42 U.S.C. § 609 : US Code - Section 609: Penalties

Search 42 U.S.C. § 609 : US Code - Section 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.
(C) Penalty for misuse of competitive welfare-to-work funds
If the Secretary of Labor finds that an amount paid to an
entity under section 603(a)(5)(B) of this title has been used
in violation of subparagraph (B) or (C) of section 603(a)(5) of
this title, the entity shall remit to the Secretary of Labor an
amount equal to the amount so used.
(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.
(B) Rescission of penalty
The Secretary shall rescind a penalty imposed on a State
under subparagraph (A) with respect to a report if the State
submits the report before the end of the fiscal quarter that
immediately succeeds the fiscal quarter for which the report
was required.
(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 -
(I) the percentage by which the grant payable to the
State under section 603(a)(1) of this title was reduced for
such preceding fiscal year, increased by 2 percentage
points; or
(II) 21 percent.
(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, or 2007 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.
(bb) Child care 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.
(dd) Administrative costs in connection with the
matters described in items (aa), (bb), (cc), and (ee),
but only to the extent that such costs do not exceed 15
percent of the total amount of qualified State
expenditures for the fiscal year.
(ee) Any other use of funds allowable under section
604(a)(1) of this title.
(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.
(ii) Applicable percentage
The term "applicable percentage" means for fiscal years
1997 through 2006, 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 -
(I) any expenditure from amounts made available by the
Federal Government;
(II) any State funds expended for the medicaid program
under subchapter XIX of this chapter;
(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 -
(i) not less than 1 nor more than 2 percent;
(ii) not less than 2 nor more than 3 percent, if the
finding is the 2nd consecutive finding made pursuant to
subparagraph (A); or
(iii) not less than 3 nor more than 5 percent, if the
finding is the 3rd or a subsequent consecutive such finding.
(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.
(B) 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.
(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 -
(A) not more than 2 percent of the State family assistance
grant; and
(B) the amount of the expenditure required by the preceding
sentence.
(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.
(B) 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.
(b) Reasonable cause exception
(1) In general
The Secretary may not impose a penalty on a State under
subsection (a) of this section with respect to a requirement if
the Secretary determines that the State has reasonable cause for
failing to comply with the requirement.
(2) Exception
Paragraph (1) of this subsection shall not apply to any penalty
under paragraph (6), (7), (8), (10), (12), or (13) of subsection
(a) of this section.
(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.
(C) Consultation about modifications
During the 60-day period that begins with the date the
Secretary receives a corrective compliance plan submitted by a
State in accordance with subparagraph (B), the Secretary may
consult with the State on modifications to the plan.
(D) Acceptance of plan
A corrective compliance plan submitted by a State in
accordance with subparagraph (B) is deemed to be accepted by
the Secretary if the Secretary does not accept or reject the
plan during 60-day period that begins on the date the plan is
submitted.
(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.
(4) Inapplicability to certain penalties
This subsection shall not apply to the imposition of a penalty
against a State under paragraph (6), (7), (8), (10), (12), or
(13) of subsection (a) of this section.
(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.