## Facts

- Anthony, a child who had been abused in his mother’s home, was informally placed with his grandmother, Enedina Rosales.
- While living with his mother, Anthony was not financially eligible for Aid to Families with Dependent Children (AFDC) due to household income.
- While living with Rosales, Anthony would have been financially eligible for AFDC.
- California later initiated dependency proceedings to remove Anthony from his mother’s custody; Rosales was formally appointed as Anthony’s foster parent.
- Rosales sought AFDC–Foster Care (AFDC-FC) payments, but the Secretary of Health and Human Services (HHS) denied federal financial participation, asserting the child had to be AFDC-eligible in the legal parents’ home (the “home of removal”).
- California’s Department of Social Services submitted a state plan amendment to allow AFDC-FC eligibility to be determined based on the relative caregiver’s household (when the dependency petition was filed) as an alternative to the legal parents’ household.
- The Secretary rejected the amendment as inconsistent with federal law and agency policy.

## Issues

1. Whether federal AFDC-FC law limits eligibility to children who were AFDC-eligible in the “home of removal” (the legal parents’ or guardians’ home).
2. Whether a state may instead determine AFDC-FC eligibility based on the child’s AFDC eligibility in the home of a relative caregiver with whom the child was living when the removal petition was initiated.
3. Whether HHS’s “home of removal only” interpretation was entitled to deference.

## Decision

- The Ninth Circuit reversed the district court and set aside the Secretary’s rejection of California’s plan amendment.
- The court held the AFDC-FC statute does not impose a categorical requirement that the child be AFDC-eligible only in the “home of removal.”
- The court permitted states to base AFDC-FC eligibility on the child’s AFDC status in the home of a relative caregiver who was caring for the child when the dependency petition was filed, if other statutory conditions are satisfied.
- The court rejected deference to the Secretary’s interpretation because it was inconsistent with the statute’s text and purposes.

## Legal Principles

- AFDC-FC eligibility is linked to AFDC eligibility criteria “prior to” foster-care placement, but the statute does not mandate that eligibility be assessed exclusively by reference to the legal parents’ household.
- Federal foster-care funding rules must not disadvantage relative foster caregivers compared to non-relative foster caregivers; parity between kin and non-kin caregivers is required.
- Agency interpretations are not upheld where they conflict with statutory text and purpose; deference does not save an unreasonable construction that defeats program design and congressional policy favoring kinship care.

## Conclusion

The Ninth Circuit invalidated HHS’s “home of removal only” approach to AFDC-FC eligibility and held that California could structure its plan to determine eligibility using the relative caregiver’s home at the time removal proceedings began, ensuring kinship caregivers are not treated less favorably than non-kin foster providers.


State of California Dep’t of Soc. Servs. v. Thompson, 321 F.3d 835 (9th Cir. 2003)