WISDOM, Circuit Judge:
This case began as a class action seeking a declaratory judgment and injunctive relief to prevent the Louisiana Department of Public Welfare from making a ten percent reduction in aid to families with dependent children.1 This Court discussed the factual and legal issues in an opinion by Judge Comiskey issued April 15, 1969, 299 F.Supp. 336; Judge Cassibry dissented. Louisiana’s welfare appropriation, as set out in Act 9 of 1968, was effective until June 30, 1969. July 1, 1969, was the deadline fixed by Congress for action by the states to adjust their standard of need for dependent children to reflect fully changes in living costs since the adoption of the standard. See Section 402(a) (23) of the Social Security Act, 42 U.S.C. 602(a) (23). The Louisiana legislature was to begin its fiscal session in May 1969. Accordingly, a majority of the Court held that it was premature to reach the merits of the action. In our earlier opinion we said: “We cannot say at this time whether or not Louisiana will devote additional funds to ADC for the new cost of living increases in the new appropriations bill. We certainly cannot tell what Louisiana will do after July 1 from an appropriation bill which expires on June 30.” The Court retained jurisdiction of the case.
July 1 has come and gone. The Louisiana legislature met and adjourned without increasing the level of payments to families with dependent children. The Department raised its standard of need to reflect a twenty percent rise in living costs — but reduced its actual ADC payments. It did so by abolishing its system of dollar máximums and by instituting a ratable reduction of 42.13 percent against each recipient family’s budgetary deficit.2
The plaintiffs contend that this action of the Department violates Section 402 (a) (23) of the Social Security Act. A majority of the court, however, feel compelled to hold that if the State of Louisiana decides to supply only half of the amount dependent children admittedly need for a bare subsistence, the State may do so without violating the Act.
* * *
Under Title IY of the Social Security Act, Congress, through the Department of Health, Education, and Welfare (HEW) contributes federal funds to the states for their programs of furnishing Aid to Families with Dependent Children (AFDCorADC). Federal aid in Louisiana amounts to nearly eighty percent of the total costs of the ADC program.
Section 402(a) (23) of the Act, 42 U.S.C. § 602(a) (23), one of the 1967 amendments to the Act, provides, as follows :
“A state plan for aid and services to needy families with children must * * * provide that by July 1, 1969, [1] the amounts used by the State to determine the needs of individuals will have been adjusted to reflect fully changes in living costs since such [1386] amounts were established, and [2] any máximums that the State imposes on the amount of aid paid to families will have been proportionately adjusted.”
The question for decision is whether the second clause of this provision, as a condition to HEW approval of federal participation in the ADC program, prohibits the State from decreasing its ADC payments and, in addition, requires the State to increase its payments to reflect fully the changes in living costs since the level of payments were established.
Until July 1, 1969, the Louisiana Department of Public Welfare used dollar máximums for payments to recipients. For example, a mother and a dependent child were limited to $80 a month. A family of five or more received maximum aid of $163 a month.
Just prior to July 1, 1969, the Department redetermined the standard of need and increased it by 20 percent to reflect the increase in the costs of living up to May 1968.3 All agree that the first clause of Section 402(a) (23) requires an increase in the standard of need. All also agree that the State may give less than 100 percent of the standard of need. The dispute .is over the meaning of the clause that refers to “any máximums”.
At the time the Department increased the standard of need, it abolished dollar máximums. The defendants contend, therefore, and so the statute seems, literally, to say, that the State need not increase the ADC payments to reflect the rise in the costs of living when there are no longer any arbitrary máximums to adjust. Here, instead of making upward adjustments, the State made a ratable reduction in its ADC payments. The Department determined the budgetary deficit of each recipient family and made a ratable reduction against each budgetary deficit of 42.13 percent. The payments to be made, therefore, will amount to only 57.87 percent of the budgetary deficits. This reduction was made necessary by the fact that the Louisiana Legislature, which has recently concluded its fiscal'session, rejected the Department’s budget request for $17,320,000 and appropriated only $9,043,000 for the State’s 1969-1970 fiscal year. (The federal matching share now added to the state share of ADC grants for Louisiana’s appropriation is $38,800.00.)
We recognize the merit in the plaintiffs’ arguments. The dissenting opinion ably supports the plaintiffs’ position. So, too, do two decisions: Rosado v. Wyman, E.D.N.Y.1969, 304 F.Supp. 1356; Jefferson v. Hackney, N.D.Tex.1969, 304 F.Supp. 1332. The plaintiffs contend, in effect, that the defendants’ construction of the statute puts Congress in the old shell game: now you see it, now you don’t. First, Congress requires the States to redetermine need and máximums to reflect rising costs of living. Then, Congress permits the States to make deep cuts in actual payments far below the level of need and the prior payments without taking into consideration rising costs of living. Moreover Congress gave the states eighteen months to make these adjustments in order to allow the state legislatures an opportunity to convene in their regular sessions and make the appropriate adjustments in their AFDC programs. This is a semantic ploy or exercise in bookkeeping that Congress would not engage in, the plaintiffs say. The fact is, however, that the statute is clear on its face. There are doubts as to its meaning only because Section 402(a) (23) produces pitifully inadequate results in a period of rising costs of living and skyrocketing demands on the States to meet all their budgetary deficits.
[1387] The determination of a standard of need is different from meeting the need. Every dependent family in Louisiana knows this now, whether or not the family comprehends the reason for the state’s reducing its grants. If Congress had intended to require the states to put a floor on current levels of aid and to increase payments to reflect the increase in the costs of living, it would have been obvious to Congress that such requirements would cost the federal government and the states several hundred million dollars and perhaps as much as five hundred million dollars. A bill clearly having this effect would have been a burning issue on the floors of the House and the Senate.
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WISDOM, Circuit Judge:
This case began as a class action seeking a declaratory judgment and injunctive relief to prevent the Louisiana Department of Public Welfare from making a ten percent reduction in aid to families with dependent children.1 This Court discussed the factual and legal issues in an opinion by Judge Comiskey issued April 15, 1969, 299 F.Supp. 336; Judge Cassibry dissented. Louisiana’s welfare appropriation, as set out in Act 9 of 1968, was effective until June 30, 1969. July 1, 1969, was the deadline fixed by Congress for action by the states to adjust their standard of need for dependent children to reflect fully changes in living costs since the adoption of the standard. See Section 402(a) (23) of the Social Security Act, 42 U.S.C. 602(a) (23). The Louisiana legislature was to begin its fiscal session in May 1969. Accordingly, a majority of the Court held that it was premature to reach the merits of the action. In our earlier opinion we said: “We cannot say at this time whether or not Louisiana will devote additional funds to ADC for the new cost of living increases in the new appropriations bill. We certainly cannot tell what Louisiana will do after July 1 from an appropriation bill which expires on June 30.” The Court retained jurisdiction of the case.
July 1 has come and gone. The Louisiana legislature met and adjourned without increasing the level of payments to families with dependent children. The Department raised its standard of need to reflect a twenty percent rise in living costs — but reduced its actual ADC payments. It did so by abolishing its system of dollar máximums and by instituting a ratable reduction of 42.13 percent against each recipient family’s budgetary deficit.2
The plaintiffs contend that this action of the Department violates Section 402 (a) (23) of the Social Security Act. A majority of the court, however, feel compelled to hold that if the State of Louisiana decides to supply only half of the amount dependent children admittedly need for a bare subsistence, the State may do so without violating the Act.
* * *
Under Title IY of the Social Security Act, Congress, through the Department of Health, Education, and Welfare (HEW) contributes federal funds to the states for their programs of furnishing Aid to Families with Dependent Children (AFDCorADC). Federal aid in Louisiana amounts to nearly eighty percent of the total costs of the ADC program.
Section 402(a) (23) of the Act, 42 U.S.C. § 602(a) (23), one of the 1967 amendments to the Act, provides, as follows :
“A state plan for aid and services to needy families with children must * * * provide that by July 1, 1969, [1] the amounts used by the State to determine the needs of individuals will have been adjusted to reflect fully changes in living costs since such [1386] amounts were established, and [2] any máximums that the State imposes on the amount of aid paid to families will have been proportionately adjusted.”
The question for decision is whether the second clause of this provision, as a condition to HEW approval of federal participation in the ADC program, prohibits the State from decreasing its ADC payments and, in addition, requires the State to increase its payments to reflect fully the changes in living costs since the level of payments were established.
Until July 1, 1969, the Louisiana Department of Public Welfare used dollar máximums for payments to recipients. For example, a mother and a dependent child were limited to $80 a month. A family of five or more received maximum aid of $163 a month.
Just prior to July 1, 1969, the Department redetermined the standard of need and increased it by 20 percent to reflect the increase in the costs of living up to May 1968.3 All agree that the first clause of Section 402(a) (23) requires an increase in the standard of need. All also agree that the State may give less than 100 percent of the standard of need. The dispute .is over the meaning of the clause that refers to “any máximums”.
At the time the Department increased the standard of need, it abolished dollar máximums. The defendants contend, therefore, and so the statute seems, literally, to say, that the State need not increase the ADC payments to reflect the rise in the costs of living when there are no longer any arbitrary máximums to adjust. Here, instead of making upward adjustments, the State made a ratable reduction in its ADC payments. The Department determined the budgetary deficit of each recipient family and made a ratable reduction against each budgetary deficit of 42.13 percent. The payments to be made, therefore, will amount to only 57.87 percent of the budgetary deficits. This reduction was made necessary by the fact that the Louisiana Legislature, which has recently concluded its fiscal'session, rejected the Department’s budget request for $17,320,000 and appropriated only $9,043,000 for the State’s 1969-1970 fiscal year. (The federal matching share now added to the state share of ADC grants for Louisiana’s appropriation is $38,800.00.)
We recognize the merit in the plaintiffs’ arguments. The dissenting opinion ably supports the plaintiffs’ position. So, too, do two decisions: Rosado v. Wyman, E.D.N.Y.1969, 304 F.Supp. 1356; Jefferson v. Hackney, N.D.Tex.1969, 304 F.Supp. 1332. The plaintiffs contend, in effect, that the defendants’ construction of the statute puts Congress in the old shell game: now you see it, now you don’t. First, Congress requires the States to redetermine need and máximums to reflect rising costs of living. Then, Congress permits the States to make deep cuts in actual payments far below the level of need and the prior payments without taking into consideration rising costs of living. Moreover Congress gave the states eighteen months to make these adjustments in order to allow the state legislatures an opportunity to convene in their regular sessions and make the appropriate adjustments in their AFDC programs. This is a semantic ploy or exercise in bookkeeping that Congress would not engage in, the plaintiffs say. The fact is, however, that the statute is clear on its face. There are doubts as to its meaning only because Section 402(a) (23) produces pitifully inadequate results in a period of rising costs of living and skyrocketing demands on the States to meet all their budgetary deficits.
[1387] The determination of a standard of need is different from meeting the need. Every dependent family in Louisiana knows this now, whether or not the family comprehends the reason for the state’s reducing its grants. If Congress had intended to require the states to put a floor on current levels of aid and to increase payments to reflect the increase in the costs of living, it would have been obvious to Congress that such requirements would cost the federal government and the states several hundred million dollars and perhaps as much as five hundred million dollars. A bill clearly having this effect would have been a burning issue on the floors of the House and the Senate.
Section 402(a) (23) was enacted by section 213(b) of P.L. 90-248, 81 Stat. 898 in the committee reports, most of the attention was given to Section 213 (a). That section amended the “adult” titles to allow states at their option to disregard not more than $7.50 a month. Thus, the Senate Report, under the heading “Increasing the benefits for the aged”, discussed the provision for the adult categories at some length, then added noncommittally,
“States would be required to price their standards used for determining the amount of assistance under the AFDC program by July 1, 1969 and to reprice them at least annually thereafter, adjusting the standards and any máximums imposed on payments to reflect changes in living costs.” S.Rep. No. 744, 90th Cong., 1st Sess. 170 (1967), U.S.Code Cong. & Admin. News 1967, p. 3007.
In the summary of principal provisions of the bill, the report refers only to the provision for the adult categories, and is silent on the ADC provision. S.Rep. No. 744, 90th Cong., 1st Sess. 29 (1967). The Conference Report, under the heading “Increasing income of recipients of assistance”, reflected only the changes that had been made in Conference. On ADC, it stated
“Under the agreement, the new section 402(a) provision (for adjustments to reflect living costs) would require States to make only one adjustment before July 1, 1969, after which date the provision would not apply.” H.R. Rep.No.1030, 90th Cong., 1st Sess. 63 (1967), U.S.Code Cong. & Admin. News 1967, p. 3209.
The “Summary of Social Security Amendments of 1967”, a Committee Print of a Joint Publication of the Senate and House Committees (90th Cong., 1st Sess., December 1967) referred to the contents of section 213 under the heading “Pass Along”, mentioning only the amendment to the adult categories, without any reference to the ADC provision. It is also significant that the cost estimates on the bill as agreed to by the Conference Committee (Table 5 of the Joint Publication, page 28) did not reflect anything for section 213. Clearly, no great cost effect was anticipated.
Senator George McGovern of South Dakota made the modest proposal that ADC aid be increased by four dollars a month to each recipient. This little proposal would have cost approximately $80 million annually in federal funds and $136 million annually in non-federal funds. Senator Russell B. Long of Louisiana opposed the amendment on the ground that it would place too heavy a financial burden on the states. His main concern was that he. did not know where the states would get the additional funds to meet such a requirement. 113 Cong. Ree. S16964, (daily ed. Nov. 21, 1967).
The original Administration-HEW proposal to Congress distinguished between “meeting need” and “determining need”. The original proposal would have required the state to meet need in full as well as to update the amounts used to determine need, as follows:
“each state plan must provide * * * effective July 1, 1969, for meeting * * * all the need as determined in accordance with standards applicable under the plan for determining need * .* * and effective July 1, 1968, for an annual review of such standards and (to the extent prescribed by the Secretary) for updating such stand[1388] ards to take into account changes in living costs”. Section 202 of H.R. 5710.
Congress rejected the proposal for meeting need, and retained only the provision that the standard used to determine need be updated.
Former HEW Secretary Gardner complained that
“the states are required to set assistance standards for needy persons in order to determine eligibility, but they need not make their assistance payments on the basis of these standards.” (Senate Finance Committee Hearings, 90th Cong., 1st Sess., on H.R. 12080 at 216.)
Looking at the statutory language, the second clause of Section 402(a) (23) in terms applies only to máximums. The defendants and HEW point out that “máximums” is a term of art. In the field of social security law, so they say, “máximums” means dollar máximums; there is no such thing as “percentage máximums”. The Act itself distinguishes between “máximums” and percentages. See Section 403, 42 U.S.C. 603(a) (1) (B). When, therefore, a state abandons its máximums, it is free to make ratable reductions. (The plaintiffs, however, make the point that any dollar máximums may be translated into a percentage and vice versa.)
Maximums have been under severe constitutional attack. See Williams v. Dandridge, D.Md.1968, 297 F.Supp. 450; Dews v. Henry, D.Ariz.1969, 297 F.Supp. 587; Collins v. State Board of Social Welfare, 1957, 248 Iowa 369, 81 N.W.2d 4; Westberry v. Fisher, D.Me.1969, 297 F.Supp. 1109. In Westberry v. Fisher, Judge Edward Gignoux, after a careful review of the law, held that Maine’s regulations establishing maximum grants violated the Equal Protection Clause of the Fourteenth Amendment:
“The classifications created by the Maine maximum grant and maximum budget regulations bear no reasonable relation to the purposes of the federal and state AFDC program * * * The only apparent purpose to be served by the challenged regulations is to protect the state treasury against the burgeoning costs of public welfare * * But it may not be accomplished by arbitrarily singling out a particular class of persons to bear the entire burden of achieving that end * * *. We see no other rational basis for the distinction made by these regulations between dependent children in small families and dependent children in large families, and the State of Maine has suggested none. * * 297 F.Supp. 1109 at 1114, 1115.
Judge Gignoux “emphasize [d] that Maine is free to take reasonable steps, as other states have done, to allocate on a non-discriminatory basis its resources available for AFDC”. He pointed out that seven states provide “simply for percentage reductions or similar nondiscriminatory methods for limiting need standards or grants”.
In view of Westberry v. Fisher, the Louisiana Department of Public Welfare must be credited with having eliminated its máximums because of serious doubt as to their validity and not as a backhanded way of avoiding the necessity of increasing the máximums (payments) to reflect the rise in cost of living.4
The premise that Section 402(a) (23) is meaningless unless the ADC pay[1389] ments are adjusted upward, fails to take into consideration that one of the effects of Section 402(a) (23), as interpreted by HEW and defendants, is to make additional persons eligible for AFDC payments as well as for concomitant services provided not only for the child but also for his parents and family members. An examination of the many lengthy provisions added to Section 402 by the 1967 Social Security Amendments shows that Congress’s major concern was the provision of family counseling and rehabilitation services, work incentives, and family planning programs to reduce out-of-wedlock births, for all persons in the family, in order to promote self-support and child development and to strengthen family life. See also U.S. Code Cong. & Admin.News, Vol. 2, 90th Cong., 1st Sess. 1967, p. 2837. By making those with marginal incomes eligible for AFDC by raising the standard of need, more persons would be eligible for such services, which Congress considered vital to cut down in the long run the numbers dependent on welfare.
The construction HEW places on the statute tips the scales in favor of the defendants.5 HEW is the agency charged with administering the programs under the statute.6 And, presumably, HEW sponsored or opposed the changes in the Act that became the 1967 amendments. The pertinent HEW regulation specifically allows a state to make “ratable reductions” in the “event the State is not able to meet need in full under the adjusted standard”.
“In the AFDC plan, provide that by July 1, 1969, the State’s standard of assistance for the AFDC program will have been adjusted to reflect fully changes in living costs since such standards were established, and any máximums that the State imposes on the amount of aid paid to families will have been proportionately adjusted. In such adjustment a consolidation of the standard (i. e., combining of items) may not result in a reduction in the content of the standard. In the event the State is not able to meet need in full under the adjusted standard, the State may make ratable reductions in accordance with subparagraph (3) (viii) of this paragraph. Nevertheless, if a State maintains a system of dollar máximums, these máximums must be proportionately adjüsted in relation to the updated standards.” 45 C.F.R. 233.20(a) (2) (ii), 34 F.R. 1394 (1969).
* * *
The Social Security Act is an example of cooperative federalism. As the Supreme Court said in King v. Smith, 1968, 392 U.S. 309, 318, 88 S.Ct. 2128, 20 L.Ed.2d 1118:
“There is no question that States have considerable latitude in allocating their AFDC sources, since each State is free to set its own standard of need and to determine the level of benefits by the amount of funds it devotes to the program.”
If Section 402(a) (23) should be read as prohibiting the states from reducing their current levels of ADC benefits and as requiring upward adjustments of payments, that provision would be a striking exception to the way the statute was originally designed to function. Such a departure from the principle expressed in King v. Smith would not be warranted without clear statutory lan[1390] guage supported by unmistakable legislative history.
The majority of this Court is just as unhappy about the result we reach as is the dissenting judge. In Jefferson v. Hackney the court held in favor of the dependent children but stayed the judgment sixty days to allow time for the Texas legislature to comply with the court’s construction of Section 402(a) (23). Perhaps the State of Louisiana may find a way to make payments to dependent children that will at least furnish aid based on current levels plus the rise in the costs of living. If Section 402(a) (23) of the Social Security Act does nothing else, it spotlights the difference between the amount a state has determined to be the need of its dependent children and the amount its legislature has. appropriated to meet the need along with federal funds. In Louisiana, on outdated figures, the difference is 42.17 percent.
The plaintiffs’ suit for a preliminary and a permanent injunction is denied.
The State Department of Welfare is directed to adopt a standard of need that will reflect fully changes in living costs using the latest figures now available for properly determining living costs in Louisiana.
The motion to make the HEW an indispensable party is denied.
The Clerk shall issue a judgment in accordance with this opinion.