Congress' first constraint (i.e., by time limits and conditioned benefits) on a long standing policy of looking to actual or practical availability.

DISPOSITION

Although prospective relief is no longer appropriate, three of appellants additionally sought administrative mandamus relief against respondents' final administrative rulings denying each of them benefits despite good faith efforts to dispose of their real property interests.   They are entitled to that relief, which will mean that respondents must allow them to attempt disposition of their properties 15 under the current federal scheme.

As to the appeal (A021109), the judgment is affirmed insofar as it denies injunctive relief and reversed insofar as it impliedly denies the administrative mandamus relief requested by appellants Kronsperger-Smith, Williams and Burros.   The trial court is directed to grant administrative mandamus and remand the proceedings for further administrative action consistent with this opinion.

For reasons stated above, the original petition for writ of mandamus filed in this court (A020975) must be denied.16  In order to ensure simultaneous finality of both dispositions herein (see Cal.Rules of Court, rule 24(a)), the petition is hereby denied effective thirty days after the filing of this opinion.

FOOTNOTES

1.   The record is lacking in specific facts as to Mrs. Galster such as what circumstances caused her to leave the residence, what were her husband's reasons for not helping her financially and by how much the value of her community property interest exceeded $1,000.   The declaration of a county social worker does show that she was destitute and that she sought legal advice in regard to obtaining assets or support through initiating dissolution proceedings.

2.   A July 23, 1982, memorandum addressed to AFDC eligibility supervisors at the Humboldt County Department of Public Welfare advises:“Effective immediately the community property interest of clients in an absent spouses's property is to be considered available and included in his/her property reserve․“The only exception to the availability of the property is if there is a legal barrier to the client's obtaining his/her share.   Filing for divorce or a legal separation would not be sufficient, since the property can still be liquidated.   An interlocutory decree or temporary restraining order which specifically makes the property unavailable would be sufficient.   Another example would be if the client was a co-tenant in a piece of property and the other co-tenants refuse to either buy his/her interest or let it be sold.“Intake is already operating under this new state policy.   Ongoing should start reviewing for cases with community property as soon as possible since we have some ineligible cases currently receiving aid.   Cases still receiving aid after August 31, 1982 who are ineligible due to excess property will be charged with administrative error property overpayments starting September.“Questions about what constitutes a legal barrier or extenuating case circumstances may be referred to the Program Validation Unit [PVU].”A second document, a “PVU Inquiry/Response Control” form from the DSS Program Operations Bureau in response to a local agency's question regarding the availability of community property as a countable resource, confirms, “If legal barrier—not available.   Otherwise available immediately ․”Finally, a May 24, 1982, letter from DSS to the director of the Shasta County Welfare Department answers a hypothetical question posed by the director:“QUESTION # 1“Example:  Woman has separated from husband, leaving him in home owned in joint tenancy.   Divorce action has been filed, property settlement is pending.   How do we treat the ‘other real property,’ consisting of her community interest in the value of the home?   Does the pending court action on the divorce make it unavailable to her until a settlement is reached?   Would a ‘tenants in common’ holding change the determination?   How should it be considered if there is only a separation, and no legal action has been taken?“ANSWER“In the example given, the value of the community interest in the property would be used for making a determination for AFDC–FC eligibility.   Until the property settlement is determined, or unless an interim court order exists enjoining the parties from distribution, sale or encumbrance, the applicant's/recipient's community property would be assumed to be available under current policy.”

3.   Mr. Woods is no longer the DSS director, although, for convenience, he is referred to in this opinion as respondent Woods.   (Darces v. Woods (1984) 35 Cal.3d 871, 878, fn. 2, 201 Cal.Rptr. 807, 679 P.2d 458.)

4.   The Supreme Court's order states in part:  “Pending final disposition of this proceeding, real parties in interest [respondents] are stayed from denying benefits to any applicant for [AFDC] on the ground that such applicant owns a property right of a market value in excess of $1,000 ․ if that property right is not, as a practical matter, ‘available for the use [of] or expenditure by or in behalf of the applicant ․’ ”  (Quoting Welf. & Inst.Code, § 11155, subd. 4.)

5.   The federal statute and regulations exempt, for purposes of the resource limitation, “a home owned and occupied” by a member of the assisted family or one living with them in the home, irrespective of the home's value (42 U.S.C. §§ 602(a)(7)(A) and 602(a)(7)(B);  45 C.F.R. § 233.20(a)(3)(i)(1)), and California law necessarily also reflects that exemption (Welf. & Inst.Code, § 11257, subd. (b)(1)).

6.   The following italicized portion of our state's Welfare and Institutions Code section 11257, subdivision (a), is identical to the federal regulation except for omission of the word “available” (supplied in brackets for comparison):  “For purposes of this subdivision, real and personal property shall be considered [available] both when actually available and when the applicant or recipient has a legal interest in a liquidated sum and has the legal ability to make that sum available for support and maintenance.”  (Emphasis added.)

7.   Respondents therefore miss the point when they suggest steps which each might have taken to reduce her estimated adjusted fair market value (Welf. & Inst.Code, § 11257, subd. (a)) or “equity value” (45 C.F.R. § 233.20(a)(3)(ii)(E)), or urge that the parcels of land here in question might have been sold for lower asking prices.   Because respondents evidently considered good faith efforts to convert the resources to cash proceeds irrelevant, there is no reason to believe that appellants' cases would have come out differently upon a greater showing of good faith or effort.

8.   Both the federal regulation and the California statute premise availability in part on the applicant having “a legal interest in a liquidated sum ․”  (emphasis added;  45 C.F.R. § 233.20(a)(3)(ii)(D);  Welf. & Inst.Code, § 11257, subd. (a)), yet an interpretation that recognized only resources already converted to cash as “available” would produce the absurd result that one could have endless realty investments and still qualify for AFDC assistance.   Contrary to respondents' assertion, appellants do not make such a claim.

9.   The following was published on February 5, 1972 (47 Fed.Reg., No. 25, p. 5657):“Comment:  Clarification was requested on how to proceed when an applicant or recipient has non-liquid resources such as a car or real property that could meet current need, but which must be disposed of to retain eligibility.“Response:  Assistance cannot be paid for any month in which the recipient has liquid or non-liquid resources which exceed the $1,000 limit prescribed by the statute.”We note that the response would assume the comment's given fact of availability—i.e., that the property “could meet current need ․”

10.   Miller v. Stumbo (Ky.App.1983) 661 S.W.2d 1, provides additional support for our conclusion that a real property resource must be practically as well as legally available.   Sharon Miller, the AFDC recipient in that case, had her benefits discontinued when it was discovered that she owned a one-third interest (worth $1,867) in non-income producing property valued at $5,600.   Her interest exceeded the federal limit of $1,000, and she was therefore found ineligible in administrative proceedings despite the fact that the property was for sale and was difficult to sell due to numerous needed repairs.   Relying on the language of the federal regulation (45 C.F.R. § 233.20(a)(3)(ii)(D)), the court of appeals reversed the trial court's affirmance of the administrative appeal board's order, finding that insufficient probative evidence supported the board's order.   Concluding that the proceeds of the sale were not yet actually available to Miller, the court noted that she had a “legal interest” in the property and the “theoretical legal ability to make it available for support and maintenance,” but did not have “the practical legal ability to do so․”  (661 S.W.2d at p. 2.)   The court further concluded that Miller's interest was not in a “liquidated sum.”   (Ibid.)  Although appellants herein do not pursue the “liquidated sum” element of the regulation, the Miller case is nevertheless significant in that the appellate court, in reversing, relied in part on the recipient's lack of “practical legal ability to make her interest in the realty available ․”  (Ibid.)  (See also Parson v. Miller (1974) 90 Nev. 126, 520 P.2d 607, 609–610 [in light of uncertain state of title and unsuccessful efforts to secure a loan against or sell an AFDC recipient's undivided 50 percent interest in real property, the resource did not appear marketable and hence a currently available resource].)

11.   As amended, section 602(a) of title 42 of the United States Code reads in relevant part as follows (added language italicized):“[602 (a) ] A State plan for aid and services to needy families with dependent children must ․;“(7) except as may be otherwise provided ․, provide that the State agency—“․“(B) shall determine ineligible for aid any family the combined value of whose resources (reduced by any obligations or debts with respect to such resources) exceeds $1,000 or such lower amount as the State may determine, but not including as a resource for purposes of this subparagraph ․ (iii) for such period or periods of time as the Secretary may prescribe, real property which the family is making a good-faith effort to dispose of, but any aid payable to the family for any such period shall be conditioned upon such disposal, and any payments of such aid for that period shall (at the time of the disposal) be considered overpayments to the extent that they would not have been made had the disposal occurred at the beginning of the period for which the payments of such aid were made.”

12.   As amended, the regulation (45 C.F.R. § 233.20(a)(3)(i)(B)) provides in relevant part:  “The amount of real and personal property that can be reserved for each assistance unit shall not be in excess of one thousand dollars equity value (or such lesser amount as the State specifies in its State plan) excluding only:  [¶] ․  [¶] (5) Real property for a period of six months (or at the option of the State, nine months) which the family is making a good faith effort (as defined in the State plan) to sell subject to [the] following provisions.   The family must sign an agreement to dispose of the property and to repay the amount of aid received during such period that would not have been paid had the property been sold at the beginning of such period, but not to exceed the amount of the net proceeds of the sale.   If the property has not been sold within the specified time period, or if eligibility stops for any other reason, the entire amount of aid paid during such period will be treated as an overpayment;  ․”   (49 Fed.Reg. 35599–35600.)

13.   A further shift from respondents' practice is now compelled by recent state law amendments.   Effective January 1, 1984, the following provision was inserted in section 11257 of California's Welfare and Institutions Code, governing retention of realty interests in cases of recent marital separation:  “[I]f an applicant has entered into a marital separation for the purpose of trial or legal separation or dissolution, real property which was the usual home of the applicant shall be exempt for three months following the end of the month in which aid begins.   If the recipient was receiving aid when the marital separation occurred, the period of exemption shall be three months following the end of the month in which the separation occurs․”  (Welf. & Inst.Code, § 11257, subd. (b)(1), as amended by Stats.1983, ch. 902, § 2, No. 9 West's Cal.Legis. Service, pp. 4984–4985.)   Following that three-month flat exemption period, further exemption under the statute is made to depend, as to a spouse out of possession, on a species of “legal” unavailability akin to that required by respondents in this case:  “To remain exempt following this three-month period, the home must be occupied by the recipient, or be unavailable for use, control, and possession due to legal proceedings affecting a property settlement or sale of the property.”  (Ibid.)

14.   The only express indication of intent is this brief explanation of the amendment's legislative history:“Present law  [¶] ․ Real property is considered as a resource available to the family both when actually available and when the applicant or recipient has a legal interest in a liquidated sum and has the legal ability to make the sum available for support and maintenance.“House bill  [¶] Exempt from the AFDC resource limitation, ․ real property which the household is making a good faith effort to sell at a reasonable price and which has not been sold.   Effective October 1, 1984.“Senate amendment  [¶] No provision.“Conference agreement  [¶] The conference agreement follows the House bill with a modification establishing an AFDC policy on real property that is similar to SSI policy.   The managers intend that by regulation, real property which the household is making a good faith effort to sell would be exempt for six months (with State option for an additional 3 months) but only if the family agrees to use the proceeds from the sale to repay the AFDC paid.   Any remaining proceeds would be considered a resource.”   (Pub.L. No. 98–369, House Conf. Report No. 98–861, pp. 1395–1396, 1984 U.S.Code & Admin.News, No. 6A, pp. 1389–1390.)As can be seen, the explanation does no more than restate preexisting law as worded in the Code of Federal Regulations, title 45, section 233.20(a)(3)(ii)(B), and indicate that the time periods, etc., are meant to conform to Social Security provisions.

15.   The record does not reveal whether any of appellants still retain nonexempt real property interests or are otherwise eligible for aid at this time.

16.   Although the Supreme Court granted appellants' petition for a hearing for purposes of issuing the stay and retransferring the cause to this court, no alternative writ ever issued.

SMITH, Associate Justice.

KLINE, P.J., and ROUSE, J., concur.