Felicia R. Sheppard appeals by leave granted from a decision and report of the Crime Victims Compensation Board (cvcb) denying her compensation claim. We reverse and remand.
Appellant was the minor* 1 daughter of Wayman Adams. Adams was robbed and murdered while selling drugs in May 1993, and appellant filed a claim with the cvcb shortly thereafter. In August 1994, the board denied appellant’s claim on the ground that “[t]he Victim contributed substantially to the infliction of the injury. ...” Upon further inquiry by appellant regarding the basis of the board’s decision, an eviden*283tiary hearing was held in June 1995. On August 31, 1995, the board issued a decision and report affirming its earlier decision. We granted appellant’s application for leave to appeal, pursuant to MCL 18.358; MSA 3.372(8).
The CVCB was created and empowered by 1976 PA 223, becoming effective on March 31, 1977. MCL 18.351 et seq.-, MSA 3.372(1) et seq. Section 4(1) of the act identifies persons who are eligible for compensation awards, including “[a] surviving . . . child ... of a victim of a crime who died as a direct result of the crime.” MCL 18.354(1); MSA 3.372(4)(1). Section 11(5) of the act discusses various aspects of the award process and provides in relevant part:
The board shall determine whether the claimant contributed to the infliction of his or her injury and shall reduce the amount of the award or reject the claim altogether, in accordance with the determination. [MCL 18.361(5); MSA 3.372(H)(5).2]
It was under this statutory provision that the cvcb denied appellant’s claim for compensation.
In reviewing a decision of an administrative agency, such as the cvcb, this Court must hold a decision unlawful and set it aside if substantial rights of the petitioner have been prejudiced because the decision, among other things, violates the constitution or a statute or is affected by substantial and material errors of law. MCL 24.306(1)(a) and (f); MSA 3.560(206)(1)(a) *284and (f); Barker Bros Constr v Bureau of Safety & Regulation, 212 Mich App 132, 136; 536 NW2d 845 (1995). In this case, we reverse the cvcb’s decision because it contravenes a federal funding statute.
Pursuant to the federal Victims of Crime Act of 1984 (voca), 42 USC 10601 et seq., Michigan’s crime victim compensation program receives forty percent of its funding from the federal government. 42 USC 10602(a)(1). In 1988, Congress amended the voca to require that federally funded state programs comply with certain mandates. The mandate important for our purposes is found in 42 USC 10602(b)(7):
(b) A crime victim compensation program is an eligible crime victim compensation program for the purposes of this section if—
(7) such program does not, except pursuant to rules issued by the program to prevent unjust enrichment of the offender, deny compensation to any victim because of that victim’s familial relationship to the offender, or because of the sharing of a residence by the victim and the offender. . . .
While the apparent reasoning behind the mandate was to ensure that victims of domestic violence and drunken driving were not excluded from the program merely because a family member was an offender,3 *285the actual language of the mandate expresses Congress’ intent that, in any case where the claimant is a family member of or shares a residence with an offender, the state compensation program must balance the goals of compensating innocent familial claimants and preventing unjust enrichment of the offender. Indeed, in adopting final program guidelines to assist state programs in rule promulgation, the Department of Justice has indicated that “[t]he rules relating to unjust enrichment should be applicable to all claims for compensation although it is recognized *286that domestic violence cases have the greatest potential for unjust enrichment.” Dep’t of Justice, Final Program Guidelines, Victims of Crime Act Victim Compensation Grant Program, 62 Fed Reg 7050, 7056 (1997) (emphasis added). Thus, although the facts of this case do not involve domestic violence or drunken driving, the CVCB must still utilize the congressional balancing test in evaluating appellant’s claim for compensation.
Notably, 42 USC 10602(b)(7) precludes denial of such claims “except pursuant to rules issued by the program to prevent unjust enrichment of the offender.” Michigan’s CVCB has explicit authority to promulgate rules under MCL 18.353(1)(a); MSA 3.372(3)(1)(a), yet none of its general rules — 1983 AACS, R 18.351 through 18.367 — pertains to the balancing test set out by Congress.4
*287Here, the claimant was denied compensation because her father was a contributing victim. By applying an absolute rule under MCL 18.361(5); MSA 3.372(H)(5) that claimants should be denied compensation merely because of their family relationship to the contributing victim, the cvcb acted contrary to congressional mandates. Accordingly, we reverse and remand this matter to the cvcb for reevaluation of appellant’s claim in light of 42 USC 10602(b)(7) and its concomitant balancing test.
*288Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
Mackenzie, P.J., concurred.Appellant turned eighteen years old on November 21, 1995.
MCL 18.361(5); MSA 3.372(11)(5) was amended by 1996 PA 519, effective January 13, 1997, and now provides in subsection 6 that “[t]he commission shall determine whether the victim’s misconduct contributed to his or her injury and shall reduce the amount of the award or reject the claim altogether, in accordance with the determination.”
See 134 Cong Rec S 17301 (daily ed. October 21, 1988), where the following statement of Senator Byrd was printed into the record:
Mr. Metzenbaum. Mr. President, the drug bill before the senate today reauthorizes and expands the victims of crime act of 1984. I wholeheartedly support this reauthorization, and am especially pleased that it includes language I suggested to require states to offer compensation to victims of domestic violence and drunk driving.
*285This new victims compensation language amends section 1403(b) of the victims of crime act by requiring state victim compensation programs to make available compensation benefits to victims of domestic violence and drunk driving. The provision also prohibits victim compensation programs from denying compensation benefits to victims because of a familial relationship or because the victim lived with the offender at the time of the crime.
Some victim compensation programs have supported “household or family exclusions” because they fear an offender might somehow benefit from compensation received by the crime victim. In order to address these concerns, crime victim compensation programs are permitted by this provision to issue guidelines that would prevent the unjust enrichment of the offender. Crime victim compensation programs, domestic violence victims, and victim advocates alike share a common interest in preventing unjust enrichment of the offender.
One way that state compensation programs are successfully balancing the goals of making compensation benefits available to battered women and preventing the unjust enrichment of the offender is to utilize third party payments. By paying medical and other compensable bills directly, the programs need not worry that the offender will somehow benefit from the compensation award to the victim.
The attorney general’s task force on family violence argues that the “legal response to family violence must be guided primarily by the nature of the abusive act, not the relationship between the victim and the abuser.” Crime victim compensation programs can greatly assist in furthering this goal by treating domestic violence claims as compensable crimes and viewing domestic violence as it would other forms o'f criminal conduct.
See Dep’t of Justice, Final Program Guidelines, supra, 62 Fed Reg 7056-7057:
9. Unjust Enrichment. Except pursuant to rules issued by the compensation program to prevent unjust enrichment of the offender, the state cannot deny compensation to any victim because of that victim’s familial relationship to the offender, or because of the sharing of a residence by the victim and the offender.
Unjust enrichment, as the basis for denying crime victims compensation, must be based upon written rules issued by the state crime victims compensation program. “Rules” mean either written policies or directives developed and distributed by state crime victim compensation programs or rules adopted by legislative or administrative bodies. Such rules cannot have the effect of denying compensation to a substantial percentage of domestic violence victims. The rules relating to unjust enrichment should be applicable to all claims for compensation although it is recognized that domestic violence cases have the greatest potential for unjust enrichment.
hi general, programs must balance the goals of maldng compensation benefits available to victims and preventing unjust enrich*287ment of offenders. State programs are strongly encouraged to work with domestic violence coalitions and representatives to this end.
In developing rules, the states are encouraged to consider the following:
a. Legal responsibilities of the offender to the victim under the laws of the state and collateral resources available to the victim from the offender. For example, legal responsibilities may include court-ordered restitution or requirements for spouse and/or family support under the domestic or marital property laws of the state. Collateral resources may include insurance or pension benefits available to the offender to cover the costs incurred by the victim as a result of the crime. However, as with other crimes, victims of domestic violence should not be penalized when collateral sources of payment are not viable, e.g., when the offender refuses to, or cannot, pay restitution or other civil judgments within a reasonable period of time or when the offender otherwise impedes direct or third party (i.e., insurance) payments.
b. Payments to victims of domestic violence which benefit offenders in only a minimal or inconsequential manner would not be considered unjust enrichment. To deny payments, in some instances, could serve to further victimize the claimant. For example, denial of medical or dental expenses solely because the offender has legal responsibility for the charges, but is unwilling, or unable to pay them, could result in the victim’s inability to receive treatment.
c. Consultation with social services and other concerned governmental entities, as well as with private organizations that support and advocate on behalf of domestic violence victims.
d. The special needs of child victims of criminal violence especially when the perpetrator was the parent who may or may not have lived in the same residence.