COUNTY OF SACRAMENTO v. County of Los Angeles, Intervenor and Respondent. (1981)

In this appeal from a judgment holding the state and various state officials (state) liable to the County of Sacramento (county) for the county's unreimbursed expenditures in administering a state-mandated program of “in-home supportive services” for aged, blind and disabled persons, we are called upon to decide the state's responsibility for funding the program. We hold, on the basis of statutes applicable to this case,¹ that the state met its funding obligation in providing (or exceeding) the “matching” contribution required to secure federal dollars and that it was not further obligated to reimburse the county for administrative expenses unless otherwise provided for.

FACTS

On January 1, 1974, the federal government consolidated its adult income maintenance programs for aged, blind and disabled persons and reorganized their funding. (Pub.L.No.92-603.) To qualify for federal funds, California enacted legislation for supplemental payments and services for aged, blind and disabled Californians. (Welf. & Inst.Code, s 12000 et seq., added by Stats.1973, ch. 1216, s 37, p. 2904.) A program was created providing for in-home “supportive services,” which include “domestic services, heavy cleaning, nonmedical personal services, accompaniment ... during necessary travel (,) ... other necessary transportation(,) ... yard hazard abatement, protective supervision, ... paramedical services, and other services ... which make it possible for the recipient to live in comfort and safety under an independent living arrangement.” (Welf. & Inst.Code, ss 12300-12308.) It is one of ten social services programs mandated in every county by California's “Statewide Social Services Plan,” which was adopted to conform with federal law. (45 C.F.R. s 28 et seq.; see Welf. & Inst.Code, ss 12250-12252.)

Seventy-five percent of the funding of the program is provided by the federal government up to the amount federally appropriated and allocated to the state.² The amount of federal dollars appropriated and allocated to California must be matched by one dollar of state money for each three dollars of federal money. (42 U.S.C. s 1397a(a)(1).) The state may provide supplemental funds for program costs which exceed these amounts. Federal law does not prohibit a state from requiring counties to pay for a part or all of the state's matching or supplemental share of program costs.

The State Department of Social Services has developed a system for the sharing of these costs by the counties. The state pays for the “direct costs” of the in-home services program (such as cash payments to recipients), as well as employee time spent actually rendering homemaking and similar services or supervising such services, but denies reimbursement for “assessment time” (time spent by a social worker assessing a potential recipient's needs) and other costs of administration, for which county funds are used to match and supplement federal contributions. This division of “direct” and “administrative” costs was carried over from a predecessor “attendant-care” program, which involved cash grants for in-home services.

On March 23, 1977, the county filed a claim with the State Board of Control asserting a right to reimbursement of all of its expenditures, including administrative expenditures. On May 11, 1977, it filed a complaint in Sacramento Superior Court alleging that the state had not met its funding obligations and seeking relief. Within a short time two more counties filed suit and these cases were consolidated with Sacramento County's. Twenty-three other counties intervened. After a trial limited to the issue of liability and an “Interlocutory Judgment” finding the state liable, the county's action was severed from the others and a trial was had on the issue of damages. Judgment was subsequently rendered for the county, declaring the state liable for all costs of providing in-home supportive services, including assessment and administrative costs, ordering the state to revise its reimbursement scheme, and awarding Sacramento County $1,367,899 plus interest. The state appeals and the county cross-appeals on the issue of the amount of interest to which it is entitled.

DISCUSSION

At issue is whether California counties must pay for the administrative expenses of the in-home services program which are in excess of the amounts necessary to match the federal dollars appropriated and allocated to California by the federal government. We hold that, under the law applicable to the case, they do.

Welfare and Institutions Code section 10800³ imposes upon counties the “responsibility” for the “administration of public social services,” “(s) ubject to the provisions of Section 11050 and Chapter 3 ... of Part 3” of the Welfare and Institutions Code.

We read section 10800, consistent with the interpretation placed upon it by the state and counties, as imposing a funding responsibility upon counties for all costs of public social services, including administrative costs, except as otherwise provided. The county agrees, but claims that former Welfare and Institutions Code section 12306 (added by Stats.1973, ch. 1216, s 37, p. 2912, eff. Dec. 5, 1973; amended by Stats.1981, ch. 69, s 21 (see ante, fn. 1)), applicable here, places a supervening responsibility upon the state for all costs of the in-home supportive services program. It provided: “As regards in-home supportive services, the state shall pay the matching funds required for federal social services funds from the state's General Fund.” The phrase “federal social services funds” in federal law includes funds for administrative expenses. (42 U.S.C. s 1397a(a)(1).) The state is therefore directed to pay the matching funds necessary to secure federal funds for such expenses. Since the state is required to put up one dollar for each three dollars of federal program funds appropriated and allocated to California for the in-home supportive services program,⁴ the state's responsibility under section 12306 is limited by the amount of such federal funds. This section would work a complete assumption of responsibility for the nonfederal share of program expenditures if federal appropriations allocated to California amounted to 75 percent of total program costs. They do not due to federal budget strictures. In fact, in recent years the amount of federal funds made available to California has remained constant and the state has appropriated an amount in excess of one dollar for each three federal dollars.

Section 12306 provides for the state payment of funds “required ” to match federal funds made available to California, and does not cover the program costs, including administrative costs, which are in excess of the mandated state shares. That does not cover all costs of the program. Since section 12306 is an exception to the responsibility placed upon the counties by section 10800, the county is obligated to pay the residual costs not covered by section 12306 or by other statutory exceptions.

Two other statutes confirm this interpretation of section 12306. Section 12304, prior to January 1, 1980 (Stats.1973, ch. 1216, s 37, p. 2911; amended by Stats.1979, ch. 1071, s 5, operative Jan. 1, 1980), applied to severely impaired persons, a subclass of the class of persons eligible for supportive services, and contained a special funding provision which is manifestly superfluous if the county's interpretation of section 12306 is correct: “(g) Funding for the in-home supportive services under this section shall qualify, where possible, for the maximum federal reimbursement. In the event ... that federal funds prove inadequate, the state shall provide funding for services under this section.” Plainly, it would not be necessary to specify state assumption of the costs of part of the program if section 12306 provided reimbursement for all of the program.

More illuminating is the language of section 12302.2 (added by Stats.1978, ch. 463, s 4, eff. Jul. 18, 1978), which provides for unemployment benefits for providers of in-home services: “(b) Funding for the costs of administering this section and for contributions, premiums, and taxes paid or transmitted on the recipient's behalf as an employer pursuant to this section shall qualify, where possible, for the maximum federal reimbursement. To the extent that federal funds are inadequate, notwithstanding Section 12306, the state shall provide funding for the purposes of this section.” (Emphasis added.)⁵ The inference is inescapable that section 12306 does not provide for state assumption of all costs of in-home services.

The county next relies on former Welfare and Institutions Code section 12400 as evidence against our reading of section 12306. That statute, until it was repealed in 1979 (Stats.1979, ch. 282, s 73, eff. Jul. 24, 1979), prescribed for each county a specified amount of its “share toward the cost of state supplementary aid provided under this chapter.” (Emphasis added.) However, Welfare and Institutions Code section 10052⁶ defines “ ‘(a)id’ ” as “financial assistance provided to or in behalf of needy persons ... including direct money payments and vendor payments.” (Emphasis added.) Accordingly, the state's argument in response, that, to make sense in light of the statutes discussed hereinbefore, section 12400 must be read as referring to the supplemental payment component of the statutory scheme, not supplemental services programs, appears persuasive. The county makes much of the language at the end of the statute referring to “(t)he counties' share toward the cost of care and administration,” but this comports with the definition of “aid” as including “payments,” which must be processed, and “medical care.”

In view of the state's limited statutory assumption of financial responsibility for the administration of the program and the evidence that the state substantially exceeded its funding obligations under Welfare and Institutions Code sections 12306 and 12304, subdivision (g), in every year after fiscal 1973-1974, it does not matter that the cost allocation system may have been inequitable and inconsistent, as the trial court found, or even invalid because not properly promulgated in the form of regulations, as the county suggests (the trial court specifically declined to so conclude), since the county received more than it was entitled to in reimbursement from the state.⁷

The judgment is reversed.⁸

FOOTNOTES

1.  Commencing July 1, 1981, a new formula for the state-county share of costs of services became operative. (Stats.1981, ch. 69, s 21.)

2.  The federal government includes administrative expenditures among program costs. (42 U.S.C. s 1397a(a)(1).

3.  Welfare and Institutions Code section 10800 provides:“Subject to the provisions of Section 11050 and Chapter 3 (commencing with Section 12000) of Part 3, the administration of public social services in each of the several counties of the state is hereby declared to be a county function and responsibility and therefore rests upon the boards of supervisors in the respective counties pursuant to the applicable laws, and in the case of public social services for which federal or state funds are provided, subject to the regulations of the department and the State Department of Health Services. (P) For the purpose of providing for and carrying out this function and responsibility, the board of supervisors of each county, or other agency as may be otherwise provided by county charter, shall establish a county department, unless otherwise provided by the county charter. Except as provided herein, the county department shall be the county agency for the administration of public social services and for the promotion of public understanding of the public social services provided under this code and the problems with which they deal.”

4.  The federal funding formula provides for funding of “75 percent of the total expenditures” of the in-home supportive services program (42 U.S.C. s 1397a(a)(1)), but since federal funds are limited by budget restrictions, the formula is read as requiring one dollar of state funds for each three dollars of federal funds appropriated and allocated to the state.

5.  On July 17 of this year, long after the trial of this action, the Governor signed legislation amending Welfare and Institutions Code section 12306 and adding a new section 12306.1: “The amendment of Section 12306 made by this act does not mandate a new program or a higher level of service on any level of local government. The sole financial obligation of the state under this article before the effective date of this section was to match available federal social service funds allocated by the department, except as provided by Section 12302.2 and by subdivision (g) of Section 12304, which subdivision is repealed by the same act adding this section to the code. Additional funding which was previously made available from time to time in the annual Budget Act was not intended by the Legislature to be a permanent assumption of the county obligation to fund other program costs.” (Added by Stats.1981, ch. 69, s 22.) The Legislature, if constitutionally permitted to do so, may by appropriate legislation retroactively amend a statute. The Legislature has here attempted to retroactively, and only retroactively (since it is repealing the statute it interprets), declare what an earlier legislature meant. But it may not do so in the guise of a declaration about the meaning of a prior enactment. “ ‘ ”The ultimate interpretation of a statute is an exercise of the judicial power.“ (Citations.) And our Supreme Court has succinctly stated the part which it, as the highest court of the state, must play in this process: ”(I)t is the duty of this court, when such a question of law is properly presented, to state the true meaning of the statute finally and conclusively....“ (Bodinson Mfg. Co. v. California E. Com., supra, 17 Cal.2d 321, 326, 109 P.2d 935; italics added.) (P) In line with the well-established rule that statutory interpretation is a judicial function, the courts have consistently held that ”declaratory or defining statutes are to be upheld ... as an exercise of the legislative power to enact a law for the future.“ (Citations.) Thus, the Legislature ” may not revise the operation of an existing law in the form of an amendatory statute to affect past transactions.“ ... Further, our courts have concluded that subsequent legislation passed to clarify a statute ” merely supplies an indication of legislative purpose which may be considered together with other factors in arriving at the true intent existing at the time the statute was enacted.“ (In re Marriage of Paddock (1971) 18 Cal.App.3d 355, 360, 95 Cal.Rptr. 652; Stockton Sav. & Loan Bank v. Massanet, supra, 18 Cal.2d 200, 204, 114 P.2d 592; Flewelling v. Board of Trustees (1960) 178 Cal.App.2d 168, 172, 2 Cal.Rptr. 891.)’ ” (Emphasis added.) (People v. Cuevas (1980) 111 Cal.App.3d 189, 199-200, 168 Cal.Rptr. 519; and see 1A Sutherland, Statutory Construction (4th ed. 1972) s 27.04, pp. 313-314.)

6.  Welfare and Institutions Code section 10052 provides: “ ‘Aid’ means financial assistance provided to or in behalf of needy persons under the terms of this division, including direct money payments and vendor payments.”

7.  The record shows that, on a statewide basis, the state paid in excess of its federally mandated share of administrative costs. The county made no showing that it was treated any differently than the statewide figures imply.

8.  In view of our holding, we have no occasion to consider the county's appeal which was solely concerned with the proper amount of interest to be awarded.

BLEASE, Associate Justice.

PUGLIA, P. J., and REGAN, J., concur.