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Contract income that is intended for the household’s annual support will be budgeted for an entire year, even though predetermined non-work periods are involved, or actual compensation is scheduled for payment during work periods only. The provisions of this paragraph may apply, for example, to teachers and other school employees, or to sharecroppers, but not to migrant farm workers.

8705.1 Contract Renewal The renewal process may involve the signing of a new contract each year, may be automatically renewable, or, as in cases of school tenure, rehire rights may be implied and not require a written contract. For ongoing employment (that is intended for annual support) that has the contract renewed, the new income should be annualized and budgeted the month the income will start.

8705.2 Work/Non-work Cycle The fact that this type contract is in effect for an entire year does not necessarily mean that the contract will stipulate work every month of the year. Rather, there may be certain predictable non- work periods or vacations, such as the summer break between school years.

8705.3 Income Income from the contract will be considered as compensation for a full year regardless of the frequency of compensation as stipulated in the terms of the contract, as determined by the employer or by the employee.

8705.4 Determination of Eligibility and Benefits for Contract Employees The yearly income that household members receive from contractual employment, described above, must be averaged over a 12-month period to determine the member's average monthly income. To determine household eligibility, all other monthly income from other household members must be added to this average monthly income. Income exclusions and deductions are applied to the gross monthly income, as in any other case, to determine the household's benefit level.

Contract income received over a period of less than one year that is not intended for annual support is prorated over the period of intent. The contract income must not affect more benefit months than the number of months in the period it is prorated.

Example: John signed a contract for 9 months as a school janitor and the contract states he will receive $9000 in monthly installments. John states the income is intended for his annual support: If John is paid $1000 every month regardless of the hours he works, it is a true contract situation, and we would budget $9000 by 12 months = $750 monthly.

However, if John’s monthly wages vary by the number of hours he works per month, it is not a true contract because John is being paid by the hour, not by the contract amount. [For example, one month his wage shows 160 hours X $6.25 per hour and 20 hours X $9.38 overtime, and the next month shows 100 hours X $6.25, and the pay is equal to the hourly rate.] John’s income would be budgeted as received in this situation, not annualized or averaged over the period of the contract.