§ 609. Penalties
(a)
In general
Subject to this section:
(1)
Use of grant in violation of this part
(A)
General penalty
If an audit conducted under chapter
75 of title
31 finds that an amount paid to a State under section
603 of this title for a fiscal year has been used in violation of this part, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year quarter by the amount so used.
(B)
Enhanced penalty for intentional violations
If the State does not prove to the satisfaction of the Secretary that the State did not intend to use the amount in violation of this part, the Secretary shall further reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year quarter by an amount equal to 5 percent of the State family assistance grant.
(2)
Failure to submit required report
(A)
In general
If the Secretary determines that a State has not, within 45 days after the end of a fiscal quarter, submitted the report required by section
611
(a) of this title for the quarter, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to 4 percent of the State family assistance grant.
(3)
Failure to satisfy minimum participation rates
(A)
In general
If the Secretary determines that a State to which a grant is made under section
603 of this title for a fiscal year has failed to comply with section
607
(a) of this title for the fiscal year, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to the applicable percentage of the State family assistance grant.
(B)
“Applicable percentage” defined
As used in subparagraph (A), the term “applicable percentage” means, with respect to a State—
(i)
if a penalty was not imposed on the State under subparagraph (A) for the immediately preceding fiscal year, 5 percent; or
(ii)
if a penalty was imposed on the State under subparagraph (A) for the immediately preceding fiscal year, the lesser of—
(C)
Penalty based on severity of failure
The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance, and may reduce the penalty if the noncompliance is due to circumstances that caused the State to become a needy State (as defined in section
603
(b)(6) of this title) during the fiscal year or if the noncompliance is due to extraordinary circumstances such as a natural disaster or regional recession. The Secretary shall provide a written report to Congress to justify any waiver or penalty reduction due to such extraordinary circumstances.
(4)
Failure to participate in the income and eligibility verification system
If the Secretary determines that a State program funded under this part is not participating during a fiscal year in the income and eligibility verification system required by section
1320b–7 of this title, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to not more than 2 percent of the State family assistance grant.
(5)
Failure to comply with paternity establishment and child support enforcement requirements under part D
Notwithstanding any other provision of this chapter, if the Secretary determines that the State agency that administers a program funded under this part does not enforce the penalties requested by the agency administering part D of this subchapter against recipients of assistance under the State program who fail to cooperate in establishing paternity or in establishing, modifying, or enforcing a child support order in accordance with such part and who do not qualify for any good cause or other exception established by the State under section
654
(29) of this title, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year (without regard to this section) by not more than 5 percent.
(6)
Failure to timely repay a Federal Loan Fund for State Welfare Programs
If the Secretary determines that a State has failed to repay any amount borrowed from the Federal Loan Fund for State Welfare Programs established under section
606 of this title within the period of maturity applicable to the loan, plus any interest owed on the loan, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year quarter (without regard to this section) by the outstanding loan amount, plus the interest owed on the outstanding amount. The Secretary shall not forgive any outstanding loan amount or interest owed on the outstanding amount.
(7)
Failure of any State to maintain certain level of historic effort
(A)
In general
The Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for fiscal year 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, or 2011 by the amount (if any) by which qualified State expenditures for the then immediately preceding fiscal year are less than the applicable percentage of historic State expenditures with respect to such preceding fiscal year.
(B)
Definitions
As used in this paragraph:
(i)
Qualified State expenditures
(I)
In general
The term “qualified State expenditures” means, with respect to a State and a fiscal year, the total expenditures by the State during the fiscal year, under all State programs, for any of the following with respect to eligible families:
(aa)
Cash assistance, including any amount collected by the State as support pursuant to a plan approved under part D of this subchapter, on behalf of a family receiving assistance under the State program funded under this part, that is distributed to the family under section
657
(a)(1)(B) of this title and disregarded in determining the eligibility of the family for, and the amount of, such assistance.
(cc)
Educational activities designed to increase self-sufficiency, job training, and work, excluding any expenditure for public education in the State except expenditures which involve the provision of services or assistance to a member of an eligible family which is not generally available to persons who are not members of an eligible family.
(II)
Exclusion of transfers from other State and local programs
Such term does not include expenditures under any State or local program during a fiscal year, except to the extent that—
(aa)
the expenditures exceed the amount expended under the State or local program in the fiscal year most recently ending before August 22, 1996; or
(bb)
the State is entitled to a payment under former section
603 of this title (as in effect immediately before August 22, 1996) with respect to the expenditures.
(III)
Exclusion of amounts expended to replace penalty grant reductions
Such term does not include any amount expended in order to comply with paragraph (12).
(IV)
Eligible families
As used in subclause (I), the term “eligible families” means families eligible for assistance under the State program funded under this part, families that would be eligible for such assistance but for the application of section
608
(a)(7) of this title, and families of aliens lawfully present in the United States that would be eligible for such assistance but for the application of title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 [8 U.S.C. 1601 et seq.].
(ii)
Applicable percentage
The term “applicable percentage” means for fiscal years 1997 through 2010, 80 percent (or, if the State meets the requirements of section
607
(a) of this title for the fiscal year, 75 percent).
(iii)
Historic State expenditures
The term “historic State expenditures” means, with respect to a State, the lesser of—
(I)
the expenditures by the State under parts A and F of this subchapter (as in effect during fiscal year 1994) for fiscal year 1994; or
(II)
the amount which bears the same ratio to the amount described in subclause (I) as—
(aa)
the State family assistance grant, plus the total amount required to be paid to the State under former section
603 of this title for fiscal year 1994 with respect to amounts expended by the State for child care under subsection (g) or (i) of section
602 of this title (as in effect during fiscal year 1994); bears to
(bb)
the total amount required to be paid to the State under former section
603 of this title (as in effect during fiscal year 1994) for fiscal year 1994.
Such term does not include any expenditures under the State plan approved under part A of this subchapter (as so in effect) on behalf of individuals covered by a tribal family assistance plan approved under section
612 of this title, as determined by the Secretary.
(iv)
Expenditures by the State
The term “expenditures by the State” does not include—
(III)
any State funds which are used to match Federal funds provided under section
603
(a)(5) of this title; or
(IV)
any State funds which are expended as a condition of receiving Federal funds other than under this part.
Notwithstanding subclause (IV) of the preceding sentence, such term includes expenditures by a State for child care in a fiscal year to the extent that the total amount of the expenditures does not exceed the amount of State expenditures in fiscal year 1994 or 1995 (whichever is the greater) that equal the non-Federal share for the programs described in section
618
(a)(1)(A) of this title.
(v)
Source of data
In determining expenditures by a State for fiscal years 1994 and 1995, the Secretary shall use information which was reported by the State on ACF Form
231 or (in the case of expenditures under part F of this subchapter) ACF Form
331, available as of the dates specified in clauses (ii) and (iii) of section
603
(a)(1)(D) [1] of this title.
(8)
Noncompliance of State child support enforcement program with requirements of part D
(A)
In general
If the Secretary finds, with respect to a State’s program under part D of this subchapter, in a fiscal year beginning on or after October 1, 1997—
(i)
(I)
on the basis of data submitted by a State pursuant to section
654
(15)(B) of this title, or on the basis of the results of a review conducted under section
652
(a)(4) of this title, that the State program failed to achieve the paternity establishment percentages (as defined in section
652
(g)(2) of this title), or to meet other performance measures that may be established by the Secretary;
(II)
on the basis of the results of an audit or audits conducted under section
652
(a)(4)(C)(i) of this title that the State data submitted pursuant to section
654
(15)(B) of this title is incomplete or unreliable; or
(III)
on the basis of the results of an audit or audits conducted under section
652
(a)(4)(C) of this title that a State failed to substantially comply with 1 or more of the requirements of part D of this subchapter (other than paragraph (24), or subparagraph (A) or (B)(i) of paragraph (27), of section
654 of this title); and
(ii)
that, with respect to the succeeding fiscal year—
(I)
the State failed to take sufficient corrective action to achieve the appropriate performance levels or compliance as described in subparagraph (A)(i); or
(II)
the data submitted by the State pursuant to section
654
(15)(B) of this title is incomplete or unreliable;
the amounts otherwise payable to the State under this part for quarters following the end of such succeeding fiscal year, prior to quarters following the end of the first quarter throughout which the State program has achieved the paternity establishment percentages or other performance measures as described in subparagraph (A)(i)(I), or is in substantial compliance with 1 or more of the requirements of part D of this subchapter as described in subparagraph (A)(i)(III), as appropriate, shall be reduced by the percentage specified in subparagraph (B).
(B)
Amount of reductions
The reductions required under subparagraph (A) shall be—
(C)
Disregard of noncompliance which is of a technical nature
For purposes of this section and section
652
(a)(4) of this title, a State determined as a result of an audit—
(i)
to have failed to have substantially complied with 1 or more of the requirements of part D of this subchapter shall be determined to have achieved substantial compliance only if the Secretary determines that the extent of the noncompliance is of a technical nature which does not adversely affect the performance of the State’s program under part D of this subchapter; or
(ii)
to have submitted incomplete or unreliable data pursuant to section
654
(15)(B) of this title shall be determined to have submitted adequate data only if the Secretary determines that the extent of the incompleteness or unreliability of the data is of a technical nature which does not adversely affect the determination of the level of the State’s paternity establishment percentages (as defined under section
652
(g)(2) of this title) or other performance measures that may be established by the Secretary.
(9)
Failure to comply with 5-year limit on assistance
If the Secretary determines that a State has not complied with section
608
(a)(7) of this title during a fiscal year, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant.
(10)
Failure of State receiving amounts from Contingency Fund to maintain 100 percent of historic effort
If, at the end of any fiscal year during which amounts from the Contingency Fund for State Welfare Programs have been paid to a State, the Secretary finds that the qualified State expenditures (as defined in paragraph (7)(B)(i) (other than the expenditures described in subclause (I)(bb) of that paragraph)) under the State program funded under this part for the fiscal year are less than 100 percent of historic State expenditures (as defined in paragraph (7)(B)(iii) of this subsection), excluding any amount expended by the State for child care under subsection (g) or (i) of section
602 of this title (as in effect during fiscal year 1994) for fiscal year 1994, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by the total of the amounts so paid to the State that the State has not remitted under section
603
(b)(6) of this title.
(11)
Failure to maintain assistance to adult single custodial parent who cannot obtain child care for child under age 6
(A)
In general
If the Secretary determines that a State to which a grant is made under section
603 of this title for a fiscal year has violated section
607
(e)(2) of this title during the fiscal year, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to not more than 5 percent of the State family assistance grant.
(12)
Requirement to expend additional State funds to replace grant reductions; penalty for failure to do so
If the grant payable to a State under section
603
(a)(1) of this title for a fiscal year is reduced by reason of this subsection, the State shall, during the immediately succeeding fiscal year, expend under the State program funded under this part an amount equal to the total amount of such reductions. If the State fails during such succeeding fiscal year to make the expenditure required by the preceding sentence from its own funds, the Secretary may reduce the grant payable to the State under section
603
(a)(1) of this title for the fiscal year that follows such succeeding fiscal year by an amount equal to the sum of—
(13)
Penalty for failure of State to maintain historic effort during year in which welfare-to-work grant is received
If a grant is made to a State under section
603
(a)(5)(A) of this title for a fiscal year and paragraph (7) of this subsection requires the grant payable to the State under section
603
(a)(1) of this title to be reduced for the immediately succeeding fiscal year, then the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for such succeeding fiscal year by the amount of the grant made to the State under section
603
(a)(5)(A) of this title for the fiscal year.
(14)
Penalty for failure to reduce assistance for recipients refusing without good cause to work
(A)
In general
If the Secretary determines that a State to which a grant is made under section
603 of this title in a fiscal year has violated section
607
(e) of this title during the fiscal year, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to not less than 1 percent and not more than 5 percent of the State family assistance grant.
(15)
Penalty for failure to establish or comply with work participation verification procedures
(A)
In general
If the Secretary determines that a State to which a grant is made under section
603 of this title in a fiscal year has violated section
607
(i)(2) of this title during the fiscal year, the Secretary shall reduce the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to not less than 1 percent and not more than 5 percent of the State family assistance grant.
(b)
Reasonable cause exception
(c)
Corrective compliance plan
(1)
In general
(A)
Notification of violation
Before imposing a penalty against a State under subsection (a) of this section with respect to a violation of this part, the Secretary shall notify the State of the violation and allow the State the opportunity to enter into a corrective compliance plan in accordance with this subsection which outlines how the State will correct or discontinue, as appropriate, the violation and how the State will insure continuing compliance with this part.
(B)
60-day period to propose a corrective compliance plan
During the 60-day period that begins on the date the State receives a notice provided under subparagraph (A) with respect to a violation, the State may submit to the Federal Government a corrective compliance plan to correct or discontinue, as appropriate, the violation.
(2)
Effect of correcting or discontinuing violation
The Secretary may not impose any penalty under subsection (a) of this section with respect to any violation covered by a State corrective compliance plan accepted by the Secretary if the State corrects or discontinues, as appropriate [2] the violation pursuant to the plan.
(3)
Effect of failing to correct or discontinue violation
The Secretary shall assess some or all of a penalty imposed on a State under subsection (a) of this section with respect to a violation if the State does not, in a timely manner, correct or discontinue, as appropriate, the violation pursuant to a State corrective compliance plan accepted by the Secretary.
(d)
Limitation on amount of penalties
(1)
In general
In imposing the penalties described in subsection (a) of this section, the Secretary shall not reduce any quarterly payment to a State by more than 25 percent.
(2)
Carryforward of unrecovered penalties
To the extent that paragraph (1) of this subsection prevents the Secretary from recovering during a fiscal year the full amount of penalties imposed on a State under subsection (a) of this section for a prior fiscal year, the Secretary shall apply any remaining amount of such penalties to the grant payable to the State under section
603
(a)(1) of this title for the immediately succeeding fiscal year.
[1] See References in Text note below.
[2] So in original. Probably should be followed by a comma.