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| | | | | American Constitutional Law, Volume One
Gregg Ivers, American University
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Case Problems
Chapter Eight: The Contract Clause
Is Social Welfare a Contract?
In March 2000, Woodstock County enacted the Public Assistance to Families Act (PAFA), a program intended to provide both intermediate and long-term public welfare for families headed by single parents with one or more dependents under the age of eighteen. Effective September 1, 2000, with terms to expire on August 31, 2005, PAFA provided cash grants to qualified families in the following amounts:
| Head of Household: | $750 per month. | | Dependents: | $180 to $105 per dependent per month. |
Dependents were eligible to receive funds under PAFA until their sixteenth birthday. No limitation existed on the number of dependents per family eligible for assistance under PAFA. PAFA also featured an escalating cost-of-living adjustment (COLA) pegged to the rate of inflation. Assistance amounts were calculated according to the baseline subsistence level for a single adult eighteen years or older living in Woodstock County ($9,000 per year). Dependent amounts were based on estimated food and clothing costs, plus other essential expenses, for minors under the age of eighteen. The county developed a sliding scale for dependent benefits, from $2,160 per year (for infants to three-year-olds) to $1,250 per year for fourteen- to sixteen-year-olds.
In addition to the standard provisions of PAFA, Woodstock County developed an additional, optional program called "The Social Responsibility Contract" (SRC). Participating in the SRC program increased the cash grant allowance for heads of households to $900 per month and $225 per month for each dependent if participants met the conditions outlined in the SRC. The SRC required participants to meet with job counselors on a bi-weekly basis and to provide evidence that the participants had applied for at least one job during the interim period. In addition, the SRC required all participants in the program to remain drug-free, with drug tests required on a weekly basis. Conviction for a criminal offense disqualified an individual from participating in the SRC program. All participants in the SRC program were required to sign a contract binding them to the terms of agreement.
Within a year of PAFA's enactment, forty-three percent of all participants were successful enrollees in the SRC program. Participants were permitted to remain enrolled in the SRC for up to one year.
In February 2002, the state in which Woodstock County was located enacted the Work and Responsibility Act (WRA), which abolished all county-level welfare programs such as PAFA. The law gave the state complete policy-making control over all such social welfare programs. Under this new law, counties became administrative agents of the state.
Under the new state law, people who had been participating in Woodstock County's program had their benefits reduced to the following state-mandated amounts:
| Head of Household: | $425 per month. | | Dependents: | $145 per month. |
Other changes under WRA included a reduction in the cost-of-living-adjustment (COLA) amount pegged to one-half the rate of inflation, or an amount not to exceed one-and-one-half percent per year. It capped the number of dependents eligible to receive assistance at three per eligible family, and included an additional rule that required all participants in the WRA program to work at least ten hours per week.
In June 2002, the Social Safety Alliance, representing a class of over 300 participants in the SRC under the now-invalidated Woodstock County PAFA, sued the state's Commissioner for Social Responsibility, Eric Lemieux, to stop the law from going into effect. The Social Safety Alliance claimed that the state's passage of WRA impaired Woodstock County's contractual obligation to participants in the SRC program under PAFA. Enrollees in the Woodstock program had made important personal and financial decisions according to the terms of the SRC contract. Since Woodstock had encouraged participation in the SRC, for the state to rescind the terms of that agreement violated the Contract Clause.
Questions
- Is the SRC a contract for purposes of Contract Clause analysis?
- In Hudson Water Co. v. McCarter (1908), Justice Holmes wrote about Contract Clause obligations: "One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contact about them. The contract will carry with it the infirmity of the subject matter." How is that observation applicable here?
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