The opinion of the court was delivered by: GURFEIN
After a dismissal of the complaint by our late brother, Judge McLean, the Court of Appeals remanded the claims of those individuals who were suing the state defendant, the Commissioner of Social Services of the State of New York, in their official and personal capacities to declare the New York Social Services Law unconstitutional in certain respects, with instructions to convene a three-judge district court. The Court of Appeals affirmed the district court's dismissal of all the plaintiffs' claims against the federal defendants. It also affirmed the dismissal of those claims asserted by city and county plaintiffs against the state defendant.
City of New York v. Richardson, 473 F.2d 923 (2 Cir. 1973), cert. denied, 412 U.S. 950, 93 S. Ct. 3012, 37 L. Ed. 2d 1002 (1973).
This court is convened pursuant to the mandate of the Court of Appeals. The federal defendants are out of the case. The City of New York has been dismissed as a plaintiff. The plaintiff, Ola Bryant, described as a citizen and taxpayer, but, also as a welfare recipient of the city, is in limbo, because the question of her claim to damages in excess of the jurisdictional amount of $10,000 under 28 U.S.C. § 1331, has not been adjudicated. The issue of whether she is a proper plaintiff under 42 U.S.C. § 1983 has not been pressed. The plaintiffs now are the Mayor and the City Commissioner.
The action, as presently amended, seeks a declaratory judgment and injunction to declare invalid under the Equal Protection Clause of the Fourteenth Amendment, the provisions of the New York Social Services Law, McKinney's Consol. Laws, c. 55 referred to in the amended complaint
that divide the State of New York into Social Services districts and in so doing allegedly achieve an unequal and discriminatory distribution of the burden of public assistance costs and payments in the State, and the imposition of local taxes accordingly.
The plaintiffs move for summary judgment and the defendant cross-moves for summary judgment.
The facts are not in serious dispute. We cannot state them more concisely than Chief Judge Kaufman did on the appeal in 473 F.2d 923, at 926-927 as follows:
"The Social Security Act provides, inter alia, for public assistance to the aged, Title I, 42 U.S.C. § 301 et seq., to families with dependent children, Title IV, 42 U.S.C. § 601 et seq., to the blind, Title X, 42 U.S.C. § 1201 et seq., and to the permanently and totally disabled, Title XIV, 42 U.S.C. § 1351 et seq. Funds provided in accordance with the Social Security Act are not distributed directly to individuals eligible for assistance; instead, as part of what has been called a "scheme of cooperative federalism," King v. Smith, 392 U.S. 309, 316, 88 S. Ct. 2128, 20 L. Ed. 2d 1118 (1968), federal funds are made available on a matching-fund basis, for administration by the states. No state is required to participate in any program offered under the Social Security Act, but those states that wish to receive federal financial aid for local public assistance must submit to the Secretary of HEW, and have approved by him, a state plan for such assistance. Each plan, to obtain approval, must comply with certain provisions of the Social Security Act and with rules and regulations issued by HEW. Thus, subject to certain limited exceptions, a state plan will not be approved unless it provides 'for the establishment or designation of a single state agency with authority to administer or supervise the administration of the plan. ' 45 C.F.R. § 205.100(a) (1). The plan must be in effect 'on a statewide basis in accordance with equitable standards for assistance and administration that are mandatory throughout the State. ' 45 C.F.R. § 205.120(a). State funds must be used for both assistance and administration and on no account may State participation total less than 40% of the non-federal share of the total expenditure, 45 C.F.R. 205.130(a) (1), (c). There is no requirement that local governments contribute to the cost of a state's welfare expenditure, but 'if there is local financial participation there [must] be a method of apportioning State and Federal funds among the political subdivisions of the State on an equalization or other basis that will assure that lack of funds from local sources does not result in lowering the amount, duration, scope, or quality of care and services or level of administration under the plan in any part of the State. ' 45 C.F.R. § 205.130(c) (2).
"States submitting an approved plan to the Secretary of HEW may choose between two reimbursement formulae. The first of these, see 42 U.S.C. §§ 303, 603, 1203, 1353, 1383, is based upon a sliding percentage calculation of certain fixed dollar allotments for each of the four public assistance programs covered by the Social Security Act. The second, the 'Medicaid' formula, see 42 U.S.C. § 1318, takes into account not fixed but actual payments made by a state for public assistance and is based upon a sliding percentage scale, with a minimum reimbursement level to the states of 50%. The Medicaid formula contains a factor based upon the ratio of the square of the state's per capita income to the square of the per capita income of the nation as a whole. Under the formula relatively 'poorer' states are reimbursed at a higher percentage than relatively 'richer' states. New York State, whose plan was approved by the secretary of HEW, opted for the Medicaid formula under which the federal government reimburses New York for 50% of its total welfare costs.
"New York State's approved plan divides the state into geographic social services districts. New York City is one such social service district, see Social Services Law, McKinney's Consol. Laws, c. 55, § 61(1), and is consequently 'responsible for the assistance and care of any person who resides or is found in its territory and who is in need of public assistance and care which he is unable to provide for himself. ' Social Services Law § 62(1). The state plan sets standards for eligibility, payments schedules and the conditions of administration, and requires each local social service district to finance its own public needs, subject to the following reimbursement provision in New York Social Services Law, § 153:
'Reimbursement and advances by the state.
There shall be paid to each such [public welfare] district, city or town
a. the amount of federal funds, if any, properly received or to be received on account of such expenditures;
c. fifty percentum of the amount expended for public assistance and care for local charges, after first deducting therefrom any federal funds properly received or to be received on account thereof. '
"The net effect of the combined federal-state programs is that payments for assistance in federally-aided categories are provided as follows:
Federal revenue: 50%
State revenue: 25%
Local revenue: 25%"
The plaintiffs complain that this formula violates the Equal Protection Clause of the Fourteenth Amendment, because the City of New York is required to carry a heavier burden of public assistance costs than the rest of the State, since a disproportionately larger number of persons who receive public assistance reside in the City of New York and because the City is required to raise its mandated share of the cost by local taxation of its residents.
The plaintiffs argue that it is not the fault of the City or its residents that migrants from the South and Puerto Rico, who are generally poor, largely choose to make their new homes in the City rather than in other parts of the State, and that the State should not mandate the level of payments required to be made by the City.
The City notes that in the year 1969, for example, while only 45% of the State's residents were living in New York City, that the City was responsible for fully 74% of the entire welfare burden of the State. Moreover, it is noted that in the same 1969 year, 12.52% of the City residents received public assistance against an average of 3.49% for the balance of the State. By 1972, the percentage of the State's welfare recipients in New York City was 70% against 30% for the balance of the State -- a considerable difference. By 1972, 16.03% of the City's population was on welfare against 5.04% outside New York City. Finally, by 1971, New York City was expending $151.47 per inhabitant on welfare against an expenditure of $44.23 by inhabitants of other parts of the State. The City's share of public assistance expenditures was $869,060 in fiscal year 1972-73; the State's share was $881,788. The federal government contributed $1,454,843. The actual source of funds expended in the City was 45.4% federal, 27.5% state, and 27.1% city. (D. Ex. 1, attached to defendant's affidavit).
The conclusion is, of course, inescapable that New York City bears a heavier share of the welfare costs than the rest of the State, because a proportionately larger percentage of welfare recipients live within its borders. The question to which we must address ourselves is whether this is constitutionally permissible under the Equal Protection Clause of the Fourteenth Amendment.
We have studied the brief of the State-appellee upon the appeal from Judge McLean's order. Although the brief tendered was adequate on other points, it failed to discuss any significant rationale for justifying the State's welfare plan. In the brief and affidavit before us, however, that deficiency has been remedied. The Court of Appeals in remanding to this Court said that "[in] directing the convening of a three-judge court we intimate no views on the ultimate merits of the constitutional claim to be adjudicated by that Court." 473 F.2d at 933, n. 10.
Since the opinion in this case was filed by the Court of Appeals on January 26, 1973, the Supreme Court has decided San Antonio Independent School District et al. v. Rodriguez, 411 U.S. 1, 93 S. Ct. 1278, 36 L. Ed. 2d 16 (1973). Since then the Supreme Court has also affirmed, without opinion, State ex rel. Seehawer, Rooney and Racine County v. Schmidt, 414 U.S. 1105, 94 S. Ct. 832, 38 L. Ed. 2d 734 (1973), the decision of a three-judge court in the Eastern District of Wisconsin. The Supreme Court has now given us guidelines for constitutional analysis in this kind of equal protection attack which were not clear at the time the Court of Appeals for the Second Circuit remanded to this Court.
Our Court of Appeals held only that the present plaintiffs have standing and that there is a question substantial enough under Ex Parte Poresky, 290 U.S. 30, 54 S. Ct. 3, 78 L. Ed. 152 ...