NOTICE: This file contains text of the Code of Federal Regulations as of October 1, 1992. This text may be used and distributed freely. Please remember, however, that the Office of the Federal Register provides these electronic files for informational purposes only. The printed Federal Register and Code of Federal Regulations continue to be the official version of these regulations.

PART 200 -- [RESERVED]

PART 201 -- GRANTS TO STATES FOR PUBLIC ASSISTANCE PROGRAMS

Sec.

201.0 Scope and applicability.

201.1 General definitions. Subpart A -- Approval of State Plans and Certification of Grants

201.2 General.

201.3 Approval of State plans and amendments.

201.4 Administrative review of certain administrative decisions.

201.5 Grants.

201.6 Withholding of payment; reduction of Federal financial participation in the costs of social services and training.

201.7 Judicial review. Subpart B -- Review and Audits

201.10 Review of State and local administration.

201.11 Personnel merit system review.

201.12 Public assistance audits. 201.13 Action on audit and review findings.

201.14 Reconsideration under section 1116(d) of the Act.

201.15 Deferral of claims for Federal financial participation.

201.66 Repayment of Federal funds by installments.

201.67 Treatment of uncashed or cancelled checks. Authority: 42 U.S.C. 303, 603, 1203, 1301, 1302, 1316, 1353 and 1383 (note). Source: 35 FR 12180, July 29, 1970, unless otherwise noted. Editorial Note: Nomenclature changes affecting this part appear at 53 FR 36579, Sept. 21, 1988.

201.0 Scope and applicability. Titles I, X, XIV and XVI (as in effect without regard to section 301 of the Social Security Amendments of 1972) shall continue to apply to Puerto Rico, the Virgin Islands, and Guam. The term State as used in such titles means Puerto Rico, the Virgin Islands, and Guam.

[39 FR 8326, Mar. 5, 1974]

201.1 General definitions. When used in this chapter, unless the context otherwise indicates:

(a) Act means the Social Security Act, and titles referred to are titles of that Act;

(b) Department means the Department of Health and Human Services;

(c) Administrator means the Administrator, Family Support Administration:

(d) Secretary means the Secretary of Health and Human Services;

(e) Administration means the Family Support Administration;

(f) Regional Administrator means the Regional Administrator of the Family Support Administration;

(g) State means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa. The term ``State'' with respect to American Samoa applies to the programs set forth in title IV - A and IV - F of the Act.

(h) State agency means the State agency administering or supervising the administration of the State plan or plans under title I, IV - A, IV - F, X, or XVI (AABD) of the Act.

(i) The terms regional office and central office refer to the regional offices and the central office of the Family Support Administration, respectively.

[35 FR 12180, July 29, 1970, as amended at 39 FR 34543, Sept. 26, 1974; 53 FR 36578, Sept. 21, 1988; 57 FR 30425, July 9, 1992]

Subpart A -- Approval of State Plans and Certification of Grants

201.2 General. The State plan is a comprehensive statement submitted by the State agency describing the nature and scope of its program and giving assurance that it will be administered in conformity with the specific requirements stipulated in the pertinent title of the Act, the regulations in Subtitle A and this chapter of this title, and other applicable official issuances of the Department. The State plan contains all information necessary for the Administration to determine whether the plan can be approved, as a basis for Federal financial participation in the State program. [35 FR 12180, July 29, 1970, as amended at 53 FR 36578, Sept. 21, 1988]

201.3 Approval of State plans and amendments. The State plan consists of written documents furnished by the State to cover each of its programs under the Act: Old-age assistance (title I); aid and services to needy families with children (part A of title IV); aid to the blind (title X); aid to the permanently and totally disabled (title XIV); or aid to the aged, blind or disabled (title XVI). The State may submit the common material on more than one program as an integrated plan. However, it must identify the provisions pertinent to each title since a separate plan must be approved for each public assistance title. A plan submitted under title XVI encompasses, under a single plan, the programs otherwise covered by three separate plans under titles I, X, and XIV. After approval of the original plan by the Administration, all relevant changes, required by new statutes, rules, regulations, interpretations, and court decisions, are required to be submitted currently so that the Administration may determine whether the plan continues to meet Federal requirements and policies.

(a) Submittal. State plans and revisions of the plans are submitted first to the State governor or his designee for review in accordance with 204.1 of this chapter, and then to the regional office. The States are encouraged to obtain consultation of the regional staff when a plan is in process of preparation or revision.

(b) Review. Staff in the regional offices are responsible for review of State plans and amendments. They also initiate discussion with the State agency on clarification of significant aspects of the plan which come to their attention in the course of this review. State plan material on which the regional staff has questions concerning the application of Federal policy is referred with recommendations as required to the central office for technical assistance. Comments and suggestions, including those of consultants in specified areas, may be prepared by the central office for use by the regional staff in negotiations with the State agency.

(c) Action. The Regional Administrator, exercised delegated authority to take affirmative action on State plans and amendments thereto on the basis of policy statements or precedents previously approved by the Administrator. The Administrator retains authority for determining that proposed plan material is not approvable, or that a previously approved plan no longer meets the requirements for approval, except that a final determination of disapproval may not be made without prior consultation and discussion by the Administrator with the Secretary. The Regional Administrator, or the Administrator formally notifies the State agency of the actions taken on State plans or revisions.

(d) Basis for approval. Determinations as to whether State plans (including plan amendments and administrative practice under the plans) originally meet or continue to meet, the requirements for approval are based on relevant Federal statutes and regulations. Guidelines are furnished to assist in the interpretation of the regulations.

(e) Prompt approval of State plans. Pursuant to section 1116 of the Act, the determination as to whether a State plan submitted for approval conforms to the requirements for approval under the Act and regulations issued pursuant thereto shall be made promptly and not later than the 90th day following the date on which the plan submittal is received in the regional office, unless the Regional Administrator, has secured from the State agency a written agreement to extend that period.

(f) Prompt approval of plan amendments. Any amendment of an approved State plan may, at the option of the State, be considered as a submission of a new State plan. If the State requests that such amendment be so considered the determination as to its conformity with the requirements for approval shall be made promptly and not later than the 90th day following the date on which such a request is received in the regional office with respect to an amendment that has been received in such office, unless the Regional Administrator, has secured from the State agency a written agreement to extend that period. In absence of request by a State that an amendment of an approved State plan shall be considered as a submission of a new State plan, the procedures under 201.6 (a) and (b) shall be applicable.

(g) Effective date. The effective date of a new plan may not be earlier than the first day of the calendar quarter in which an approvable plan is submitted, and with respect to expenditures for assistance under such plan, may not be earlier than the first day on which the plan is in operation on a statewide basis. The same applies with respect to plan amendments that provide additional assistance or services to persons eligible under the approved plan or that make new groups eligible for assistance or services provided under the approved plan. For other plan amendments the effective date shall be as specified in other sections of this chapter.

[35 FR 12180, July 29, 1970, as amended at 39 FR 34542, Sept. 26, 1974; 42 FR 43977, Sept. 1, 1977; 53 FR 36579, Sept. 21, 1988]

201.4 Administrative review of certain administrative decisions. Pursuant to section 1116 of the Act, any State dissatisfied with a determination of the Administrator pursuant to 201.3 (e) or (f) with respect to any plan or amendment may, within 60 days after the date of receipt of notification of such determination, file a petition with the Regional Administrator, asking the Administrator for reconsideration of the issue of whether such plan or amendment conforms to the requirements for approval under the Act and pertinent Federal requirements. Within 30 days after receipt of such a petition, the Administrator shall notify the State of the time and place at which the hearing for the purpose of reconsidering such issue will be held. Such hearing shall be held not less than 30 days nor more than 60 days after the date notice of such hearing is furnished to the State, unless the Administrator and the State agree in writing on another time. For hearing procedures, see Part 213 of this chapter. A determination affirming, modifying, or reversing the Administrator's original decision will be made within 60 days of the conclusion of the hearing. Action pursuant to an initial determination by the Administrator described in such 201.3 (e) or (f) that a plan or amendment is not approvable shall not be stayed pending the reconsideration, but in the event that the Administrator subsequently determines that his original decision was incorrect he shall certify restitution forthwith in a lump sum of any funds incorrectly withheld or otherwise denied.

[35 FR 12180, July 29, 1970, as amended at 42 FR 43977, Sept. 1, 1977; 53 FR 36579, Sept. 21, 1988]

201.5 Grants. To States with approved plans, grants are made each quarter for expenditures under the plan for assistance, services, training and administration. The determination as to the amount of a grant to be made to a State is based upon documents submitted by the State agency containing information required under the Act and such other pertinent facts, including title IV - A the appropriate Federal share of child support collections made by the State, as may be found necessary.

(a) Form and manner of submittal. (1) Time and place: The estimates for public assistance grants for each quarterly period must be forwarded to the regional office 45 days prior to the period of the estimate. They include a certification of State funds available and a justification statement in support of the estimates. A statement of quarterly expenditures and any necessary supporting schedules must be forwarded to the Department of Health and Human Services, Family Support Administration, not later than 30 days after the end of the quarter.

(2) Description of forms: ``State Agency Expenditure Projection -- Quarterly Projection by Program'' represents the State agency's estimate of the total amount and the Federal share of expenditures for assistance, services, training, and administration to be made during the quarter for each of the public assistance programs under the Act. From these estimates the State and Federal shares of the total expenditures are computed. The State's computed share of total estimated expenditures is the amount of State and local funds necessary for the quarter. The Federal share is the basis for the funds to be advanced for the quarter. The State agency must also certify, on this form or otherwise, the amount of State funds (exclusive of any balance of advances received from the Federal Government) actually on hand and available for expenditure; this certification must be signed by the executive officer of the State agency submitting the estimate or a person officially designated by him, or by a fiscal officer of the State if required by State law or regulation. (A form ``Certificate of Availability of State Funds for Assistance and Administration during Quarter'' is available for submitting this information, but its use is optional.) If the amount of State funds (or State and local funds if localities participate in the program), shown as available for expenditures is not sufficient to cover the State's proportionate share of the amount estimated to be expended, the certification must contain a statement showing the source from which the amount of the deficiency is expected to be derived and the time when this amount is expected to be made available.

(3) The State agency must also submit a quarterly statement of expenditures for each of the public assistance programs under the Act. This is an accounting statement of the disposition of the Federal funds granted for past periods and provides the basis for making the adjustments necessary when the State's estimate for any prior quarter was greater or less than the amount the State actually expended in that quarter. The statement of expenditures also shows the share of the Federal Government in any recoupment, from whatever source, including for title IV - A the appropriate share of child support collections made by the State, of expenditures claimed in a prior period, and also in expenditures not properly subject to Federal financial participation which are acknowledged by the State agency, including the share of the Federal Government for uncashed and cancelled checks as described at 45 CFR 201.67 and replacement checks as described at 45 CFR 201.70 in this part, or which have been revealed in the course of an audit.

(b) Review. The State's estimates are analyzed by the regional office staff and are forwarded with recommendations as required to the central office. The central office reviews the State's estimate, other relevant information, and any adjustments to be made for prior periods, and computes the grant.

(c) Grant award. The grant award computation form shows, by program, the amount of the estimate for the ensuing quarter, and the amounts by which the estimate is reduced or increased because of over- or under-estimate for the prior quarter and for other adjustments. This form is transmitted to the State agency to draw the amount of the grant award, as needed, to meet the Federal share of disbursements. The draw is through a commercial bank and the Federal Reserve system against a continuing letter of credit certified to the Secretary of the Treasury in favor of the State payee. A copy of the grant award notice is sent to the State Central Information Reception Agency in accord with section 201 of the Intergovernmental Cooperation Act of 1968.

(d) Letter of credit payment system. The letter of credit system for payment of advances of Federal funds was established pursuant to Treasury Department regulations (Circular No. 1075), published in the Federal Register on July 11, 1967 (32 FR 10201). The HEW ``Instructions to Recipient Organizations for Use of Letter of Credit'' was transmitted to all grantees by memorandum from the Assistant Secretary-Comptroller on January 15, 1968.

(e) General administrative requirements. With the following exceptions, the provisions of part 74 of this title, establishing uniform administrative requirements and cost principles, shall apply to all grants made to States under this part:

45 CFR Part 74 Subpart G -- Matching and Cost Sharing.

Subpart I -- Financial Reporting Requirements.

[35 FR 12180, July 29, 1970, as amended at 38 FR 26320, Sept. 19, 1973; 46 FR 48003, Sept. 30, 1981; 53 FR 24269, June 28, 1988; 53 FR 36579, Sept. 21, 1988]

201.6 Withholding of payment; reduction of Federal financial participation in the costs of social services and training.

(a) When withheld. Further payments to a State are withheld in whole or in part if the Administrator, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of an approved plan, finds:

(1) That the plan no longer complies with the provisions of section 2, 402, 1002, 1402, or 1602 of the Act; or

(2) That in the administration of the plan there is failure to comply substantially with any such provision.

A question of noncompliance of a State plan may arise from an unapprovable change in the approved State plan, the failure of the State to change its approved plan to conform to a new Federal requirement for approval of State plans, or the failure of the State in practice to comply with a Federal requirement, whether or not its State plan has been amended to conform to such requirement.

(b) When the rate of Federal financial participation is reduced. Under title I, X, XIV, or XVI (AABD) of the Act, Federal financial participation in the costs of social services and training approved at the rate of 75 per centum is reduced to 50 per centum if the Administrator, after reasonable notice and opportunity for a hearing to the State agency, finds:

(1) That the plan provision under such title for prescribed services no longer complies with the Federal requirements with respect to such prescribed services; or

(2) That in the administration of the plan there is a failure to comply substantially with such plan provision. (c) Information discussions. Hearings with respect to matters under paragraph (a) or (b) of this section are generally not called, however, until after reasonable effort has been made by the Administration to resolve the questions involved by conference and discussion with State officials. Formal notification of the date and place of hearing does not foreclose further negotiations with State officials.

(d) Conduct of hearings. For hearing procedures, see part 213 of this chapter.

(e) Notification of withholding. If the Administrator makes a finding of noncompliance with respect to a matter under paragraph (a) of this section, the State agency is notified that further payments will not be made to the State (or, in his discretion, that payments will be limited to categories under or parts of the plan not affected by such failure), until the Administrator is satisfied that there will no longer be any such failure to comply. Until he is so satisfied, no further payments will be made to the State (or will be limited to categories under or parts of the plan not affected by such failure).

(f) Notification of reduction in the rate of Federal financial participation. If the Administrator makes a finding of noncompliance with respect to a matter under paragraph (b) of this section, the State agency is notified that further payments will be made to the State at the rate of 50 per centum of the costs of services and training, until the Administrator is satisfied that there will no longer be any failure to comply. [35 FR 12180, July 29, 1970, as amended at 39 FR 34542, Sept. 26, 1974; 53 FR 36579, Sept. 21, 1988]

201.7 Judicial review. Any State dissatisfied with a final determination of the Secretary pursuant to 201.4 or 201.6(a) may, within 60 days after it has been notified of such determination, file with the U.S. Court of Appeals for the circuit in which such State is located a petition for review of such determination. After a copy of the petition is transmitted by the clerk of the court to the Secretary, the Secretary thereupon shall file in the court the record of proceedings upon which such determination was based as provided in section 2112 of title 28, United States Code. The court is bound by the Secretary's findings of fact, if supported by substantial evidence. The court has jurisdiction to affirm the Secretary's decision, or set it aside in whole or in part, or, for good cause, to remand the case for additional evidence. If the case is remanded, the Secretary may thereupon make new or modified findings of fact, and may modify his previous determination. The Secretary shall certify to the court the transcript and record of the further proceedings. The judgment of the court is subject to review by the Supreme Court of the United States upon certiorari or certification as provided in 28 U.S.C. 1254.

Subpart B -- Review and Audits

201.10 Review of State and local administration.

(a) In order to provide a basis for determining that State agencies are adhering to Federal requirements and to the substantive legal and administrative provisions of their approved plans, the Administration conducts a review of State and local public assistance administration. This review includes analysis of procedures and policies of State and local agencies and examination of case records of individual recipients.

(b) Each State agency is required to carry out a continuing quality control program primarily covering determination of eligibility in statistically selected samples of individual cases. The Service conducts a continuing observation of these State systems.

(c) Adherence to other Federal requirements set forth in the pertinent titles of the Act and the regulations in this title is evaluated through review of selected case records and aspects of agency operations.

[35 FR 12180, July 29, 1970, as amended at 53 FR 36579, Sept. 21, 1988]

201.11 Personnel merit system review. A personnel merit system review is carried out by the Office of State Merit Systems of the Office of the Assistant Secretary for Administration of the Department. The purpose of the review is to evaluate the effectiveness of the State merit system relating to the public assistance programs and to determine whether there is compliance with Federal requirements in the administration of the merit system plan. See Part 70 of this title.

201.12 Public assistance audits.

(a) Annually, or at such frequencies as are considered necessary and appropriate, the operations of the State agency are audited by representatives of the Audit Agency of the Department. Such audits are made to determine whether the State agency is being operated in a manner that:

(1) Encourages prudent use of program funds, and

(2) Provides a reasonable degree of assurance that funds are being properly expended, and for the purposes for which appropriated and provided for under the related Act and State plan, including State laws and regulations.

(b) Reports of these audits are released by the Audit Agency simultaneously to program officials of the Department, and to the cognizant State officials. These audit reports relate the opinion of the Audit Agency on the practices reviewed and the allowability of costs audited at the State agency. Final determinations as to actions required on all matters reported are made by cognizant officials of the Department.

201.13 Action on audit and review findings.

(a) If the audit results in no exceptions, the State agency is advised by letter of this result. The general course for the disposition of proposed exceptions resulting from audits involves the submittal of details of these exceptions to the State agency which then has an opportunity to concur in the proposed exceptions or to assemble and submit additional facts for purposes of clearance. Provision is made for the State agency to appeal proposed audit exceptions in which it has not concurred and which have not been deleted on the basis of clearance material. After consideration of a State agency's appeal by the Administrator, the Administration advises the State agency of any expenditures in which the Federal Government may not participate and requests it to include the amount as adjustments in a subsequent statement of expenditures. Expenditures in which it is found the Federal Government may not participate and which are not properly adjusted through the State's claim will be deducted from subsequent grants made to the State agency.

(b) If the Federal or State reviews reveal serious problems with respect to compliance with any Federal requirement, the State agency is required to correct its practice so that there will be no recurrence of the problem in the future.

[35 FR 12180, July 29, 1970, as amended at 53 FR 36579, Sept. 21, 1988]

201.14 Reconsideration under section 1116(d) of the Act.

(a) Applicability. This section applies to any disallowance of any item or class of items for which FFP is claimed under title I, IV, X, XIV, XVI(AABD), or XX of the Act, with respect to which reconsideration was requested prior to March 6, 1978, unless the State by filing a written notice to that effect with the Executive Secretary, Departmental Grant Appeals Board (with proof of service on the head of the constituent agency), within 30 days after mailing of the confirmation of the disallowance by the agency head, elects to have the reconsideration governed by 45 CFR Part 16.

(1) Reduction of the Federal share of assistance payments under title IV - A, for failure to certify WIN registrants (section 402(e) of the Act);

(2) Reduction by one per centum of the quarterly amount payable to a State for all expenditures under title IV - A for failure, in certain cases, to carry out the provisions of section 402(a)(15) of the Act which require the offering of and arrangement for the provision of family planning services (section 402(f) of the Act);

(3) -- (5) [Reserved]

(6) Any other decision pursuant to sections 3, 403, 422, 455, 1003, 1403, 1603, or 2003, of the Act.

(b) Notice of disallowance determination.(1) When the Regional Administrator, determines that a State claim for FFP in expenditures for a particular item or class of items is not allowable, he shall promptly issue a disallowance letter to the State.

(2) This disallowance letter shall include where appropriate:

(i) The date or dates on which the State's claim for FFP was made;

(ii) The time period during which the expenditures in question were made or claimed to have been made;

(iii) The date and amount of any payment or notice of deferral;

(iv) A statement of the amount of FFP claimed, allowed, and disallowed and the manner in which these amounts were calculated;

(v) Findings of fact on which the disallowance determination is based or a reference to other documents previously or contemporaneously furnished to the State (such as a report of a financial review or audit) which contain the findings of fact on which the disallowance determination is based;

(vi) Pertinent citations to the law, regulations, guides and instructions supporting the action taken; and

(vii) Notice of the State's right to request reconsideration of the disallowance under this section and the time within such request must be made.

(c) Request for reconsideration. (1) To obtain reconsideration of a disallowance of an item or class of items for FFP, a State shall, within 30 days of the date of the disallowance letter, request reconsideration by the Administrator, with copy to the Regional Administrator, and enclose a copy of the disallowance letter.

(2) The request for reconsideration must be accompanied by a brief statement of the issues in dispute, including an explanation of the State's position with respect to each issue.

(d) Reconsideration procedures. (1) The Administrator will promptly acknowledge receipt of a State's request for reconsideration.

(2) Upon receipt of a copy of the request for reconsideration, the Regional Administrator, shall, within 30 days of the request, provide to the Administrator a complete record of all material which he believes to have a bearing on the reconsideration, including any reports of audit or review which were the basis for his decision.

(3) The Administrator shall promptly forward to the State a list of all items currently in the record, including those received from the Regional Administrator, or with respect to the medical assistance program under title XIX, Regional Medicaid Director and make available for examination, inspection and copying any such items not previously received by the State.

(4) Within 60 days from the date of the Administrator's transmittal to the State under paragraph (d)(3) of this section, the State shall submit in writing to the Administrator any new relevant evidence, documentation, or argument and shall simultaneously submit a copy thereof to the Regional Administrator, or with respect to the medical assistance program under title XIX, Regional Medicaid Director.

(5) The Regional Administrator, or with respect to the medical assistance program under title XIX, Regional Medicaid Director shall, within 60 days of submittal by the State, submit to the Administrator (with a copy to the State) an analysis of the issues relevant to the disallowance including: (i) A restatement of the findings on which the disallowance was based; (ii) A response to each issue raised by the State with respect to such findings; (iii) A response to any other issues raised by the State, providing additional documentation when necessary; and (iv) Any additional documentation which he deems relevant.

(6) The State may respond to the material submitted by the Regional Administrator, or with respect to the medical assistance program under title XIX, Regional Medicaid Director by submitting to the Administrator within 15 days any supplemental material the State wishes to have entered into the record.

(7) At the time of submitting any additional material pursuant to paragraph (d)(4), the State may obtain, upon request to him, a conference with the Administrator, during which it may discuss with the Administrator its position on the issues. The State may, at its own expense, have such conference transcribed; the transcript shall become part of the administrative record.

(8) In reconsidering the disallowance, the Administrator may request any additional information or documents necessary to his decision.

(9) New relevant evidence received into the record by the Administrator pursuant to paragraph (d)(8) of this section which is not received from, or previously otherwise made available to, the State shall promptly be made available to the State for examination, inspection, and copying and the State will be given appropriate additional time for comment.

(10) All documents, reports, correspondence, and other materials considered by the Administrator in reaching his decision shall constitute the record of the reconsideration proceedings.

(11) After consideration of such record and the laws and regulations pertinent to the issues in question, the Administrator shall issue a written decision, based on the administrative record, which summarizes the facts and cites the regulations or statutes that support the decision. The decision shall constitute final administrative action on the matter and shall be promptly mailed to the head of the State agency.

(12) Either the state or the Regional Administrator, or with respect to the medical assistance program under title XIX, Regional Medicaid Director may request from the Administrator, for good cause, an extension of any of the time limits specified in this section.

(13) No section of this regulation shall be interpreted as waiving the Department's right to assert any provision or exemption in the Freedom of Information Act.

(e) Implementation of the decision. If the decision requires an adjustment in the Federal share, either upward or downward, this will be reflected in subsequent grant awards.

(f) For purposes of this section, the Administrator includes the Deputy Administrator, except that whichever official conducts the conference requested pursuant to paragraph (d)(7) of this section will also issue the final administrative decision pursuant to paragraph (d)(11) of this section.

Appendix -- Reconsideration of Disallowances Under Section 1116(d) of the Social Security Act

transfer of functions

Under the authority of Reorganization Plan No. 1 of 1953, and pursuant to the authorities vested in me as Secretary of Health amd Human Services, I hereby order that, with respect to reconsiderations of disallowances imposed under titles I, IV, VI, X, XIV, XVI (AABD), XIX and XX of the Social Security Act, 42 U.S.C. 301 et seq., 601 et seq., 801 et seq., 1201 et seq., 1351 et seq., 1381 et seq. (AABD), 1396 et seq. and 1397 et seq., all references to ``Administrator'' appearing in 45 CFR 201.14 shall be deemed to read ``Chairman, Departmental Grant Appeals Board'' and all references to ``Deputy Administrator'' appearing therein shall be deemed to refer to one or more members of the Departmental Grant Appeals Board, designated by the Chairman to decide a reconsideration. States which have previously had or requested a conference pursuant to 45 CFR 201.14(d)(7) will be entitled to a conference with the Chairman of the Departmental Grant Appeals Board acting (as provided above) as successor to the Administrator of the Social and Rehabilitation Service (SRS), or with a member or members of the Board designated by the Chairman to decide the matter, acting as successor to the Deputy Administrator of SRS. The Chairman may, at his option, utilize a Grant Appeals Panel, designated pursuant to 45 CFR 516.4(b), to decide the matter, and may supplement the 201.14 procedures by utilizing the procedures of 45 CFR Part 16 including the authority provided in 45 CFR 16.51 to waive or modify any procedural provision upon a determination that no party will be prejudiced and that the ends of justice will be served.

[40 FR 34592, Aug. 18, 1975; 40 FR 44326, Sept. 26, 1975, as amended at 41 FR 42205, Sept. 27, 1976; 42 FR 43977, Sept. 1, 1977; 42 FR 51583, Sept. 29, 1977; 43 FR 9266, Mar. 6, 1978; 51 FR 9202, Mar. 18, 1986; 53 FR 36579, Sept. 21, 1988]

201.15 Deferral of claims for Federal financial participation.

(a) Scope. Except as otherwise provided, this section applies to all claims for Federal financial participation submitted by States pursuant to titles I, IV, X, XIV, XVI (AABD), of the Social Security Act.

(b) Definitions.

(1) Deferral Action means the process of suspending payment with respect to a claim within the scope of paragraph (a) of this section, pending the receipt and analysis of further information relating to the allowability of the claim, under the procedures specified in this section.

(2) Deferred claim means a claim within the scope of paragraph (a) of this section upon which a deferral action has been taken. (c) Procedures. (1) A claim or any portion of a claim for reimbursement for expenditures reported on the Quarterly Statement of Expenditures shall be deferred only when the Regional Administrator believes the claim or a specific portion of the claim is of questionable allowability. The deferral action will be taken within 60 days after receipt of a Quarterly Statement of Expenditures prepared in accordance with instructions issued by the Administration. (2) When deferral action is taken on a claim, the Regional Administrator or the Administrator will within 15 days send written notice to the State identifying the type and amount of the claim and the reason for deferral. In the written notice of the deferral action, the Regional Administrator or the Administrator will request the State to make available for inspection all documents and materials which the Regional office then believes necessary to determine the allowability of the claim.

(3) Within 60 days of receipt of the notice of deferral action described in paragraph (c)(2) of this section the State shall make available to the Regional office, in readily reviewable form, all requested documents and materials, or when necessary, shall identify those documents and items of information which are not available. If the State requires additional time to make the documents and material available, it shall upon request be given an additional 60 days.

(4) The Regional office will normally initiate the review within 30 days of the date that materials become available for review.

(5) If the Regional Administrator finds that the documents and materials are not in readily reviewable form or that supplemental information is required, he will promptly notify the State. The State will have 15 days from the date of notification to complete the action requested. If the Regional Commissioner or the Administrator finds that the documents necessary to determine the allowability of the claim are not made available within the allowed time limits, or that the documents are not made available in readily reviewable form, he shall promptly disallow the claim.

(6) The Regional Administrator or the Administrator will have 90 days after all documentation is available in readily reviewable form to determine the allowability of the deferred claim. If he is unable to complete the review within the time period the claim will be paid subject to a later determination of allowability.

(7) It is the responsibility of the State agency to establish the allowability of a deferred claim.

(8) The Regional Office or the Administrator will notify the State in writing of the decision on the allowability of the deferred claim.

(9) If a deferred claim is disallowed, the Regional Administrator or the Administrator shall advise the State of its right to reconsideration pursuant to 201.14.

(10) A decision to pay a deferred claim shall not preclude a subsequent disallowance as a result of an audit exception or financial management review. If a subsequent disallowance should occur, the State, upon request shall be granted reconsideration pursuant to 201.14.

[41 FR 7104, Feb. 17, 1976, as amended at 42 FR 51583, Sept. 29, 1977; 47 FR 7669, Feb. 22, 1982; 53 FR 36579, Sept. 21, 1988]

201.66 Repayment of Federal funds by installments.

(a) Basic Conditions. When a State has been reimbursed Federal funds for expenditures claimed under titles I, IV - A, X, XIV, XVI (AABD) which are later determined to be unallowable for Federal financial participation, the State may make repayment of such Federal funds in installments provided:

(1) The amount of the repayment exceeds 2\1/2\ percent of the estimated annual State share for the program in which the unallowable expenditure occurred as set forth in paragraph (b) of this section; and

(2) The State has notified the Regional Administrator in writing of its intent to make installment repayments. Such notice must be given prior to the time repayment of the total was otherwise due.

(b) Criteria governing installment repayments. (1) The number of quarters over which the repayment of the total unallowable expenditures will be made will be determined by the percentage the total of such repayment is of the estimated State share of the annual expenditures for the specific program against which the recovery is made, as follows: * * * TABLE START * * * @h1Total repayment amount as percentage of State share of annual expenditures for the specific program@h1Number of quarters to make repayment 2.5 pct. or less....... 1 Greater than 2.5, but not greater than 5....... 2 Greater than 5, but not greater than 7.5....... 3 Greater than 7.5, but not greater than 10....... 4 Greater than 10, but not greater than 15....... 5 Greater than 15, but not greater than 20 - ....... 6 Greater than 20 but not greater than 25....... 7 Greater than 25, but not greater than 30....... 8 Greater than 30, but not greater than 47.5....... 9 Greater than 47.5, but not greater than 65....... 10 Greater than 65, but not greater than 82.5....... 11 Greater than 82.5, but not greater than 100....... 12 * * * TABLE END * * * The quarterly repayment amounts for each of the quarters in the repayment schedule shall not be less than the following percentages of the estimated State share of the annual expenditures for the program against which the recovery is made. * * * TABLE START * * * @h1For each of the following quarters@h1Repayment installment may not be less than these percentages 1 to 4....... 2.5 5 to 8....... 5.0 9 to 12....... 17.5 * * * TABLE END * * * If the State chooses to repay amounts representing higher percentages during the early quarters, any corresponding reduction in required minimum percentages would be applied first to the last scheduled payment, then to the next to the last payment, and so forth as necessary.

(2) The latest State Agency Statement of Financial Plan for AFDC submitted by the State shall be used to estimate the State's share of annual expenditures for the specific program in which the unallowable expenditures occurred. That estimated share shall be the sum of the State's share of the estimates (as shown on the latest State Agency Statement of Financial Plan for AFDC) for four quarters, beginning with the quarter in which the first installment is to be paid.

(3) In the case of a program terminated by law or by the State, the actual State share -- rather than the estimate -- shall be used for determining whether the amount of the repayment exceeds 2\1/2\% of the annual State share for the program. The annual State share in these cases will be determined using payments computable for Federal funding as reported for the program by the State on its Quarterly Statement of Expenditures reports submitted for the last four quarters preceding the date on which the program was terminated.

(4) Repayment shall be accomplished through adjustment in the quarterly grants over the period covered by the repayment schedule.

(5) The amount of the repayment for purpose of paragraphs (a) and (b) of this section may not include any amount previously approved for installment repayment.

(6) The repayment schedule may be extended beyond 12 quarterly installments if the total repayment amount exceeds 100% of the estimated State share of annual expenditures. In these circumstances, the criteria in paragraphs (b) (1) and (2) or (3) of this section, as appropriate, shall be followed for repayment of the amount equal to 100% of the annual State share. The remaining amount of the repayment shall be in quarterly amounts not less than those for the 9th through 12th quarters.

(7) The amount of a retroactive claim to be paid a State will be offset against any amounts to be, or already being, repaid by the State in installments, under the same title of the Social Security Act. Under this provision the State may choose to: (i) Suspend payments until the retroactive claim due the State has, in fact, been offset; or (ii) Continue payments until the reduced amount of its debt (remaining after the offset), has been paid in full. This second option would result in a shorter payment period. A retroactive claim for the purpose of this regulation is a claim applicable to any period ending 12 months or more prior to the beginning of the quarter in which the payment is to be made by the Administration.

[42 FR 28884, June 6, 1977, as amended at 47 FR 7669, Feb. 22, 1982; 52 FR 273, Jan. 5, 1987; 53 FR 36579, Sept. 21, 1988]

201.67 Treatment of uncashed or cancelled checks.

(a) Purpose. This section provides the rules to ensure that States refund the Federal portion of uncashed or cancelled (voided) checks under titles I, IV - A, X, XIV, and XVI (AABD).

(b) Definitions. As used in this section -- Check means a check or warrant that the State or local agency uses to make a payment. Cancelled (voided) check means a check issued by the State agency or local agency which prior to its being cashed is cancelled (voided) by State or local agency action, thus preventing disbursement of funds. Uncashed check means a check issued by the State agency or local agency which has not been cashed by the payee.

(c) Refund of Federal financial participation (FFP) for uncashed checks -- (1) General provisions. If a check remains uncashed beyond a period of 180 days from the date it was issued, i.e., the date of the check, it will no longer be regarded as an amount expended because no funds have actually been disbursed. If the State agency has claimed and received FFP for the amount of the uncashed check, it must refund the amount of FFP received.

(2) Report of refund. At the end of each calendar quarter, the State agency must identify those checks which remain uncashed beyond a period of 180 days after issuance. The State agency must report on the Quarterly Statement of Expenditures for that quarter all FFP that it received for uncashed checks. Once reported on the Quarterly Statement of Expenditures for a quarter, an uncashed check is not to be reported on a subsequent Quarterly Statement of Expenditures. If an uncashed check is cashed after the refund is made, the State agency may submit a new claim for FFP.

(d) Refund of FFP for cancelled (voided) checks -- (1) General provisions. If the State agency has claimed and received FFP for the amount of a cancelled (voided) check, it must refund the amount of FFP received.

(2) Report of refund. At the end of each calendar quarter, the State agency must identify those checks which were cancelled (voided). The State agency must report on the Quarterly Statement of Expenditures for that quarter all FFP received by the State agency for these checks. Once reported on the Quarterly Statement of Expenditures for a quarter, a cancelled (voided) check is not to be reported on a subsequent Quarterly Statement of Expenditures.

[50 FR 37661, Sept. 17, 1985]

201.70 Treatment of replacement checks.

(a) Purpose. This section provides the rules to ensure State do not claim Federal financial participation (FFP) for replacement checks under titles I, VI - A, X, XIV XVI (AABD) except under the circumstances specified in paragraph (c) of this section.

(b) Definitions. As used in this section -- ``Check'' means a check or warrant that the State or local agency uses to make a payment. ``Replacement check'' means a check issued by the State or local agency to replace an earlier check.

(c) Claiming of FFP for replacement checks. The State agency may not claim FFP for the amount of a replacement check unless: (1) It makes no claim for FFP for the earlier check; (2) The earlier check has been cancelled (voided) and FFP refunded, where claimed, pursuant to 45 CFR 201.67(d); or (3) The earlier check has been cashed and FFP has been refunded. The State agency shall report the amount of the refund of FFP for the earlier check on the Quarterly Statement of Expenditures for the quarter no later than the quarter in which the replacement check is issued.

[53 FR 24269, June 28, 1988]

PART 204 -- GENERAL ADMINISTRATION -- STATE PLANS AND GRANT APPEALS

Sec. 204.1 Submittal of State plans for Governor's review.

204.2 State plans -- format.

204.3 Responsibilities of the State.

204.4 Grant appeals. Authority: 42 U.S.C. 602(a)(44) and 1302 and sections 1, 5, 6, and 7 of Reorganization Plan No. 1 of 1953, 67 Stat. 631. Editorial Note: Nomenclature changes affecting this part appear at 53 FR 36579, Sept. 21, 1988.

204.1 Submittal of State plans for Governor's review. A State plan under title I, IV - A, IV - B, X, XIV, XVI(AABD) of the Social Security Act, section 101 of the Rehabilitation Act of 1973, or title I of the Mental Retardation Facilities and Community Mental Health Centers Construction Act, must be submitted to the State Governor for his review and comments, and the State plan must provide that the Governor will be given opportunity to review State plan amendments and long-range program planning projections or other periodic reports thereon. This requirement does not apply to periodic statistical or budget and other fiscal reports. Under this requirement, the Office of the Governor will be afforded a specified period in which to review the material. Any comments made will be transmitted to the Family Support Administration with the documents. (Sec. 1102, 49 Stat. 647 (42 U.S.C. 1302))

[39 FR 34542, Sept. 26, 1974, as amended at 53 FR 36579, Sept. 21, 1988]

204.2 State plans -- format. State plans for Federally-assisted programs for which the Family Support Administration has responsibility must be submitted to the Administration in the format and containing the information prescribed by the Administration, and within time limits set in implementing instructions issued by the Administration. Such time limits will be adequate for proper preparation of plans and submittal in accordance with the requirements for State Governors' review (see204.1 of this chapter). (Sec. 1102, 49 Stat. 647, 42 U.S.C. 1302; sec. 7(b), 68 Stat. 658, 29 U.S.C. 37(b); sec. 139, 84 Stat. 1323, 42 U.S.C. 2677(b)) [38 FR 16872, June 27, 1973, as amended at 53 FR 36579, Sept. 21, 1988]

204.3 Responsibilities of the State. The State agency shall be responsible for assuring that the benefits and services available under titles IV - A, IV - D, and IV - F are furnished in an integrated manner.

[57 FR 30425, July 9, 1992]

204.4 Grant appeals.

(a) Scope. This section applies to certain determinations (as set forth in Part 16, Appendix A, section C of this title), made with respect to direct, discretionary project grants awarded by the Family Support Administration, and such other grants or grant programs as the Administrator, with the approval of the Secretary, may designate. The statutory authority for current grant programs to which this section applies appears in the appendix to this section. This section is also applicable to determinations with respect to grants which were made under authority which has expired or been repealed since the grants were made, even though such authority does not appear in the appendix.

(b) Submission. (1) A grantee who has received notification, as described in 16.3(b) and (c) of this title, of a determination described in Part 16, Appendix A, section C of this title, may request reconsideration by informing the Grants Appeals Officer as identified in the final adverse determination or otherwise designated by the Administrator, Family Support Administration, Washington, DC 20201 of the grantee's intent to contest the determination. The grantee's request for reconsideration must be postmarked no later than 30 days after the postmark date of the written notification of such determination, except when the Grant Appeals Officer grants an extension of time for good cause.

(2) Although the request need not follow any prescribed form, it shall clearly identify the question or questions in dispute and contain a full statement of the grantee's position with respect to such question or questions, and the pertinent facts and reasons in support of such position. The grantee shall attach to his submission a copy of the agency notification specified in 16.3(b) of this title.

(c) Action by the Administration on requests for reconsideration. (1) Upon receipt of such an application the Grant Appeals Officer will inform the grantee that: (i) His request is under review, and (ii) If no decision is received within 90 days of the postmark date of the grantee's request for reconsideration, the determination may be appealed to the Departmental Grant Appeals Board.

(2) The Grant Appeals Officer will reconsider the determination appealed from, considering any material submitted by the grantee and any other material necessary.

(3) If the response to the grantee is adverse to the grantee's position, the response will include notification of the grantee's right to appeal to the Departmental Grant Appeals Board. Appendix This section is issued under sections 1, 5, 6, and 7 of Reorganization Plan No. 1 of 1953, 18 FR 2053, 67 Stat. 631 and is applicable to programs carried out under the following authorities: (1) Section 222(a) and (b) of the Social Security Amendments of 1972 (Pub. L. 92 - 603). (2) Section 426 of the Social Security Act (42 U.S.C. 262). (3) Section 707 of the Social Security Act (42 U.S.C. 907). (4) Section 1110 of the Social Security Act (42 U.S.C. 1310). (5) Section 1115 of the Social Security Act (42 U.S.C. 1315). (Secs. 1, 5, 6, 7 Reorganization Plan No. 1 of 1953, 67 Stat. 631)

[40 FR 51443, Nov. 5, 1975, as amended at 53 FR 36579, Sept. 21, 1988]

PART 205 -- GENERAL ADMINISTRATION -- PUBLIC ASSISTANCE PROGRAMS

Sec. 205.5 Plan amendments.

205.10 Hearings.

205.25 Eligibility of supplemental security income beneficiaries for food stamps or surplus commodities.

205.30 Methods of administration.

205.32 Procedures for issuance of replacement checks.

205.35 Mechanized claims processing and information retrieval systems; definitions.

205.36 State plan requirements.

205.37 Responsibilities of the Family Support Administration (FSA).

205.38 Federal financial participation (FFP) for establishing a statewide mechanized system.

205.40 Quality control system.

205.42 Reduction in Federal financial participation (FFP) for incorrect payments made by States from October 1980 through September 1984.

205.43 Increase in Federal financial participation (FFP) for States with low error rates.

205.44 Reduction in Federal financial participation (FFP) for incorrect payments made by States after September 1984.

205.45 Federal financial participation in relation to State emergency welfare preparedness.

205.50 Safeguarding information for the financial assistance programs.

205.51 Income and eligibility verification requirements.

205.52 Furnishing of social security numbers.

205.55 Requirements for requesting and furnishing eligibility and income information.

205.56 Requirements governing the use of income and eligibility information.

207.57 Maintenance of a machine readable file; requests for income and eligibility information.

205.58 Income and eligibility information; specific agreements required between the State agency and the agency supplying the information.

205.60 Reports and maintenance of records.

205.62 Delay of effective date.

205.70 Availability of agency program manuals.

205.80 Evaluation of the Work Incentive Demonstration Program.

205.100 Single State agency.

205.101 Organization for administration.

205.120 Statewide operation.

205.130 State financial participation.

205.146 Specific limitations on Federal financial participation under title IV - A.

205.150 Cost allocation.

205.160 Non-expendable personal property.

205.170 State standards for office space, equipment, and facilities.

205.190 Standard-setting authority for institutions. Authority: 42 U.S.C. 602, 603, 606, 607, 611, 1302, 1306(a), 1320b - 7. Editorial Note: Nomenclature changes affecting this part appear at 53 FR 36579, Sept. 21, 1988.

205.5 Plan amendments.

(a) State plan requirements. A State plan under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that the plan will be amended whenever necessary to reflect new or revised Federal statutes or regulations, or material change in any phase of State law, organization, policy or State agency operation.

(b) Federal financial participation. Except where otherwise provided, Federal financial participation is available in the additional expenditures resulting from an amended provision of the State plan as of the first day of the calendar quarter in which an approvable amendment is submitted or the date on which the amended provision becomes effective in the State, whichever is later.

[39 FR 34542, Dec. 26, 1974, as amended at 53 FR 36579, Sept. 21, 1988]

§205.10 Hearings.

(a) State plan requirements. A State plan under title I, IV - A, X, XIV, or XVI(AABD) of the Social Security Act shall provide for a system of hearings under which:

(1) The single State agency responsible for the program shall be responsible for fulfillment of hearing provisions which shall provide for:

(i) A hearing before the State agency, or

(ii) An evidentiary hearing at the local level with a right of appeal to a State agency hearing. Where a State agency adopts a system of evidentiary hearings with an appeal to a State agency hearing, it may, in some political subdivisions, permit local evidentiary hearings, and in others, provide for a single hearing before the State agency. Under this requirement hearings shall meet the due process standards set forth in the U.S. Supreme Court decision in Goldberg v. Kelly, 397 U.S. 254 (1970) and the standards set forth in this section.

(2) Hearing procedures shall be issued and publicized by the State agency. Such procedures shall provide for a face-to-face hearing or, at State option, a hearing by telephone when the applicant or recipient also agrees. Under this provision, the State shall assure that the applicant or recipient is afforded all rights as specified in this section, whether the hearing is face-to-face or by telephone;

(3) Every applicant or recipient shall be informed in writing at the time of application and at the time of any action affecting his claim:

(i) Of his right to a hearing, as provided in paragraph (a)(5) of this section;

(ii) Of the method by which he may obtain a hearing;

(iii) That he may be represented by an authorized representative, such as legal counsel, relative, friend, or other spokesman, or he may represent himself.

(4) In cases of intended action to discontinue, terminate, suspend or reduce assistance or to change the manner or form of payment to a protective, vendor, or two-party payment under 234.60:

(i) The State or local agency shall give timely and adequate notice, except as provided for in paragraphs (a)(4)(ii), (iii), or (iv) of this section. Under this requirement: (A) Timely means that the notice is mailed at least 10 days before the date of action, that is, the date upon which the action would become effective; (B) Adequate means a written notice that includes a statement of what action the agency intends to take, the reasons for the intended agency action, the specific regulations supporting such action, explanation of the individual's right to request an evidentiary hearing (if provided) and a State agency hearing, the circumstances under which assistance is continued if a hearing is requested, and if the agency action is upheld, that such assistance must be repaid under title IV - A, and must also be repaid under titles I, X, XIV or XVI (AABD) if the State plan provides for recovery of such payments.

(ii) The agency may dispense with timely notice but shall send adequate notice not later than the date of action when: (A) The agency has factual information confirming the death of a recipient or of the AFDC payee when there is no relative available to serve as new payee;

(B) The agency receives a clear written statement signed by a recipient that he no longer wishes assistance, or that gives information which requires termination or reduction of assistance, and the recipient has indicated, in writing, that he understands that this must be the consequence of supplying such information;

(C) The recipient has been admitted or committed to an institution, and further payments to that individual do not qualify for Federal financial participation under the State plan;

(D) The recipient has been placed in skilled nursing care, intermediate care or long-term hospitalization;

(E) The claimant's whereabouts are unknown and agency mail directed to him has been returned by the post office indicating no known forwarding address. The claimant's check must, however, be made available to him if his whereabouts become known during the payment period covered by a returned check;

(F) A recipient has been accepted for assistance in a new jurisdiction and that fact has been established by the jurisdiction previously providing assistance;

(G) An AFDC child is removed from the home as a result of a judicial determination, or voluntarily placed in foster care by his legal guardian;

(H) For AFDC, the agency takes action because of information the recipient furnished in a monthly report or because the recipient has failed to submit a complete or a timely monthly report without good cause. (See 233.37);

(I) A special allowance granted for a specific period is terminated and the recipient has been informed in writing at the time of initiation that the allowance shall automatically terminate at the end of the specified period;

(J) The agency has made a presumption of mismanagement as a result of a recipient's nonpayment of rent and provides for post hearings in such circumstances;

(K) An individual's payment is suspended or reduced for failure to meet a payment after performance obligation as set forth at 233.101(b)(2)(iv) (B) or (C) of this chapter. In addition to the contents set forth in paragraph (a)(4)(i)(B) of this section, the adequate notice must advise the individual of the right to have assistance immediately reinstated retroactive to the date of action at the previous month's level pending the hearing decision if he or she makes a request for a hearing and reinstatement within 10 days after the date of the notice.

(iii) When changes in either State or Federal law require automatic grant adjustments for classes of recipients, timely notice of such grant adjustments shall be given which shall be ``adequate'' if it includes a statement of the intended action, the reasons for such intended action, a statement of the specific change in law requiring such action and a statement of the circumstances under which a hearing may be obtained and assistance continued.

(iv) When the agency obtains facts indicating that assistance should be discontinued, suspended, terminated, or reduced because of the probable fraud of the recipient, and, where possible, such facts have been verified through collateral sources, notice of such grant adjustment shall be timely if mailed at least five (5) days before action would become effective.

(5) An opportunity for a hearing shall be granted to any applicant who requests a hearing because his or her claim for financial assistance (including a request for supplemental payments under § §233.23 and 233.27) is denied, or is not acted upon with reasonable promptness, and to any recipient who is aggrieved by any agency action resulting in suspension, reduction, discontinuance, or termination of assistance, or determination that a protective, vendor, or two-party payment should be made or continued. A hearing need not be granted when either State or Federal law requires automatic grant adjustments for classes of recipients unless the reason for an individual appeal is incorrect grant computation.

(i) A request for a hearing is defined as a clear expression by the claimant (or his authorized representative acting for him), to the effect that he wants the opportunity to present his case to higher authority. The State may require that such request be in written form in order to be effective;

(ii) The freedom to make such a request shall not be limited or interfered with in any way. The agency may assist the claimant to submit and process his request;

(iii) The claimant shall be provided reasonable time, not to exceed 90 days, in which to appeal an agency action;

(iv) Agencies may respond to a series of individual requests for hearing by conducting a single group hearing. Agencies may consolidate only cases in which the sole issue involved is one of State or Federal law or policy or changes in State or Federal law. In all group hearings, the policies governing hearings must be followed. Thus, each individual claimant shall be permitted to present his own case or be represented by his authorized representative;

(v) The agency may deny or dismiss a request for a hearing where it has been withdrawn by the claimant in writing, where the sole issue is one of State or Federal law requiring automatic grant adjustments for classes of recipients, where a decision has been rendered after a WIN hearing before the manpower agency that a participant has, without good cause, refused to accept employment or participate in the WIN program, or has failed to request such a hearing after notice of intended action for such refusal, or where it is abandoned. Abandonment may be deemed to have occurred if the claimant, without good cause therefor, fails to appear by himself or by authorized representative at the hearing scheduled for such claimant.

(6) If the recipient requests a hearing within the timely notice period:

(i) Assistance shall not be suspended, reduced, discontinued or terminated (but is subject to recovery by the agency if its action is sustained), until a decision is rendered after a hearing, unless:

(A) A determination is made at the hearing that the sole issue is one of State or Federal law or policy, or change in State or Federal law and not one of incorrect grant computation;

(B) A change affecting the recipient's grant occurs while the hearing decision is pending and the recipient fails to request a hearing after notice of the change;

(C) The recipient specifically requests that he or she not receive continued assistance pending a hearing decision; or

(D) The agency has made a presumption of mismanagement as a result of a recipient's nonpayment of rent and provides for the opportunity for a hearing after the manner or form of payment has been changed for such cases in accordance with §234.60 (a)(2) and (a)(11).

(ii) The agency shall promptly inform the claimant in writing if assistance is to be discontinued pending the hearing decision; and

(iii) In any case where the decision of an evidentiary hearing is adverse to the claimant, he shall be informed of and afforded the right to make a written request, within 15 days of the mailing of the notification of such adverse decision, for a State agency hearing and of his right to request a de novo hearing. Unless a de novo hearing is specifically requested by the appellant, the State agency hearing may consist of a review by the State agency hearing officer of the record of the evidentiary hearing to determine whether the decision of the evidentiary hearing officer was supported by substantial evidence in the record. Assistance shall not be continued after an adverse decision to the claimant at the evidentiary hearing.

(7) A State may provide that a hearing request made after the date of action (but during a period not in excess of 10 days following such date) shall result in reinstatement of assistance to be continued until the hearing decision, unless

(i) the recipient specifically requests that continued assistance not be paid pending the hearing decision; or

(ii) at the hearing it is determined that the sole issue is one of State or Federal law or policy. In any case where action was taken without timely notice, if the recipient requests a hearing within 10 days of the mailing of the notice of the action, and the agency determines that the action resulted from other than the application of State or Federal law or policy or a change in State or Federal law, assistance shall be reinstated and continued until a decision is rendered after the hearing, unless the recipient specifically requests that continued assistance not be paid pending the hearing decision.

(8) The hearing shall be conducted at a reasonable time, date, and place, and adequate preliminary written notice shall be given.

(9) Hearings shall be conducted by an impartial official (officials) or designee of the agency. Under this requirement, the hearing official (officials) or designee shall not have been directly involved in the initial determination of the action in question.

(10) When the hearing involves medical issues such as those concerning a diagnosis, an examining physician's report, or a medical review team's decision, a medical assessment other than that of the person or persons involved in making the original decision shall be obtained at agency expense and made part of the record if the hearing officer considers it necessary.

(11) In respect to title IV - C, when the appeal has been taken on the basis of a disputed WIN registration requirement, exemption determination or finding of failure to appear for an appraisal interview, a representative of the local WIN manpower agency shall, where appropriate, participate in the conduct of the hearing.

(12) The hearing shall include consideration of:

(i) An agency action, or failure to act with reasonable promptness, on a claim for financial assistance, which includes undue delay in reaching a decision on eligibility or in making a payment, refusal to consider a request for or undue delay in making an adjustment in payment, and discontinuance, termination or reduction of such assistance;

(ii) Agency decision regarding:

(A) Eligibility for financial assistance in both initial and subsequent determinations,

(B) Amount of financial assistance or change in payments,

(C) The manner or form of payment, including restricted or protective payments, even though no Federal financial participation is claimed.

(13) The claimant, or his representative, shall have adequate opportunity:

(i) To examine the contents of his case file and all documents and records to be used by the agency at the hearing at a reasonable time before the date of the hearing as well as during the hearing;

(ii) At his option, to present his case himself or with the aid of an authorized representative;

(iii) To bring witnesses;

(iv) To establish all pertinent facts and circumstances; (v) To advance any arguments without undue interference;

(vi) To question or refute any testimony or evidence, including opportunity to confront and cross-examine adverse witnesses.

(14) Recommendations or decisions of the hearing officer or panel shall be based exclusively on evidence and other material introduced at the hearing. The transcript or recording of testimony and exhibits, or an official report containing the substance of what transpired at the hearing, together with all papers and requests filed in the proceeding, and the recommendation or decision of the hearing officer or panel shall constitute the exclusive record and shall be available to the claimant at a place accessible to him or his representative at a reasonable time.

(15) Decisions by the hearing authority shall:

(i) In the event of an evidentiary hearing, consist of a memorandum decision summarizing the facts and identifying the regulations supporting the decision;

(ii) In the event of a State agency de novo hearing, specify the reasons for the decision and identify the supporting evidence and regulations. Under this requirement no persons who participated in the local decision being appealed shall participate in a final administrative decision on such a case.

(16) Prompt, definitive, and final administrative action shall be taken within 90 days from the date of the request for a hearing.

(17) The claimant shall be notified of the decision in writing and, to the extent it is available to him, of his right to appeal to State agency hearing or judicial review.

(18) When the hearing decision is favorable to the claimant, or when the agency decides in favor of the claimant prior to the hearing, the agency shall promptly make corrective payments retroactively to the date the incorrect action was taken.

(19) All State agency hearing decisions shall be accessible to the public (subject to provisions of safeguarding public assistance information).

(b) Federal financial participation.

Federal financial participation is available for the following items:

(1) Payments of assistance continued pending a hearing decision.

(2) Payments of assistance made to carry out hearing decisions, or to take corrective action after an appeal but prior to hearing, or to extend the benefit of a hearing decision or court order to others in the same situation as those directly affected by the decision or order. Such payments may be retroactive in accordance with applicable Federal policies on corrective payments.

(3) Payments of assistance within the scope of Federally aided public assistance programs made in accordance with a court order.

(4) Administrative costs incurred by the agency for:

(i) Providing transportation for the claimant, his representative and witnesses to and from the place of the hearing;

(ii) Meeting other expenditures incurred by the claimant in connection with the hearing;

(iii) Carrying out the hearing procedures, including expenses of obtaining an additional medical assessment.

[38 FR 22007, Aug. 15, 1973, as amended at 44 FR 17941, Mar. 23, 1979; 45 FR 20480, Mar. 28, 1980; 47 FR 5673, Feb. 5, 1982; 47 FR 47827, Oct 28, 1982; 51 FR 9202, Mar. 18, 1986; 53 FR 36579, Sept. 21, 1988; 57 FR 30425, July 9, 1992]

§205.25 Eligibility of supplemental security income beneficiaries for food stamps or surplus commodities.

(a) In respect to any individual who is receiving supplemental security income benefits under Title XVI of the Social Security Act, the State agency shall make the following determinations:

(1) The amount of assistance such individual would have been entitled to receive for any month under the appropriate State plan in effect for December 1973, under Title I, X, XIV, or XVI, and for such purpose such individual shall be deemed to be aged, blind, or permanently and totally disabled, as the case may be, under the provisions of such plan.

(2) The bonus value of the food stamps (according to the Food Stamp Schedule effective for July 1973) such individual would have been entitled to receive for such month, assuming the individual were receiving the assistance determined under paragraph (a)(1) of this section.

(3) The amount of benefits such individual is receiving for such month under Title XVI, plus supplementary payments as defined in section 1616(a) of the Social Security Act and payments pursuant to section 212 of Pub. L. 93 - 66, if any.

(b) If the amount determined in paragraph (a)(1) of this section plus the amount determined in paragraph (a)(2) of this section exceeds the amount determined in paragraph (a)(3) of this section, such individual shall be eligible to participate in the food stamp program established by the Food Stamp Act of 1964 or surplus commodities distribution programs established by the Secretary of Agriculture pursuant to section 416 of the Agricultural Act of 1949, section 32 of Pub. L. 74 - 320, or any other law, in accordance with regulations and procedures established by the Secretary of Agriculture.

(c) For purposes of paragraph (a)(3) of this section, the State agency shall obtain the amount of the title XVI payment and the amount of any Federally administered State supplementary payment from the Social Security Administration.

(d) The State agency shall redetermine the eligibility of individuals to participate in the food stamp or surplus commodities distribution programs hereunder at such times as the Secretary of Agriculture requires re-certification for such stamps or commodities.

[38 FR 34324, Dec. 13, 1973]

§205.30 Methods of administration. State plan requirements: A State plan for financial assistance under title I, IV - A, X, XIV or XVI (AABD) of the Social Security Act must provide for such methods of administration as are found by the Secretary to be necessary for the proper and efficient operation of the plan.

[45 FR 56684, Aug. 25, 1980] §205.32 Procedures for issuance of replacement checks.

(a) State plan requirements.

A State plan under title IV - A of the Social Security Act shall provide that

(1) procedures are in effect to ensure that no undue delays occur in issuing a replacement check; and

(2) when applicable, prior to the issuance of a replacement check, the State agency must:

(i) Issue a stop payment order on the original AFDC check through appropriate banking procedures; and

(ii) Require recipients to execute a signed statement attesting to the nonreceipt, loss, or theft of the original FDC check. However, if obtaining such a statement from the recipient will cause the issuance of the check to be unduly delayed, the statement may be obtained within a reasonable time after the check is issued.

(b) State option.

A State plan may provide that as a condition for issuance of a replacement check, a recipient is required to report a lost or stolen AFDC check to the police or other appropriate authorities. Under this provision, the State agency may require that the recipient verify that a report was made to the police or other appropriate authorities and, if so, the agency will establish procedures for such verification.

[51 FR 9203, Mar. 18, 1986]

§205.35 Mechanized claims processing and information retrieval systems; definitions.

Section 205.35 through 205.38 contain State plan requirements for an automated statewide management information system, conditions for FFP and responsibilities of the Family Support Administration (FSA). For purposes of §§205.35 through 205.38:

(a) A mechanized claims processing and information retrieval system, hereafter referred to as an automated application processing and information retrieval system (APIRS), or the system, means a system of software and hardware used:

(1) To introduce, control and account for data items in providing public assistance under the Aid to Families with Dependent Children (AFDC) State plan; and

(2) To retrieve and produce utilization and management information about such aid and services as required by the single State agency and Federal government for program administration and audit purposes.

(b) Planning means: (1) The preliminary project activity to determine the requirements necessitating the project, the activities to be undertaken, and the resources required to complete the project;

(2) The preparation of an APD;

(3) The preparation of a detailed project plan describing when and how the computer system will be designed and developed; and

(4) The preparation of a detailed implementation plan describing specific training, testing, and conversion plans to install the computer system.

(c) The following terms are defined at 45 CFR part 95, subpart F, §95.605: Annually updated advance automatic data processing planning document; Design or System Design; Development; Initial advance automatic data processing planning document; Installation; Operation; and Software.

[51 FR 45330, Dec. 18, 1986, as amended at 53 FR 36579, Sept. 21, 1988; 55 FR 4379, Feb. 7, 1990]

§205.36 State plan requirements.

A State plan under title IV - A of the Social Security Act shall, at the option of the State, provide for the establishment and operation, in accordance with an (initial and annually updated) advance automatic data processing planning document approved by SSA, of an automated statewide management information system designed effectively and efficiently, to assist management in the administration of an approved AFDC State plan. The submission process to amend the State plan is explained in §201.3. This system must be designed:

(a) To automatically control and account for --

(1) All the factors in the total eligibility determination process under the plan for aid, including but not limited to:

(i) Identifiable correlation factors (such as social security numbers, names, dates of birth, home addresses, and mailing addresses (including postal ZIP codes), of all applicants and recipients of AFDC and the relative with whom any child who is an applicant or recipient is living)).

(A) To assure sufficient compatibility among the systems of different jurisdictions, and

(B) To permit periodic screening to determine whether an individual is or has been receiving benefits from more than one jurisdiction.

(ii) Checking records of applicants and recipients of such aid on a periodic basis with other agencies, both intra and inter-state, for eligibility determination, verification and payment as required by other provisions of the Social Security Act.

(2) The costs, quality, and delivery of funds and services furnished to applicants for and recipients of such aid.

(b) To notify the appropriate State officials of child support, food stamp, social service, and medical assistance programs approved under title XIX whenever a case/recipient for aid and services becomes ineligible or the amount of aid or services is changed.

(c) To provide for security against unauthorized access to, or use of, the data in the system.

[51 FR 13006, Apr. 17, 1986]

§205.37 Responsibilities of the Family Support Administration (FSA). (a) FSA shall not approve the initial and annually updated advance automatic data processing planning document unless the document, when implemented, will carry out the requirements of the law and the objectives of title IV - A (AFDC) Automated Application Processing and Information Retrieval System Guide. The initial advance automatic data processing planning document must include: (1) A requirements analysis, including consideration of the program mission, functions, organization, services, constraints and current support relating to such system; (2) A description of the proposed statewide management system, including the description of information flows, input data formats, output reports and uses; (3) The security and interface requirements to be employed in such statewide management system; (4) A description of the projected resource requirements including staff and other needs; and the resources available or expected to be available to meet these requirements; (5) A cost benefit analysis of alternative systems designs, data processing services and equipment in terms of qualitative and quantitative measures. The alternative systems considered should include the advantages of the proposed system over the alternatives and should indicate the period of time the system will be operated to justify the funds invested. OFA certified systems that are already in place in other States must be included in the alternatives to be considered and evaluated; (6) A plan for distribution of costs, containing the basis for rates, both direct and indirect, to be in effect under such a statewide management system; (7) An implementation plan with charts of development events, testing description, proposed acceptance criteria, and backup and fallback procedures to handle possible failure of a system; and (8) Evidence that the State's system will be compatible with those of the FSA to facilitate the exchange of data between the State and Federal system. (b) FSA shall on a continuing basis, review, assess, and inspect the planning, design, and operation of, statewide management information systems, with a view to determining whether, and to what extent, these systems meet and continue to meet the requirements under these regulations. (c) If FSA finds that any statewide management information system referred to in 205.38 fails to comply substantially with criteria, requirements, and other undertakings prescribed by the approved advance automatic data processing planning document, approval of such document shall be suspended. The State will be given written notice of the suspension. The notice of suspension will state the reason for the suspension, whether the suspended system complies with the criteria for 50 percent FFP under 45 CFR Part 95, the actions required for future Federal funding, and the effective date of the suspension. The suspension shall be effective as of the date that the system failed to comply substantially with the approved APD. The suspension shall remain in effect until FSA makes a determination that such system complies with prescribed criteria, requirements, and other undertakings for future Federal funding. Should a State cease development of their approved system, either by voluntary withdrawal or as a result of Federal suspension, all Federal incentive funds invested to date that exceed the normal administrative FFP rate (50 percent) will be subject to recoupment. (d) FSA shall provide technical assistance to States as is deemed necessary to assist States to plan, design, develop, or install and provide for the security of the management information systems. (e) Approvals of the systems by FSA under the provisions of this section will be undertaken only as a result of State applications for increased matching. The requirements of 45 CFR part 95, subpart E and subpart F apply. [51 FR 13006, Apr. 17, 1986, as amended at 53 FR 36579, Sept. 21, 1988; 55 FR 4379, Feb. 7, 1990; 56 FR 1493, Jan. 15, 1991] 205.38 Federal financial participation (FFP) for establishing a statewide mechanized system. (a) Effective July 1, 1981, FFP is available at 90 percent of expenditures incurred for planning, design, development or installation of a statewide automated application processing and information retrieval system which are consistent with an approved ADP. The 90 percent FFP includes the purchase or rental of computer equipment and software directly required for and used in the operation of this system. (b) FSA will approve the system provided the following conditions are met -- (1) FSA determines that the system is likely to provide more efficient, economical, and effective administration of the AFDC program. (2) The system is compatible with the claims processing and information retrieval systems used in the administration of State plans approved under title XIX, and State programs where there is FFP under title XX. (3) The system meets the requirements referred to in 205.36. (4) The system meets criteria established in the title IV - A (AFDC) Automated Application Processing and Information Retrieval System Guide issued by FSA and which provides specific standard requirements for major functions, such as automated eligibility determination, grant computation, verification, referral, management control, compability, and data security. (5) The State agency certifies that -- (i) The State will have all ownership rights in software or modifications thereof and associated documentation designed or developed with 90 percent FFP under this section, except that the Department of Health and Human Services reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use, and to authorize others to use for Federal government purposes, such software, modifications, and documentation; (ii) Methods and procedures for properly charging the cost of all systems whether acquired from public or private sources shall be in accordance with Federal regulations in Part 74 of this title and the applicable FSA title IV - A (AFDC) Automated Application Processing and Information Retrieval System Guide; (iii) The complete system planned, designed, developed, installed, and hardware acquired, with FFP under these regulations will be used for a period of time which is consistent with the advance planning document as approved, or which FSA determines is sufficient to justify the Federal funds invested; (iv) Information in the system will be safeguarded in accordance with applicable Federal law; and (v) Access to the system in all of its aspects, including design, development, and operation, including work performed by any source, and including cost records of contractors and subcontractors, shall be made available to the Federal Government by the State at intervals deemed necessary by FSA to determine whether the conditions for approval are being met and to determine its efficiency, economy and effectiveness. (c) If FSA suspends approval, as described in 205.37, of the advance automated data processing planning document and/or system, FFP at the higher matching rate shall not be allowed for any costs incurred, until such time as the conditions for approval are met. Should the State fail to correct the deficiencies which led to the suspension within 90 days of the date of notification of suspension or within a longer period of time agreed to by both the State and FSA, all Federal incentive funds invested to date that exceed the normal administrative FFP rate (50 percent) will be disallowed. (d) Should a State voluntarily withdraw its approved APD and cease development of the approved system, all Federal incentive funds invested to date that exceed the normal administrative FFP rate (50 percent) will be disallowed. (e) Once a State is certified as having met the requirements referred to in 205.36 incentive funding will not be allowable for enhancements or other modifications unless these modifications are authorized by the Office of Family Assistance as a result of Federal legislative or regulatory change. [51 FR 13007, Apr. 17, 1986, as amended at 53 FR 36579, Sept. 21, 1988] 205.40 Quality control system. (a) Definitions. For purposes of this section, notwithstanding any other regulations in this chapter: (1) Assistance unit means all individuals whose needs, income, and resources are considered in determining eligibility for, and the amount of, an assistance payment for which Federal financial participation is claimed under this chapter. (2) Case error, for active cases, means an overpayment, underpayment, or payment to ineligibiles, as defined in this section; for negative case actions, means that the reason given by the agency for that action was incorrect. (For exceptions and special provisions, see paragraph (c) of this section.) (3) Payment to ineligibles means a financial assistance payment received by or for an assistance unit, for the review month, when that assistance unit was not eligible for any part of the payment under permissible State practice in effect on the first day of the review month, even though the State agency had not made a finding of ineligibility under 206.10(a)(5) of this chapter. (4) Overpayment means a financial assistance payment received by or for an assistance unit, for the review month, which exceeds by at least $5.00 the amount for which that unit was eligible under permissible State practice in effect on the first day of the review month. (5) Underpayment means a financial assistance payment received by or for an assistance unit for the review month which is at least $5.00 less than the amount for which that assistance unit under permissible State practice was eligible in effect on the first day of the review month. (6) Review month means the specific calendar or fiscal month for which the assistance payment under review is received. (7) Assistance payment means a single payment (or two successive payments, in States that pay on a semi-monthly basis), received for a specific calendar or fiscal month. (8) Permissible State practice means State written policy instructions that are consistent with the State plan or with plan amendments which have been submitted to, but have not been acted upon by the Department. In all instances where written instructions are not consistent with the State plan or proposed plan amendments, permissible State practice means the provisions of the State plan. (9) Negative case action means an action to deny an application for assistance or to otherwise dispose of that application without a determination of eligibility (for instance, because the application was withdrawn or abandoned), or to terminate assistance. (10) Disposed of case means that a decision was made on the eligibility and payment status of a case under review or that the case was dropped or listed in error. (11) Edited review findings means that the findings on the review schedule have been screened to insure the data are both accurate and internally consistent. (b) State plan requirements. A State plan under title IV - A or I, X, XIV or XVI (AABD) of the Social Security Act must provide for a continuing system of quality control for assuring that assistance is furnished in accordance with permissible State practice as defined in paragraph (a) of this section. Under this requirement: (1) The State agency shall operate the quality control system in accordance with policies and procedures prescribed in the Quality Control Manuals issued by the Department. Specifically: (i) It shall apply the prescribed sampling and methods and schedules. (ii) It shall conduct field investigations, including a personal interview in all cases which fall within the sample of active cases, and as necessary for cases in the negative case action sample. (iii) It shall provide the resources and methods necessary to analyze the findings of the system. (iv) It shall take appropriate corrective action on improperly authorized or denied assistance and on the causes of improper actions. (v) It shall assure access by HHS staff to State and local records relating to public assistance, to recipients, and to third parties, including information available under 205.55. (2) The State agency shall submit to the Department, in such form and at such times as it prescribes: (i) A description of the State agency's sampling plan for active cases and for negative case actions, which is to be submitted to the Department no later than 60 days before the start of each sample period unless there has been no change in the State's sampling plan and it continues to meet Federal sampling requirements. Where the State choose to reduce its active case sample below the standard sample size but not below the minimum sample size specified in the Quality Control Manual, the State must provide the Department with a statement, as part of its sampling plan, accepting the reliability of the reduced sample size and agreeing not to challenge the resulting AFDC and Medicaid error rates based on the size of the sample. (ii)Edited review findings for the State agency's disposed of active case and negative case actions. The State shall input these findings into the computer terminal provided by the Federal government, and transmit the data to a designated host computer. For State agencies that do not have a terminal provided by the Federal government, the State agency shall submit the review findings in a format specified by the Department. The State agency shall dispose of and submit review findings in the following time frames:'' (A) Ninety percent or all but five cases of the cases selected in the active case sample each month, and ninety percent or all but five cases of the cases selected in the negative case sample each month, within 75 days after the end of the sample month; (B) Ninety-five percent or all but five cases selected in the active and negative case samples within 95 days after the end of each sample month; and (C) One hundred percent of the cases selected in the active and negative case samples within 120 days after the end of each sample month. (iii) On a monthly basis, the edited review findings for the sample cases disposed of in the preceding month. (iv) Original case record, i.e., the local agency record and the State QC file, legible copies of case records, or specified information contained in case records, by mail, within ten days of the State's receipt of a request for such information. The Department may grant exceptions to these requirements in limited cases. (v) The following corrective action material: (A) Corrective action plans for reducing case error rates for ineligibility, overpayments, underpayments, improper denials and terminations by February 15 of each year. (B) A progress report on the status of implemented corrective actions, an evaluation of their effectiveness and any new initiatives based on current error rate data since the last annual corrective action plan by August 15 of each year. (vi) Other data and reports that the Administrator requests. (3) The State agency may submit an alternate completion plan for the Administrator's approval if the State is unable to meet the requirements of paragraph (b)(2)(ii) of this section either as a result of circumstances of a permanent or recurring nature or as a result of the occurrence of an unforeseen event during the sample period. Until the Administrator approves an alternate completion plan, the State must continue to comply with the requirements of paragraph (b)(2)(ii) of this section. (i) Alternate sample case completion plan based on permanent or recurring events. (A) The Administrator may approve an alternate completion plan where: The State's sample population is dispersed over such great distances that conducting the required number of field interviews needed to meet the requirements of paragraph (b)(2)(ii) of this section is cost prohibitive; or the State's usual weather conditions or geography make significant numbers of the sample population inaccessible or difficult to contact during certain times of the year making it a hardship for the State to comply with the requirements of paragraph (b)(2)(ii) of this section; (B) The alternate completion plan request must contain supporting evidence and data which justify the need for an alternate completion plan including a description of the population dispersal or population inaccessibility problems within the State and the reason(s) why the State cannot comply with the requirements of paragraph (b)(2)(ii) of this section; (C) The alternative completion plan request must contain details on the agency's proposed schedule for completing the sample cases including: The sample period(s) to be covered by the plan; the revised completion dates and completion percentages; and a revised schedule for the submission of the sample case edited review findings. The alternate completion plan request must be submitted no later than 60 days before the start of the first sample period covered by the plan; and (D) Even if the alternate plan is approved, the agency must submit edited review findings on all cases selected in the sample period within 120 days after the end of each sample month in the period. (ii) Temporary alternate completion plan based on unforseen events. (A) The Administrator may approve an alternate completion plan for a particular sample period where unforseen events occur which temporarily prevent the State from meeting the requirements of paragraph (b)(2)(ii) of this section. These events can include, but are not limited to -- floods, earthquakes, computer breakdowns, snowstorms, labor disputes, etc. (B) The temporary alternate plan request must: Briefly describe the event(s) requiring the implementation of the temporary alternate plan; the period the revised schedule will be in effect; the revised completion dates; the revised completion percentages; and the revised schedule for submission of sample case edited review findings; (C) A temporary alternate plan may allow the State agency to submit the edited review findings on its sample cases at later dates than specified in paragraph (b)(2)(ii) of this section. (c) Special provisions applicable to changes in circumstances. (1) An overpayment, underpayment, or payment of ineligibiles that is related to a change in circumstances shall be counted as a case error if: (i) The changes are incorrectly reflected in the review month payment; or (ii) The change occurred in or before the second month prior to the review month and is not reflected in the review month payment. (2) An overpayment, underpayment, or payment to ineligibles that is related to a change in circumstances shall not be counted as a case error if: (i) The payment continues unadjusted because a hearing was requested; or (ii) The change occurred in the review month or the month immediately preceding the review month. (3) For purposes of this paragraph (c): (i) A hearing decision is considered a change in circumstances; (ii) The fact that the agency has complied with the requirements for redetermination of eligibility (see 206.10(a)(9) of this chapter) or for timely action on information from the State's Income and Eligibility Verification System (IEVS) (see 205.56(a)(1)) has no bearing on, and does not relieve the State agency of its responsibility for, the determination of erroneous payments or its liability for such payments; and (iii) When the overpayment, underpayment, or payment to ineligibles is the result of several changes in circumstances, each change will be evaluated as to its impact on the final determination of case error. [42 FR 37207, July 20, 1977, as amended at 43 FR 2631, Jan. 18, 1978; 47 FR 46510, Oct. 19, 1982; 47 FR 57942, Dec. 29, 1982; 48 FR 15629, Apr. 12, 1983; 49 FR 38285, Sept. 28, 1984; 51 FR 7214, Feb. 28, 1986; 51 FR 9203, Mar. 18, 1986; 53 FR 36579, Sept. 21, 1988] 205.42 Reduction in Federal financial participation (FFP) for incorrect payments made by States from October 1980 through September 1984. (a) Purpose and applicability. This section provides the rules we will use from October 1980 through September 1984. to determine whether we will reduce the amount of Federal matching funds (Federal financial participation or FFP) we give to a State, and, if so, the amount of the reduction. We will reduce the amount of our matching funds if a State makes more incorrect payments in its AFDC program than allowed under the rules in this section. These rules apply to all States which have AFDC programs. (b) Definitions. For the purposes of this section: Annual assessment period means the 12-month period October 1 through September 30. Base period means the April through September 1978 quality control system review period. Incorrect payments means payments to people who are ineligible for a payment and overpayments to eligible people. National standard means a four percent payment error rate for the period October 1982 through September 1983 for all States; a four percent payment error rate for Guam, Puerto Rico and the Virgin Islands and a three percent payment error rate for the other States for the period October 1983 through September 1984. Payment error rate means the dollar amount of incorrect payments a State has made expressed as a percentage of the State's total payments. We, us or our means the Department or the Family Support Administration as appropriate. (c) General. In these rules we are establishing a national standard for incorrect payments in the AFDC programs. This standard will be used to measure performance of the States in each annual assessment period from October 1980 through September 1984. A State whose payment error rate is below the national standard in the base period must not go above the standard, without risking reduction in Federal matching funds. A State whose payment error rate is above the standard must reduce its error rate to the national standard or to the State's target error rate established under these rules. (d) How we establish acceptable levels for State performance using the national standard -- (1) Target error rates for States above the national standard in the base period. (i) Each State with a base period payment error rate in excess of 4 percent must reduce its payment error rate to 4 percent by the October 1982 through September 1983 annual assessment period in 3 equal increments for each October through September annual assessment period beginning with the October 1980 through September 1981 period. Each State other than Guam, Puerto Rico and the Virgin Islands must meet a three percent standard for the annual assessment period October 1983 - September 1984. (ii) We will establish each State's target error rate for the October 1980 through September 1981 annual assessment period by multiplying one-third times the amount by which the State's base period payment error rate exceeds 4 percent; this product is then subtracted from the State's base period payment error rate. To establish the target error rate for the October 1981 through September 1982 annual assessment period, we will multiply two-thirds times the amount by which the State's base period payment error rate exceeds 4 percent; this product is then subtracted from the State's base period payment error rate. For annual assessment periods after September 30, 1982, the State must meet the national standard. Example: The State's payment error rate during the base period is 10 percent. Therefore, the amount by which the State's payment error rate exceeds the 4 percent national standard is 6 percent (or 10 minus 4). The State must reduce this 6 percent by one-third, or 2 percent (8 percent target error rate) for the October 1980 through September 1981 annual assessment period. For the October 1981 through September 1982 annual assessment period, the State's target error rate would be 6 percent. For annual assessment periods after September 30, 1982, the State must meet the national standard. (2) States that have achieved the national standard. States that achieved the four percent national standard in the base period must maintain that standard during the October 1980 - September 1981 and the October 1981 - September 1982 assessment periods and must meet the appropriate national standard thereafter. (e) Information we will use. We will use the information provided by the Federal/State quality control system. This system measures the dollar amount of incorrect payments for every 6-month period. (April through September and October through March). A State's payment error rate for the annual assessment period will be the sum of the weighted payment error rates in the State for the two corresponding 6-month sample periods. The weights will be established as a percentage of the total annual payments that occur in each of the 6-month periods. If a State fails to complete a valid and reliable sample for any 6-month sample period, we will assign to the State an error rate based on the weighted average of the State's payment error rate for the last three sample periods, a Federal sample, an audit, or a Federal subsample. (f) If a State fails to meet the established rate. If a State does not meet the national standard or its target error rate for any 12 month annual assessment period, we will reduce our matching funds to the State to those 12 months, unless the State can show that it made a good faith effort to meet the target rate. We will reduce our matching funds by the amount we would not have paid if the State had reached its goal (the national standard or the target error rate). If a State uses the regular Federal percentage for FFP and has an average monthly payment per recipient of more than $32 in a 6-month sample period, an adjustment will be made to the State's error rate for purposes of determining the amount of reduction in our matching funds. Example: The State's target payment error rate was 8 percent. During the first 6-month sample period the actual payment error rate was 10 percent and the total payments made during that 6-month period were $20 million. During the second 6-month sample period, the payment error rate was 9 percent and total payments were $30 million. The total payments in the annual assessment period were $50 million. The weight applied to the payment error rate for the first 6-month period would be 0.4 ($20 million divided by $50 million) and the weight applied to the payment error rate for the second 6-month period would be 0.6 ($30 million divided by $50 million). Therefore the payment error rate for the annual assessment period would be 9.4 percent or 4 percent (10% x 0.4 for the first 6 months) plus 5.4% (9% x 0.6 for the second 6 months). Since the target error rate was 8 percent and the payment error rate was 9.4 percent, we will reduce our matching funds by 1.4 percent of the Federal share of the dollars the State paid under its AFDC program. (g) When we will reduce a disallowance because a State has made a good faith effort. (1) We will notify a State that we are going to reduce (or disallow) matching funds because the State did not meet the national standard or the target error rate established for the State. The State will have 65 days from the date on this notification to show that it made a good faith effort to meet the established error rate target. If we find that the State did not meet the national standard or the target error rate despite a good faith effort, we will reduce the funds being disallowed in whole or in part as we find appropriate under the circumstances shown by the State. A finding that a State did not meet the target error rate despite a good faith effort will be limited to extraordinary circumstances. (2) Some examples of circumstances under which we may find that a State did not meet the target error rate despite a good faith effort are: (i) Disasters such as fire, flood or civil disorders, that: (A) Require the diversion of significant personnel normally assigned to AFDC eligibility administration, or (B) Destroyed or delayed access to significant records needed to make or maintain accurate eligibility determinations; (ii) Strikes of State staff or other government or private personnel necessary to the determination of eligibility or processing of case changes; (iii) Sudden and unanticipated workload changes which result from changes in Federal law and regulations, or rapid, unpredictable caseload growth in excess of, for example, 15 percent for a 6-month period; (iv) State actions resulting from incorrect written policy interpretation to the State by a Federal official reasonably assumed to be in a position to provide such interpretation; and (v) The State timely developed and implemented a corrective action plan reasonably designed to meet the target error rate but the target error rate was not met. In evaluating whether the State has indeed made a good faith effort in these circumstances, we will consider the following factors: (A) Demonstrated commitment by top management to the error reduction program e.g., priorities and goals clearly enunciated to staff, accountability for performance, availability of resources; (B) Sufficiency and quality of systems designed to reduce errors that are operational in the State, e.g., BENDEX, IDEX, monthly reporting, retrospective budgeting, error prone profiles, local agency monitoring systems, computer clearances; (C) Use of effective system and procedures for the statistical and program analysis of QC and related data, e.g., statistical tests, tabulations and cross-tabulations, error prone profiles, corrective action committees, special studies; and (D) Effective management and execution of the correction action process, e.g., assignment of responsibilities, milestones for completing tasks, completion of tasks, monitoring of progress. (3) The failure of a State to act upon necessary legislative changes or to obtain budget authorization for needed resources is not a basis for finding that a State failed to meet the target error rate despite a good faith effort. (h) Disallowances subject to appeal. If a State does not agree with our decision to reduce (disallow) FFP, it can appeal to us within 45 days from the date of our decision. The regular procedures for appeal of disallowance will apply, including review by the Grant Appeals Board (see 45 CFR Part 16). [45 FR 6333, Jan. 25, 1980; 49 FR 38286, Sept. 28, 1984; 50 FR 11698, Mar. 25, 1985, as amended at 53 FR 36580, Sept. 21, 1988] 205.43 Increase in Federal financial participation (FFP) for States with low error rates. (a) Purpose. (1) This section provides the rules we will use to determine whether we will increase the amount of Federal matching funds (Federal financial participation or FFP) we give to a State and, if so, the amount of the increase. Basically, we will increase the amount of matching funds to States with low error rates in their AFDC program as allowed under rules in this section. These rules apply to all States which have an AFDC program through March 31, 1983; however, these rules will only apply to the Commonwealth of Puerto Rico, the Virgin Islands, and Guam thereafter. (2) We will use the data from the quality control system (see 205.40) in each State and the Federal monitoring system in determining the amount of incorrect payments and payments that should have been made. The quality control (QC) system provides data on incorrect payments and nonpayments for every sample. (b) Definitions. For purposes of this section: Assistance payment error rate means the combined dollar amounts of a State's incorrect payments to ineligible families receiving assistance and overpayments and underpayments to eligible families receiving assistance, expressed as a percentage of the State's total payments. Dollar error rate means the error rate obtained by combining the assistance payment error rate for ineligible, overpaid and underpaid cases with an estimated nonpayment error rate that results from incorrect terminations and denials. Erroneous excess payments means the total of erroneous payments to ineligible families receiving assistance and overpayments to eligible families receiving assistance. Nonpayment error rate means the estimated dollar amounts of a State's incorrect terminations and denials, expressed as a percentage of a State's total payments. Sample period means the 6-month periods, October -- March and April -- September. Termination and denial error rate means the number of a State's incorrect actions to terminate or deny assistance, expressed as a percentage of a State's total number of terminations and denials. We means the Department or the Family Support Administration, as appropriate. (c) General. In these rules we are establishing the basis under which States will receive increased FFP for dollar error rates below 4 percent. For each one-half percentage point below 4 percent, in which a State's dollar error rate falls, a State will receive an additional 10 percent of the Federal share of money saved, up to a maximum of 50 percent if the State's dollar error rate is below 2 percent. To figure the amount of increased FFP requires a two step computation. We first establish the dollar error rate. This rate determines a State's eligibility for increased FFP and, for eligible States, the percentage adjustment, between 10 and 50 percent, that will be applied in the 6-month period. The next step is to determine the State's erroneous excess payments and what those payments would have been at a rate of 4 percent. The percentage adjustment is applied to the difference. We describe this process in detail in the following paragraphs of this section. (d) How we establish a dollar error rate -- (1) Information we will use. We will use the information provided by the Federal/State quality control system. This system measures the dollar amount of incorrect payments and the number of incorrect terminations and denials. (2) How we use the information. We will obtain a dollar error rate of incorrect payments and nonpayments in the following manner: (i) We will figure the dollar amount of incorrect payments by multiplying the State assistance payment error rate for ineligibility, overpayments and underpayments by the total of State expenditures to AFDC families subject to sampling under the AFDC QC system in the sample period. (ii) We will figure the dollar amount of incorrect nonpayments as follows: (A) Obtain a total number of incorrect terminations and denials by multiplying the State's termination and denial error rate by the total number of terminations and denials subject to sampling under the AFDC QC system in the sample period; and (B) Obtain a dollar amount for incorrect nonpayments by multiplying the total number of incorrect terminations and denials in step (A) by the average monthly cash payment made to AFDC QC sample cases in the sample period. (iii) We will obtain the dollar error rate by dividing the sum of the dollar amounts of incorrect payments and nonpayments in steps (i) and (ii) by the total of State expenditures to AFDC families subject to sampling under the AFDC QC system in the sample period. Example: The total State payments made to AFDC families subject to sampling under the AFDC QC system in a sample period are $1,000,000. The assistance payment error rate for ineligibility (1 percent), overpayments (1.4 percent), and underpayments (0.1 percent) is 2.5 percent. This equates to incorrect payments of $25,000 (2.5 percentX$1,000,000). The termination and denial error rate is 0.5 percent. There were 4,000 terminations and denials subject to sampling in the sample period and the average monthly cash payment made to AFDC sample cases in the period was $250. Therefore, the estimated incorrect nonpayment dollar amount would be $5,000 (0.5 percentX4,000X$250). The dollar error rate is the sum of $25,000 and $5,000 divided by $1,000,000, or 3 percent. (e) How increased FFP will be determined -- (1) What percentage adjustment is applied. We will apply the following percentage adjustment: If the dollar error rate is: * * * TABLE START * * * @h1 @h1Percentage adjustment applied 4 percent or greater....... 0 At least 3.5 percent but less than 4 percent....... 10 At least 3 percent but less than 3.5 percent....... 20 At least 2.5 percent but less than 3 percent....... 30 At least 2 percent but less than 2.5 percent....... 40 Less than 2 percent....... 50 * * * TABLE END * * * (2) How the percentage adjustment is applied. States with a dollar error rate of less than 4 percent will receive increased FFP. The adjustment percentage provided in paragraph (e)(1) of this section will be applied to the difference between a State's erroneous excess payments and what those payments would have been at a rate of 4 percent. Example: Using the example in paragraph (d)(2) of this section, the amount of increased FFP would be determined as follows. The amount of erroneous excess payments is obtained by multiplying the combined payment error rate for ineligibility and overpayments (2.4 percent) by the total payments made to AFDC families ($1,000,000). This equates to $24,000. If the combined payment error rate for ineligibility and overpayments were 4 percent the erroneous excess payments would have been $40,000, or $16,000 more. Assuming the Federal share is 50 percent the Federal share of the $16,000 difference would be $8,000. Since the State has a 3 percent dollar error rate the percentage adjustment is 20 percent. The increase in FFP would therefore, by $8,000 X 20 percent, or $1,600. [44 FR 67422, Nov. 26, 1979 as amended at 49 FR 38286, Sept. 28, 1984; 53 FR 36580, Sept. 21, 1988] 205.44 Reduction in Federal financial participation (FFP) for incorrect payments made by States after September 1984. (a) Purpose and applicability. This section provides the rules we will use beginning with October 1984 to determine whether we will reduce the amount of Federal matching funds (Federal financial participation or FFP) we give to a State, and, if so, the amount of the reduction. We will reduce the amount of our matching funds if a State makes more incorrect payments in its AFDC program than allowed under the rules in this section. These rules apply to all States which have AFDC programs. (b) Definitions. For the purposes of this section -- ``Annual assessment period'' means the 12-month period October 1 - September 30. ``Incorrect assistance payments'' means payments to people who are ineligible for a payment and overpayments to eligible people. ``National standard'' means a four percent payment error rate for Guam, Puerto Rico and the Virgin Islands and a three percent payment error rate for all other States. ``Payment error rate'' means the dollar amount of incorrect assistance payments a State has made expressed as a percentage of the State's total assistance payments. ``We, '' ``us'' or ``our'' mean the Department of Health and Human Services or the Family Support Administration. (c) General. In these rules we are establishing national standards of four percent for Guam, Puerto Rico and the Virgin Islands and three percent for all other States for incorrect payments in the AFDC program. These standards will be used to measure performance of the states in each annual assessment period. (d) How we will measure a State's performance. We will use the information provided by the Federal/State quality control system. (1) This system measures the dollar amount of incorrect payments in each annual assessment period by reviewing a statistically valid sample of cases selected during each month of the assessment period. The sample results are then projected to the universe of all cases. (2) If a State fails to complete a valid and reliable sample in accordance with the prescribed QC procedures and deadlines, which includes obtaining and using information available under 205.55, as required by 205.40, for any assessment period, we will notify the State of its failure and provide the State the opportunity to negotiate a solution regarding the timely completion of its sample. Where a State is unable to negotiate a solution or fails to carry out a negotiated solution we will assign to the State an error rate based on the best data reasonably available, including data obtained from any one or more of the following methods, error rate information for past sample periods, a partially completed State sample, a Federal subsample of completed State cases, a supplemental Federal sample, a Federal audit, and an audit conducted through a contractual agreement with a third party. (e) Cost of determining an error rate for States other than Guam, Puerto Rico and the Virgin Islands. In any case where it is necessary for us to determine a State's error rate for a fiscal year because the State fails to cooperate with us by not providing the information required of the State in accordance with 205.40 of these rules, the following procedure will apply. Pursuant to section 403(i)(3)(A) of the Act, notwithstanding any other provision of this chapter, total payments to a State under section 403(a)(3) for the proper and efficient administration of the State plan shall be reduced by the amount necessary (deducted without regard to any other reduction under this section) to offset all expenditures the Federal government has incurred in order to determine the State's error rate for any fiscal year in which that State has failed to provide the necessary error rate data. All amounts, both direct and indirect expenditures, shall be deducted generally no later than the second quarter following the quarter in which the costs of compiling data for determining the State's error rate are available. (f) If a State fails to meet the established error rate. If a State does not meet the national standard for any assessment period, we will reduce our matching funds to the State for that period, unless a State can show that it made a good faith effort to meet the national standard. If a State uses the regular Federal percentage in section 403(a)(1) of the Act for FFP and has an average monthly payment per recipient of more than $32 in an assessment period, an adjustment will be made to the State's error rate for purposes of determining the amount of reduction in our matching funds. Example: In fiscal year 1985, the applicable national standard for a particular State is three percent. The State's payment error rate for the assessment period, October 1, 1984 through September 30, 1985, was 4.4 percent. Because the 4.4 percent error rate exceeds the national standard by 1.4 percentage points, we will reduce our Federal matching funds by 1.4 percent of the Federal share of the dollars the State paid to recipients in the form of assistance payments under its AFDC program during that year. (g) When we will reduce a disallowance because a State has made a good faith effort. (1) A State will have 30 days after receipt of a notice of intent to disallow or 15 months after the end of each fiscal year, whichever comes first, to show that it made a good faith effort to meet the national standard. If we find that the State did not meet the national standard despite a good faith effort, we will reduce the funds being disallowed in whole or in part as we find appropriate under the circumstances shown by the State. A finding may be made that a State did not meet the national standard despite a good faith effort under certain limited circumstances. The burden of proof for showing that a good faith effort was made rests entirely with the State. (2) Some examples of the limited circumstances under which we may find that a State did not meet the national standard despite a good faith effort are -- (i) Disasters such as fire, flood or civil disorders, that require the diversion of significant personnel normally assigned to AFDC eligibility administration, or destroyed or delayed access to significant records needed tomake or maintain accurate eligibility determinations. (ii) Strikes of State staff or other government or private personnel necessary to the determination of eligibility or processing of case changes. (iii) Sudden and unanticipated workload changes which result from changes in Federal law and regulations, or rapid, unpredictable caseload growth in excess of, for example, 15 percent for any consecutive six-month period in an assessment period; (iv) The State has taken the action needed to meet the national standard, but the national standard was not met, and the State has demonstrated why these actions were not successful in meeting the standard. Request for a waiver under this criterion will not be considered unless a State has demonstrated some error reduction from the last assessment period or has achieved an error rate for the measurement period that does not exceed its target error rate by more than one-third despite an increase in error rate. If a State has met the error reduction requirement above, we will evaluate requests for a good faith waiver based on the following factors: (A) Demonstrated committment by top management to the error reduction program, e.g., priorities and goals clearly enunciated to staff and acted upon, accountability for performance, acquisition of necessary resources, implementation of statutory and regulatory provisions intended to reduce errors, e.g., monthly reporting, retrospective budgeting, direct involvement of top management in activities related to error reduction; (B) Sufficiency and quality of manual and automated systems and the effective use of such systems, designed to reduce errors, that are operational in the State, e.g., BENDEX, FAMIS, interjurisdictional matches, account number validation, computer matches, local agency case monitoring systems, supervisory reviews, verification procedures; (C) Use of effective systems and procedures for the statistical and program analysis of QC and related data, e.g., statistical analyses by error element, tests of significance, augmented samples, tabulations and cross-tabulations, geographic breakdown of QC and related data, error prone profiles, special studies; (D) Effective planning, management, execution and evaluation of the corrective action process, e.g., corrective action committees, assisgnment of responsibilities, milestones for completing tasks, monitoring of progress in completing tasks, completion of tasks, implementation of corrective actions; and (E) Operation of a quality control system in accordance with federally prescribed policies, procedures, and time limits for sampling, conducting case reviews, and submitting QC data and reports. (3) The failure of a State to act upon necessary legislative changes or to obtain budget authorization for needed resources is not a basis for finding that a State failed to meet the national standard despite a good faith effort. (h) Disallowances subject to appeal. If a State does not agree with our decision to reduce (disallow) FFP, it can appeal to us within 30 days from the date of our notice. The regular procedures for appeal of a disallowance will apply, including review by the Commissioner and by the Grant Appeals Board (see 45 CFR Part 16). This appeal provision, as it applies to AFDC Quality Control disallowances, is not applicable to the Commissioner's decision on a State's ``good faith'' waiver request. [49 FR 38286, Sept. 28, 1984; 50 FR 11698, Mar. 25, 1985, as amended at 51 FR 7214, Feb. 28, 1986; 53 FR 36580, Sept. 21, 1988] 205.45 Federal financial participation in relation to State emergency welfare preparedness. (a) Under title IV - A, Federal financial participation is available at the rate of 50 percent in expenditures for development and planning activities for emergency welfare preparedness. Such activities must relate to emergency welfare situations resulting from natural disasters, civil disorders, and enemy caused disasters, as prescribed in ``Guidelines for the Preparation of State Emergency Welfare Services Plan'' issued by Social and Rehabilitation Service, DHHS publication No. (SRS) 72 - 23004. These activities include: (1) Safekeeping essential documents and records; (2) Planning and developing emergency operating capability for providing food, lodging, clothing, and welfare registration and inquiry; (3) Assuring that qualified individuals are responsible for the planning and operation of each welfare function essential under emergency conditions for care and services for public assistance recipients and potential recipients; (4) Coordinating with other government and voluntary welfare agencies, and welfare-related business and professional organizations and associations, in developing emergency operating plans and attaining operational readiness; (5) Preparing and maintaining data on kinds, numbers, and locations of essential welfare resources, including manpower; (6) Developing ability to assess emergency welfare resources and determining requirements necessary to care for public assistance cases in the event of disaster or attack; (7) Preparing plans for claiming and distributing the above resources; (8) Developing mutual aid agreements at State and local levels with neighboring welfare organizations; (9) Preparing and distributing written emergency operations plans for public assistance agencies and operating units; (10) Participating in preparedness exercises for the purpose of testing plans and determining the role of public assistance programs in relation to the overall preparedness program; and (11) Travel incidental to any of the above activities. (b) Federal financial participation is available at 50 percent under title IV - A for providing training in emergency welfare preparedness for all staff and for volunteers. (c) In Guam, Puerto Rico, and the Virgin Islands, Federal financial participation is available at the rate of 75 percent in expenditures for emergency welfare preparedness under titles I, X, XIV, XVI (AABD) of the Social Security Act. (d) The cost of these activities must be allocated to all programs benefited in accordance with Part 74, Subtitle A of Title 45 of the Code of Federal Regulations. [41 FR 23387, June 10, 1976, as amended at 51 FR 9203, Mar. 18, 1986] 205.50 Safeguarding information for the financial assistance programs. (a) State plan requirements. A State plan for financial assistance under title IV - A of the Social Security Act, must provide that: (1) Pursuant to State statute which imposes legal sanctions: (i) The use or disclosure of information concerning applicants and recipients will be limited to purposes directly connected with: (A) The administration of the plan of the State approved under title IV - A, the plan or program of the State under title IV - B, IV - C, IV - D, or IV - F or under title I, X, XIV, XVI (AABD), XIX or XX or the supplemental security income (SSI) program established by title XVI. Such purposes include establishing eligibility, determining amount of assistance, and providing services for applicants and recipients. (B) Any investigation, prosecution, or criminal or civil proceeding conducted in connection with the administration of any such plans or programs. (C) The administration of any other Federal or federally assisted program which provides assistance, in cash or in kind, or services, directly to individuals on the basis of need. (D) The verification to the Employment Security Agency, or other certifying agency that an individual has been an AFDC recipient for at least 90 days or is a WIN or WIN Demonstration participant pursuant to Pub. L. 97 - 34, the Economic Recovery Tax Act of 1981. (E) Any audit or similar activity, e.g., review of expenditure reports or financial review, conducted in connection with the administration of any such plan or program by any governmental entity which is authorized by law to conduct such audit or activity. (F) The administration of a State unemployment compensation program. (ii) The State agency has authority to implement and enforce the provisions for safeguarding information about applicants and recipients: (iii) Disclosure of any information that identifies by name or address any applicant or recipient to any Federal, State, or local committee or legislative body other than in connection with any activity under paragraph (a)(1)(i)(E) of this section is prohibited. (iv) Publication of lists or names of applicants and recipients will be prohibited. Exception. In respect to a State plan for financial assistance under title I, IVA, X, XIV, or XVI (AABD) of the Social Security Act, an exception to this restriction may be made by reason of the enactment or enforcement of State legislation, prescribing any conditions under which public access may be had to records of the disbursement of funds or payments under such titles within the State, if such legislation prohibits the use of any list or names obtained through such access to such records for commercial or political purposes. (v) The State or local agency responsible for the administration of the State plan has authority to disclose the current address of a recipient to a State or local law enforcement officer at his or her request. Such information is disclosed only to law enforcement officers who provide the name and Social Security number of the recipient and satisfactorily demonstrate that: (A) The recipient is a fugitive felon (as defined by the State); (B) The location or apprehension of such felon is within the law officer's official duties; and (C) The request is made in the proper exercise of those duties. (2) The agency will have clearly defined criteria which govern the types of information that are safeguarded and the conditions under which such information may be released or used. Under this requirement: (i) Types of information to be safeguarded include but are not limited to: (A) The names and addresses of applicants and recipients and amounts of assistance provided (unless excepted under paragraph (a)(1)(iv) of this section); (B) Information related to the social and economic conditions or circumstances of a particular individual including information obtained from any agency pursuant to 205.55; information obtained from the Internal Revenue Service (IRS) and the Social Security Administration (SSA) must be safeguarded in accordance with procedures set forth by those agencies; (C) Agency evaluation of information about a particular individual; (D) Medical data, including diagnosis and past history of disease or disability, concerning a particular individual. (ii) The release or use of information concerning individuals applying for or receiving financial assistance is restricted to persons or agency representatives who are subject to standards of confidentiality which are comparable to those of the agency administering the financial assistance programs. (iii) Except in the case of information requested pursuant to 205.55 and 205.56, or in the case of an emergency situation when the individual's prior consent for the release of information cannot be obtained, the family or individual is informed whenever possible of a request for information from an outside source, and permission is obtained to meet the request. In an emergency situation when the individual's consent for the release of information cannot be obtained, the individual will be notified immediately. (iv) In the event of the issuance of a subpoena for the case record or for any agency representative to testify concerning an applicant or recipient, the court's attention is called, through proper channels to the statutory provisions and the policies or rules and regulations against disclosure of information. (v) The same policies are applied to requests for information from a governmental authority, the courts, or a law enforcement officer (except as provided for under paragraph (a)(1)(v) with respect to fugitive felons) as from any other outside source. (3)(i) The agency will publicize provisions governing the confidential nature of information about applicants and recipients, including the legal sanctions imposed for improper disclosure and use, and will make these provisions available to applicants and recipients and to other persons and agencies to whom information is disclosed. (ii) All information obtained pursuant to the income and eligibility verification requirements at 205.55 and 205.56 will be stored and processed so that no unauthorized personnel can acquire or retrieve the information by any means. (iii) All persons with access to information obtained pursuant to the income and eligibility verification requirements under 205.55 and 205.56 will be advised of the circumstances under which access is permitted and the sanctions imposed for illegal use or disclosure of the information. (4) All materials sent or distributed to applicants, recipients, or medical vendors, including material enclosed in envelopes containing checks, will be limited to those which are directly related to the administration of the program and will not have political implications. Under this requirement: (i) Specifically excluded from mailing or distribution are materials such as ``holiday'' greetings, general public announcements, voting information, alien registration notices; (ii) Not prohibited from such mailing or distribution are materials in the immediate interest of the health and welfare of applicants and recipients, such as announcements of free medical examinations, availability of surplus food, and consumer protection information; (iii) Only the names of persons directly connected with the administration of the program are contained in material sent or distributed to applicants, recipients, and vendors, and such persons are identified only in their official capacity with the State or local agency. (b) [Reserved] (c) State plan requirements for programs of financial assistance in Puerto Rico, the Virgin Islands, and Guam. A State plan under title I, X, XIV, or XVI (AABD) of the Social Security Act must meet all the requirements of paragraph (a) of this section, with the exception of paragraphs (a)(1)(i) (D) and (E), of this section, and also provide for disclosure of information concerning applicants and recipients for use by public officials who require such information in connection with their official duties. Under this requirement, such information shall be available only to public officials who certify in writing that: (1) They are public officials as defined by State or Federal law of general applicability; and (2) The information to be disclosed and used is required in connection with their official duties. [45 FR 56684, Aug. 25, 1980, as amended at 47 FR 46506, Oct. 19, 1982; 49 FR 35599, Sept. 10, 1984; 51 FR 7214, Feb. 28, 1986; 51 FR 9203, Mar. 18, 1986; 54 FR 42243, Oct. 13, 1989; 54 FR 42243, Oct. 13, 1989; 57 FR 30157, July 8, 1992] 205.51 Income and eligibility verification requirements. (a) A State plan under title I, IV - A, X, XIV or XVI (AABD) of the Social Security Act must provide that there be an Income and Eligibility Verification System in the State. Income and Eligibility Verification System (IEVS) means a system through which the State agency: (1) Co-ordinates data exchanges with other Federally-assisted benefit programs covered by section 1137(b) of the Act; (2) Requests and uses income and benefit information as specified in section 1137(a)(2) of the Act and 205.55 and 205.56; and (3) Adheres to standardized formats and procedures in exchanging information with the other programs and agencies and in providing such information as may be useful to assist Federal, State and local agencies in the administration of the child support program and the Social Security Administration in the administration of the title II and title XVI (SSI) programs. The State agency (UC) information from the State Wage Information Collection Agency, described in paragraph (b) of this section; from the agency administering the State's unemployment compensation program (UC) under section 3304 of the Internal Revenue Code; from agencies in other States cited in 205.55(a)(5), as set forth by the Secretary; from SSA, as set forth by the Commissioner of Social Security; and from IRS, as set forth by the Commissioner of Internal Revenue. (b) A State plan under title I, IV - A, X, XIV or XVI (AABD) of the Social Security Act must provide that, as part of its Income and Eligibility Verification System, there be a State Wage Information Collection Agency in the State. State Wage Information Collection Agency (SWICA) means the State agency receiving quarterly wage reports from employers in the State (which may be the agency administering the State's unemployment compensation program), or an alternative system which has been determined by the Secretary of Labor, in consultation with the Secretary of Agriculture and the Secretary of Health and Human Services, to be as effective and timely in providing employment related income and eligibility information. (c) Wage information maintained by a SWICA which receives quarterly wage reports from employers but does not use these reports for computation of employment compensation shall: (1) Contain the social security number, first and last name and middle initial, wages earned for the period of the report, and an identifier of the employer (such as name and address) for each employee; (2) Include all employers covered by the State's UC law and require such employers to report wage information (as specified above) for each employee within 30 days from the end of each calendar quarter; (3) Accumulate earnings reported by employers for periods no longer than calendar quarters; (4) Be machine readable; i.e., maintained in a fashion that permits automated processing; and (5) Be available to other agencies in the State, to agencies in other States, and to Social Security Administration for establishing or verifying eligibility and benefit amounts under titles II and XVI of the Social Security Act, pursuant to agreements as required in 205.58. (d) A State shall obtain prior written approval from the Department, where appropriate, in accordance with 45 CFR 95.611, for any new developmental costs for automatic data processing equipment and services incurred in meeting IEVS requirements. [51 FR 7214, Feb. 28, 1986] 205.52 Furnishing of social security numbers. The State plan under title I, IV - A, X, XIV, or CVI (AABD) of the Social Security Act must provide that: (a) As a condition of eligibility, each applicant for or recipient of aid will be required: (1) To furnish to the State or local agency a social security account number, hereinafter referred to as the SSN (or numbers, if more than one has been issued); and (2) If he cannot furnish a SSN (either because such SSN has not been issued or is not known), to apply for such number through procedures adopted by the State or local agency with the Social Security Administration. If such procedures are not in effect, the applicant or recipient shall apply directly for such number, submit verification of such application, and provide the number upon its receipt. (b) The State or local agency will assist the applicant or recipient in making applications for SSNs and will comply with the procedures and requirements established by the Social Security Administration for application, issuance, and verification of social security account numbers. (c) The State or local agency will not deny, delay, or discontinue assistance pending the issuance or verfication of such numbers if the applicant or recipient has complied with the requirements of paragraph (a) of this section. (d) The State or local agency will use such account numbers, in addition to any other means of identification it may determine to employ, in the administration of the plan. (e) ``Applicant'' and ``recipient'' include for the purposes of this section the individuals seeking or receiving assistance and any other individual whose needs are considered in determining the amount of assistance. (f) The State or local agency shall notify the applicant or recipient that the furnishing of the SSN is a condition of eligibility for assistance required by section 1137 of the Social Security Act and that the SSN will be utilized in the administration of the program. (g) The State agency will submit all unverified social security numbers to the Social Security Administration (SSA) for verification. The State agency may accept as verified a social security number provided directly to the State agency by SSA or by another Federal or federally-assisted benefit program which has received the number from SSA or has submitted it to SSA for verification. [51 FR 7217, Feb. 28, 1986] 205.55 Requirements for requesting and furnishing eligibility and income information. A State plan under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that: (a) Except as provided in paragraph (b), the State agency will request through the IEVS: (1) Wage information from the SWICA for all applicants at the first opportunity following receipt of the application and for all recipients on a quarterly basis. (2) Unemployment compensation information from the agency administering the State's unemployment compensation program under section 3304 of the Internal Revenue Code of 1954 and section 303 of the Act as follows: (i) For applicants at the first opportunity following receipt of the application and in each of the first three months in which the individual is receiving aid, unless the individual is found to be receiving unemployment compensation, in which case the information will be requested until benefits are exhausted; and (ii) In each of the first three months following any recipient-reported loss of employment, unless the individual is found to be receiving unemployment compensation, in which case the information will be requested until the benefits are exhausted. (3) All available information maintained by the Social Security Administration for all applicants at the first opportunity following receipt of the application in the manner set forth by the Commissioner of Social Security. The State agency will also request such information for all recipients as of the effective date of this provision for whom such information has not previously been requested. (4) Unearned income information from the Internal Revenue Service available under section 6103 (l)(7)(B) of the Internal Revenue Code of 1954, for all applicants at the first opportunity following receipt of the application for all recipients on a yearly basis. The request shall be made at the time and in the manner set forth by the Commissioner of Internal Revenue. (5) As necessary, any income or other information affecting eligibility available from agencies in the State or other States administering: (i) An AFDC program (in another State) under title IV - A of the Social Security Act; (ii) A Medicaid program under title XIX of the Social Security Act; (iii) An unemployment compensation program (in another State) under section 3304 of the Internal Revenue Code of 1954; (iv) A Food Stamp program under the Food Stamp Act of 1977, as amended; (v) Any State program administered under plan approved under Title I, X, XIV, or XVI (AABD) of the Social Security Act; and (vi) A SWICA (in another State). (b)(1) With respect to individuals who cannot furnish an SSN at application, information specified in paragraph (a) will be requested at the first opportunity provided by each source after the State agency is provided with the SSN. (2) For the purposes of this section, applicants and recipients shall also include any other individuals whose income or resources are considered in determining the amount of assistance, if the State agency has obtained the SSN of such individuals. (c) The State agency must furnish, when requested, income, eligibility and benefit information to: (1) Agencies in the State or other States administering the programs cited in paragraph (a)(5) of this section, in accordance with specific agreements as described in 205.58; (2) The agency in the State or other States administering a program under title IV - D of the Social Security Act; and (3) The Social Security Administration for purposes of establishing or verifying eligibility or benefit amounts under title II and XVI (SSI) of the Social Security Act. (d) The Secretary may, based upon application from a State, permit a State to obtain and use income and eligibility information from an alternate source or sources in order to meet any requirement of paragraph (a) of this section. The State agency must demonstrate to the Secretary that the alternate source or sources is as timely, complete and useful for verifying eligibility and benefit amounts. The Secretary will consult with the Secretary of Agriculture and the Secretary of Labor prior to approval of a request. The State must continue to meet the requirements of this section unless the Secretary has approved the request. (e) The State agency must, upon request, reimburse another agency for reasonable costs incurred in furnishing income and eligibility information as prescribed in this section, including new developmental costs associated with furnishing such information, in accordance with specific agreements as described in 205.58. [51 FR 7215, Feb. 28, 1986] 205.56 Requirements governing the use of income and eligibility information. A State plan under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that: (a) The State agency will use the information obtained under 205.55, in conjunction with other information, for: (1) Determining individuals' eligibility for assistance under the State plan and determining the amount of assistance. States wishing to exclude categories of information items from follow-up must submit for the Secretary's approval a follow-up plan describing the categories of information items which it proposes to exclude. For each category, the State must provide a reasonable justification that follow-up is not cost-effective. A formal cost-benefit analysis is not required. A State may exclude information items from the following data sources without written justification if followed up previously from another source: Unemployment compensation information received from the Internal Revenue Service, and earnings information received from the Social Security Administration. Information items in these categories which are not duplicative, but provide new leads, may not be excluded without written justification. A State may submit a follow-up plan or alter its plan at any time by notifying the Secretary and submitting the necessary justification. The Secretary will approve or disapprove categories of information items to be excluded under the plan within 60 days of its submission. Those categories approved by the Secretary will constitute an approved State follow-up plan for IEVS. For those information items not excluded from follow-up, (i) The State agency shall review and compare the information obtained from each data exchange against information contained in the case record to determine whether it affects the applicant's or the recipient's eligibility or the amount of assistance. (ii) The State agency shall verify that the information is accurate and applicable to case circumstances either through the applicant or recipient or through a third party, if such verification is determined appropriate based on agency experience or is required under paragraph (b) of this section. (iii) For applicants, if the information is received during the application period, the State agency shall use such information, to the extent possible, in making the eligibility determination. (iv) For individuals who are recipients when the information is received or for whom a decision could not be made prior to authorization of benefits, the State agency shall within forty-five (45) days of its receipt, initiate a notice of case action or an entry in the case record that no case action is necessary, except that: Completion of action may be delayed beyond forty-five (45) days on no more than twenty (20) percent of the information items targeted for follow-up, if: (A) The reason that the action cannot be completed within forty-five (45) days is the nonreceipt of requested third-party verification; and (B) Action is completed promptly, when third party verification is received or at the next time eligibility is redetermined, whichever is earlier. If action is completed when eligibility is redetermined and third party verification has not been received, the State agency shall make its decision based on information provided by the recipient and any other information in its possession. (v) The State agency shall use appropriate procedures to monitor the timeliness requirements specified in this subparagraph; (2) Investigations to determine whether recipients received assistance under the State plan to which they were not entitled; and (3) Criminal or civil prosecutions based on receipt of assistance under the State plan to which recipients were not entitled. (b)(1) State agencies shall not take any adverse action to terminate, deny, suspend or reduce benefits to an applicant or recipient, based on information produced by a Federal computer matching program that is subject to the requirements in the Computer Matching and Privacy Protection Act (CMPPA) unless: (i) The information has been independently verified in accordance with the independent verification requirements set out in the State agency's written agreement as required by 205.58 or (ii) The independent verification requirement has been waived by the Department's Data Integrity Board. (2) The CMPPA defines a matching program as any computerized comparison of: (i) Two or more automated systems of records or a system of records with non-Federal records for the purpose of: (A) Establishing or verifying the eligibility of, or continuing compliance with statutory and regulatory requirements by, applicants for, recipients or beneficiaries of, participants in, or providers of services with respect to, cash or in-kind assistance or payments under Federal benefit programs, or (B) Recouping payments or delinquent debts under such Federal benefit programs, or (ii) Two or more automated Federal personnel or payroll system of records or a system of Federal personnel or payroll records with non-Federal records. (c) If the agency intends to reduce, suspend, terminate or deny benefits as a result of the actions taken pursuant to this section, the agency must provide notice and the opportunity for a fair hearing in accordance with 205.10(a). [51 FR 7215, Feb. 28, 1986, as amended at 53 FR 52712, Dec. 29, 1988; 56 FR 66375, Dec. 23, 1991] 205.57 Maintenance of a machine readable file; requests for income and eligibility Information. A State plan under title I, IV -- A, X, XIV, or XVI (AABD) of the Social Security Act must provide that: (a) The State agency will maintain a file which is machine readable, i.e., which is maintained in a fashion that permits automated processing, and which contains the first and last name and verified social security number of each person applying for or receiving assistance under the plan. (b) The State agency will use this file to exchange data with other agencies pursuant to 205.55. [51 FR 7216, Feb. 28, 1986] 205.58 Income and eligibility information; specific agreements required between the State agency and the agency supplying the information. (a) A State plan under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that, in carrying out the requirements of 205.55 and 205.56, the State agency will enter into specific written agreements as described in paragraph (b) of this section with those agencies providing income and eligibility information. Agreements with Federal agencies are subject to the approval by the appropriate Federal Data Integrity Boards. The agreements will contain the procedure to be used in requesting and providing information. (b) These agreements will include, but need not be limited to, the following: (1) Purpose of the request; (2) Identification of all agency officials, by position with authority to request information; (3) Methods and timing of the requests for information, including the machine readable format to be used, the period of time needed to furnish the requested information and the basis for establishing this period. Agreements with the SWICA and the agency administering the Unemployment Compensation program in the State must provide that the State agency shall obtain information no less frequently than twice monthly; (4) The type of information and reporting periods for which information will be provided and the verification methodologies to be used; (5) Safeguards limiting release or redisclosure as required by Federal or State law or regulation, including the requirements of 205.50 and as may be required by guidelines issued by the Secretary; and (6) Reimbursement, if any, for the costs of furnishing the information requested by the State agency, including new developmental costs associated with furnishing such information. [51 FR 7216, Feb. 28, 1986, as amended at 56 FR 66375, Dec. 23, 1991] 205.60 Reports and maintenance of records. A State plan under title I, IV -- A, X, XIV, or XVI (AABD) of the Social Security Act must provide that: (a) The State agency will maintain or supervise the maintenance of records necessary for the proper and efficient operation of the plan, including records regarding applications, determination of eligibility, the provision of financial assistance, and the use of any information obtained under 205.55, with respect to individual applications denied, recipients whose benefits have been terminated, recipients whose benefits have been modified, and the dollar value of these denials, terminations and modifications. Under this requirement, the agency will keep individual records which contain pertinent facts about each applicant and recipient. The records will include information concerning the date of application and the date and basis of its disposition; facts essential to the determination of initial and continuing eligibility (including the individual's social security number, need for, and provision of financial assistance); and the basis for discontinuing assistance. (b) The agency shall report as the Secretary prescribes for the purpose of determining compliance with the requirements of 205.55 and 205.56 and for evaluating the effectiveness of the Income and Eligibility Verification System. [51 FR 7216, Feb. 28, 1986] 205.62 Delay of effective date. (a) If the agency submits, by May 29, 1986, a plan describing a good faith effort to come into compliance with the requirements of section 1137 of the Act and these implementing regulations, the Secretary may grant a delay in the effective date of any provision of 205.55 through 205.60 and 206.10 implementing section 1137(a) and (g) of the Act. This plan must include the following information for each provision: the provision, the proposed implementation date, a justification for the delay, and a plan for implementing the provision. The Secretary shall consult with the Secretary of Agriculture and the Secretary of Labor prior to approval of any plan describing a good faith effort and may not grant a delay of the effective date of any provision beyond September 30, 1986. (b) The Secretary may not grant a delay of the effective date of section 1137(c) of the Act, which is implemented by 205.56. (The provisions of these statutory and regulation sections require the agency to follow certain procedures before taking any adverse actions based on information from the Internal Revenue Service concerning unearned income.) [51 FR 7216, Feb. 28, 1986] 205.70 Availability of agency program manuals. State plan requirements. A State plan for financial assistance under title I, IV - A, IV - B, X, XIV, or XVI (AABD) of the Social Security Act must provide that: (a) Program manuals and other policy issuances which affect the public, including the State agency's rules and regulations governing eligibility, need and amount of assistance, and recipient rights and responsibilities will be maintained in the State office and in each local and district office for examination on regular workdays during regular office hours by individuals, upon request for review, study, or reproduction by the individual. (b)(1) A current copy of such material will be made available without charge or at a charge related to the cost of reproduction for access by the public through custodians who (i) request the material for this purpose, (ii) are centrally located and publicly accessible to a substantial number of the recipient population they serve, and (iii) agree to accept responsibility for filing all amendments and changes forwarded by the agency. (2) Under this requirement the material, if requested, must be made available without charge or at a charge related to the cost of reproduction to public or university libraries, the local or district offices of the Bureau of Indian Affairs, and welfare or legal services offices or organizations. The material may also be made available, with or without charge, to other groups and to individuals. Wide availability of agency policy materials is recommended. (c) Upon request, the agency will reproduce without charge or at a charge related to the cost of reproduction the specific policy materials necessary for an applicant or recipient, or his representative, to determine whether a fair hearing should be requested or to prepare for a fair hearing; and will establish policies for reproducing policy materials without charge, or at a charge related to cost, for any individual who requests such material for other purposes. [38 FR 26378, Sept. 20, 1973, as amended at 44 FR 17941, Mar. 23, 1979; 45 FR 56685, Aug. 25, 1980] 205.80 Evaluation of the Work Incentive Demonstration Program. (a) If a State plan for AFDC under title IV - A of the Social Security Act provides for single State agency operation of a Work Incentive Demonstration program under the provisions of section 445 of title IV of the Social Security Act, the State is required to report data which the Secretary determines to be necessary to carry out his responsibility to evaluate the demonstration program. The report shall include, but not be limited to, such data as: (1) Number of registrants; (2) Number of registrants who enter full-time employment; (3) Number of registrants who entered employment who are still employed 30 days later; (4) Number of registrants whose AFDC grants are reduced or terminated because of participation in a work incentive demonstration program; and (5) Amount of reduction in AFDC grants due to participation in a work incentive demonstration program. (b) Such data are to be reported at a schedule to be determined by the Secretary, but not more frequently than quarterly. (c) The State agency shall cooperate with the Department in the required evaluation of the work incentive demonstration program. [47 FR 5673, Feb. 5, 1982] 205.100 Single State agency. (a)(1) State plan requirements. A State plan for financial assistance under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must: (i) Provide for the establishment or designation of a single State agency with authority to administer or supervise the administration of the plan. (ii) Include a certification by the attorney general of the State identifying the single State agency and citing the legal authority under which such agency administers, or supervises the administration of, the plan on a statewide basis including the authority to make rules and regulations governing the administration of the plan by such agency or rules and regulations that are binding on the political subdivisions, if the plan is administered by them. (b) Conditions for implementing the requirements of paragraph (a) of this section. (1) The State agency will not delegate to other than its own officials its authority for exercising administrative discretion in the administration or supervision of the plan including the issuance of policies, rules, and regulations on program matters. (2) In the event that any rules and regulations or decisions of the single State agency are subject to review, clearance, or other action by other offices or agencies of the State government, the requisite authority of the single State agency will not be impaired. (3) In the event that any services are performed for the single State agency by other State or local agencies or offices, such agencies and offices must not have authority to review, change, or disapprove any administrative decision of the single State agency, or otherwise substitute their judgment for that of the agency as to the application of policies, rules, and regulations promulgated by the State agency. [45 FR 56685, Aug. 25, 1980] 205.101 Organization for administration. (a) A State plan for financial assistance under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act shall include a description of the organization and functions of the single State agency and an organizational chart of the agency. (b) Where applicable, a State plan for financial assistance under title I, IV - A, X, XIV, or XVI (AABD) of the act shall identify the organizational unit within the State agency which is responsible for operation of the plan and shall include a description of its organization and functions and an organizational chart of the unit. [45 FR 56685, Aug. 25, 1980] 205.120 Statewide operation. (a) State plan requirements. A State plan for financial assistance under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that: (1) It shall be in operation, through a system of local offices, on a statewide basis in accordance with equitable standards for assistance and administration that are mandatory throughout the State; (2) If administered by political subdivisions of the State, the plan will be mandatory on such political subdivisions; (3) The State agency will assure that the plan is continuously in operation in all local offices or agencies through: (i) Methods for informing staff of State policies, standards, procedures and instructions; and (ii) Regular planned examination and evaluation of operations in local offices by regularly assigned State staff, including regular visits by such staff; and through reports, controls, or other necessary methods. [39 FR 16971, May 10, 1974, as amended at 44 FR 17942, Mar. 23, 1979; 45 FR 56686, Aug. 25, 1980] 205.130 State financial participation. State plan requirements: (a) A State plan for financial assistance under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that: (1) State (as distiguished from local) funds will be used in both assistance and administration; and (2) State and Federal funds will be apportioned among the political subdivisions of the State on a basis consistent with equitable treatment of individuals in similar circumstances throughout the State. (b) A State plan under title I, IV - A, X, XIV, or XVI (AABD) of the Act must provide further that State funds will be used to pay a substantial part of the total costs of the assistance programs. [45 FR 56686, Aug. 25, 1980] 205.146 Specific limitations on Federal financial participation under title IV - A. (a) Penalty for failure to certify WIN registrants. Pursuant to section 403(c) of the act, notwithstanding any other provision of this chapter, the Federal share of assistance payments under title IV - A of the act, with respect to any State, for any fiscal year beginning on or after July 1, 1973, shall be reduced by 1 percentage point (calculated without regard to any other reduction under this section) for each percentage point by which the number of individuals certified to the manpower agency as ready for employment or training under the State's WIN program falls below 15 percent of the average number of individuals in the State who are required to be registered during such fiscal year. (See 220.35(b)(5) of this chapter.) (b) Penalty for failure to offer and arrange for provision of family planning services under title IV - A of the Act. Pursuant to section 403(f) of the act, notwithstanding any other provision of this chapter, total payments to a State under title IV - A of the Act, for any fiscal year beginning on or after July 1, 1973, shall be reduced by 1 percent (calculated without regard to any other reduction under this section) if such State: (1) In the immediately preceding fiscal year failed to carry out the provisions of section 402(a)(15) of the act, which require the offering and arrangement for provision of family planning services, or (2) In the immediately preceding fiscal year (but in the case of the fiscal year beginning July 1, 1972, considering only the third and fourth quarters thereof), failed to carry out the provisions of section 402(a)(15) of the act with respect to any individual who within 3 months had been an applicant for or a recipient of AFDC under the State's approved title IV - A plan. This penalty will be applied in accordance with instructions to be issued by SRS. (c) [Reserved] (d) Penalty for failure to have an effective child support enforcement program -- (1)General. Pursuant to section 403(h) of the Act, notwithstanding any other provision of this chapter, total payments to a State under title IV - A of the Act for any quarters in any fiscal year, shall be reduced if a State is found by the Secretary to have failed to have an effective child support enforcement program in substantial compliance with the requirements of section 402(a)(27), as implemented by Parts 302 and 305 of this title. The reduction for any quarter (calculated without regard to any other reduction under this section) shall be: (i) Not less than one nor more than two percent of such payments for a period beginning in accordance with 305.100 (c) or (d) of this title not to exceed the one-year period following the end of the suspension period specified in the notice required by 305.99 of this title; (ii) Not less than two nor more than three percent of such payments if the finding is the second consecutive finding made as a result of an audit for a period beginning as of the second one-year period following the suspension period specified in the notice required by 305.99 of this title not to exceed one year; or (iii) Not less than three nor more than five percent of such payments if the finding is the third or subsequent consecutive finding as a result of an audit for a period beginning as of the third one-year period following the suspension period specified in the notice required by 305.99 of this title. (2) Application of penalty. (i) The penalty will be imposed for any quarter beginning after September 30, 1983. (ii) The penalty will be imposed on the basis of the results of the audit conducted pursuant to Part 305 of this title. (3) Notice, suspension, corrective action period. Notice, suspension and corrective action provisions are set forth at 45 CFR 305.99. (e) Reconsideration of penalty imposition. Whenever a penalty is imposed under the provisions of this section, the State shall be entitled to and upon request shall receive a reconsideration of the imposition of the penalty in accordance with section 1116(d) of the Social Security Act, and regulations issued thereunder. [38 FR 26379, Sept. 20, 1973, as amended at 39 FR 29706, Aug. 2, 1974; 41 FR 55346, Dec. 20, 1976; 44 FR 29427, May 18, 1979; 50 FR 40139, Oct. 1, 1985; 51 FR 9203, Mar. 18, 1986] 205.150 Cost allocation. A State plan under Title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that the State agency will have an approved cost allocation plan on file with the Department in accordance with the requirements contained in Subpart E of 45 CFR Part 95. Subpart E also sets forth the effect on FFP if the requirements contained in that Subpart are not met. [47 FR 17508, Apr. 23, 1982] 205.160 Equipment -- Federal financial participation. Claims for Federal financial participation in the cost of equipment for the cash assistance programs under Titles I, IV - A, X, XIV, XVI [AABD] and for the separate administrative unit established under Section 402(a)(19)(G) of the Social Security Act are to be determined in accordance with Subpart G or 45 CFR Part 95. Requirements concerning the management and disposition of equipment under these Titles are also prescribed in Subpart G of 45 CFR Part 95. [47 FR 41576, Sept. 21, 1982] 205.170 State standards for office space, equipment, and facilities. State plan requirements: A State plan for financial assistance under title I, IV - A, X, XIV, or XVI(AABD) of the Social Security Act must provide that: (a) The State agency will establish and maintain standards for office space, equipment, and facilities that will adequately and effectively meet program and staff needs. Under this requirement, offices must be well marked and clearly identifiable in the community as a public service. (b) The State agency will assure that the standards are continuously in effect in all State and local offices or agencies, including agency suboffices, and special centers through: (1) Making information about the standards available to State and local staff and other appropriate persons; (2) Regular planned evaluation of housing and facilities by regularly assigned staff through visits, reports, controls and other necessary methods; (3) Methods for enforcement when necessary to secure compliance with State standards. [36 FR 3862, Feb. 27, 1971, as amended at 45 FR 56686, Aug. 25, 1980] 205.190 Standard-setting authority for institutions. (a) State plan requirements. If a State plan for financial assistance under title I, X, XIV, or XVI(AABD) of the Social Security Act includes aid or assistance to individuals in institutions as defined in 233.60(b) (1) and (2) of this chapter the plan must: (1) Provide for the designation of a State authority or authorities which shall be responsible for establishing and maintaining standards for such institutions; (2) Provide that the State agency will keep on file and make available to FSA, OFA upon request: (i) A listing of the types or kinds of institutions in which an individual may receive financial assistance; (ii) A record naming the State authority(ies) responsible for establishing and maintaining standards for such types of institutions; (iii) The standards to be utilized by such State authority(ies) for approval or licensing of institutions including, to the extent applicable, standards related to the following factors: (a) Health (dietary standards and accident prevention); (b) Humane treatment; (c) Sanitation; (d) Types of construction; (e) Physical facilities, including space and accommodations per person; (f) Fire and safety, (g) Staffing, in number and qualifications, related to the purposes and scope of services of the institution; (h) Resident records; (i) Admission procedures; (j) Administrative and fiscal records; (k) The control by the individual, or his guardian or protective payee, of the individual's personal affairs. (3) Provide for cooperative arrangements with the standard-setting authority(ies) in the development of standards directed toward assuring adequate quality of care; in upgrading of institutional programs and practice; in actions necessary to close institutions that mistreat or are hazardous to the safety of the patients; and in planning so that institutions may be geographically located in accordance with need. (b) Federal financial participation. (1) Federal financial participation is available in staff and related costs of the State or local agency that are necessary to discharge the responsibilities of the State agency under this section, including such costs for staff: (i) Participating with other agencies and community groups in activities to set up the authority(ies) and to advise on the formulation of policy for the establishment and maintenance of standards; (ii) On loan for a time limited period to work with the standard-setting authority(ies) in upgrading institutional care; (iii) Engaged in the function of coordination in States where there is more than one authority; and (iv) Engaged in adjusting complaints and making reports and recommendations to the standard-setting authority(ies) on conditions which appear to be in violation of such standards. (2) Federal financial participation is not available in the costs incurred by the standard-setting authority(ies) in establishing and maintaining standards for institutions. [36 FR 3862, Feb. 27, 1971, as amended at 45 FR 56686, Aug. 25, 1980; 53 FR 36580, Sept. 21, 1988] PART 206 -- APPLICATION, DETERMINATION OF ELIGIBILITY AND FURNISHING ASSISTANCE -- PUBLIC ASSISTANCE PROGRAMS Authority: Sections 402 and 1102 of the Social Security Act (42 U.S.C. 602 and 1302) and Pub. L. No. 97 - 248, 96 Stat. 324, and Pub. L. No. 99 - 603, 100 Stat. 3359. 206.10 Application, determination of eligibility and furnishing of assistance. (a) State plan requirements. A State plan under title I, IV - A, X, XIV, or XVI(AABD), of that Social Security Act shall provide that: (1) Each individual wishing to do so shall have the opportunity to apply for assistance under the plan without delay. Under this requirement: (i) Each individual may apply under whichever of the State plan plans he chooses; (ii) The agency shall require a written application, signed under a penalty of perjury, on a form prescribed by the State agency, from the applicant himself, or his authorized representative, or, where the applicant is incompetent or incapacitated, someone acting responsibly for him. When an individual is required to be included in an existing assistance unit pursuant to paragraph (a)(1)(vii), such individual will be considered to be included in the application, as of the date he is required to be included in the assistance unit; (iii) An applicant may be assisted, if he so desires, by an individual(s) of his choice (who need not be a lawyer) in the various aspects of the application process and the redetermination of eligibility and may be accompanied by such individual(s) in contacts with the agency and when so accompanied may also be represented by them. (iv) -- (v) [Reserved] (vi) Every recipient in a State which provides a supplemental payment under 233.27 of this chapter shall have an opportunity to request that payment without delay. (vii) For AFDC only, in order for the family to be eligible, an application with respect to a dependent child must also include, if living in the same household and otherwise eligible for assistance: (A) Any natural or adoptive parent, or stepparent (in the case of States with laws of general applicability); and (B) Any blood-related or adoptive brother or sister; Exception: needs and income of disqualified alien siblings, pursuant to 233.50(c), are not considered in determining the eligibility and payment of an otherwise eligible dependent child. (2)(i) Applicants shall be informed about the eligibility requirements and their rights and obligations under the program. Under this requirement individuals are given information in written form, and orally as appropriate, about coverage, conditions of eligibility, scope of the program, and related services available, and the rights and responsibilities of applicants for and recipients of assistance. Specifically developed bulletins or pamphlets explaining the rules regarding eligibility and appeals in simple, understandable terms are publicized and available in quantity. (ii) Procedures shall be adopted which are designed to assure that recipients make timely and accurate reports of any change in circumstances which may affect their eligibility or the amount of assistance. (iii) All applicants for and recipients of assistance shall be notified in writing at the time of application and on redetermination that eligibility and income information will be regularly requested from agencies specified in 205.55 and will be used to aid in determining their eligibility for assistance. (3) A decision shall be made promptly on applications, pursuant to reasonable State-established time standards not in excess of: (i) 45 days for OAA, AFDC, AB, AABD (for aged and blind); and (ii) 60 days for APTD, AABD (for disabled). Under this requirement, the applicant is informed of the agency's time standard in acting on applications which covers the time from date of application under the State plan to the date that the assistance check, or notification of denial of assistance or change of award is mailed to the applicant or recipient. The State's time standards apply except in unusual circumstances (e.g., where the agency cannot reach a decision because of failure or delay on the part of the applicant or an examining physician, or because of some administrative or other emergency that could not be controlled by the agency), in which instances the case record shows the cause for the delay. The agency's standards of promptness for acting on applications or redetermining eligibility shall not be used as a waiting period before granting aid, or as a basis for denial of an application or for terminating assistance. (4) Adequate notice shall be sent to applicants and recipients to indicate that assistance has been authorized (including the amount of financial assistance) or that it has been denied or terminated. Under this requirement, adequate notice means a written notice that contains a statement of the action taken, and the reasons for and specific regulations supporting such action, and an explanation of the individual's right to request a hearing. (5)(i) Financial assistance and medical care and services included in the plan shall be furnished promptly to eligible individuals without any delay attributable to the agency's administrative process, and shall be continued regularly to all eligible individuals until they are found to be ineligible. Under this requirement there must be arrangements to assist applicants and recipients in obtaining medical care and services in emergency situations on a 24-hour basis, 7 days a week. (ii) Assistance will not be denied, delayed, or discontinued pending receipt of income or other information requested under 205.55, if other evidence establishes the individual's eligibility for assistance. (6) Assistance shall begin as specified in the State plan, which: (i) For financial assistance. (A) Must be no later than: (1) The date of authorization of payment, or (2) Thirty days in OAA, AFDC, AB, and AABD (as to the aged and blind), and 60 days in APTD and AABD (as to the disabled), from the date of receipt of a signed and completed application form, whichever is earlier: Provided, That the individuals then met all the eligibility conditions, and (B) For purposes of Federal financial participation in OAA, AB, APTD, and AABD, may be as early as the first of the month in which an application has been received and the individual meets all the eligibility conditions; and (C) In AFDC, for purposes of Federal financial participation, may be as early as the date of application provided that the assistance unit meets all the eligibility conditions; and (D) In AFDC, States that pay for the month of application must prorate the payment for that month by multiplying the amount payable if payment were made for the entire month including special needs in accordance with 233.34 by the ratio of the days in the month including and following the date of application (or, at State option, the date of authorization of payment) to the total number of days in such month. The State plan may provide for using a standard 30-day month to determine the prorated amount. (7) In cases of proposed action to terminate, discontinue, suspend or reduce assistance, the agency shall give timely and adequate notice. Such notice shall comply with the provisions of 205.10 of this chapter. (8) Each decision regarding eligibility or ineligibility will be supported by facts in the applicant's or recipient's case record. Under this requirement each application is disposed of by a finding of eligibility or ineligibility unless: (i) The applicant voluntarily withdraws his application, and there is an entry in the case record that a notice has been sent to confirm the applicant's notification to the agency that he does not desire to pursue his application; or (ii) There is an entry in the case record that the application has been disposed of because the applicant died or could not be located. (9) Where an individual has been determined to be eligible, eligibility will be reconsidered or redetermined: (i) When required on the basis of information the agency has obtained previously about anticipated changes in the individual's situation; (ii) Promptly, after a report is obtained which indicates changes in the individual's circumstances that may affect the amount of assistance to which he is entitled or may make him ineligible; and (iii) Periodically, within agency established time standards, but not less frequently than every 12 months in OAA, AB, APTD, and AABD, on eligibility factors subject to change. For recipients of AFDC, all factors of eligibility will be redetermined at least every 6 months except in the case of monthly reporting cases or cases covered by an approved error-prone profiling system as specified in paragraph (a)(9)(iv) of this section. Under the AFDC program, at least one face-to-face redetermination must be conducted in each case once in every 12 months. (iv) In accordance with paragraph (a)(9)(iii) of this section, under an alternative redetermination plan based on error-prone profiling, which has been approved by the Secretary, and includes: (A) A description of the statistical methodology used to develop the error-prone profile system upon which the redetermination schedule is based; (B) The criteria to be used to vary the scope of review and to assign different types of cases; and (C) A detailed outline of the evaluation system, including provisions for necessary changes in the error-prone output, such as types of cases, types of errors, frequencies of redeterminations and corrective action. (10) Standards and methods for determination of eligibility shall be consistent with the objectives of the programs, and will respect the rights of individuals under the United States Constitution, the Social Security Act, title VI of the Civil Rights Act of 1964, and all other relevant provisions of Federal and State laws. (11) [Reserved] (12) The State agency shall establish and maintain methods by which it shall be kept currently informed about local agencies' adherence to the State plan provisions and to the State agency's procedural requirements for determining eligibility, and it shall take corrective action when necessary. (b) Definitions. For purposes of this section: (1) Applicant is a person who has, directly, or through his authorized representative, or where incompetent or incapacitated, through someone acting responsibly for him, made application for public assistance from the agency administering the program, and whose application has not been terminated. (2) Application is the action by which an individual indicates in writing to the agency administering public assistance (on a form prescribed by the State agency) his desire to receive assistance. The relative with whom a child is living or will live ordinarily makes application for the child for AFDC. An application is distinguished from an inquiry, which is simply a request for information about eligibility requirements for public assistance. Such inquiry may be followed by an application. When an individual is required to be included in an existing assistance unit pursuant to paragraph (a)(1)(vii), such individual will be considered to be included in the application, as of the date he is required to be included in the assistance unit. (3) Date of Application is the date on which the action described in paragraph (b)(2) of this section occurs. (4) Redetermination is a review of factors affecting AFDC eligibility and payment amount; e.g. continued absence, income (including child and spousal support), etc. (5) Assistance Unit is the group of individuals whose income, resources and needs are considered as a unit for purposes of determining eligibility and the amount of payment. [48 FR 28407, June 21, 1983 as amended at 49 FR 35599, Sept. 10, 1984; 51 FR 7217, Feb. 28, 1986; 51 FR 9203, Mar. 18, 1986; 52 FR 48689, Dec. 24, 1987; 53 FR 30433, Aug. 12, 1988; 57 FR 30157, July 8, 1992] PART 211 -- CARE AND TREATMENT OF MENTALLY ILL NATIONALS OF THE UNITED STATES, RETURNED FROM FOREIGN COUNTRIES Sec. 211.1 General definitions. 211.2 General. 211.3 Certificates. 211.4 Notification to legal guardian, spouse, next of kin, or interested persons. 211.5 Action under State law; appointment of guardian. 211.6 Reception; temporary care, treatment, and assistance. 211.7 Transfer and release of eligible person. 211.8 Continuing hospitalization. 211.9 Examination and reexamination. 211.10 Termination of hospitalization. 211.11 Request for release from hospitalization. 211.12 Federal payments. 211.13 Financial responsibility of the eligible person; collections, compromise, or waiver of payment. 211.14 Disclosure of information. 211.15 Nondiscrimination. Authority: Secs. 1 - 11, 74 Stat. 308 - 310; 24 U.S.C. 321 - 329. Source: 39 FR 26546, July 19, 1974, unless otherwise noted. 211.1 General definitions. When used in this part: (a) Act means Pub. L. 86 - 571, approved July 5, 1960, 74 Stat. 308, entitled ``An Act to provide for the hospitalization, at Saint Elizabeths Hospital in the District of Columbia or elsewhere, of certain nationals of the United States adjudged insane or otherwise found mentally ill in foreign countries, and for other purposes''; (b) The term Secretary means the Secretary of Health and Human Services; (c) The term Department means the Department of Health and Human Services; (d) The term Administrator means the Administrator, Family Support Administration, Department of Health and Human Services; (e) The term eligible person means an individual with respect to whom the certificates referred to in 211.3 are furnished to the Administrator in connection with the reception of an individual arriving from a foreign country; (f) The term Public Health Service means the Public Health Service in the Department of Health and Human Services; (g) The term agency means an appropriate State or local public or nonprofit agency with which the Administrator has entered into arrangements for the provision of care, treatment, and assistance pursuant to the Act; (h) The term State includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, and Guam; (i) The term residence means residence as determined under the applicable law or regulations of a State or political subdivision for the purpose of determining the eligibility of an individual for hospitalization in a public mental hospital; (j) The term legal guardian means a guardian, appointed by a court, whose powers, duties, and responsibilities include the powers, duties, and responsibilities of guardianship of the person. [39 FR 26546, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988] 211.2 General. The Administrator shall make suitable arrangements with agencies to the end that any eligible person will be received, upon request of the Secretary of State, at the port of entry or debarkation upon arrival in the United States from a foreign country and be provided, to the extent necessary, with temporary care, treatment, and assistance, pending transfer and release or hospitalization pursuant to the Act. The Administrator shall also make suitable arrangements with appropriate divisions of the Public Health Service, with Saint Elizabeths Hospital in the District of Columbia, with Federal hospitals outside of the Department, or with other public or private hospitals to provide the eligible person with care and treatment in a hospital. The Administrator shall maintain a roster setting forth the name and address of each eligible person currently receiving care and treatment, or assistance, pursuant to the Act. 211.3 Certificates. The following certificates are necessary to establish that an individual is an eligible person: (a) Certificates as to nationality. A certificate issued by an authorized official of the Department of State, stating that the individual is a national of the United States. (b) Certificate as to mental condition. Either (1) a certificate obtained or transmitted by an authorized official of the Department of State that the individual has been legally adjudged insane in a named foreign country; or (2) a certificate of an appropriate authority or person stating that at the time of such certification the individual was in a named foreign country and was in need of care and treatment in a mental hospital. A statement shall, if possible, be incorporated into or attached to the certificate furnished under this paragraph setting forth all available medical and other pertinent information concerning the individual. (c) Appropriate authority or person. For the purpose of paragraph (b)(2) of this section a medical officer of the Public Health Service or of another agency of the United States, or a medical practitioner legally authorized to provide care or treatment of mentally ill persons in the foreign country, is an ``appropriate authority or person,'' and shall be so identified in his execution of the certificate. If such a medical officer or practitioner is unavailable, an authorized official of the Department of State may serve as an ``appropriate authority or person,'' and shall, in the execution of the certificate, identity himself as serving as such person due to the unavailability of a suitable medical officer or practitioner. 211.4 Notification to legal guardian, spouse, next of kin, or interested persons. (a) Whenever an eligible person arrives in the United States from a foreign country, or when such person is transferred from one State to another, the Administrator shall, upon such arrival or transfer (or in advance thereof, if possible), provide for notification of his legal guardian, or in the absence of such a guardian, of his spouse or next of kin, or in the absence of any of these, of one or more interested persons, if known. (b) Whenever an eligible person is admitted to a hospital pursuant to the Act, the Administrator shall provide for immediate notification of his legal guardian, spouse, or next of kin, if known. 211.5 Action under State law; appointment of guardian. Whenever an eligible person is incapable of giving his consent to care and treatment in a hospital, either because of his mental condition or because he is a minor, the agency will take appropriate action under State law, including, if necessary, procuring the appointment of a legal guardian, to ensure the proper planning for and provision of such care and treatment. 211.6 Reception; temporary care, treatment, and assistance. (a) Reception. The agency will meet the eligible person at the port of entry or debarkation, will arrange for appropriate medical examination, and will plan with him, in cooperation with his legal guardian, or, in the absence of such a guardian, with other interested persons, if any, for needed temporary care and treatment. (b) Temporary care, treatment, and assistance. The agency will provide for temporary care, treatment, and assistance, as reasonably required for the health and welfare of the eligible person. Such care, treatment, and assistance may be provided in the form of hospitalization and other medical and remedial care (including services of necessary attendants), food and lodging, money, payments, transportation, or other goods and services. The agency will utilize the Public Health Service General Hospital nearest to the port of entry or debarkation or any other suitable public or private hospital, in providing hospitalization and medical care, including diagnostic service as needed, pending other appropriate arrangements for serving the eligible person. 211.7 Transfer and release of eligible person. (a) Transfer and release to relative. If at the time of arrival from a foreign country or any time during temporary or continuing care and treatment the Administrator finds that the best interests of the eligible person will be served thereby, and a relative, having been fully informed of his condition, agrees in writing to assume responsibility for his care and treatment, the Administrator shall transfer and release him to such relative. In determining whether his best interest will be served by such transfer and release, due weight shall be given to the relationship of the individuals involved, the financial ability of the relative to provide for such person, and the accessibility to necessary medical facilities. (b) Transfer and release to appropriate State authorities, or agency of the United States. If appropriate arrangements cannot be accomplished under paragraph (a) of this section, and if no other agency of the United States is responsible for the care and treatment of the eligible person, the Administrator shall endeavor to arrange with the appropriate State mental health authorities of the eligible person's State of residence or legal domicile, if any, for the assumption of responsibility for the care and treatment of the eligible person by such authorities and shall, upon the making of such arrangements in writing, transfer and release him to such authorities. If any other agency of the United States is responsible for the care and treatment of the eligible person, the Administrator shall make arrangements for his transfer and release to that agency. 211.8 Continuing hospitalization. (a) Authorization and arrangements. In the event that appropriate arrangements for an eligible person in need of continuing care and treatment in a hospital cannot be accomplished under 211.7, or until such arrangements can be made, care and treatment shall be provided by the Administrator in Saint Elizabeths Hospital in the District of Columbia, in an appropriate Public Health Service Hospital, or in such other suitable public or private hospital as the Administrator determines is in the best interests of such person. (b) Transfer to other hospital. At any time during continuing hospitalization, when the Administrator deems it to be in the interest of the eligible person or of the hospital affected, the Administrator shall authorize the transfer of such person from one hospital to another and, where necessary to that end, the Administrator shall authorize the initiation of judicial proceedings for the purpose of obtaining a commitment of such person to the Secretary. (c) Place of hospitalization. In determining the placement or transfer of an eligible person for purposes of hospitalization, due weight shall be given to such factors as the location of the eligible person's legal guardian or family, the character of his illness and the probable duration thereof, and the facilities of the hospital to provide care and treatment for the particular health needs of such person. 211.9 Examination and reexamination. Following admission of an eligible person to a hospital for temporary or continuing care and treatment, he shall be examined by qualified members of the medical staff as soon as practicable, but not later than the fifth day after his admission. Each such person shall be reexamined at least once within each six month period beginning with the month following the month in which he was first examined. 211.10 Termination of hospitalization. (a) Discharge or conditional release. If, following an examination, the head of the hospital finds that the eligible person hospitalized for mental illness (whether or not pursuant to a judicial commitment) is not in need of such hospitalization, he shall be discharged. In the case where hospitalization was pursuant to a judicial commitment, the head of the hospital may, in accordance with laws governing hospitalization for mental illness as may be in force and generally applicable in the State in which the hospital is located, conditionally release him if he finds that this is in his best interests. (b) Notification to committing court. In the case of any person hospitalized under 211.8 who has been judicially committed to the custody of the Secretary, the Secretary will notify the committing court in writing of the discharge or conditional release of such person under this section or of his transfer and release under 211.7. 211.11 Request for release from hospitalization. If an eligible person who is hospitalized pursuant to the Act, or his legal guardian, spouse, or adult next of kin, requests his release, such request shall be granted by the Administrator if his best interests will be served thereby, or by the head of the hospital if he is found not to be in need of hospitalization by reason of mental illness. The right of the administrator or the head of the hospital, to refuse such request and to detain him for care and treatment shall be determined in accordance with laws governing the detention, for care and treatment, of persons alleged to be mentally ill as may be in force and applicable generally in the State in which such hospital is located, but in no event shall the patient be detained more than forty-eight hours (excluding any period of time falling on a Sunday or a legal holiday observed by the courts of the State in which such hospital is located) after the receipt of such request unless within such time (a) judicial proceedings for such hospitalization are commenced or (b) a judicial extension of such time is obtained, for a period of not more than five days, for the commencement of such proceedings. 211.12 Federal payments. The arrangements made by the Administrator with an agency or hospital for carrying out the purposes of the Act shall provide for payments to such agency or hospital, either in advance or by way of reimbursement, of the costs of reception, temporary care, treatment, and assistance, continuing care and treatment, and transportation, pursuant to the Act, and payments for other expenditures necessarily and reasonably related to providing the same. Such arrangements shall include the methods and procedures for determining the amounts of the advances or reimbursements, and for remittance and adjustment thereof. 211.13 Financial responsibility of the eligible person; collections, compromise, or waiver of payment. (a) For temporary care and treatment. If an eligible person receiving temporary care, treatment, and assistance, pursuant to the Act, has financial resources available to pay all or part of the costs of such care, the Administrator shall require him to pay for such costs, either in advance or by way of reimbursement, unless in his judgment it would be inequitable or impracticable to require such payment. (b) For continuing care and treatment. Any eligible person receiving continuing care and treatment in a hospital, or his estate, shall be liable to pay or contribute toward the payment of the costs or charges therefor, to the same extent as such person would, if a resident of the District of Columbia, be liable to pay, under the laws of the District of Columbia, for his care and maintenance in a hospital for the mentally ill in that jurisdiction. (c) Collections, compromise, or waiver of payment. The Administrator may, in his discretion, where in his judgment substantial justice will be best served thereby or the probable recovery will not warrant the expense of collection, compromise, or waive the whole or any portion of, any claim for continuing care and treatment, and assistance, and in the process of arriving at such decision, the Administrator may make or cause to be made such investigations as may be necessary to determine the ability of the patient to pay or contribute toward the cost of his continuing care and treatment in a hospital. 211.14 Disclosure of information. (a) No disclosure of any information of a personal and private nature with respect to an individual obtained at any time by any person, organization, or institution in the course of discharging the duties of the Secretary under the Act shall be made except insofar: (1) As the individual or his legal guardian, if any (or, if he is a minor, his parent or legal guardian), shall consent; (2) As disclosure may be necessary to carry out any functions of the Secretary under the Act; (3) As disclosure may be directed by the order of a court of competent jurisdiction; (4) As disclosure may be necessary to carry out any functions of any agency of the United States which are related to the return of the individual from a foreign country, or his entry into the United States; or (5) As expressly authorized by the Administrator. (b) An agreement made with an agency or hospital for care, treatment, and assistance pursuant to the Act shall provide that no disclosure will be made of any information of a personal and private nature received by such agency or hospital in the course of discharging the duties under such agreement except as is provided therein, or is otherwise specifically authorized by the Administrator. (c) Nothing in this section shall preclude disclosure, upon proper inquiry, of information as to the presence of an eligible person in a hospital, or as to his general condition and progress. 211.15 Nondiscrimination. (a) No eligible person shall, on the ground of race, color, or national origin, be excluded from participation, be denied any benefits, or otherwise be subjected to discrimination of any nature or form in the provision of any benefits, under the Act. (b) The prohibition in paragraph (a) of this section precludes discrimination either in the selection of individuals to receive the benefits, in the scope of benefits, or in the manner of providing them. It extends to all facilities and services provided by the Administrator or an agency to an individual, and to the arrangements and the procedures under this part relating thereto, in connection with reception, temporary care, treatment, and assistance, and continuing hospitalization under the Act. PART 212 -- ASSISTANCE FOR UNITED STATES CITIZENS RETURNED FROM FOREIGN COUNTRIES Sec. 212.1 General definitions. 212.2 General. 212.3 Eligible person. 212.4 Reception; initial determination, provisions of temporary assistance. 212.5 Periodic review and redetermination; termination of temporary assistance. 212.6 Duty to report. 212.7 Repayment to the United States. 212.8 Federal payments. 212.9 Disclosure of information. 212.10 Nondiscrimination. Authority: Sec. 302, 75 Stat. 142, sec. 1102, 49 Stat. 647; 42 U.S.C. 1313, 1302. Source: 39 FR 26548, July 19, 1974, unless otherwise noted. Editorial Note: Nomenclature changes to this part appear at 53 FR 36580, Sept. 21, 1988. 212.1 General definitions. When used in this part: (a) Act means section 1113 of the Social Security Act, as amended; (b) The term Secretary means the Secretary of Health and Human Services; (c) The term Department means the Department of Health and Human Services; (d) The term Administration means the Family Support Administration, Department of Health and Human Services; (e) The term Administrator means the Administrator, Family Support Administration; (f) The term eligible person means an individual with respect to whom the conditions in 212.3 are met; (g) The term State includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, and Guam; (h) The term United States when used in a geographical sense means the States; (i) The term agency means State or local public agency or organization or national or local private agency or organization with which the Administrator has entered into agreement for the provision of temporary assistance pursuant to the Act; (j) The term temporary assistance means money payments, medical care, temporary billeting, transportation, and other goods and services necessary for the health, or welfare of individuals, including guidance, counseling, and other welfare services. [39 FR 26548, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988] 212.2 General. The Administrator shall develop plans and make arrangements for provision of temporary assistance within the United States to any eligible person, after consultation with appropriate offices of the Department of State, the Department of Justice, and the Department of Defense. Temporary assistance shall be provided, to the extent feasible, in accordance with such plans, as modified from time to time by the Administrator. The Administrator shall enter into agreements with agencies whose services and facilities are to be utilized for the purpose of providing temporary assistance pursuant to the Act, specifying the conditions governing the provision of such assistance and the manner of payment of the cost of providing therefor. 212.3 Eligible person. In order to establish that an individual is an eligible person, it must be found that: (a) He is a citizen of the United States or a dependent of a citizen of the United States; (b) A written statement has been transmitted to the Service by an authorized official of the Department of State containing information which identifies him as having returned, or been brought, from a foreign country to the United States because of the destitution of the citizen of the United States, or the illness of such citizen or any of his dependents, or because of war, threat of war, invasion, or similar crisis. Such statement shall, if possible, incorporate or have attached thereto, all available pertinent information concerning the individual. In case of war, threat of war, invasion, or similar crisis, a determination by the Department of State that such a condition is the general cause for the return of citizens of the United States and their dependents from a particular foreign country, and evidence that an individual has returned, or, been brought, from such country to the United States shall be considered sufficient identification of the reason for his return to, or entry into the United States; and (c) He is without resources immediately accessible to meet his needs. 212.4 Reception; initial determination, provisions of temporary assistance. (a) The Administration, or the agency upon notification by the Administration, will meet individuals, identified as provided in 212.3(b), at the port of entry or debarkation. (b) The Administration or agency will make findings, setting forth the pertinent facts and conclusions, and an initial determination, according to standards established by the Administration, as to whether an individual is an eligible person. (c) The Administration or agency will provide temporary assistance within the United States to an eligible person, according to standards of need established by the Administration, upon arrival at the port of entry or debarkation, during transportation to his intermediate and ultimate destinations, and after arrival at such destinations. (d) Temporary assistance may be furnished only for 90 days from the day of arrival of the eligible person in the United States unless he is handicapped in attaining self-support or self-care for such reasons as age, disability, or lack of vocational preparation. In such cases temporary assistance may be extended upon prior authorization by the Administration for nine additional months. [39 FR 26548, July 19, 1974, as amended at 40 FR 43218, Sept. 19, 1975; 53 FR 36580, Sept. 21, 1988] 212.5 Periodic review and redetermination; termination of temporary assistance. (a) The Administration or agency will review the situation of each recipient of temporary assistance at frequent intervals to consider whether or not circumstances have changed that would require a different plan for him. (b) Upon a finding by the Administration or agency that a recipient of temporary assistance has sufficient resources available to meet his needs, temporary assistance shall be terminated. [39 FR 26548, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988] 212.6 Duty to report. The eligible person who receives temporary assistance, or the person who is caring for or otherwise acting on behalf of such eligible person, shall report promptly to the Administration or agency any event or circumstance which would cause such assistance to be changed in amount or terminated. [39 FR 26548, July 19, 1974, as amended at 53 FR 36580, Sept. 21, 1988] 212.7 Repayment to the United States. (a) An individual who has received temporary assistance shall be required to repay, in accordance with his ability, any or all of the cost of such assistance to the United States, except insofar as it is determined that: (1) The cost is not readily allocable to such individual; (2) The probable recovery would be uneconomical or otherwise impractical; (3) He does not have, and is not expected within a reasonable time to have, income and financial resources sufficient for more than ordinary needs; or (4) Recovery would be against equity and good conscience. (b) In determining an individual's resources, any claim which he has against any individual, trust or estate, partnership, corporation, or government shall be considered, and assignment to the United States of such claims shall be taken in appropriate cases. (c) A determination that an individual is not required to repay the cost of temporary assistance shall be final and binding, unless such determination was procured by fraud or misrepresentation of the individual or some other person, or the individual voluntarily offers to repay. (d) A determination that an individual is required to repay any or all of the cost of temporary assistance may be reconsidered at any time prior to repayment of the required amount. A further determination shall be made with respect to his liability to repay the balance of such amount on the basis of new evidence as to whether (1) he has, or is expected within a reasonable time to have, income and financial resources sufficient for more than ordinary needs, or (2) recovery would be against equity and good conscience. 212.8 Federal payments. The agreement made by the Administrator with an agency for carrying out the purposes of the Act shall provide for payment to such agency, either in advance or by way of reimbursement, of the cost of temporary assistance provided pursuant to the Act, and payment of the cost of other expenditures necessarily and reasonably related to providing the same. Such agreement shall include the cost of other expenditures necessarily and reasonably related to providing the same. Such agreement shall include the method for determining such costs, as well as the methods and procedures for determining the amounts of advances or reimbursement and for remittance and adjustment thereof. 212.9 Disclosure of information. (a) No disclosures of any information of a personal and private nature with respect to an individual obtained at any time by any person, organization, or institution in the course of discharging the duties of the Secretary under the Act shall be made except insofar: (1) As the individual or his legal guardian, if any (or, if he is a minor, his parent or legal guardian), shall consent; (2) As disclosure may be necessary to carry out any functions of the Secretary under the Act; (3) As disclosure may be necessary to carry out any functions of any agency of the United States which are related to the return of the individual from a foreign country, or his entry into the United States; or (4) As expressly authorized by the Administrator. (b) An agreement made with an agency for the provision of temporary assistance pursuant to the Act shall provide that no disclosure will be made of any information of a personal and private nature received by such agency in the course of discharging the duties under such agreement except as is provided therein, or is otherwise specifically authorized by the Administrator. 212.10 Nondiscrimination. (a) No eligible person shall, on the ground of race, color, or national origin be excluded from participation, be denied any benefits, or otherwise be subjected to discrimination of any nature or form in the provision of any benefits under the Act. (b) The prohibition in paragraph (a) of this section precludes discrimination either in the selection of individuals to receive the benefits, in the scope of benefits, or in the manner of providing them. It extends to all facilities and services provided by the Service or an agency to an individual, and to the arrangements and the procedures under this part relating thereto, in connection with reception and temporary assistance under the Act. PART 213 -- PRACTICE AND PROCEDURE FOR HEARINGS TO STATES ON CONFORMITY OF PUBLIC ASSISTANCE PLANS TO FEDERAL REQUIREMENTS Subpart A -- General Sec. 213.1 Scope of rules. 213.2 Records to be public. 213.3 Use of gender and number. 213.4 Suspension of rules. 213.5 Filing and service of papers. Subpart B -- Preliminary Matters -- Notice and Parties 213.11 Notice of hearing or opportunity for hearing. 213.12 Time of hearing. 213.13 Place. 213.14 Issues at hearing. 213.15 Request to participate in hearing. Subpart C -- Hearing Procedures 213.21 Who presides. 213.22 Authority of presiding officer. 213.23 Rights of parties. 213.23a Discovery. 213.24 Evidentiary purpose. 213.25 Evidence. 213.26 Exclusion from hearing for misconduct. 213.27 Unsponsored written material. 213.28 Official transcript. 213.29 Record for decision. Subpart D -- Posthearing Procedures, Decisions 213.31 Posthearing briefs. 213.32 Decisions following hearing. 213.33 Effective date of Administrator's decision. Authority: Sec. 1102, 49 Stat. 647; 42 U.S.C. 1302. Source: 36 FR 1454, Jan. 29, 1971, unless otherwise noted. Subpart A -- General 213.1 Scope of rules. (a) The rules of procedure in this part govern the practice for hearings afforded by the Department to States pursuant to 201.4 or 201.6 (a) or (b) of this chapter, and the practice relating to decisions upon such hearings. These rules may also be applied to hearings afforded by the Department to States in other Federal-State programs for which Federal administrative responsibility has been delegated to the Service. (b) Nothing in this part is intended to preclude or limit negotiations between the Department and the State, whether before, during, or after the hearing to resolve the issues which are, or otherwise would be, considered at the hearing. Such negotiations and resolution of issues are not part of the hearing, and are not governed by the rules in this part, except as expressly provided herein. 213.2 Records to be public. All pleadings, correspondence, exhibits, transcripts of testimony, exceptions, briefs, decisions, and other documents filed in the docket in any proceeding may be inspected and copied in the office of the FSA Hearing Clerk. Inquiries may be made at the Central Information Center, Department of Health and Human Services, 330 Independence Avenue SW., Washington, DC 20201. [36 FR 1454, Jan. 29, 1971, as amended at 53 FR 36580, Sept. 21, 1988] 213.3 Use of gender and number. As used in this part, words importing the singular number may extend and be applied to several persons or things, and vice versa. Words importing the masculine gender may be applied to females or organizations. 213.4 Suspension of rules. Upon notice to all parties, the Administrator or the presiding officer, with respect to matters pending before him and within his jurisdiction, may modify or waive any rule in this part upon determination that no party will be unduly prejudiced and the ends of justice will thereby be served. 213.5 Filing and service of papers. (a) All papers in the proceedings shall be filed with the FSA Hearing Clerk, in an original and two copies. Originals only of exhibits and transcripts of testimony need be filed. (b) All papers in the proceedings shall be served on all parties by personal delivery or by mail. Service on the party's designated attorney will be deemed service upon the party. [36 FR 1454, Jan. 29, 1971, as amended at 53 FR 36580, Sept. 21, 1988] Subpart B -- Preliminary Matters -- Notice and Parties 213.11 Notice of hearing or opportunity for hearing. Proceedings are commenced by mailing a notice of hearing or opportunity for hearing from the Administrator to the State. The notice shall state the time and place for the hearing, and the issues which will be considered, and shall be published in the Federal Register. 213.12 Time of hearing. The hearing shall be scheduled not less than 30 days nor more than 60 days after the date notice of the hearing is furnished to the State. 213.13 Place. The hearing shall be held in the city in which the regional office of the Department is located or in such other place as is fixed by the Administrator in light of the circumstances of the case, with due regard for the convenience and necessity of the parties or their representatives. 213.14 Issues at hearing. (a) The Administrator may, prior to a hearing under 201.6 (a) or (b) of this chapter, notify the State in writing of additional issues which will be considered at the hearing, and such notice shall be published in the Federal Register. If such notice is furnished to the State less than 20 days before the date of the hearing, the State or any other party, at its request, shall be granted a postponement of the hearing to a date 20 days after such notice was furnished, or such later date as may be agreed to by the Administrator. (b) If, as a result of negotiations between the Department and the State, the submittal of a plan amendment, a change in the State program, or other actions by the State, any issue is resolved in whole or in part, but new or modified issues are presented, as specified by the Administrator, the hearing shall proceed on such new or modified issues. (c)(1) If at any time, whether prior to, during, or after the hearing, the Administrator finds that the State has come into compliance with Federal requirements on any issue, in whole or in part, he shall remove such issue from the proceedings in whole or in part, as may be appropriate. If all issues are removed, he shall terminate the hearing. (2) Prior to the removal of any issue from the hearing, in whole or in part, the Administrator shall provide all parties other than the Department and the State (see 213.15(b)) with the statement of his intention, and the reasons therefor, and a copy of the proposed State plan provision on which the State and he have settled, and the parties shall have opportunity to submit in writing within 15 days, for the Administrator's consideration and for the record, their views as to, or any information bearing upon, the merits of the proposed plan provision and the merits of the Administrator's reasons for removing the issue from the hearing. (d) The issues considered at the hearing shall be limited to those issues of which the State is notified as provided in 213.11 and paragraph (a) of this section, and new or modified issues described in paragraph (b) of this section, and shall not include issues or parts of issues removed from the proceedings pursuant to paragraph (c) of this section. 213.15 Request to participate in hearing. (a) The Department and the State are parties to the hearing without making a specific request to participate. (b)(1) Other individuals or groups may be recognized as parties, if the issues to be considered at the hearing have caused them injury and their interest is within the zone of interests to be protected by the governing Federal statute. (2) Any individual or group wishing to participate as a party shall file a petition with the FSA Hearing Clerk within 15 days after notice of the hearing has been published in the Federal Register, and shall serve a copy on each party of record at that time, in accordance with 213.5(b). Such petition shall concisely state (i) petitioner's interest in the proceeding, (ii) who will appear for petitioner, (iii) the issues on which petitioner wishes to participate, and (iv) whether petitioner intends to present witnesses. (3) Any party may, within 5 days of receipt of such petition, file comments thereon. (4) The presiding officer shall promptly determine whether each petitioner has the requisite interest in the proceedings and shall permit or deny participation accordingly. Where petitions to participate as parties are made by individuals or groups with common interests, the presiding officer may request all such petitioners to designate a single representative, or he may recognize one or more of such petitioners to represent all such petitioners. The presiding officer shall give each petitioner written notice of the decision on his petition, and if the petition is denied, he shall briefly state the grounds for denial. (c)(1) Any interested person or organization wishing to participate as amicus curiae shall file a petition with the FSA Hearing Clerk before the commencement of the hearing. Such petition shall concisely state (i) the petitioner's interest in the hearing, (ii) who will represent the petitioner, and (iii) the issues on which petitioner intends to present argument. The presiding officer may grant the petition if he finds that the petitioner has a legitimate interest in the proceedings, that such participation will not unduly delay the outcome and may contribute materially to the proper disposition of the issues. An amicus curiae is not a party but may participate as provided in this paragraph. (2) An amicus curiae may present a brief oral statement at the hearing, at the point in the proceedings specified by the presiding officer. He may submit a written statement of position to the presiding officer prior to the beginning of a hearing, and shall serve a copy on each party. He may also submit a brief or written statement at such time as the parties submit briefs, and shall serve a copy on each party. [36 FR 1454, Jan. 29, 1971, as amended at 53 FR 36580, Sept. 21, 1988] Subpart C -- Hearing Procedures 213.21 Who presides. (a) The presiding officer at a hearing shall be the Administrator or his designee. (b) The designation of the presiding officer shall be in writing. A copy of the designation shall be served on all parties. [39 FR 40850, Nov. 21, 1974] 213.22 Authority of presiding officer. (a) The presiding officer shall have the duty to conduct a fair hearing, to avoid delay, maintain order, and make a record of the proceedings. He shall have all powers necessary to accomplish these ends, including, but not limited to, the power to: (1) Change the date, time, and place of the hearing, upon due notice to the parties. This includes the power to continue the hearing in whole or in part. In hearings pursuant to section 1116(a)(2) of the Social Security Act (see 201.4 of this chapter), changes of time are subject to the requirements of the statute. (2) Hold conferences to settle or simplify the issues in a proceeding, or to consider other matters that may aid in the expeditious disposition of the proceeding. (3) Regulate participation of parties and amici curiae and require parties and amici curiae to state their position with respect to the various issues in the proceeding. (4) Administer oaths and affirmations. (5) Rule on motions and other procedural items on matters pending before him including issuance of protective orders or other relief to a party against whom discovery is sought. (6) Regulate the course of the hearing and conduct of counsel therein. (7) Examine witnesses. (8) Receive, rule on, exclude or limit evidence or discovery. (9) Fix the time for filing motions, petitions, briefs, or other items in matters pending before him. (10) If the presiding officer is the Administrator, make a final decision. (11) If the presiding officer is a hearing examiner, certify the entire record including his recommended findings and proposed decision to the Administrator. (12) Take any action authorized by the rules in this part or in conformance with the provisions of 5 U.S.C. 551 through 559. (b) The presiding officer does not have authority to compel by subpoena the production of witnesses, papers, or other evidence. (c) If the presiding officer is a hearing examiner, his authority pertains to the issues of compliance by a State with Federal requirements which are to be considered at the hearing, and does not extend to the question of whether, in case of any noncompliance, Federal payments will not be made in respect to the entire State plan or will be limited to categories under or parts of the State plan affected by such noncompliance. [40 FR 50272, Oct. 29, 1975] 213.23 Rights of parties. All parties may: (a) Appear by counsel or other authorized representative, in all hearing proceedings. (b) Participate in any prehearing conference held by the presiding officer. (c) Agree to stipulations as to facts which will be made a part of the record. (d) Make opening statements at the hearing. (e) Present relevant evidence on the issues at the hearing. (f) Present witnesses who then must be available for cross-examination by all other parties. (g) Present oral arguments at the hearing. (h) Submit written briefs, proposed findings of fact, and proposed conclusions of law, after the hearing. 213.23a Discovery. The Department and any party named in the notice issued pursuant to 213.11 shall have the right to conduct discovery (including depositions) against opposing parties. Rules 26 - 37 of the Federal Rules of Civil Procedures shall apply to such proceedings; there will be no fixed rule on priority of discovery. Upon written motion, the Presiding Officer shall promptly rule upon any objection to such discovery action initiated pursuant to this section. The Presiding Officer shall also have the power to grant a protective order or relief to any party against whom discovery is sought and to restrict or control discovery so as to prevent undue delay in the conduct of the hearing. Upon the failure of any party to make discovery, the Presiding Officer may, in his discretion, issue any order and impose any sanction (other than contempt orders) authorized by Rule 37 of the Federal Rules of Civil Procedure. [40 FR 50272, Oct. 29, 1975] 213.24 Evidentiary purpose. The hearing is directed to receiving factual evidence and expert opinion testimony related to the issues in the proceeding. Argument will not be received in evidence; rather it should be presented in statements, memoranda, or briefs, as determined by the presiding officer. Brief opening statements, which shall be limited to statement of the party's position and what he intends to prove, may be made at hearings. 213.25 Evidence. (a) Testimony. Testimony shall be given orally under oath or affirmation by witnesses at the hearing. Witnesses shall be available at the hearing for cross-examination by all parties. (b) Stipulations and exhibits. Two or more parties may agree to stipulations of fact. Such stipulations, or any exhibit proposed by any party, shall be exchanged at the prehearing conference or otherwise prior to the hearing if the presiding officer so requires. (c) Rules of evidence. Technical rules of evidence shall not apply to hearings conducted pursuant to this part, but rules or principles designed to assure production of the most credible evidence available and to subject testimony to test by cross-examination shall be applied where reasonably necessary by the presiding officer. A witness may be cross-examined on any matter material to the proceeding without regard to the scope of his direct examination. The presiding officer may exclude irrelevant, immaterial, or unduly repetitious evidence. All documents and other evidence offered or taken for the record shall be open to examination by the parties and opportunity shall be given to refute facts and arguments advanced on either side of the issues. 213.26 Exclusion from hearing for misconduct. Disrespectful, disorderly, or contumacious language or contemptuous conduct, refusal to comply with directions, or continued use of dilatory tactics by any person at the hearing before a presiding officer shall constitute grounds for immediate exclusion of such person from the hearing by the presiding officer. 213.27 Unsponsored written material. Letters expressing views or urging action and other unsponsored written material regarding matters in issue in a hearing will be placed in the correspondence section of the docket of the proceeding. These data are not deemed part of the evidence or record in the hearing. 213.28 Official transcript. The Department will designate the official reporter for all hearings. The official transcripts of testimony taken, together with any stipulations, exhibits, briefs, or memoranda of law filed therewith shall be filed with the Department. Transcripts of testimony in hearings may be obtained from the official reporter by the parties and the public at rates not to exceed the maximum rates fixed by the contract between the Department and the reporter. Upon notice to all parties, the presiding officer may authorize corrections to the transcript which involve matters of substance. 213.29 Record for decision. The transcript of testimony, exhibits, and all papers and requests filed in the proceedings, except the correspondence section of the docket, including rulings and any recommended or initial decision shall constitute the exclusive record for decision. Subpart D -- Posthearing Procedures, Decisions 213.31 Posthearing briefs. The presiding officer shall fix the time for filing posthearings briefs, which may contain proposed findings of fact and conclusions of law, and, if permitted, reply briefs. 213.32 Decisions following hearing. (a) If the Administrator is the presiding officer, he shall, when the time for submission of posthearing briefs has expired, issue his decision within 60 days. (b)(1) If a hearing examiner is the presiding officer, he shall, when the time for submission of posthearing briefs has expired, certify the entire record, including his recommended findings and proposed decision, to the Administrator. The Administrator shall serve a copy of the recommended findings and proposed decision upon all parties, and amici, if any. (2) Any party may, within 20 days, file with the Administrator exceptions to the recommended findings and proposed decision and a supporting brief or statement. (3) The Administrator shall thereupon review the recommended decision and, within 60 days of its issuance, issue his own decision. (c) If the Administrator concludes that a State plan does not comply with Federal requirements, he shall also, in the case of a hearing pursuant to 201.6(a) of this chapter, specify whether further payments will not be made to the State or whether, in the exercise of his discretion, payments will be limited to categories under or parts of the State plan not affected by such noncompliance. The Administrator may ask the parties for recommendations or briefs or may hold conferences of the parties on this question. (d) The decision of the Administrator under this section shall be the final decision of the Secretary and shall constitute ``final agency action'' within the meaning of 5 U.S.C. 704 and a ``final determination'' within the meaning of section 1116(a)(3) of the Act and 201.7 of this chapter. The Administrator's decision shall be promptly served on all parties, and amici, if any. [36 FR 1454, Jan. 29, 1971, as amended at 36 FR 21520, Nov. 10, 1971] 213.33 Effective date of Administrator's decision. If, in the case of a hearing pursuant to 201.6(a) of this chapter, the Administrator concludes that a State plan does not comply with Federal requirements, his decision that further payments will not be made to the State, or payments will be limited to categories under or parts of the State plan not affected, shall specify the effective date for the withholding of Federal funds. The effective date shall not be earlier than the date of the Administrator's decision and shall not be later than the first day of the next calendar quarter. The provisions of this section may not be waived pursuant to 213.4. PART 224 -- WORK INCENTIVE PROGRAMS FOR AFDC RECIPIENTS UNDER TITLE IV OF THE SOCIAL SECURITY ACT Subpart A -- Purpose and Scope and Definitions Sec. 224.0 Purpose and scope. 224.1 Definitions. Subpart B -- Administration 224.10 General administration provisions. 224.11 Annual State WIN plans. 224.12 [Reserved] 224.13 State and local agreements for WIN activities and programs. 224.14 Allocation of Federal funds. 224.15 Use of Federal funds; political activities. 224.16 Non-Federal contribution. 224.17 Reports, records, financial statements and audits. 224.18 Adjustments in payments to WIN sponsors. 224.19 Termination of contracts or grants. Subpart C -- Requirements and Procedures for Registration, Appraisal and Certification 224.20 Registration requirements for AFDC applicants and recipients; State plan requirements. 224.21 Registration procedures. 224.22 Appraisal and certification. Subpart D -- Supportive and Manpower Services and Protective Provisions 224.30 Supportive services; State plan requirements. 224.31 [Reserved] 224.32 Pay and allowances for WIN registrants. 224.33 Relocation assistance. 224.34 Appropriate work and training criteria. 224.35 Period of participation. 224.36 Nondiscrimination. Subpart E -- The WIN Components and Activities 224.40 Public service employment (PSE). 224.41 Intensive manpower services component. 224.42 On-the-job training (OJT). 224.43 Institutional and other work experience training. 224.44 WIN individuals suspended to other employment or training programs. 224.45 Non-Federal employee status. Subpart F -- Deregistration and Sanctions 224.50 Deregistration. 224.51 Sanctions. Subpart G -- The WIN Adjudication System 224.60 Disputes regarding WIN registrations. 224.61 Rules and procedures. 224.62 Complaints and grievances. 224.63 Requirement of conciliation and notice. 224.64 Request for hearing. 224.65 Issues subject to a hearing. 224.66 Hearing procedures. 224.67 Conduct of WIN hearings. 224.68 Decisions of the hearing officer. 224.69 Appeals from hearing officer's decision. 224.70 National review panel (NRP). 224.71 Appeals to the NRP. 224.72 Request from NRP to accept certification. 224.73 Requests by NRP for certification. 224.74 Certification of the record. 224.75 Consideration by and decisions of the NRP. 224.76 [Reserved] 224.77 Subsequent WIN registration by deregistered individuals. Authority: Secs. 402(a)(19), 430 - 444 and 1102, Social Security Act (42 U.S.C. 602(a)(19), 630 - 644, and 1302); secs. 202 and 204, Pub. L. 100 - 485, 102 Stat. 2377, 2381. Source: 41 FR 47688, Oct. 29, 1976, unless otherwise noted. Subpart A -- Purpose and Scope and Definitions 224.0 Purpose and scope. (a) The purpose of this Part 224 is to provide for a Work Incentive Program (WIN) under Title IV of the Social Security Act (Act). (b) This part contains the policies, rules, and regulations pertaining to the WIN program. (c) The provisions of this part do not apply to any State IV - A agency which has an approved JOBS plan under 250.20. A list of State IV - A agencies with approved JOBS plans is available from the Family Support Administration, Office of Family Assistance, 370 L'Enfant Promenade, SW., Washington, DC 20447. For all State IV - A agencies the provisions of this Part are repealed as of October 1, 1990. [41 FR 47688, Oct. 29, 1976, as amended at 54 FR 42243, Oct. 13, 1989] 224.1 Definitions. Act means the Social Security Act. AFDC (Aid to Families with Dependent Children) means the program authorized by Title IV - A of the Act to provide financial assistance and social services to needy families with dependent children. AFDC Applicant means a person who applies to the State or local welfare agency for AFDC. Appraisal means the interview of a WIN registrant by WIN sponsor staff and Separate Administrative Unit (SAU) staff to determine employability potential, to determine the need for supportive services, and to develop an employability plan. Certification means a written notice from the SAU that necessary supportive services have been arranged or are available to enable a WIN registrant to accept employment, training, manpower services, or other employment related activities, or that no supportive services are needed and that the individual is at that time ready for employment or training. Complaints (See grievances). Component means a structured regularly scheduled program activity for certified registrants such as OJT, WIN, PSE, institutional training, and work experience, but not employment-related activities or supportive services. Deregistration means the removal of an individual from the WIN program. DHHS means the U.S. Department of Health and Human Services. DOL means the U.S. Department of Labor. Employability Plan means a written plan for a WIN registrant that sets forth that individual's occupational goal and the manpower and supportive services necessary for him to reach that goal. Employment-related Activities means activities providing employment and training services to WIN registrants to assist them in locating and securing unsubsidized employment. Employment-related activities include employment search. Employment search is the part of employment-related activities where registrants are provided with job seeking skills, job development assistance and referrals, and actively contact employers in their effort to secure jobs. Exempt refers to an AFDC applicant or recipient who is not required by the Act to register for employment, training, or other employment-related activities under the WIN program as a condition of eligibility for AFDC. Grievance means an adjudicable issue initiated by a WIN registrant which does not involve the threat of sanction. Grievances may include, but are not limited to disputes over assignments where the registrant is not refusing the assignment, alleged discrimination, and complaints about eligibility for, or amounts of, WIN allowances. Hearing Officer means the hearing officer designated in the State WIN plan to hear and decide or make recommendations on issues involving WIN. Income Maintenance Unit (IMU) means the unit of the State or local welfare agency which determines individuals' eligibility for AFDC. Institutional training means vocational or other classroom training conducted by an instructor in a nonworksite setting. Local WIN Plan means the plan developed annually by local WIN sponsor and SAU staffs which describes the operation of the WIN program for a specific local area. Mandatory or nonexempt registrant means an AFDC applicant or recipient who is required by the Act to register for manpower services training, employment, or other employment-related activities as a condition of eligibility for AFDC. Manpower services means employment related and training services provided by the WIN sponsor, designed to improve the work skills of an individual and aid him to find employment. NCC means the National Coordination Committee, a committee established to administer the WIN program, consisting of the Assistant Secretary for Employment and Training (DOL) and the Administrator of the Social and Rehabilitation Service (DHHS). NRP means the National Review Panel, the final level of administrative review which is comprised of the DOL Chief Administrative Law Judge and other Administrative Law Judges appointed pursuant to the Administrative Procedure Act's requirements and designated by the Chief Judge to serve as members of that panel. OJT means on-the-job training, an employment opportunity component in which a certified registrant is hired by a private or public employer and is provided training under contract with the employer. PSE means public service employment, a WIN sponsored component which provides subsidized employment with public or nonprofit private agencies for individuals who cannot be placed in regular unsubsidized employment. Recipient means an individual who has been determined to be eligible to receive AFDC. RA means the Regional Administrator, Employment and Training Administration (DOL). RC means the Regional Commissioner of the Social and Rehabilitation Service (DHHS). RCC means the Regional Coordination Committee established in each region consisting of the ARDM and the RC. Registrant means an AFDC applicant or recipient who has registered with the WIN sponsor for manpower services, training, employment, and other employment-related activities. Registration means the process whereby an AFDC applicant or recipient completes all necessary registration requirements. SAU means the Separate Administrative Unit, that unit of the State welfare agency established pursuant to section 402(a)(19)(G) of the Act, to administer the WIN program for that agency. State welfare agency means the welfare agency designated pursuant to 45 CFR 205.100 with authority to administer or supervise the administration of the State plan approved under title IV - A of the Act. State means any of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, and Guam. State plan means the State plan for AFDC approved under title IV, A of the Act. State WIN Plan means the Statewide operational plan for WIN, covering AFDC applicants and recipients who register for employment, other employment-related activities, manpower services and training under WIN, developed by the WIN sponsor and SAU in each state and approved and supervised by the RCC under title IV, of the Act. Supportive services means those social services provided or arranged by the SAU, necessary to enable an individual to engage in employment, other employment-related activities, or training. Training related expenses means those expenses, reimbursable from WIN funds, that are incurred by individuals participating in WIN program components and activities. Volunteer means an AFDC applicant or recipient who, though exempt from WIN registration, volunteers for WIN and registers for employment, other employment-related activities, manpower services and training. Welfare hearing officer means the hearing officer designated by the welfare agency to hear and decide or make recommendations on issues relating to exemption or nonexemption for WIN registration. WIN incentive payment means a cash payment of up to $30 per month, paid to an individual who is participating in an institutional or work experience component. WIN sponsor means the State agency (such as the State employment service) or other public or nonprofit private agency which, through agreement with the RA, administers the WIN manpower program under Part C of title IV of the Act at the State or local level. Work experience training means a clearly defined, well-supervised assignment with a public or nonprofit private employer. [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 48652, Oct. 2, 1981] Subpart B -- Administration 224.10 General administration provisions. (a) The WIN program is administered jointly by the Secretary of Labor and the Secretary of Health and Human Services. To carry out Department of Labor responsibilities under these regulations, the Secretary of Labor has designated the Assistant Secretary Employment and Training (Assistant Secretary). To carry out Department of Health and Human Services responsibilities under these regulations, the Secretary of Health and Human Services has designated the Administrator of the Social and Rehabilitation Service (Administrator). (b) The Assistant Secretary and the Administrator together form the WIN National Coordination Committee (NCC) which is responsible for the effective national administration of WIN. (c) The NCC shall issue a WIN Handbook, establish uniform reporting procedures, establish and clarify policy under these regulations, and establish other requirements for effective administration. NCC issuances shall be binding on all regional, State, and local WIN operations. (d) The NCC shall designate a national Executive Director to administer the program. (e) The Assistant Secretary has designated the Assistant Regional Director, Employment and Training Administration in each region (RA) to carry out the WIN program in each region. The Administrator has designated the Regional Commissioner (RC) of the Social and Rehabilitation Service to carry out his responsibilities under these regulations in each region. (f) Within each region the RA and the RC shall form the WIN Regional Coordination Committee (RCC). The RCC shall review and approve all State WIN plans and modifications of such plans covering the States in its region. Consistent with directives of the NCC, it shall also establish and clarify policy under these regulations and shall establish other requirements for effective administration. (g) The RCC shall enter into an agreement with the State WIN sponsor and the State welfare agency under which they shall be responsible for the overall administration of the State WIN plan. (h) Within each state the welfare agency's Separate Administrative Unit (SAU) shall be responsible for the provision and arrangement of supportive services. The Income Maintenance Unit (IMU) of each State welfare agency is responsible for determining all questions relating to eligibility for AFDC benefits, including whether an individual is required to register for WIN. (The information collection requirements contained in paragraph (c) were approved by the Office of Management and Budget under control number 1205 - 0155. The information collection requirements contained in paragraphs (f) and (g) were approved under control number 1205 - 0214) [41 FR 47688, Oct. 29, 1976, as amended at 51 FR 9441, Mar. 19, 1986] 224.11 Annual State WIN plans. (a) State WIN plans on an annual basis shall be jointly developed and approved by the State WIN sponsor and State welfare agency. The NCC shall issue instructions setting guidelines to the State WIN sponsor and State welfare agency for the development of State plans. The plan shall indicate those areas in which the State WIN sponsor and welfare agency, after considering such factors as size of the welfare case load and budgetary constraints, propose to operate WIN projects. Each State WIN plan shall describe the operation to be carried out by the State WIN sponsor and the State welfare agency as well as a summary of the data in the local WIN plans, as required by paragraph (b) of this section. The State WIN plan shall also provide for the establishment of Labor Market Advisory Councils in accord with section 432(f) of the Act. (b) Each local WIN sponsor and each local SAU shall jointly develop an annual local WIN plan after consulting with other agencies as appropriate. Such plan shall describe the local project's operation. The NCC will issue instructions setting guidelines for the development of such plans. (c) Local WIN plans shall be forwarded to the State WIN sponsor and State SAU for consideration in the development of the State WIN plan. (d)(1) The State WIN sponsor and State welfare agency shall: (i) Submit the State WIN plan (with local WIN plans attached) to the appropriate RCC for action; (ii) -- (iii) [Reserved] (iv) Request the Governor and the Council to send any comments directly to the RCC, (with copies to the State WIN sponsor and the State welfare agency), within 45 days from the date that copies of the State WIN plan were mailed to them. (2) The RCC shall consider any such comments in reviewing the plan, and shall not take final action on the plan until the Governor's and Council's comments have been received, or until the 45 days referred to in paragraph (d)(1)(iv) of this section have elapsed, whichever is earlier. (Approved by the Office of Management and Budget under control number 1205 - 0214) [41 FR 47688, Oct. 29, 1976, as amended at 48 FR 29202, June 24, 1983; 51 FR 9441, Mar. 19, 1986] 224.12 [Reserved] 224.13 State and local agreements for WIN activities and programs. A WIN sponsor may, through agreements with public or private agencies or organizations, including Indian tribes with respect to Indians on a reservation, carry out such activities and programs as are approved or developed by the Secretary of Labor, including but not limited to public service employment programs, intensive manpower services programs, institutional programs, on-the-job training programs, and work experience programs. Work experience programs and public service employment agreements may be entered into only with public agencies and nonprofit private employers organized for a public purpose. 224.14 Allocations of Federal funds. (a) The Secretary of Labor shall allocate not less than 50 percent of the sums appropriated under Part C of title IV of the Act to carry out the WIN program among the States in accordance with a formula under which each State receives (from the total available for such allotment) an amount which bears the same ratio to the total amount available as the average number of individuals in each State who, during the month of January last preceding the commencement of such fiscal year, are registered pursuant to section 402(a)(19)(A) of the Act, bears to the average number of individuals in all States who, during that month, are so registered. (b) The Secretary of Labor shall allocate the balance of the sums not allocated under paragraph (a) of this section in such manner as he determines will best serve the objectives of the program. (c) Of the sums expended on WIN by the Department of Labor not less than 33\1/3\ percent thereof shall be expended for carrying out the programs of on-the-job training and public service employment which meet criteria specified in the WIN Handbook issued under 224.10. (d) The Secretary of Health and Human Services shall prescribe methods for the allocation of funds pursuant to section 403(d) of the Act for the 50 States and the District of Columbia. For Puerto Rico, Guam and the Virgin Islands, the Secretary of Health and Human Services shall allocate funds pursuant to section 1108 of the Act. 224.15 Use of Federal funds; political activities. (a) Federal funds under Part C of title IV of the Act, allocated by the Secretary of Labor to the State WIN sponsor, may be used to meet not more than 90 percent of the cost of carrying out the regulations promulgated under this part. (b) WIN funds under Part C of title IV of the Act may be used for training, supervision, materials, administration, incentive payments, transportation fees for medical examinations required for the determination of exempt status under 224.20 or incapacity for work assignment under 224.34(a)(2) and other items as authorized by the Secretary of Labor, but may not, except in cases of WIN/PSE under the Act, be used for any reimbursement to the employer for time spent by individuals in work. (c) WIN funds under section 403(d) of the Act may be used to meet 90 percent of the cost of supportive services, including child care, provided by or arranged for by the SAU, for AFDC recipients who are certified to WIN, and SAU administrative costs for all registrants. (d) Federal funds shall be expended only for costs: (1) Permitted under the provisions of Subpart 1 - 15.7 of Title 41 of the Code of Federal Regulations, entitled ``Principles for Determining Costs Applicable to Grants and Contracts''; and (2) Not barred under the provisions of this part. (e) Pursuant to section 403(c) of the Act, notwithstanding any other provision of this chapter, the Federal share of assistance payments under title IV - A of the Act for any fiscal year shall be reduced by 1 percentage point for each percentage point by which the number of individuals certified to the WIN sponsor as ready for employment or training under the WIN program falls below 15 percent of the average number of individuals in the State who are required to be registered during such fiscal year. (f) No funds allocated under the Act shall be used for any partisan or nonpartisan political activity or to further the election or defeat of any candidate for public office; nor shall they be used to provide services, or for the employment or assignment of personnel in a manner supporting or resulting in the identification of programs conducted pursuant to the Act with: (1) Any partisan or nonpartisan political activity or any other political activity associated with a candidate, or contending faction or group, in an election for public or party office, or lobbying for any matter at public issue; (2) Any activity to provide voters or prospective voters with transportation to the polls or similar assistance in connection with any such election; (3) Any voter registration activity. 224.16 Non-Federal contribution. (a) A State plan under title IV - A of the Act must provide that the State welfare agency will assure a non-Federal contribution to the Work Incentive programs established under Part C of the Act by appropriate agencies of the State or private organizations of 10 percent of the total cost of such programs, in cash or in-kind fairly evaluated. For this purpose, the State welfare agency will plan jointly with the State WIN sponsor for the development and use of in-kind resources. The State welfare agency must make the arrangements for, but need not itself make, the contribution. An in-kind contribution may be made in the form of the provision of services, staff, space, equipment, or any other goods or services of value essential to the operation of the WIN program. Where such contribution is in-kind, the amount thereof will be determined on the basis of its reasonable value as established by suitable documentation. (b) The State welfare agency shall assure a non-Federal cash or in-kind contribution of 10 percent of the cost of supportive services and related administrative expenses incurred by the SAU under Title IV - A of the Act. (c) The WIN sponsor costs of operation of the WIN program which may be met by the non-Federal contribution may include the costs of training, supervision, materials, administration, incentive payments, transportation, and other items as are authorized by the WIN sponsor. (d) Funds from other Federal sources, whether in cash or in-kind, may not be used for the non-Federal share, except when specifically permitted by law. State funds or resources that have been used to match other Federal funds also may not be used for this purpose. (e) If the State welfare agency fails to make arrangements for the non-Federal contribution of 10 percent of the total Statewide program costs of operation, pursuant to paragraph (a) of this section, the Secretary of Health and Human Services may withhold, under the conditions specified in the law, the equivalent of amounts to be paid from the grants to the State agency for the public assistance titles. (f) The provisions of Federal Management Circular (FMC) 74 - 7 must be met. [41 FR 47688, Oct 29, 1976, as amended at 46 FR 48652, Oct. 2, 1981] 224.17 Reports, records, financial statements and audits. (a) State and local WIN sponsors and welfare agencies shall submit periodic reports as required by DOL and DHHS to assure proper accounting for all program funds, including the non-Federal share. Such records and accounts shall be made available for audit purposes to DOL and DHHS, the Comptroller General of the United States or any authorized representative of these agencies, and shall be retained for 3 years from the date of submission of the final expenditure report or from the date of submission of the annual expenditure report for payments under a grant or contract, whichever is earlier. The records shall be retained beyond the 3-year period if audit findings have not been resolved. State and local WIN sponsors and welfare agencies shall also submit periodic reports as required by DOL and DHHS covering non-financial program activities. (b) Program funds and activities shall be audited in conformity with the Standards for Audit of Government Organizations, Programs Activities and Functions issued by the Comptroller General of the United States. (Approved by the Office of Management and Budget under control number 1205 - 0155) [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 48613, Oct. 1, 1981] 224.18 Adjustments in payments to WIN sponsors. (a) If any funds are expended by a WIN sponsor or by a public service employer in violation of the Act, the regulations, grant conditions or contract provisions, the Secretary of Labor may make necessary adjustments in payments to the sponsor or the employing agency on account of such unauthorized expenditures. He may draw back unexpended funds which have been made available in order to assure that they will be used in accordance with the purposes of the Act, or to prevent further unauthorized expenditures, and he may withhold funds otherwise payable under the Act in order to recover any amounts expended for unauthorized purposes in the current or immediately preceding fiscal year. (b) No action taken by the Secretary of Labor under paragraph (a) of this section shall entitle the WIN sponsor to reduce program activities or allowances for any registrant or to expend less during the effective period of the contract or grant than those sums called for in the State WIN plan. Any such reduction in expenditures may be deemed sufficient cause for termination. 224.19 Termination of contracts or grants. (a) If a WIN sponsor or IMU violates any provision of the Act or the regulations in this part, or contract provisions or grant conditions which the Secretary of Labor has issued or shall subsequently issue during the period of the contract or grant, the Secretary of Labor may terminate the contract or grant in whole or in part unless the agency which caused the violation corrects it within a period of 30 days after receipt of notice specifying the violation; or (b) In his discretion, the Secretary of Labor may terminate the contract or grant in whole or in part; (c) Termination shall be effected by a notice of termination which shall specify the extent of termination and the date upon which such termination becomes effective. Upon receipt of a notice of termination the agency shall: (1) Discontinue further commitments of contract or grant funds to the extent that they relate to the terminated portion of the contracts or grants; (2) Promptly cancel all contracts or subcontracts utilizing funds under the contract or grant to the extent that they relate to the terminated portion of the contract or grant; (3) Settle, with the approval of the Secretary of Labor, all outstanding claims arising from such termination; (4) Submit, within 6 months after the receipt of the notice of termination, a termination settlement proposal which shall include a final statement of all unreimbursed costs related to the terminated portion of the contract or grant but in the case of terminations under paragraph (a) of this section will not include the cost of preparing a settlement proposal. Allowable cost shall be determined in accordance with the provisions of Part 1 - 15.7 of Title 41 of the Code of Federal Regulations and Federal Management Circular (FMC) 74 - 4. Subpart C -- Requirements and Procedures for Registration, Appraisal and Certification 224.20 Registration requirements for AFDC applicants and recipients; State plan requirements. A State plan under Title IV - A of the Social Security Act must provide that: (a) All applicants and recipients who are required to register by section 402(a)(19)(A) of the Act, shall register for manpower services, training, employment, and other employment-related activities as a condition of eligibility for AFDC, except as otherwise provided under paragraph (b) of this section; (b) The Income Maintenance Unit (IMU) of the State or local welfare agency shall determine which AFDC applicants and recipients are exempt from registration and which are required to register as a condition of eligibility for AFDC benefits. Based on the following criteria: Each AFDC applicant and recipient shall register unless he or she is: (1) Under age 16; (2) A full-time student (as defined in State welfare regulations), aged 16 but under age 18 who is attending an elementary or secondary school, or a vocational or technical school that is equivalent to a secondary school; or a full-time student under age 19, if the State AFDC plan extends coverage to children under age 19, who is attending a secondary school or a program in a vocational or technical school that is equivalent to a secondary school and is reasonably expected to complete such school or program before reaching age 19 ; (3) Ill, when determined by the IMU on the basis of medical evidence or on another sound basis that the illness or injury is serious enough to temporarily prevent entry into employment or training; (4) Incapacitated, when verified by the IMU that a physical or mental impairment, determined by a physician or licensed or certified psychologist, by itself or in conjunction with age, prevents the individual from engaging in employment or training under WIN; (5) 65 years of age or older; (6) Residing outside of a WIN project area specified in the State WIN plan or residing within a WIN project area at a location which is so remote from a WIN office or service unit that effective participation in the program is precluded. The individual shall be considered remote if a round trip of more than 2 hours by reasonably available public or private transportation, exclusive of time necessary to transport children to and from a child care facility, would be required for a normal work or training day, unless normal round trip commuting time in the area is more than 2 hours, in which case the round trip commuting time shall not exceed the generally accepted community standards; (7) A person in the home, and the IMU has verified that a physical or mental impairment, as determined by a physician or licensed or certified psychologist, of another member of the household requires the individual's presence in the home on a substantially continuous basis, and that no other appropriate member of the household is available; (8) A parent or other caretaker relative of a child under age 6 who personally provides full-time care of the child with only very brief and infrequent absences from the child; (9) A parent or other caretaker of a child who is deprived of parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent, if another adult relative in the home, or phyusical or mental incapacity of a parent, if another adult relative in the home is registered and has not failed or refused to participate in the program or to accept employment without good cause; (10) A person who is working not less than 30 hours per week in unsubsidized employment expected to last a minimum of 30 days. This exemption continues to apply if there is a temporary break in full-time employment expected to last no longer than 10 work days; (11) The parent of a child who is deprived of parental support or care by reason of the unemployment of a parent, if the other parent (who is the principal earner as defined in 45 CFR 233.100(a)) is not exempt under one of the other preceding clauses of this section. (12) A pregnant woman when it is verified by the IMU, on the basis of medical evidence, that the child is expected to be born in the month that registration otherwise would be required or within the next 3 months. (13) An individual employed under a Work Supplementation Program established under Part 239 of this chapter. (c) The IMU shall inform each applicant and recipient in writing that: (1) The needs of any nonexempt applicant or recipient who fails to register as required will not be taken into account in determining the need and the amount of the AFDC assistance payment; (2) Exempt applicants and recipients must report to the IMU any changes which affect their exempt status; (3) Any applicant or recipient has a right to a hearing before the State welfare agency to contest a determination of nonexempt status or to contest a denial of AFDC benefits when such benefits have been denied because of his refusal to register for WIN; (4) Exempt applicants and recipients in WIN project areas may choose to register voluntarily for manpower services, training, employment, and employment-related activities, and may withdraw such registration at any time without loss of AFDC benefits, provided their status has not changed in a way which would require registration; and (5) Nonexempt applicants and recipients, along with exempt individuals who volunteer for WIN, shall report to a specified place of registration at the office of the WIN sponsor or its approved agent. (d) The IMU shall immediately refer all applicants and recipients, whom it has determined to be nonexempt, and all volunteers, to the WIN sponsor or its approved agent for registration. (e) The IMU shall refer individuals who have been determined to be exempt from registration on the basis of incapacity to the appropriate State vocational rehabilitation agency. (f) The IMU of the welfare agency shall include a redetermination of exemption as a part of the AFDC eligibility redetermination process, except where an individual has been determined to be 65 years of age or older, or permanently incapacitated. (g) The IMU shall notify the WIN sponsor within 3 working days of any welfare determination which may affect an individual's WIN status. [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 46806, Sept. 22. 1981; 46 FR 48652, Oct. 2, 1981; 50 FR 6166, Feb. 14, 1985; 51 FR 9440, Mar. 19, 1986] 224.21 Registration procedures. (a) The WIN sponsor shall promptly register all individuals found by the IMU to be nonexempt, and all individuals who volunteer for WIN, when they appear at the WIN office so that eligibility determinations are not delayed. Where special conditions warrant (such as a paucity of WIN sponsor offices in an area), the WIN sponsor may, with the concurrence of the RCC, contract with other public or private nonprofit agencies in specified areas to carry out registration activities. Under this requirement, the WIN sponsor (or its approved agency) shall: (1) Obtain a complete work history on each applicant and recipient; (2) Notify each registrant about the nature of the WIN program and about his rights and responsibilities therein; (3) Provide each registrant with written proof of registration; (4) If the IMU has determined an individual to be nonexempt and the WIN sponsor disagrees, register the individual and request the IMU to reconsider its determination. The IMU's response will be accepted by the WIN sponsor. If the IMU reverses its decision, the WIN sponsor shall deregister the individual as exempt unless the individual volunteers for WIN. If the IMU does not respond within 30 days of the request, the WIN sponsor shall deregister the individual as exempt; (5) Notify the IMU of any employment or other change of status which may affect an individual's AFDC eligibility or the amount of the AFDC payment. Included in this notification will be the hours and expected duration of employment. (6) Notify the IMU, within 3 working days of the registration, that registration has been completed so that the IMU's completion of the welfare eligibility determination shall not be delayed; and (7) Provide all registrants, at the time of registration, job market information and referral to available employment. All appropriate job market information available to the WIN Sponsor, including Job Bank, shall be used to provide this information and facilitate such referrals. (b) The needs of any individual who fails to register as required under paragraph (a) of this section shall not be taken into account in determining the need of the family and the amount of assistance, and assistance will be furnished to the eligible members of the family; (c) Where the WIN sponsor is the State public employment service, the registration required of unemployed fathers under section 407(b)(2)(c)(i) of the Act may be completed at the WIN office. This will fulfill the WIN registration requirement under section 402(a)(19)(A) of the Act. [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 48652, Oct. 2, 1981] 224.22 Appraisal and certification. (a) The appraisal interview shall be conducted jointly to the extent possible, or sequentially as appropriate, by the WIN sponsor and the SAU. Whenever possible, appraisal shall occur at the time of registration. An employability plan shall be initiated by the WIN sponsor and the SAU at the appraisal interview for each registrant who is found suitable for participation in the WIN program. The decision to refer an individual to employment or to a work or training component rests with the WIN sponsor. (b) All unemployed parents who are principal earners as defined in 45 CFR 233.100(a) shall be appraised within 2 weeks of the determination of eligibility for AFDC benefits, and appraisal shall occur prior to certification. Certification shall be completed no later than 30 days from the receipt of AFDC benefits. (c) Other individuals will be appraised according to the following priorities, taking into account the individual's employment potential: (1) Mothers, whether or not required to register, who volunteer; (2) Other mothers, and pregnant women under 19 years of age, who are required to register; (3) Dependent children and relatives who have attained age 16 and who are not in school full-time or engaged in work or manpower training; and (4) Others. (d) The employability plan shall contain a manpower services plan and a supportive services plan, and shall be designed to lead to employment and ultimately to self-support. It shall contain a definite employment goal, attainable in the shortest time period consistent with the supportive services needs, project resources, and job market opportunities. Final approval of the employability plan rests with the WIN sponsor. (e) The SAU shall certify in writing that the necessary immediate and on-going supportive services have been provided or arranged, or that no such services are required for those individuals who have been selected for participation in a WIN component. The SAU shall also certify registrants who are recipients who are selected to participate in employment-related activities. When certified, the individual shall be placed in employment if appropriate work that the individual can perform is available. If the individual cannot be immediately placed in employment, he shall be placed in employment-related activities, on-the-job training, public service employment, institutional training or in any other manpower program or activity. (f) The SAU may provide or arrange for social services for AFDC applicants to enable them to participate in employment-related activities. Such applicants may be certified, or services may be provided or arranged on an occasional basis without certification. (g) Registrants who find employment or are placed by the WIN sponsor may be certified and necessary supportive services may be provided. (h) AFDC grants and social services for individuals under the State AFDC plan shall not be denied by reason of the individual's referral to a job to a WIN program, or solely by reason of an individual's participation therein. (Approved by the Office of Management and Budget under control number 1205 - 0156) [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 46806, Sept 22, 1981; 46 FR 48652, Oct. 2, 1981; 51 FR 9441, Mar. 19, 1986] Subpart D -- Supportive and Manpower Services and Protective Provisions 224.30 Supportive services; State plan requirements. A State plan under Part A of title IV of the Act must provide that: (a) Within the State agency there will be separate administrative units which will, to the maximum extent possible, perform functions only in connection with the WIN program. To the maximum extent feasible, local SAU staff and WIN employment and training staff should be located together to foster more efficient working arrangements for joint appraisals, the development of employability plans, and the provision of services to registrants. (b) The SAU shall be responsible for: (1) Developing, jointly with the State WIN sponsor, and approving, a State WIN plan in accordance with section 433(b) of the Act; (2) Developing and supplying social services necessary to enable a registrant to accept employment, training for employment, or other employment-related activities. Necessary services shall continue for a period of 30 days after the start of unsubsidized employment and may continue for a maximum of 90 days at the discretion of the SAU. Such services may be provided even after the AFDC grant has been discontinued due to employment. In an emergency such services may also be provided for a period of up to 30 days to enable a registrant to continue existing employment; (3) Participating with the WIN sponsor in appraisal and certification, in the development of employability plans pursuant to 224.22, and in efforts to resolve grievances and disputes informally. (4) Certifying in writing to the WIN sponsor that the individual is ready for WIN manpower services when the WIN sponsor requests such certification and the supportive services, if any, have been provided or arranged for; and (c) Supportive services under the WIN program shall include: (1) Child care which meets the standards specified in 45 CFR 228.42. When more than one kind of child care is available, the mother or other caretaker relative may choose the type, but may not refuse to accept child care services if they are available. Such services must be responsive to breakdowns in prior arrangements in order to ease or avoid disruption of employment or participation in manpower services; (2) Family planning services; (3) Counseling services; (4) Employment related medical, remedical, and health-related care services not included under the State's Title XIX plan or otherwise available; (5) Selected vocational rehabilitation services, as defined by the Rehabilitation Act of 1973, which cannot otherwise be funded by the vocational rehabilitation agency; (d) Other supportive services included in the State WIN plan may be provided if they are necessary to enable registrants to accept employment or receive manpower training. (e) Supportive services may be provided for up to two weeks to a registrant between participation in WIN components or between participation in a component or employment-related activities and the start of employment in order to avoid interruption of the employability process. [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 48653, Oct. 2, 1981] 224.31 [Reserved] 224.32 Pay and allowances for WIN registrants. (a) An individual assigned to employment search shall receive an allowance for necessary expenses for participation. (b) An individual assigned to a WIN institutional or work experience training component, in which no salary is paid, shall receive an allowance for necessary training related expenses. He shall also receive incentive payments at a rate not to exceed $30 a month provided he meets the requirements of the component relative to hours of participation. (c) Individuals placed in employment, OJT, or PSE shall be authorized training related expenses for not in excess of two WIN pay periods; or until they receive their first full paycheck or the cash from a grant adjustment reflecting new work related expenses, whichever occurs first. (d) Reasonable subsistence allowance, in addition to a training-related expense payment, shall be paid to individuals for separate maintenance when in training facilities beyond daily commuting distance from their homes for each calendar day within the training payment period during which they are participating in such training and are residing away from home. (e) An individual shall be paid transportation allowance to a training facility located beyond commuting distance for the cost of his initial trip to the training facility and for his final trip home at the completion or other termination of such training. (f) Individuals may be paid allowances for nonrecurring expenses as authorized by the Secretary of Labor. (g) WIN sponsor offices may establish petty cash funds or another acceptable method to meet needs for cash for allowable expenditures for all registrants. (h) Registrants referred to employment may receive an allowance for necessary expenses. [46 FR 48653, Oct. 2, 1981] 224.33 Relocation assistance. The Secretary of Labor may assist certified individuals to relocate their place of residence when he determines such relocation is necessary in order to enable them to become permanently employed and self-supporting. Such assistance shall be given only to individuals who concur in the relocation and who have received a bona fide job offer at their place of relocation at wage rates which will meet at least their full need as determined by the State to which they will be relocated. Assistance under this section shall not exceed the reasonable costs of transportation for such individuals, their dependents, and their household belongings, plus such relocation allowance as the Secretary of Labor determines to be reasonable. 224.34 Appropriate work and training criteria. (a) WIN registrants may not be referred to employment which is known not to meet the criteria of this paragraph. Certified recipients shall accept assignment to employment, WIN training or employment-related activities, as determined a appropriate by the WIN sponsor or face deregistration action. The following standards must be met before any such individuals can be required to accept a work or training assignment including PSE and OJT: (1) All assignments for those in WIN training shall be within the scope of an individual's employability plan. This plan may be modified to reflect changed employment conditions; (2) The job or training assignment must be related to the capability of the individual to perform the task on a regular basis. Any claim of adverse effect on physical or mental health shall be based on an adequate medical testimony from a physician or licensed or certified psychologist indicating that participation would impair the individual's physical or mental health; Continued in FR200AD2.92R Continued from FR200AD1.92R (3) The total daily commuting time to and from home to the work or training site to which the individual is assigned shall not normally exceed 2 hours, not including the transporting of a child to and from a child care facility, unless a longer commuting distance and time is generally accepted in the community, in which case the round trip commuting time shall not exceed the generally accepted community standards; (4) When child care is required it must meet the standards specified in 45 CFR 228.42 and must be available during the hours the individual is engaged in a WIN component or manpower activity plus any additional necessary commuting time; (5) The work or training site to which the individual is assigned must not be in violation of applicable federal, State and local health and safety standards; (6) Assignments shall not be made which are discriminatory in terms of age, sex, race, creed, color, or national origin; (7) The individual shall not be referred to work or training unless supportive and manpower services necessary for participation are available, even in cases where the State WIN plan does not specifically provide for the needed services. The cessation or withdrawal of such necessary services while the individual is in a WIN component shall constitute good cause for refusal to participate. (b) The determination of ``appropriate work'' shall be made at the local project level. The following criteria shall be applied in addition to the above, in determining ``appropriate work'': (1) Appropriate work may be temporary, permanent, full-time, part-time or seasonal work if such work meets the other work standards of this section; (2) When an income disregard is available, the wage shall meet or exceed the Federal or State minimum wage law, whichever is applicable, or if such laws are not applicable, the wage shall not be substantially less favorable than the wage normally paid for similar work in that labor market but in no event shall it be less than three-fourths of the minimum wage rate set forth in section 6(a)(1) of the Fair Labor Standards Act; (3) When, as a result of becoming employed, no income disregard is available to the individual, the wage, less mandatory payroll deductions and a reasonable allowance for necessary employment related expenses, shall provide an income equal to or exceeding the family's AFDC cash benefits. The wage shall in no case be less than that required by any applicable minimum wage law; (4) The daily hours of work and the weekly hours of work shall not exceed those customary to the occupation; and (5) No individual shall be required to accept employment if: (i) The position offered is vacant due to a strike, lockout, or other bona fide labor dispute; (ii) The individual would be required to work for an employer contrary to the conditions of his existing membership in the union governing that occupation. However, employment not governed by the rules of a union in which he has membership may be deemed appropriate; (iii) The job offered would interrupt a program in progress under an approved employability plan leading to self-support or to the resumption of his regular job within a short period of time. This does not, however, preclude temporary employment during the interval prior to his re-employment in his regular job. (c) In addition to meeting the criteria in paragraph (a) of this section, for training to be appropriate, the quality of the training must meet local employer's requirements so that the individual will be in a competitive position within the local labor market. The training must also be likely to lead to employment which will meet the appropriate work criteria. [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 48653, Oct. 2, 1981] 224.35 Period of participation. (a) The duration of institutional training established pursuant to section 432(b)(2) of the Act shall average no more than six months with a maximum duration of one year for any individual. (b) Participation in the work experience component shall not exceed 13 weeks for any individual. (c) The RCC may, for good cause, allow an exception to the limitations in paragraph (a) of this section. 224.36 Nondiscrimination. (a) No person in the United States shall, on the grounds of age, race, creed, color, sex, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance under these regulations. (b) Grievances involving discrimination under paragraph (a) of this section shall be processed according to equal opportunity provisions established by DOL and DHHS and, to the extent applicable, in compliance with Title VI of the Civil Rights Act of 1964 (78 Stat. 252) and the regulations issued thereunder at 29 CFR Part 31 (DOL) and 45 CFR Part 80 (DHHS). Subpart E -- The WIN Components and Activities 224.40 Public service employment (PSE). (a) PSE consists of WIN subsidized jobs in the public and private nonprofit sectors. All PSE jobs must meet the criteria for appropriate work, established by 224.34, and must be jobs which would not otherwise be performed by regular employees. The PSE component provides transitional employment intended to move individuals from AFDC into unsubsidized jobs. (b) All certified registrants for whom appropriate unsubsidized employment cannot be found are eligible for placement in PSE. (c) An eligible employer may be: (1) Any unit of State or local government; (2) Any public agency or institution which is a State or local government subdivision; (3) An Indian tribe or combination of tribes on a Federal or State reservation; or (4) Any private nonprofit organization established to serve a public purpose. (d) For the purpose of AFDC benefits, PSE participants are considered to be employed. However, PSE participants shall not be deregistered from WIN until they complete the scheduled PSE contract period and enter unsubsidized employment. PSE participants are not eligible to receive either a WIN incentive payment or the $30 plus \1/3\ disregard provided by section 402(a)(8) of the Act. (e) Individuals shall not be assigned to a PSE job if this will result in the displacement of already employed full-time workers. 224.41 Employment-related activities (EA). (a) Each State WIN sponsor shall establish a program of employment-related activities in each WIN site to assist registrants, who are either AFDC applicants or recipients, to obtain employment. The State WIN sponsor shall develop standards of participation taking into account local conditions, including, but not limited to, geographic factors, availability of public transportation, and local labor market characteristics. These standards of participation shall be included in the State WIN plan. (b) Employment-related activities shall provide employment search. Included may be group job seeking, job development, exposure to labor market information, referrals, and job placement, to assist individuals in obtaining unsubsidized employment. (c) Participation in required employment search may not exceed a total of 40 work days in any calendar year for any individual. (d) Assignment of registrants to employment-related activities shall occur only after appraisal and the development of an employability plan. Recipients must be certified prior to participation. AFDC applicants may be certified, but lacking certification must be provided any supportive services necessary to permit effective participation. [46 FR 48653, Oct. 2, 1981] 224.42 On-the-job-training (OJT). (a) OJT is an employment opportunity which includes training. Under this component, a certified registrant is hired by a private or public employer and provided training which is subsidized under contract between the employer and the WIN sponsor. Employers are encouraged to provide increased supervision and training through contracts with the WIN sponsor, pursuant to which the WIN sponsor will reimburse the employer for the extraordinary costs of such training and supervision. (b) For the purpose of AFDC benefits, OJT participants are considered to be employed. However, OJT participants shall not be deregistered from WIN until they complete the scheduled OJT contract period as they are still an active participant in the WIN program during such period. 224.43 Institutional and other work experience training. (a) Institutional training is a component involving vocational or other classroom training conducted by an instructor in a non-worksite setting. (b) A work experience component is to provide a clearly defined, well-supervised, assignment with a public or private nonprofit employer in which an individual has the opportunity to develop basic work habits, to practice skills learned in classroom training, and to demonstrate skills to a prospective employer. 224.44 WIN individuals suspended to other employment or training programs. Certified individuals referred to other eligible Federal or State funded employment or training programs, and meeting all the eligibility requirements under those programs, shall be temporarily suspended from the WIN program. Such individuals shall normally be compensated in accordance with and through the provisions of those programs. However, when such compensation is not available or would be disadvantageous to the individual, he may accept regular WIN benefits instead. Notwithstanding such suspension, necessary supportive and manpower services which are not provided under the other program, but which are necessary to permit the individual to continue in the program, will be provided or arranged for by the SAU and the WIN sponsor in accordance with the time limits set forth in this part. 224.45 Non-Federal employee status. An individual in a WIN component shall not be deemed an employee of the Federal Government, and shall not be subject to the provisions of laws relating to Federal employees, including those relating to hours of work, rates of compensation, leave, unemployment compensation, and Federal employee benefits. Subpart F -- Deregistration and Sanctions 224.50 Deregistration. (a) All deregistrations shall be performed by the WIN sponsor. (b) A deregistration is necessary when an individual is held to have refused to participate without good cause; an incorrect non-exemption determination has been made; or an individual becomes exempt. Deregistration is also necessary when an individual becomes ineligible for AFDC except in the case where he is participating in a component or is employed and receiving WIN-funded supportive services. (c) The welfare agency shall notify the WIN sponsor of any change which will affect an AFDC recipient's welfare or exemption status in such a way as to warrant deregistration. (d) Except in those cases where the WIN sponsor has been notified that an AFDC grant has been discontinued for reasons involving other than WIN program issues the WIN sponsor shall notify the IMU of all deregistrations. (e) Any WIN recipient, except a volunteer, who is determined to have failed or refused without good cause to appear for appraisal; or any certified WIN recipient, except a volunteer, who has failed or refused to participate in the WIN program without good cause shall be deregistered from WIN and removed from the AFDC grant for failure to participate Any individual who without good cause terminates or refuses to accept employment or reduces earnings shall be deregistered and removed from the AFDC grant. (f) Volunteers who withdraw from the WIN program shall be deregistered. (g) Volunteers who are found to refuse to participate after notice and an adverse hearing decision, if a hearing is requested, shall be deregistered. (h) The sanction in 224.51 of this part shall become effective on the first day of the first payment-month that the sanctioned individual's needs are removed from the AFDC grant. [41 FR 47688, Oct. 29, 1976, as amended at 46 FR 48653, Oct. 2, 1981] 224.51 Sanctions. A State plan under Title IV - A of the Act shall provide that: (a) When an AFDC recipient, who is a mandatory registrant in the WIN program, has been found to have failed or refused without good cause to participate in the program or has terminated employment, or has refused to accept employment or reduced earnings without good cause, the following sanctions shall apply: (1) For the first such occurrence the individual shall be deregistered for three payment-months. (2) For the second and subsequent occurrences, the individual shall be deregistered for six payment-months. (b) During the sanction period: (1) If the individual is a caretaker relative receiving AFDC benefits, the State will not take into account his or her needs in determining the family's need for assistance. Payments for remaining members of the assistance unit will be in the form of protective or vendor payments except that, if after making reasonable efforts, the State agency is unable to locate an appropriate individual to whom protective payments can be made, the State may continue to make payments on behalf of the remaining members of the assistance unit to the sanctioned care taker relative. (2) If the individual is the only dependent child in the family, the State will deny assistance for the family. (3) If the individual is one of several dependent children in the family, the State will deny assistance for the child and will not take into account the child's needs in determining the family's need for assistance. (c) When the State finds that an AFDC recipient who is a voluntary registrant has failed or refused to participate in the WIN program without good cause, the State will deregister the individual for three or six payment-months depending on whether this was the first or a subsequent deregistration for failure or refusal to participate. However, the individual's AFDC grant shall not be affected. (d) An individual may manifest failure or refusal to participate in the WIN program or may manifest termination of employment or may refuse to accept employment or reduction in earnings either by an overt act (express) or by a de facto action. (1) An overt (express) refusal is a written or oral statement by an individual that he or she will not participate in the WIN program. (2) A de facto refusal is any current act or pattern of behavior consisting of a series of current events from which failure or refusal to participate can be implied. Where the failure or refusal to participate or termination of employment, or refusal to accept employment, or reduction in earnings is implied, the WIN sponsor shall send a notice setting an appointment for the individual to come to the WIN office and discuss the act or pattern of behavior in question. The notice shall explain the reasons for the appointment and the consequences of failure to keep the appointment. (e) In the event a registrant is referred back to the IMU as having good cause for not continuing on a training plan or a job, the IMU shall promptly restore the assistance payment to the individual or make other necessary payment adjustments. [46 FR 48654, Oct. 2, 1981, as amended at 50 FR 6166, Feb. 14, 1985; 51 FR 9440 and 9441, Mar. 19, 1986] Subpart G -- The WIN Adjudication System 224.60 Disputes regarding WIN registrations. (a) The welfare agency shall provide an opportunity for a hearing in the case of a disputed registration determination in which the AFDC applicant claims that he is exempt from WIN by the statutory criteria. Such an applicant shall be considered as exempt until his status is finally determined. (b) A welfare hearing officer shall conduct welfare hearings under this section, pursuant to the procedures prescribed in 205.10 of this chapter. Where the local WIN sponsor becomes involved in the determination of a disputed registration, a representative of the local WIN sponsor shall appear as a party at the hearing. 224.61 Rules and procedures. (a) The State WIN plan shall include rules and procedures applicable to both certified and uncertified registrants, governing participation, attendance, conduct, disputes, notice and opportunity for a fair hearing and any State appellate review. (b) The plan shall specify that the hearing officer shall be an individual who was not involved in the original determination. The plan shall also designate the parties to the hearing. 224.62 Complaints and grievances. (a) Initially, written complaints and grievances shall be handled informally outside of the WIN adjudication system. They shall be processed at the local project level within the time frame provided under 224.61(a). At that time, an individual who is not satisfied with the disposition of his complaint may initiate a formal protest at the local project level which then will be processed through the formal WIN adjudication system. (b) Written records of all disputes arising within the WIN program shall be maintained by the WIN sponsor. The date appearing on such records shall be controlling in determining the timeliness of subsequent steps in the WIN adjudication system. 224.63 Requirement of conciliation and notice. (a) The WIN staff must exhaust efforts toward conciliatory resolution of disputes between the WIN staff and the registrant before the WIN staff issues a ``Notice of Intended Deregistration.'' This conciliation effort shall begin as soon as possible, but no later than 10 days following the date of failure or refusal to participate as determined under 224.51(d) of this part, and may continue for a period not to exceed 30 days. However, either the WIN staff, or the registrant upon written request, may terminate this period sooner when either believes that the dispute cannot be resolved by conciliation. The WIN staff shall advise the registrant of the right to terminate the conciliation effort and, where necessary, assist in preparing the written statement. (b) Within two working days after the WIN staff or the registrant terminates the conciliation period without resolution of the matter, the WIN staff shall mail to the registrant by registered mail a ``Notice of Intended Deregistration.'' This notice must include: (1) A detailed explanation of the reason for the action and the consequence of refusal or failure to cooperate in a WIN prescribed program without good cause; (2) Notification of the registrant's right to a hearing if the registrant believes that the proposed action is incorrect, or the length of the sanction period is incorrect, provided a request for a hearing is filed as prescribed in 224.64 of this part. (3) Notice that the proposed action will be implemented if a hearing request is not received within the prescribed time; (4) Instructions and required forms for requesting a hearing; (5) An offer to assist with preparation of the hearing request; (6) Notice that he may be represented at the hearing by counsel or other authorized representative appointed by him and that he and his representative will have the opportunity to confront and cross-examine opposing witnesses; (7) Notice that he will be permitted to present material evidence and testimony at the hearing that is not already in the record. (c) When written notification is mailed to the individual, the WIN sponsor shall also inform him of the intended action personally or by telephone, if possible. (d) The requirements of this section do not apply to an individual who: (1) Has successfully entered employment and is regularly employed; (2) Is deregistered as exempt; or (3) Is deregistered as a result of becoming ineligible for welfare. (Approved by the Office of Management and Budget under control number 1205 - 0175) [41 FR 47688, Oct. 29, 1976, as amended at 45 FR 27422, Apr. 22, 1980; 46 FR 48654, Oct. 2, 1981; 51 FR 9441, Mar. 19, 1986] 224.64 Request for hearing. (a) An individual who believes the intended action is incorrect may request a hearing before a hearing officer within 10 days after mailing of Notice of Intended Deregistration. The request for a hearing may be made either orally or in writing by the individual or his authorized representative to the WIN sponsor. Where the request is oral, the WIN sponsor shall prepare the required forms on behalf of the individual and obtain the individual's signature on the forms. (b) Hearing procedures shall be made available to individuals requesting hearings in advance of such hearings. 224.65 Issues subject to a hearing. (a) Under the WIN adjudication system a hearing officer will hear and decide WIN program issues arising subsequent to registration by uncertified and certified registrants. The issues for which a hearing may be requested include, but are not limited to, a registrant's failure or refusal to appear for appraisal or for assignment to a WIN component; unresolved WIN grievances; a registrant's failure or refusal without good cause to accept employment or otherwise participate in the WIN program; and the WIN staff determination of the length of the sanction period. (b) After reasonable attempts have been made at the local level to resolve disputes arising from work, or training assignment under WIN, the designated activity may be accepted without prejudicing the individual's right to protest such assignment. Such protest shall be handled through the WIN adjudication system in the same manner as if the registrant had, in fact, refused to participate in the WIN program. In such an instance, a registrant who fails to accept an adverse decision pursuant to 224.68(a)(5) shall have no further recourse to a hearing on the issue before a hearing officer but may appeal the decision pursuant to 224.69. [41 FR 47688, Oct. 29, 1976, as amended at 45 FR 27423, Apr. 22, 1980] 224.66 Hearing procedures. (a) Upon receipt of a written request for a hearing, a Notice of Scheduled Hearing shall be mailed to the individual and other parties within 10 days. Such notice shall indicate the date, time, and place of the hearing, the issues to be considered, and the hearing procedures that will be followed. Hearings shall be scheduled no earlier than 10 days, or later than 30 days, following the mailing of the hearing notice. (b) The hearing officer may reschedule a hearing upon request of the individual, his representative, or other party. (c) An individual or his representative may withdraw the request for a hearing in writing before the hearing. (d) The WIN staff or its legal representative shall have primary responsibility for presenting the case before the hearing officer. 224.67 Conduct of WIN hearings. (a) The hearing officer shall: (1) Regulate the course of the hearing; (2) Issue subpoenas authorized by State law; (3) Assure that all relevant issues are considered, including the timeliness of the hearing request; (4) Rule on the introduction of new and relevant evidence and testimony; (5) Take any other action consistent with due process, necessary to insure an orderly hearing. (b) The testimony at the hearing shall be recorded. It shall be transcribed only when necessary for review by an appellate body. (c) The registrant or his representative, and the designated WIN sponsor and SAU shall be afforded the opportunity to present, examine, and cross-examine witnesses. (d) The hearing officer may elicit testimony from witnesses, but shall not act as advocate for any party. (e) The hearing officer shall receive, and make part of the record documentary evidence offered by any party and accepted at the hearing. Copies thereof shall be made available to other interested parties upon request. (f) The case record, or any portion thereof, shall be available for inspection and copying by any party at, prior to, or subsequent to the hearing upon request. Special procedures may be used for disclosure of medical and psychological records such as disclosure to a physician designated by the individual. (g) The hearing officer shall, if feasible, resolve the dispute by conciliation at any time prior to the conclusion of the hearing. 224.68 Decisions of the hearing officer. (a) The hearing officer may rule: (1) That the individual has failed to appear for appraisal without good cause or has failed or refused to participate without good cause, and that appropriate deregistration shall be initiated; (2) That good cause has been shown for failure or refusal to participate and the individual should be retained in the program; (3) That the request for a hearing is dismissed because: (i) It was filed untimely without good cause; (ii) It has been withdrawn in writing; (iii) The individual failed to appear at the hearing without good cause; or (iv) Reasonable cause exists to believe that the request has been abandoned or that repeated requests for rescheduling are arbitrary and for the purpose of unduly delaying or avoiding a hearing, in which case the welfare agency may initiate necessary action to impose appropriate sanctions; (4) That the individual was appropriately or inappropriately assigned; or (5) That the length of the period during which the registrant failed or refused to participate was not correctly determined by the WIN staff. (6) Whether following conclusion of the sanction period, the WIN staff correctly refused to reregister the individual for cause. (b) The hearing officer may render such other decisions as are appropriate to the issue or issues before him or her for resolution. However, a hearing officer must not consider the validity or constitutionality of either the Act or the regulations in this part. (c) Based on the entire record including any evidence and oral testimony provided at the hearing the hearing officer shall prepare a written decision. Within 10 working days following the hearing, a copy of such decision stating his findings and conclusions of law and the reasons therefore, shall be mailed to the individual and his authorized representative, if any, the WIN sponsor, the SAU, and the RCC. Instructions for appealing an adverse decision or recommendation to the appropriate appellate body shall be attached to the copy sent to the individual and his representative. (d) In cases involving novel questions of law or policy the hearing officer may, within 5 days after issuing his written decision, certify the case for review and decision to the State WIN appellate body or to the National Review Panel (NRP) where the State does not provide for a State WIN appellate procedure. [41 FR 47688, Oct. 29, 1976, as amended at 45 FR 27423, Apr. 22, 1980] 224.69 Appeals from hearing officer's decision. (a) Any party who disagrees with the hearing officer's decision on the WIN issue may request a review of such decision by the appropriate State appellate body within 10 days following the date on which the hearing officer's decision is mailed. A request for appellate review of the hearing officer's decision shall not stay implementation of the decision. (b) A State WIN appellate body shall consider and decide appeals filed within the time period prescribed by paragraph (a) of this section. Within 30 days after receipt of the request for review it shall prepare a written decision either affirming or reversing the hearing officer's decision or it may remand the case to a hearing officer for further evidence. The decision shall be based on its review of the entire hearing record and any additional written evidence submitted or obtained in connection with its consideration of the appeal. However, in no case shall new evidence be admitted if it brings into question the validity or constitutionality of the regulations in this part or of the Act. The decision shall state the findings of fact and conclusions of law and the reasons therefore. Copies of the decision shall be mailed to the individual, his authorized representative, if any, the WIN sponsor, the SAU, the RCC, and the NRP. Instructions for appealing a decision to the NRP and the rules under which the NRP considers appeals shall be attached to the individual's copy of the decision. (c) While reviewing a case, a State WIN appellate body may consider novel questions of law or policy or certify the case within 5 days after rendering its decision to the NRP for review and decision. (d) If a hearing officer's adverse decision is reversed on appellate review, the individual shall be paid such retroactive WIN and welfare benefits as may be applicable and, where appropriate, shall be reinstated in the program. 224.70 National Review Panel (NRP). (a) The NRP shall be composed of the DOL Chief Administrative Law Judge and other Administrative Law Judges appointed pursuant to the Administrative Procedure Act requirements and designated by the Chief Administrative Law Judge to serve as members of the panel. The panel shall be located in Washington, DC, and shall, unless equity requires otherwise, hold its reviews in Washington. (b) The NRP has jurisdiction to: (1) Consider appeals where a State does not provide for a WIN appellate procedure in all cases in which a compelling reason exists, including, but not limited to, cases raising novel and or substantial issues of law or policy. (2) Consider and decide cases wherein, in the exercise of its discretion, it has accepted certification of the cases to it by the State WIN appellate body, or in the absence of a State WIN appellate body, by the hearing officer because they involve novel questions of law or policy. (3) Consider and decide cases which, on its own motion, it has requested from a State WIN appellate body or, in the absence of a State WIN appellate body, from the hearing officer. (4) At its discretion, consider and decide appeals filed by individuals, the WIN sponsor or welfare agencies from State WIN appellate body decisions. (5) Monitor the consistency, legal sufficiency, and quality of cases handled by the hearing officer and State WIN appellate body. (6) However, the NRP shall not have jurisdiction to examine the issue of either the validity or constitutionality of the regulations, in this Part or of the Act. 224.71 Appeals to the NRP. (a) Appeals to the NRP may be filed by any party. Such appeals shall be mailed within 10 days of the date of the written decision from which the appeal is taken. (b) The appeal shall be in writing, shall identify reasons in support of the appeal, and be addressed to the NRP. Notice of the appeal and, where possible, copies of the appeal shall be sent by the NRP to all parties. (c) Any party to the proceeding may respond to the appeal or comment in support of or in opposition to the appeal. The submitting party shall mail its response to the NRP within 10 days after the date of mailing of the notification that an appeal has been filed. 224.72 Request for NRP to accept certifications. (a) The State WIN appellate body, or, in the absence of a State WIN appellate body, the hearing officer may file a request that the NRP accept certification of a case. (b) The request must contain the following: (1) A concise statement of the novel question of law or policy which is the basis for the request to accept certification; (2) A brief summary of the relevant facts and evidence; (3) Pertinent rulings, conclusions, and decisions by the hearing officer or the WIN appellate body, as the case may be; and (4) All reasons and arguments in support of the request, including citation of applicable laws and case decisions. A copy of any written decisions by the hearing officer or WIN appellate body must be attached to the request. (c) A request for the NRP to accept certification shall be filed as follows: (1) By the State WIN appellate body within 5 days following issuance of its written decision; (2) In the absence of a State WIN appellate body, by the hearing officer within 5 days after issuance of his written decision; (d) The party filing a request to the NRP to except certification of a case shall file the request with the NRP U.S. Department of Labor, Washington, DC 20036, and simultaneously mail copies to every other party including the State agency administering hearings. (e) Any party who wishes to respond to the request or to comment thereon may file a response with the NRP in support of or in opposition to the request within 10 days following the date of mailing of a request that the NRP accept certification. A copy of the response shall be mailed to all parties to the proceeding, including the State agency administering hearings. 224.73 Requests by NRP for certification. (a) Requests by NRP for certification of a case to it shall be made in writing no later than 30 days after receipt by the NRP of a written decision by the State WIN appellate body or the hearing officer. Copies of the request shall be mailed to all parties. (b) In all cases, any party may file briefs in support of its position. The NRP may request briefs from the parties. (c) Briefs shall be filed within 30 days from the date mailing of the request that a case be certified. In cases where the NRP requests briefs, a different time limit may be set. 224.74 Certification of the record. Upon receipt of written notice from the NRP that an appeal has been filed, that it has accepted certification of a case, or that it has requested certification of a case, the State WIN appellate body or the hearing officer, whichever is applicable, within 30 days of mailing of the notification, shall certify and file with the NRP the record of the hearing including the transcript of the hearing; a copy of the hearing officer's decision; where appropriate, a copy of the decision of the State appellate body; and, any other papers and documents relevant to the proceedings. The State WIN appellate body or hearing officer, whichever is appropriate, shall prepare and include an index of the documents transmitted and shall mail a copy of such index to every party. 224.75 Consideration by and decisions of the NRP. (a) In considering appeals before it, the NRP may sit in panels of three members. The DOL Chief Administrative Law Judge may designate any Administrative Law Judge employed by DOL to review or hear a particular case and to submit his findings and recommendation to the NRP or any duly designated panel thereof. (b) In considering appeals before it, the NRP, a duly designated panel thereof, or the designated Administrative Law Judge may request the parties to submit additional written statements of position, hear oral argument or hold additional hearings where necessary. (c)(1) Any party may make application in writing for a hearing or oral presentation. Such application shall set forth the reasons in support thereof and be made within 10 days after: (i) Mailing of notification of the filing of an appeal from the decision of a hearing officer where the State does not provide for an appellate body; or (ii) Mailing of notification that the NRP at its discretion has accepted an appeal from the decision of a State WIN appellate body; or (iii) Mailing of notification that the NRP has accepted certification of a case whether at its request or upon the application of a State WIN appellate body or hearing officer. (2) If a hearing or oral argument is directed, the notice shall state the date, time, place, nature, and purpose of the hearing or oral argument. Such notice shall be mailed to all parties. (3) At any hearing or oral argument so ordered, the NRP, or the designated Administrative Law Judge, may require or direct any party or person to appear to testify or produce evidence if such hearing or argument is deemed necessary, it shall be held at the location of the original hearing. (4) Any party to the proceeding may appear personally or be represented by an attorney or agent. (5) If a hearing is directed before an Administrative Law Judge, the findings and recommendations of the Administrative Law Judge to the panel shall be mailed to all parties. Any party may file with the NRP written exceptions and briefs in support thereof within 10 days of the mailing of the Administrative Law Judge's findings and recommendations and shall at the same time mail copies of such exceptions and briefs to all other parties. Any exceptions filed shall refer to specific findings and recommendations of the Administrative Law Judge. (d) In all cases which are accepted for adjudication by the National Review Panel, the NRP shall send a copy of all relevant materials to the NCC, Solicitor of Labor and Office of General Counsel, DHHS, to afford a 30-day period for the submittal of any response deemed appropriate or requests for oral argument. (e) The NRP shall prepare a written decision setting forth its findings, the reasons for its conclusions, and an appropriate order. The decision shall be based on the record and any additional evidence submitted to or obtained by the NRP. The decision may consist of affirmation, reversal, remand for further development of the evidence or other appropriate action. Copies of the NRP decisions including notification that the NRP has denied a request that it review a decision of a State WIN appellate body and notification that NRP has accepted certification of a case, shall be mailed to all parties and such other persons as may be appropriate. 224.76 [Reserved] 224.77 Subsequent WIN registration of deregistered individuals. (a) An individual who has been deregistered on the basis of a determination that he or she failed or refused to participate without good cause in the WIN program may again register for WIN by making an application. This can be done provided the sanction period specified in 224.51(c) of this part has elapsed and the individual has given evidence to the WIN staff of willingness to participate in the program. (b) An individual who has been reaccepted into the WIN program after such deregistration shall have the same rights as an individual who registers for the first time. (c) Reacceptance into the WIN program may be denied where the termination action was the result of the individual's disruptive behavior or of criminal or other activities which presented a hazard to the staff or others. [41 FR 47688, Oct. 29, 1976, as amended at 45 FR 27423, Apr. 22, 1980] PART 225 -- TRAINING AND USE OF SUBPROFESSIONALS AND VOLUNTEERS Sec. 225.1 Definitions. 225.2 State plan requirements. 225.3 Federal financial participation. Authority: Sec. 1102, 49 Stat. 647; 42 U.S.C. 1302. 225.1 Definitions. (a) The classification of subprofessional staff as community service aides refers to persons in a variety of positions in the planning, administration, and delivery of health, social, and rehabilitation services in which the duties of the position are composed of tasks that are an integral part of the agency's service responsibilities to people and that can be performed by persons with less than a college education, by high school graduates, or by persons with little or no formal education. (b) Full-time or part-time employment means that the person is employed by the agency and his position is incorporated into the regular staffing pattern of the agency. He is paid a regular wage or salary in relation to the value of services rendered and time spent on the job. (c) The term Volunteer describes a person who contributes his personal service to the community through the agency's human services program. He is not a replacement or substitute for paid staff but adds new dimensions to agency services, and symbolizes the community's concern for the agency's clientele. (d) Partially paid volunteers means volunteers who are compensated for expenses incurred in the giving of services. Such payment does not reflect the value of the services rendered, or the amount of time given to the agency. [34 FR 1319, Jan. 28, 1969] 225.2 State plan requirements. The State plan for financial assistance programs under titles I, X, XIV, or XVI (AABD) of the Social Security Act for Guam, Puerto Rico and the Virgin Islands or for child welfare services under title IV - B of the Act must: (a) Provide for the training and effective use of subprofessional staff as community service aides through part-time or full-time employment of persons of low income and, where applicable, of recipients and for that purpose will provide for: (1) Such methods of recruitment and selection as will offer opportunity for full-time or part-time employment of persons of low income and little or no formal education, including employment of young and middle aged adults, older persons, and the physically and mentally disabled, and in the case of a State plan for financial assistance under title I, X, XIV, or XVI (AABD), of recipients: And will provide that such subprofessional positions are subject to merit system requirements, except where special exemption is approved on the basis of a State alternative plan for recruitment and selection among the disadvantaged of persons who have the potential ability for training and job performance to help assure achievement of program objectives; (2) An administrative staffing plan to include the range of service personnel of which subprofessional staff are an integral part; (3) A career service plan permitting persons to enter employment at the subprofessional level and, according to their abilities, through work experience, pre-service and in-service training and educational leave with pay, progress to positions of increasing responsibility and reward; (4) An organized training program, supervision, and supportive services for subprofessional staff; and (5) Annual progressive expansion of the plan to assure utilization of increasing numbers of subprofessional staff as community service aides, until an appropriate number and proportion of subprofessional staff to professional staff are achieved to make maximum use of subprofessionals in program operation. (b) Provide for the use of nonpaid or partially paid volunteers in providing services and in assisting any advisory committees established by the State agency and for that purpose provide for: (1) A position in which rests responsibility for the development, organization, and administration of the volunteer program, and for coordination of the program with related functions; (2) Methods of recruitment and selection which will assure participation of volunteers of all income levels in planning capacities and service provision; (3) A program for organized training and supervision of such volunteers; (4) Meeting the costs incident to volunteer service and assuring that no individual shall be deprived of the opportunity to serve because of the expenses involved in such service; and (5) Annual progressive expansion of the numbers of volunteers utilized, until the volunteer program is adequate for the achievement of the agency's service goals. [34 FR 1320, Jan. 28, 1969, as amended at 41 FR 12015, Mar. 23, 1976; 42 FR 60566, Nov. 28, 1977; 45 FR 56686, Aug. 25, 1980; 51 FR 9204, Mar. 18, 1986] 225.3 Federal financial participation. Under the State plan for financial assistance programs under titles I, X, XIV, XVI (AABD) or for child welfare services under title IV - B of the Act, Federal financial participation in expenditures for the recruitment, selection, training, and employment and other use of subprofessional staff and volunteers is available at the rates and under related conditions established for training, services, and other administrative costs under the respective titles. [51 FR 9204, Mar. 18, 1986] PART 232 -- SPEClAL PROVISIONS APPLICABLE TO TITLE IV - A OF THE SOCIAL SECURITY ACT Sec. 232.1 Scope. 232.2 Child support program; State plan requirements. 232.11 Assignment of rights to support. 232.12 Cooperation in obtaining support. 232.13 Cooperation in identifying and providing information to assist the State in pursuing third party liability for medical services. 232.20 Treatment of child support collections made in the Child Support Enforcement Program as income and resources in the Title IV - A Program. 232.21 Computation of a supplemental payment when there is a support payment. 232.30 Cost of staff of special administrative units. 232.40 Claiming good cause for refusing to cooperate. 232.41 Determination of good cause for refusal to cooperate. 232.42 Good cause circumstances. 232.43 Proof of good cause claim. 232.44 Participation by the State IV - D or Title XIX agency. 232.45 Notice to the IV - D or Title XIX agency. 232.46 Granting or continuation of assistance. 232.47 Periodic review of good cause determination. 232.48 Record keeping in good cause. 232.49 Enforcement without the caretaker's cooperation. Appendix A to Part 232 -- Model Two-Part Good Cause Notice Authority: 42 U.S.C. 1302. 232.1 Scope. This part implements provisions of titles IV - A and IV - D of the Social Security Act that are applicable only to the AFDC program and establishes other administrative and fiscal requirements. (Sec. 1102, Social Security Act, as amended, 49 Stat. 647, as amended; 42 U.S.C. 1302 and Part XXIII of Pub. L. 97 - 35, 95 Stat. 843) [47 FR 5674, Feb. 5, 1982] 232.2 Child support program; State plan requirements. The State plan must specify that the State: (a) Has in effect a plan approved under part D of title IV of the Act that, consistent with the provisions of this title, ensures that all applicants for and recipients of AFDC are encouraged, assisted, and required to cooperate in the establishment of paternity and the enforcement of child support obligations, and are notified of the paternity establishment and child support services for which they may be eligible; and (b) Operates a child support program in conformity with such plan. [40 FR 27154, June 26, 1975, as amended at 57 FR 30425, July 9, 1992] 232.11 Assignment of rights to support. (a) The State plan must provide that: (1) As a condition of eligibility for assistance, each applicant for or recipient of AFDC shall assign to the State any rights to support from any other person as such applicant or recipient may have: (i) In his own behalf or in behalf of any other family member for whom the applicant or recipient is applying for or receiving assistance; and (ii) Which have accrued at the time such assignment is executed. (2) If the relative with whom a child is living fails to comply with the requirements of paragraph (a)(1), (2), or (3) of this section, such relative shall be denied eligibility without regard to other eligibility factors. (3) If the relative with whom a child is living is found to be ineligible for assistance because of failure to comply with the requirements of paragraph (a)(1), (2), or (3) of this section, any aid for which such child is eligible (determined without regard to the needs of the ineligible relative) will be provided in the form of protective payments as described in 234.60 of this chapter. (4) For new applicants, the requirements of paragraph (a) of this section shall be effective August 1, 1975; and for current recipients, it shall be effective as determined by the State agency but not later than the time of the next redetermination of eligibility required by 206.10(a)(9) of this chapter and in any event not later than February 1, 1976. (b) An assignment by operation of State law which is substantially identical to the requirements of paragraph (a)(1) may be utilized in lieu of the assignment described in that paragraph. (c) If there is a failure to execute an assignment pursuant to this section, the State may attempt to establish paternity and collect child support pursuant to appropriate State statutes and regulations. [40 FR 27154, June 26, 1975, as amended at 40 FR 52376, Nov. 10, 1975] 232.12 Cooperation in obtaining support. The State plan must meet all requirements of this section. (a) The plan shall provide that as a condition of eligibility for assistance, each applicant for or recipient of AFDC will be required to cooperate (unless good cause for refusing to do so is determined to exist in accordance with 232.40 through 232.49 of this chapter) with the State in: (1) Identifying and locating the parent of a child for whom aid is claimed; (2) Establishing the paternity of a child born out of wedlock for whom aid is claimed; (3) Obtaining support payments for the applicant or recipient and for a child for whom aid is claimed; and (4) Obtaining any other payments or property due the applicant or recipient or the child. (b) The plan shall specify that cooperate includes any of the following actions that are relevant to, or necessary for, the achievement of the objectives specified in paragraph (a) of this section: (1) Appearing at an office of the State or local agency or the child support agency as necessary to provide verbal or written information, or documentary evidence, known to, possessed by, or reasonably obtainable by the applicant or recipient; (2) Appearing as a witness at judicial or other hearings or proceedings; (3) Providing information, or attesting to the lack of information, under penalty of perjury; and (4) Paying to the child support agency any support payments received from the absent parent after an assignment under 232.11 has been made. This includes support payments received in the current month and any amounts due to the IV - D agency under the IV - D State plan provisions for recovery of retained direct support payments at 45 CFR 302.31(a)(3)(ii). (c) The plan shall provide that, if the child support agency notifies the State or local agency of evidence of failure to cooperate, the State or local agency will act upon that information to enforce the eligibility requirements of this section. (d) The plan shall provide that, if the caretaker relative fails to cooperate as required by paragraphs (a) and (b) of this section, the State or local agency will: (1) Deny assistance to the caretaker relative without regard to other eligibility factors; and (2) Provide assistance to the eligible child in the form of protective payments as described in 234.60 of this chapter. Such assistance will be determined without regard to the needs of the caretaker relative. [43 FR 2176, Jan. 16, 1978, as amended at 43 FR 45747, Oct. 3, 1978; 47 FR 43956, Oct. 5, 1982] 232.13 Cooperation in identifying and providing information to assist the State in pursuing third party liability for medical services. (a) The State plan must provide that as a condition of eligibility, each applicant for or recipient of AFDC will be required to cooperate (unless good cause for refusing to do so is determined to exist in accordance with 232.40 through 232.49) with the State in: (1) Identifying any third party who may be liable for care and services available under the State's title XIX State plan in behalf of the applicant or recipient or in behalf of any other family member (including parents and siblings as required under 206.10(a)(1)(vii) (A) and (B)) for whom the applicant or recipient is applying for or receiving assistance; and (2) Providing relevant information, consistent with rules issued by the Health Care Financing Administration at 42 CFR 433.138(b), to assist the State in pursuing any such potentially liable third party resources. Such information may include, but is not limited to, the name of the health insurance policy holder, his or her relationship to the applicant or recipient, the social security number of the policy holder, and the name and address of the insurance company and policy number. (b) The plan shall provide that if the applicant or recipient fails to cooperate as required by this section (unless good cause is determined to exist), the State or local agency shall: (1) Deny assistance to the applicant or recipient without regard to other eligibility factors; and (2) Provide assistance to the eligible child in the form of protective payments as described in 234.60 of this chapter. Such assistance will be determined without regard to the needs of the applicant or recipient. (c) Federal financial participation (FFP) is available for title IV - A administrative costs associated with identifying and providing information about a potentially liable third party as part of the eligibility determination for the AFDC program. FFP is also available for IV - A administrative costs associated with determining good cause for failure to cooperate, and providing assistance in the form of protective payments. [56 FR 8929, Mar. 4, 1991] 232.20 Treatment of child support collections made in the Child Support Enforcement Program as income and resources in the Title IV - A Program. (a) Definition. For purposes of this section, notwithstanding any other regulations in this chapter, support collections, monthly collections and support amounts for a month mean the assigned amount that the support enforcement agency collects from an absent parent or spouse on a monthly support obligation, less the disregarded sum under 302.51(b)(1). (b) The State plan must provide that in any case in which support payments are collected for a recipient of AFDC with respect to whom an assignment under 232.11 is effective: (1) Upon notification by the IV - D agency of the amount of a support collection, the IV - A agency will use such amount to review eligibility of the assistance unit under 206.10(a)(9)(ii). This use of these amounts so collected shall not be later than the second month after the month in which the IV - A agency received a report of the monthly collections from the IV - D agency. In determining whether a support collection made by the State's IV - D agency, which represents support amounts for a month as determined pursuant to 302.51(a) of this title, is sufficient to make the family ineligible for an assistance payment for the month to which the redetermination applies, the State will determine if such collection, when treated as if it were income, makes the family ineligible for an assistance payment. If such treatment makes the family ineligible, the IV - A agency will notify the family and the IV - D agency of the effective date of the family's ineligibility. The IV - D agency will treat the support collection that caused ineligibility in accordance with 302.32. If such treatment does not make the family ineligible for an assistance payment, the assistance payment will be calculated without regard to such collection except that, when required under 232.21 supplemental payments must be calculated and issued. (2) Any payment received pursuant to 302.51(b) (3) or (5) shall be treated as income in the month following the month to which the redetermination in paragraph (b)(1) of this section applies. (c) From any amounts of assistance payments which are reimbursed by support collections made by the IV - D agency, the IV - A agency shall pay the Federal government its share of the collections made, after the incentive payments, if any, have been made pursuant to 302.52 of Chapter III of this title. (d) The State plan must provide that the IV - A agency, on behalf of the IV - D agency, will send to the family the sum disregarded under 302.51(b)(1) within 20 calendar days of the date of initial receipt in the State of the first $50 of support collected in a month, or, if less than $50 is collected in a month, within 20 calendar days of the end of the month in which the support was collected. (Sec. 1102, Social Security Act, as amended, 49 Stat. 647, as amended; 42 U.S.C. 1302 and Part XXIII of Pub. L. 97 - 35, 248, 95 Stat. 843, 96 Stat. 324) [47 FR 5674, Feb. 5, 1982, as amended at 48 FR 28408, June 21, 1983; 49 FR 35599, Sept. 10, 1984; 51 FR 29229, Aug. 15, 1986; 54 FR 32308, Aug. 4, 1989; 57 FR 30157, July 8, 1992] 232.21 Computation of a supplemental payment when there is a support payment. (a) The purpose of this section is to provide for the computation of a supplemental payment under section 402(a)(28) of the Social Security Act. When used in this section -- Countable income means the amount of the recipient's gross income that is used in the computation of the assistance payment after application of all disregards, including work-related expenses. Countable support payment means the support collected on the current month's support obligation less an amount not in excess of the first $50 collected on that obligation. It also means the excess payments paid to the recipient by the IV - D agency under 45 CFR 302.51(b) (3) and (5). Disposable income means the sum of the assistance payment, and the countable income used in determining the amount of the payment. Arrearages means all collections of past due support exclusive of those made through the Federal and State income tax refund offset. (b) The State plan must provide that, if the redetermination under 232.20 indicates that the support payment made on the current month's support obligation would not cause ineligibility, and the State permitted recipients during July 1975 to retain countable income without an equal reduction in their assistance payment, and it currently has such a policy in effect, a supplemental payment will be computed for the current month. (1) The supplemental payment for a month shall equal the maximum portion of the total support collected in that month which would not reduce the assistance payment if paid directly to the family. In determining this amount, the State agency will -- (i) First consider income from sources other than the support collection; and (ii) Include in the amount of support collected the maximum amount of any arrearages paid which would not cause ineligibility if paid directly to the family. (2) The supplemental payment will be computed as follows: (i) The State IV - A agency determines the assistance payment which would result from treating as income to the family the largest amount of the month's child support collection, including arrearages, that will not cause ineligibility. Using that assistance payment, and using that amount of the support collection as countable income, disposable income is computed. (ii) The State agency then determines the amount of the assistance payment for which the family would be eligible if there were no support collection. Using that assistance payment, disposable income is again computed. (iii) The supplemental payment is the amount of disposable income as computed in step (i) less the amount of disposable income as computed in step (ii). (iv) Examples: Example 1. The State computes the assistance payment by subtracting income from the need standard and pays the deficit or a maximum by family size, whichever is less: (All figures are assumed and do not include income from any other source.) Step (i): Treating countable support payment as income. Subtract a countable support payment of $100 from a need standard of $300. The deficit is $200. Assume the State's maximum for this family size is $150; therefore, the assistance payment would be $150. The assistance unit would have a $150 assistance payment and the $100 countable support payment for a total disposable income of $250. Step (ii): Not treating countable support payment as income. There is no income to subtract from the need standard. Thus the assistance payment would be the maximum of $150 for this family size, which would also be the disposable income. Step (iii): Taking the difference. The supplemental payment is the difference between the disposable income computed under steps (i) and (ii), $250 minus $150, or $100. Example 2. The State computes the assistance payment by subtracting income from a reduced need standard and pays the deficit or a maximum by family size, whichever is less. Assume a need standard of $400, a ratable reduction of 70%, and a maximum assistance payment of $200. Also assume a $500 total child support collection for the month, $200 of which is the current month's support obligation. The State's minimum payment is $5. Step (i): Treating countable support payments as income. Determine the largest part of the $500 child support collection which would not cause ineligibility if counted as income to the assistance unit. This would be $279 because the State's reduced need standard is $280 (70% of $400) and any amount of income over $279 would make the family ineligible. The deficit would be $1. The assistance unit would not receive an assistance payment, however, they would have the $279 support payment as disposable income. No assistance payment is made but the family remains eligible under 233.20(a)(3)(viii) (C) and (D). Step (ii): Not treating countable support payment as income. There is no income to subtract from the reduced need standard, thus the assistance payment would be the maximum of $200 for this family size, which would also be the disposable income. Step (iii): Taking the difference. The supplemental payment is the difference between the disposal incomes computed under steps (i) and (ii), $280 minus $200, or $80. (c) A supplemental payment under this section may either be added to the assistance payment for which the unit is otherwise eligible, to make a new total assistance payment for the month or be issued separately. In the examples in paragraph (b)(2)(iv) of this section, the new total assistance payments would be $250 ($150 plus $100) in Example 1, and $280 ($200 plus $80) in Example 2. [51 FR 29229, Aug. 15, 1986] 232.30 Cost of staff of special administrative units. Cost of staff of Special Administrative Units (SAUs) providing social and supportive services under the Work Incentive (WIN) program is subject to FFP under title IV - A in all jurisdictions, pursuant to section 403(d) of the Act and 45 CFR 224.14(d). Cost of staff who solely perform other social service functions is not eligible for FFP under title IV - A, except in Puerto Rico, the Virgin Islands, and Guam. [41 FR 37781, Sept. 8, 1976, as amended at 47 FR 17508, Apr. 23, 1982] 232.40 Claiming good cause for refusing to cooperate. (a) Opportunity to claim good cause. The plan shall provide that an applicant for, or recipient of, AFDC will have the opportunity to claim good cause for refusing to cooperate as required by 232.12 or 232.13. (b) Notice to applicant or recipient. (1) The plan shall provide that: (i) Prior to requiring cooperation under 232.12 or 232.13, the State or local agency will notify the applicant or recipient of the right to claim good cause as an exception to the cooperation requirement and of all the requirements applicable to a good cause determination; (ii) The notice will be in writing, with a copy furnished to the applicant or recipient; and (iii) The applicant or recipient and the caseworker will acknowledge that the applicant or recipient received the notice by signing and dating a copy of the notice, which will be placed in the case record. (2) The notice may be in two parts. If the State elects a two part notice: (i) The first notice shall: (A) Advise the applicant or recipient of the potential benefits the child may derive from the establishment of paternity, securing support, and identifying and providing information to assist the State in pursuing third party liability for medical services; (B) Advise the applicant or recipient that by law, cooperation in establishing paternity, securing support, and pursuing liability for medical services is a condition of eligibility for AFDC; (C) Advise the applicant or recipient of the sanctions provided by 232.12 and 232.13 for refusal to cooperate without good cause; (D) Advise the applicant or recipient that good cause for refusal to cooperate may be claimed; and that if the State or local agency determines, in accordance with this section, that there is good cause, the applicant or recipient will be excused from the cooperation requirement; and (E) Advise the applicant or recipient that upon request, or following a claim of good cause, the agency will provide further notice with additional details concerning good cause. (ii) The second notice, which will be provided promptly upon request of the applicant or recipient or following a claim of good cause, shall: (A) Indicate that the applicant or recipient must provide corroborative evidence of a good cause circumstance (as specified in 232.43 (b) and (f)) and must, when requested, furnish sufficient information to permit the State or local agency to investigate the circumstances; (B) Inform the applicant or recipient that upon request, the State or local agency will provide reasonable assistance in obtaining the corroborative evidence; (C) Inform the applicant or recipient that on the basis of the corroborative evidence supplied and the agency's investigation, if necessary, the State or local agency will determine whether cooperation would be against the best interests of the child for whom support or third party liability for medical services would be sought; (D) List the circumstances (as specified in 232.42) under which cooperation may be determined to be against the best interests of the child; (E) Inform the applicant or recipient that the State title IV - D agency and the State title XIX agency may review the State or local agency's findings and basis for a good cause determination and may participate in any hearings concerning the issue of good cause; and (F) As applicable (see 232.49), inform the applicant or recipient that either: The State title IV - D agency will not attempt to establish paternity and collect support and the State title XIX agency may not attempt to collect third party information or pursue third parties liable for medical services in those cases where the applicant or recipient is determined to have good cause for refusing to cooperate; or the State title IV - D agency may attempt to establish paternity and collect support and the State title XIX agency may pursue liable third parties in those cases where the State or local agency determines that this can be done without risk to the applicant or recipient if done without their participation. (3) The State or local agency may, at its option, provide a single combined notice that contains all of the elements in paragraphs (b) (2) (i) and (ii) of this section. (4) Appendix A to this Part 232 is a suggested two part notice format that meets the requirements of this section. (c) Requirements upon applicant or recipient. (1) The plan shall provide that an applicant for, or recipient of, AFDC who refuses to cooperate and who claims to have good cause for refusing to cooperate has the burden of establishing the existence of a good cause circumstance. Such applicant or recipient will be required to: (i) Specify the circumstances (see 232.42) that the applicant or recipient believes provide sufficient good cause for not cooperating. (ii) Corroborate the good cause circumstances in accordance with 232.43; and (iii) If requested, provide sufficient information (such as the putative father or absent parent's name and address, if known) to permit an investigation pursuant to 232.43(g). (2) The plan shall provide that if the requirements of paragraph (c)(1) of this section are not met, the State or local agency shall on that basis determine that good cause does not exist. [43 FR 45747, Oct. 3, 1978, as amended at 56 FR 8930, Mar. 4, 1991] 232.41 Determination of good cause for refusal to cooperate. The plan shall provide that: (a) For each applicant for or recipient of AFDC who claims to have good cause, the State or local agency will determine, in accordance with 232.40, 232.42 and 232.43, whether good cause exists. (b) The State or local agency's final determination that good cause does, or does not exist will: (1) Be in writing; (2) Contain the agency's findings and basis for determination; and (3) Be entered into the AFDC case record. (c) The State or local agency's determination of whether or not good cause exists will be made within a State established time standard that does not exceed 45 days from the day the good cause claim is made. The State or local agency may exceed this time standard only where the case record documents that the agency needs additional time because the information required to verify the claim cannot be obtained within the time standard or that the claimant did not provide corroborative evidence within the period required by 232.43(b). (d) If the State or local agency determines that good cause does not exist: (1) The applicant or recipient will be so notified and afforded an opportunity to cooperate, withdraw the application for assistance, or have the case closed; and (2) Continued refusal to cooperate will result in imposition of the sanctions provided in 232.12 or 232.13. [43 FR 45748, Oct. 3, 1978, as amended at 56 FR 8930, Mar. 4, 1991] 232.42 Good cause circumstances. (a) Circumstances under which cooperation may be ``against the best interests of the child''. The plan shall provide that the State or local agency will determine that cooperation in establishing paternity, securing support or identifying and providing information to assist the State in pursuing any third party who may be liable to pay for medical services available under the State's title XIX plan is against the best interests of the child only if: (1) The applicant's or recipient's cooperation in establishing paternity, securing support, or identifying and providing information to assist the State in pursuing third parties potentially liable for medical services is reasonably anticipated to result in: (i) Physical harm to the child for whom support is to be sought; (ii) Emotional harm to the child for whom support is to be sought; (iii) Physical harm to the parent or caretaker relative with whom the child is living which reduces such person's capacity to care for the child adequately; (iv) Emotional harm to the parent or caretaker relative with whom the child is living, of such nature or degree that it reduces such person's capacity to care for the child adequately; or (2) At least one of the following circumstances exists, and the State or local agency believes that because of the existence of that circumstance proceeding to establish paternity, secure support, or to identify and provide information to assist States in pursuing third party liability for medical services would be detrimental to the child for whom support would be sought. (i) The child for whom support is sought was conceived as a result of incest or forcible rape; (ii) Legal proceedings for the adoption of the child are pending before a court of competent jurisdiction; or (iii) The applicant or recipient is currently being assisted by a public or licensed private social agency to resolve the issue of whether to keep the child or relinquish him for adoption, and the discussions have not gone on for more than 3 months. (b) Physical harm and emotional harm defined. Physical harm and emotional harm must be of a serious nature in order to justify a finding of good cause under paragraph (a)(1) of this section. A finding of good cause for emotional harm may only be based upon a demonstration of an emotional impairment that substantially affects the individual's functioning. (c) Special considerations related to emotional harm. The plan shall provide that, for every good cause determination which is based in whole or part upon the anticipation of emotional harm to the child, the parent or the caretaker relative, as provided for in paragraphs (a)(1) (ii) and (iv) of this section, the State or local agency will consider the following: (1) The present emotional state of the individual subject to emotional harm; (2) The emotional health history of the individual subject to emotional harm; (3) Intensity and probable duration of the emotional impairment; (4) The degree of cooperation to be required; and (5) The extent of involvement of the child in the paternity establishment, support enforcement activity or collection of information to assist the State in the pursuit of third parties to be undertaken. [43 FR 45748, Oct. 3, 1978, as amended at 56 FR 8930, Mar. 4, 1991] 232.43 Proof of good-cause claim. The plan shall provide that: (a) The State or local agency will make a good-cause determination based on the corroborative evidence supplied by the applicant or recipient only after it has examined the evidence and found that it actually verifies the good-cause claim. (b) The applicant or recipient who claims good cause must provide corroborative evidence within 20 days from the day the claim was made. In exceptional cases where the State or local agency determines the applicant or recipient requires additional time because of the difficulty of obtaining the corroborative evidence, the agency shall allow a reasonable additional period of time upon approval by supervisory personnel. (c) A good-cause claim may be corroborated with the following types of evidence: (1) Birth certificates or medical or law enforcement records which indicate that the child was conceived as the result of incest or forcible rape; (2) Court documents or other records which indicate that legal proceedings for adoption are pending before a court of competent jurisdiction; (3) Court, medical, criminal, child protective services, social sevices, psychological, or law enforcement records which indicate that the putative father or absent parent might inflict physical or emotional harm on the child or caretaker relative; (4) Medical records which indicate emotional health history and present emotional health status of the caretaker relative or the child for whom support would be sought; or, written statements from a mental health professional indicating a diagnosis or prognosis concerning the emotional health of the caretaker relative or the child for whom support would be sought; (5) A written statement from a public or licensed private social agency that the applicant or recipient is being assisted by the agency to resolve the issue of whether to keep the child or relinquish him for adoption; and (6) Sworn statements from individuals other than the applicant or recipient with knowledge of the circumstances which provide the basis for the good-cause claim. (d) If after examining the corroborative evidence submitted by the applicant or recipient, the State or local agency wishes to request additional corroborative evidence which is needed to permit a good-cause determination, the agency will: (1) Promptly notify the applicant or recipient that additional corroborative evidence is needed; and (2) Specify the type of document which is needed. (e) Upon request, the State or local agency will: (1) Advise the applicant or recipient how to obtain the necessary documents; and (2) Make a reasonable effort to obtain any specific documents which the applicant or recipient is not reasonably able to obtain without assistance. (f) Where a claim is based on the applicant's or recipient's anticipation of physical harm as specified and defined in 232.42 (a) and (b), and corroborative evidence is not submitted in support of the claim: (1) The State or local agency will investigate the good-cause claim when the agency believes that: (i) The claim is credible without corroborative evidence; and (ii) Corroborative evidence is not available. (2) Good cause will be found if the claimant's statement and the investigation which is conducted satisfies the agency that the applicant or recipient has good cause for refusing to cooperate. (3) A determination that good cause exists will be reviewed and approved or disapproved by supervisory personnel and the agency's findings will be recorded in the case record. (g) The State or local agency may further verify the good-cause claim if the applicant's or recipient's statement of the claim required by 232.40(c)(1)(i), together with the corroborative evidence do not provide sufficient basis for making a determination. When the State or local agency determines that it is necessary, the agency may conduct an investigation of good-cause claims to determine that good cause does or does not exist. (h) If it conducts an investigation of a good-cause claim, the State or local agency will: (1) Contact the absent parent or putative father from whom support would be sought if such contact is determined to be necessary to establish the good-cause claim; and (2) Prior to making such necessary contact, notify the applicant or recipient to enable the applicant or recipient to: (i) Present additional corroborative evidence or information so that contact with the parent or putative father becomes unnecessary; (ii) Withdraw the application for assistancse or have the case closed; or (iii) have the good-cause claim denied. [43 FR 45749, Oct. 3, 1978] 232.44 Participation by the State IV - D or Title XIX Agency. The plan shall provide that: (a) Prior to making a final determination of good cause for refusing to cooperate, the State or local agency will: (1) Afford the IV - D agency or the title XIX agency, as appropriate, the opportunity to review and comment on the findings and basis for the proposed determination; and (2) Consider any recommendation from the IV - D agency or the title XIX agency, as appropriate. (b) The State or local agency will give the IV - D agency or the title XIX agency, as appropriate, the opportunity to participate in any hearing (under 205.10 of this chapter) that results from an applicant's or recipient's appeal of any agency action under 232.40 through 232.49. [56 FR 8930, Mar. 4, 1991] 232.45 Notice to the IV - D or Title XIX Agency. The plan shall provide that: (a) If the notice, required by 235.70 of this chapter, has previously been provided to the IV - D agency or title XIX agency, as appropriate, the State or local agency will promptly report to the IV - D agency or title XIX agency, as appropriate, that good cause has been claimed; (b) The State or local agency will promptly report to the IV - D agency or title XIX agency, as appropriate, all cases in which it has determined that there is good cause for refusal to cooperate and, if applicable, its determination whether or not child support enforcement or collection of information identified and provided to assist a State in the pursuit of third parties potentially liable for medical services may proceed without the participation of the caretaker relative; and (c) The State or local agency will promptly report to the IV - D agency or title XIX agency, as appropriate, all cases in which it has determined that there is not good cause for refusal to cooperate. [56 FR 8930, Mar. 4, 1991] 232.46 Granting or continuation of assistance. The plan shall provide that the State or local agency will not deny, delay, or discontinue assistance pending a determination of good cause for refusal to cooperate if the applicant or recipient has complied with the requirements of 232.40(c) and 232.43 to furnish corroborative evidence and information. [43 FR 45750, Oct. 3, 1978] 232.47 Periodic review of good cause determination. The plan shall provide that the State or local agency will: (a) Periodically review, not less frequently than at each redetermination of eligibility required by 206.10(a)(9) of this chapter, those cases in which the agency has determined that good cause exists based on a circumstance that is subject to change; and (b) If it determines that circumstances have changed such that good cause no longer exists, it will rescind its findings and proceed to enforce the requirements of 232.12 or 232.13 of this chapter. [43 FR 45750, Oct. 3, 1978, as amended at 56 FR 8931, Mar. 4, 1991] 232.48 Record keeping in good cause. The plan shall provide that the State will maintain separate records of the good cause claims under 232.12 and the good cause claims under 232.13 and will make it possible to submit to the Department, upon request, data concerning: (a) The total number of cases in which the applicant or recipient claimed to have good cause for refusing to cooperate; (b) The number of cases in which the claim was made without corroborative evidence under the provisions of 232.43(f); (c) The total number of cases in which the applicant or recipient was found to have good cause for refusing to cooperate; (d) The number of cases in which the applicant or recipient was found to have good cause for refusing to cooperate without corroborative evidence under the provisions of 232.43(f); (e) The number of cases in which the applicant or recipient was fund to have good cause for refusing to cooperate based solely on an examination of the corroborative evidence supplied by the applicant or recipient with no investigation; (f) The number of cases where good cause was claimed by an applicant prior to receiving AFDC and the final determination that good cause did not exist was made after the applicant was determined to be eligible for AFDC; (g) The number of cases in which the applicant or recipient was found to have good cause for refusing to cooperate but there was a determination pursuant to 232.49 that child support enforcement or the collection of information to assist the State in the pursuit of third parties potentially liable for medical services, may proceed without the participation of the caretaker relative; and (h) For those cases in which good cause was found, which of the circumstances specified in 232.42 was found to exist. [43 FR 45750, Oct. 3, 1978, as amended at 56 FR 8931, Mar. 4, 1991] Effective Date Note: At 56 FR 8931, Mar. 4, 1991, 232.48 was amended by revising the introductory text of the section and paragraph (g). The revised text contains information collection and recordkeeping requirements and will not become effective until approval has been given by the Office of Management and Budget. A notice will be published in the Federal Register once approval has been obtained. The text in effect until OMB clearance is obtained is shown below. 232.48 Recordkeeping in good cause. The plan shall provide that the State will maintain records of the activities under this section that will make it possible to submit to the Department, upon request, data concerning: * * * * * (g) The number of cases in which the applicant or recipient was found to have good cause for refusing to cooperate but there was a determination pursuant to 232.49 that child support enforcement may proceed without the participation of the caretaker relative; and * * * * * 232.49 Enforcement without the caretaker's cooperation. The State plan may provide that: (a) If the State or local agency makes a determination that good cause exists, it will also make a determination of whether or not child support enforcement or the collection of information identified and provided to assist the State in the pursuit of any third party liable for medical services could proceed without risk of harm to the child or caretaker relative if the enforcement or collection activities did not involve their participation; (b) This determination will be in writing, contain the agency's findings and basis for determination, and be entered into the AFDC case record; (c) If the IV - A agency excuses noncooperation but determines that the IV - D agency or the title XIX agency may proceed to establish paternity, enforce support, or collect information to assist the State in pursuit of liable third parties, it will notify the applicant or recipient to enable such individual to withdraw his or her application for assistance or have the case closed; and (d) Prior to making this determination under this paragraph, the State or local agency will afford the IV - D agency or the title XIX agency an opportunity to review and comment on the findings and basis for the proposed determination and consider any recommendation from the IV - D agency or the title XIX agency. [43 FR 45750, Oct. 3, 1978, as amended at 56 FR 8931, Mar. 4, 1991] Pt. 232, App. A Appendix A to Part 232 -- Model Two-Part Good Cause Notice This suggested two-part notice format meets the notice requirements of 232.40(b)(2). The first notice should be provided prior to requiring the applicant's or recipient's cooperation. The second notice should be primarily provided if the applicant or recipient so requests or following a claim of good cause. Receipt of the notice will be acknowledged by the applicant's or recipient's and the worker's signature. The signed copy should be placed in the AFDC case record with one copy retained by the applicant or recipient. Before being used by a State, this model should be adapted by substituting the appropriate agencies' names. Notice of Requirement To Cooperate and Right To Claim Good Cause for Refusal To Cooperate in Identifying and Providing Information To Assist States in Pursuit of Third Parties Liable for Medical Services, and in Child Support Enforcement. Benefits of Child Support Enforcement Your cooperation in the child support enforcement process may be of value to you and your child because it might result in the following benefits: Finding the absent parent; Legally establishing your child's paternity; The possibility that support payments might be higher than your welfare grant; and The possibility that you and your children may obtain rights to future social security, veterans, or other government benefits. What is Meant by Cooperation? The law requires you to cooperate with the welfare, child support and Medicaid agencies to get any support (financial or medical) owed to you and any of the children for whom you want AFDC, unless you have good cause for not cooperating. In cooperating with the welfare, child support and Medicaid agencies, you may be asked to do one or more of the following things: Name the parent of any child applying for or receiving AFDC, and give information you have to help find the parents; Help determine legally who the father is if your child was born out of wedlock; Give help to obtain money owed to you or the children receiving AFDC; Pay the State any money which is given directly to you by the absent parent (you will continue to get your full AFDC grant from the State); and Identify and provide information to assist the State in the pursuit of any third party who may be liable to pay for medical care and services. You may be required to come to the welfare office, child support office, court or the State Medicaid agency to sign papers or give necessary information. What is Meant by Good Cause? You may have good cause not to cooperate in the State's efforts to collect child support and to provide information to assist the State in pursuing third party liability. You may be excused from cooperating if you believe that cooperation would not be in the best interest of your child, and if you can provide evidence to support this claim. If You Do Not Cooperate and You Do Not Have Good Cause You will be ineligible for AFDC. Your children will still be eligible for AFDC for their own needs. Your children's benefits will go to another person, called a ``protective payee.'' How and When You May Claim Good Cause If you want to claim good cause, you must tell a worker that you think that you have good cause. You can do this at any time you believe you have good cause not to cooperate. If you claim ``good cause'' you must be given another notice. This second notice will explain the circumstances under which the Welfare Agency may find good cause, and the type of evidence or other information the Welfare Agency needs to decide your claim. You may also ask for this second notice to help you decide whether or not to claim good cause. I have read this notice concerning my right to claim good cause for refusing to cooperate. (Signature of applicant/recipient) (Date) I have provided the applicant/recipient with a copy of this notice. (Signature of worker) (Date) Second Notice of Right To Claim Good Cause for Refusal To Cooperate in Identifying and Providing Information to Assist the State in Pursuit of Third Parties Liable for Medical Services, and in Child Support Enforcement You may claim to have good cause for refusing to cooperate if you believe that such cooperation would not be in the best interests of your child. The following are circumstances under which the Welfare Agency may determine that you have good cause for refusing to cooperate: Cooperation is anticipated to result in serious physical or emotional harm to the child; Cooperation is anticipated to result in physical or emotional harm to you which is so serious it reduces your ability to care for the child adequately; The child was born after forcible rape or incest; Court proceedings are going on for adoption of the child; or You are working with an agency helping you to decide whether to place the child for adoption. Proving Good Cause It is your responsibility to: Provide the Welfare Agency with the evidence needed to determine whether you have good cause for refusing to cooperate (If your reason for claiming good cause is your fear of physical harm and it is impossible to obtain evidence, the Welfare Agency may still be able to make a good cause determination after an investigation of your claim). Give the necessary evidence to the agency within 20 days after claiming good cause. The Welfare Agency will give you more time only if it determines that more than 20 days are required because of the difficulty in obtaining the evidence. The Welfare Agency may: Decide your claim based on the evidence which you give to the agency, or Decide to conduct an investigation to further verify your claim. If the Welfare Agency decides an investigation is needed, you may be required to give information, such as the absent parent's name and address, to help the investigation. The agency will not contact the absent parent without first telling you. Note: If you are an applicant for assistance, you will not receive your share of the grant until you have given the agency the evidence needed to support your claim, and, if requested, the information needed to permit an investigation of your claim. Examples of Acceptable Evidence The following are examples of acceptable kinds of evidence the Welfare Agency can use in determining if good cause exists. If you need help in getting a copy of any of the documents, ask the Welfare Agency. The Welfare Agency will give you reasonable assistance which is needed to help you obtain the necessary documents to support your claim. Birth certificates, or medical or law enforcement records, which indicate that the child was conceived as the result of incest or forcible rape; Court documents or other records which indicate that legal proceedings for adoption are pending in court; Court, medical, criminal, child protective services, social services, psychological, or law enforcement records which indicate that the alleged or absent parent might inflict physical or emotional harm on you or the child; Medical records which indicate emotional health history and present health status of you or the child for whom support would be sought; or written statements from a mental health professional indicating a diagnosis or prognosis concerning the emotional health of you or the child; A written statement from a public or private agency confirming that you are being assisted in resolving the issue of whether to keep or give up the child for adoption; and Sworn statements from individuals, including friends, neighbors, clergymen, social workers, and medical professionals who might have knowledge of the circumstances providing the basis of your good cause claim. Child Support Agency and Medicaid Agency Participation and Enforcement The Child Support Enforcement Agency or the Medicaid Agency may review the welfare agency's findings and the basis for a good cause determination in your case. If you request a hearing regarding this issue of good cause for refusing to cooperate, the Child Support Enforcement Agency or the Medicaid Agency may participate in that hearing. The Notice must include one of the following statements, as applicable depending on the State plan option chosen. See 232.49. Option 1. If you are found to have good cause for not cooperating, the Child Support Enforcement Agency may attempt to establish paternity or collect support and the State Medicaid Agency may attempt to collect third party information and pursue third parties potentially liable for medical services only if the welfare agency determines that this can be done without risk to you or your child. This will not be done without first telling you. Option 2. If you are found to have good cause for not cooperating, the Child Support Enforcement Agency will not attempt to establish paternity or collect support and, as appropriate, the State Medicaid Agency may not pursue third parties potentially liable for medical services. I have read this notice concerning my right to claim good cause for refusing to cooperate. (Signature of applicant/recipient) (Date) I have provided the applicant/recipient with a copy of this notice. (Signature of worker) (Date) [56 FR 8931, Mar. 4, 1991] PART 233 -- COVERAGE AND CONDITIONS OF ELIGIBILITY IN FINANCIAL ASSISTANCE PROGRAMS Sec. 233.10 General provisions regarding coverage and eligibility. 233.20 Need and amount of assistance. 233.21 Budgeting methods for OA, AB, APTD, and AABD. 233.22 Determining eligibility under prospective budgeting. 233.23 When assistance shall be paid under retrospective budgeting. 233.24 Retrospective budgeting; determining eligibility and computing the assistance payment in the initial one or two months. 233.25 Retrospective budgeting; computing the assistance payment after the initial one or two months. 233.26 Retrospective budgeting; determining eligibility after the initial one or two months. 233.27 Supplemental payments under retrospective budgeting. 233.28 Monthly reporting. 233.29 How monthly reports are treated and what notices are required. 233.31 Budgeting methods for AFDC. 233.32 Payment and budget months (AFDC). 233.33 Determining eligibility prospectively for all payment months (AFDC). 233.34 Computing the assistance payment in the initial one or two months (AFDC). 233.35 Computing the assistance payment under retrospective budgeting after the initial one or two months (AFDC). 233.36 Monthly reporting (AFDC). 233.38 Waiver of monthly reporting and retrospective budgeting requirements; AFDC. 233.37 How monthly reports are treated and what notices are required (AFDC). 233.39 Age. 233.40 Residence. 233.50 Citizenship and alienage. 233.51 Eligibility of sponsored aliens. 233.52 Overpayment to aliens. 233.53 Support and maintenance assistance (including home energy assistance) in AFDC. 233.60 Institutional status. 233.70 Blindness. 233.80 Disability. 233.90 Factors specific to AFDC. 233.100 Dependent children of unemployed parents. 233.101 Dependent children of unemployed parents. 233.106 Denial of AFDC benefits to strikers. 233.107 Restriction in payment to households headed by a minor parent. 233.110 Foster care maintenance and adoption assistance. 233.120 Emergency assistance to needy families with children. 233.145 Expiration of medical assistance programs under titles I, IV - A, X, XIV and XVI of the Social Security Act. Authority: Secs. 1, 402, 406, 407, 1002, 1102, 1402, and 1602 of the Social Security Act (42 U.S.C. 301, 602, 606, 607, 1202, 1302, 1352 and 1382 (note)), and sec. 6 of Pub. L. No. 94 - 114, 89 Stat. 579, and Part XXIII of Pub. L. No. 97 - 35, 95 Stat. 843, Pub. L. No. 97 - 248, 96 Stat. 324, and Pub. L. No. 99 - 603, 100 Stat. 3359, and section 1883 of Pub. L. 99 - 514, 100 Stat. 2916. 233.10 General provisions regarding coverage and eligibility. (a) State plan requirements. A State plan under title I, IV -- A, X, XIV, or XVI, of the Social Security Act must: (1) Specify the groups of individuals, based on reasonable classifications, that will be included in the program, and all the conditions of eligibility that must be met by the individuals in the groups. The groups selected for inclusion in the plan and the eligibility conditions imposed must not exclude individuals or groups on an arbitrary or unreasonable basis, and must not result in inequitable treatment of individuals or groups in the light of the provisions and purposes of the public assistance titles of the Social Security Act. Under this requirement: (i) A State shall impose each condition of eligibility required by the Social Security Act; and (ii) A State may: (A) Provide more limited public assistance coverage than that provided by the Act only where the Social Security Act or its legislative history authorizes more limited coverage; (B) Impose conditions upon applicants for and recipients of public assistance which, if not satisfied, result in the denial or termination of public assistance, if such conditions assist the State in the efficient administration of its public assistance programs, or further an independent State welfare policy, and are not inconsistent with the provisions and purposes of the Social Security Act. (iii) There must be clarity as to what groups are included in the plan, and which are within, and which are outside, the scope of Federal financial participation. (iv) Eligibility conditions must be applied on a consistent and equitable basis throughout the State. (v) A plan under title XVI must have the same eligibility conditions and other requirements for the aged, blind, and disabled, except as otherwise specifically required or permitted by the Act. (vi) Eligibility conditions or agency procedures or methods must not preclude the opportunity for an individual to apply and obtain a determination of eligibility or ineligibility. (vii) Methods of determining eligibility must be consistent with the objective of assisting all eligible persons to qualify. (2) Provide that the State agency will establish methods for identifying the expenditures for assistance for any groups included in the plan for whom Federal financial participation in assistance may not be claimed. (3) In addition, a State plan under title IV - A, X, XIV, or XVI of the Act, must: Provided that no aid or assistance will be provided under the plan to an individual with respect to a period for which he is receiving aid or assistance under a State plan approved under any other of such titles or under title I of the Act. (b) Federal financial participation. (1) The provisions which govern Federal financial participation in assistance payments are set forth in the Social Security Act, throughout this chapter, and in other policy issuances of the Secretary. Where indicated, State plan provisions are prerequisite to Federal financial participation with respect to the applicable group and payments. State plan provisions on need, the amount of assistance, and eligibility determine the limits of Federal financial participation. Federal financial participation is excluded from assistance payments in which the State refuses to participate because of the failure of a local authority to apply such State plan provisions. (2) The following is a summary statement regarding the groups for whom Federal financial participation is available. (More detailed information is given elsewhere.) (i) OAA -- for needy individuals under the plan who are 65 years of age or older. (ii) AFDC -- for: (a) Needy children under the plan who are: (1) Under the age of 18, or age 18 if a full-time student in a secondary school, or in the equivalent level of vocational or technical training, and reasonably expected to complete the program before reaching age 19; (2) Deprived of parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent, or unemployment of a principal earner, and (3) Living in the home of a parent or of certain relatives specified in the Act. (b) The parent(s) of a dependent child, a caretaker relative (other than a parent) of a dependent child, and, in certain situations, a parent's spouse. (iii) AB -- for needy individual's under the plan who are blind. (iv) APTD -- for needy individuals under the plan who are 18 years of age or older and permanently and totally disabled. (v) AABD -- for needy individuals under the plan who are aged, blind, or 18 years of age or older and permanently and totally disabled. (3) Federal financial participation is available in assistance payments made for the entire month in accordance with the State plan if the individual was eligible for a portion of the month, provided that the individual was eligible on the date that the payment was made; except that where it has been determined that the State agency had previously denied assistance to which the individual was entitled, Federal financial participation will be provided in any corrective payment regardless of whether the individual is eligible on the date that the corrective payment is made. (4) Federal financial participation is available in assistance payments which are continued in accordance with the State plan, for a temporary period during which the effects of an eligibility condition are being overcome, e.g., blindness in AB, disability in APTD, physical or mental incapacity, continued absence of a parent, or unemployment of a principal earner in AFDC. (5) Where changed circumstances or a hearing decision makes the individual ineligible for any assistance, or eligible for a smaller amount of assistance than was actually paid, Federal financial participation is available in excess payments to such individuals, for not more than one month following the month in which the circumstances changed or the hearing decision was rendered. Federal financial participation is available where assistance is required to be continued unadjusted because a hearing has been requested. [36 FR 3866, Feb. 27, 1971, as amended at 38 FR 8744, Apr. 6, 1973; 39 FR 26912, July 24, 1974; 40 FR 32958, Aug. 5, 1975; 47 FR 5674, Feb. 5, 1982; 47 FR 47828, Oct. 28, 1982; 51 FR 9204, Mar. 18, 1986; 57 FR 30158, July 8, 1992] 233.20 Need and amount of assistance. (a) Requirements for State Plans. A State Plan for OAA, AFDC, AB, APTD or AABD must, as specified below: (1) General. (i) Provide that the determination of need and amount of assistance for all applicants and recipients will be made on an objective and equitable basis and all types of income will be taken into consideration in the same way except where otherwise specifically authorized by Federal statute and (ii) Provide that the needs, income, and resources of individuals receiving SSI benefits under title XVI, individuals with respect to whom Federal foster care payments are made, individuals with respect to whom State or local foster care payments are made, individuals with respect to whom Federal adoption assistance payments are made, or individuals with respect to whom State or local adoption assistance payments are made, for the period for which such benefits or payments are received, shall not be included in determining the need and the amount of the assistance payment of an AFDC assistance unit; except that the needs, income, and resources of an individual with respect to whom Federal adoption assistance payments are made, or individuals with respect to whom State or local adoption assistance payments are made are included in determining the need and the amount of the assistance payment for an AFDC assistance unit of which the individual would otherwise be regarded as a member where the amount of the assistance payment that the unit would receive would not be reduced by including the needs, income, and resources of such individual. Under this requirement, ``individuals receiving SSI benefits under title XVI'' include individuals receiving mandatory or optional State supplementary payments under section 1616(a) of the Social Security Act or under section 212 of Public Law 93 - 66, and ``individuals with respect to whom Federal foster care payments are made'' means a child with respect to whom Federal foster care maintenance payments under section 472(b) and defined in section 475(4)(A) of title IV - E of the Social Security Act are made, and a child whose costs in a foster family home or child care institution are covered by the Federal foster care maintenance payments made with respect to his or her minor parent under sections 472(h) and 475(4)(B) of title IV - E. ``Individuals with respect to whom Federal adoption assistance payments are made'' means a child who receives payments made under an approved title IV - E plan based on an adoption assistance agreement between the State and the adoptive parents of a child with special needs, pursuant to sections 473 and 475(3) of the Social Security Act. (iii) For AFDC, when an individual who is required to be included in the assistance unit pursuant to 206.10(a)(1)(vii) is also required to be included in another assistance unit, those assistance units must be consolidated, and treated as one assistance unit for purposes of determining eligibility and the amount of payment. (iv) For AFDC, when a State learns of an individual who is required to be included in the assistance unit after the date he or she is required to be included in the unit, the State must redetermine the assistance unit's eligibility and payment amount, including the need, income, and resources of the individual. This redetermination must be retroactive to the date that the individual was required to be in the assistance unit either through birth/adoption or by becoming a member of the household. Any resulting overpayment must be recovered or corrective payment made pursuant to 233.20(a)(13). (v) In determining need and the amount of payment for AFDC, all income and resources of an individual required to be in the assistance unit, but subject to sanction under 250.34 or because of an intentional program violation under the optional fraud control program implementing section 416 of the Social Security Act, are considered available to the assistance unit to the same extent that they would be if the person were not subject to a sanction. However, the needs of the sanctioned individual(s) are not considered. In accord with 250.34(c), if a parent in an AFDC - UP case is sanctioned pursuant to 233.100(a)(5), the needs of the second parent are not taken into account in determining the family's need for assistance and the amount of the assistance payment unless the second parent is participating in the JOBS program. An individual required to be in an assistance unit pursuant to 206.10(a)(1)(vii) but who fails to cooperate in meeting a condition of his or her eligibility for assistance is a sanctioned individual whose needs, income, and resources are treated in the manner described above. (2) Standards of assistance. (i) Specify a statewide standard, expressed in money amounts, to be used in determining (a) the need of applicants and recipients and (b) the amount of the assistance payment. (ii) 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 maximums 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 paragraph (a)(3)(viii) of this section. Nevertheless, if a State maintains a system of dollar maximums these maximums must be proportionately adjusted in relation to the updated standards. (iii) Provide that the standard will be uniformly applied throughout the State except as provided under 239.54. (iv) Include the method used in determining need and the amount of the assistance payment. For AFDC, the method must provide for rounding down to the next lower whole dollar when the result of determining the standard of need or the payment amount is not a whole dollar. Proration under 206.10(a)(6)(i)(D) to determine the amount of payment for the month of application must occur before rounding to determine the payment amount for that month. (v) If the State IV - A agency includes special need items in its standard: (A) Describe those that will be recognized and the circumstances under which they will be included, and (B) Provide that they will be considered for all applicants and recipients requiring them; except that: (1) Under AFDC, work expenses and child care (or care of incapacitated adults living in the same home and receiving AFDC) resulting from employment or participation in either a CWEP or an employment search program cannot be special needs, and (2) In a State which has a JOBS program under Part 250, child care, transportation, work-related expenses, other work-related supportive services, and the costs of education (including tuition, books, and fees) resulting from participation in JOBS (including participation pursuant to 250.46, 250.47, and 250.48) or any other education or training activity cannot be special needs. (vi) For OAA, AB, APTD, or AABD, if the State chooses to establish the need of the individual on a basis that recognizes, as essential to his well-being, the presence in the home of other needy individuals, (a) specify the persons whose needs will be included in the individual's need, and (b) provide that the decision as to whether any individual will be recognized as essential to the recipient's well-being shall rest both with the recipient, and be supported and concurred in by the agency supervisory staff -- a person of a higher position or authority than the first line caseworker or income maintenance intake employee. (vii) For AFDC, if the State chooses to establish the need of the individual on a basis that recognizes, as essential to his/her basic well-being, the presence in the home of other needy individuals, (a) specify the persons whose needs will be included in the individual's need, but limited to those individuals who regularly provide at least one of the following benefits or services: (1) child care which enables a caretaker relative to work on a full-time basis outside the home, (2) care for an incapacitated family member in the home, (3) child care that enables a caretaker relative to receive training on a full-time basis (4) child care that enables a caretaker relative to attend high school (or General Education Development (GED) classes) on a full-time basis, (5) child care for a period not to exceed two months that enables a caretaker relative to participate in Employment Search or another AFDC work program; and (b) provide that the decision as to whether any individual will be recognized as essential to the recipient's well-being shall rest both with the recipient, and be supported and concurred in by the agency supervisory staff -- a person of a higher position or authority than the first line caseworker or income maintenance intake employee. A person will be considered incapacitated for purposes of the previous sentence when he has a physical or mental defect, illness, or impairment. The incapacity shall be supported by medical evidence and/or recorded testimony of a licensed medical health care professional, and must be of such a debilitating nature as to reduce substantially or eliminate his/her ability to support or care for himself/herself and be expected to last for a period of at least thirty (30) days. A finding of eligibility for OASDI or SSI benefits, based on disability or blindness, is acceptable proof of incapacity. The definition of the term full-time, applicable to both minor and adult caretaker relatives, as used above in paragraph (a)(2)(vii)(a) (1), (3), and (4) of this section shall be consistent with the definition used by the State for purposes of the earned income disregards at 233.20(a)(11). (viii) Provide that the money amount of any need item included in the standard will not be prorated or otherwise reduced solely because of the presence in the household of a non-legally responsible individual; and the agency will not assume any contribution from such individual for the support of the assistance unit except as provided in paragraphs (a)(3)(xiv) and (a)(5) of this section and 233.51 of this part. (ix) For AFDC, provide that a State shall consider utility payments made in lieu of any direct rental payment to a landlord or public housing agency to be shelter costs for applicants or recipients living in housing assisted under the U.S. Housing Act of 1937, as amended, and section 236 of the National Housing Act. The amount considered as a shelter payment shall not exceed the total amount the applicant or recipient is expected to contribute for the cost of housing as determined by HUD. Utility payments means only those payments made directly to a utility company or supplier which are for gas, electricity, water, heating fuel, sewerage systems, and trash and garbage collection. Utility payments are made ``in lieu of any direct rental payment to a landlord or public housing agency'' when, and only when, the AFDC family pays its entire required contribution at HUD's direction to one or more utility companies and does not make any direct payment to the landlord or the public housing agency. Housing covered by ``the U.S. Housing Act of 1937, as amended, and section 236 of the National Housing Act'' means Department of Housing and Urban Development assisted housing which includes Indian and public housing, section 8 new and existing rental housing, and section 236 rental housing. (3) Income and resources. (i) (A) OAA, AB, APTD, AABD, Specify the amount and types of real and personal property, including liquid assets, that may be reserved, i.e., retained to meet the current and future needs while assistance is received on a continuing basis. In addition to the home, personal effects, automobile and income producing property allowed by the agency, the amount of real and personal property, including liquid assets, that can be reserved for each individual recipient shall not be in excess of two thousand dollars. Policies may allow reasonable proportions of income from businesses or farms to be used to increase capital assets, so that income may be increased; and (B) in AFDC -- The amount of real and personal property that can be reserved for each assistance unit shall not be in excess of one thousand dollars equity value (or such lesser amount as the State specifies in its State plan) excluding only: (1) The home which is the usual residence of the assistance unit; (2) One automobile, up to $1,500 of equity value or such lower limit as the State may specify in the State plan; (any excess equity value must be applied towards the general resource limit specified in the State plan); (3) One burial plot (as defined in the State plan) for each member of the assistance unit; (4) Bona fide funeral agreements (as defined and within limits specified in the State plan) up to a total of $1,500 in equity value or such lower limit as the State may specify in the State plan for each member of the assistance unit (any excess equity value must be applied towards the general resource limit specified in the State plan). This provision addresses only formal agreements for funeral and burial expenses such as burial contracts, burial trusts or other funeral arrangements (generally with licensed funeral directors) and does not apply to other assets (e.g., passbook bank accounts, simple set-aside of savings, and cash surrender value of life insurance policies); (5) Real property for a period of six consecutive months (or, at the option of the State, nine consecutive months) which the family is making a good faith effort (as defined in the State plan) to sell, subject to the following provisions. The family must sign an agreement to dispose of the property and to repay the amount of aid received during such period that would not have been paid had the property been sold at the beginning of such period, but not to exceed the amount of the net proceeds of the sale. The family has five working days from the date it realizes cash from the sale of the excess real property to repay the overpayment; failure to make repayment within this period results in the cash being considered to be an available resource. If the family becomes ineligible for AFDC for any other reason during the conditional payment period while making a good faith effort to sell the property, or fails to sell the property by the end of the period despite such a good faith effort, then the amount of the overpayment attributable to the real property will not be determined and recovery will not be begun until the property is, in fact, sold. However, if the property was intentionally sold at less than fair market value so that a good faith effort to sell it was not made, or if it is otherwise determined that a good faith effort to sell the property is not being made, the overpayment amount shall be computed using the fair market value determined at the beginning of the period. For applicants, the conditional payment period begins with the first payment month for which all otherwise applicable eligibility conditions are met and payment is authorized. For recipients who acquire property while receiving assistance, the period begins with the payment month in which the recipient receives the property; and (6) At State option, basic maintenance items essential to day-to-day living such as clothes, furniture and other similarly essential items of limited value. (ii) Provide that in determining need and the amount of the assistance payment, after all policies governing the reserves and allowances and disregard or setting aside of income and resources referred to in this section have been uniformly applied: (A) In determining need, all remaining income and resources shall be considered in relation to the State's need standard; (B) In determining financial eligibility and the amount of the assistance payment all remaining income (except unemployment compensation received by an unemployed principal earner) and, except for AFDC, all resources may be considered in relation to either the State's need standard or the State's payment standard. Unemployment compensation received by an unemployed principal earner shall be considered only by subtracting it from the amount of the assistance payment after the payment has been determined under the State's payment method; (C) States may have policies which provide for allocating an individual's income for his or her own support if the individual is not applying for or receiving assistance; for the support of other individuals living in the same household but not receiving assistance; and for the support of other individuals living in another household. Such other individuals are those who are or could be claimed by the individual as dependents for determining Federal personal income tax liability, or those he or she is legally obligated to support. No income may be allocated to meet the needs of an individual who has been sanctioned under 224.51, 232.11(a)(2), 232.12(d), 238.22 or 240.22 or who is required to be included in the assistance unit and has failed to cooperate. The amount allocated for the individual and the other individuals who are living in the home must not exceed the State's need standard amount for a family group of the same composition. The amount allocated for individuals not living in the home must not exceed the amount actually paid. (D) Income after application of disregards, except as provided in paragraph (a)(3)(xiii) of this section, and resources available for current use shall be considered. To the extent not inconsistent with any other provision of this chapter, income and resources are considered available both when actually available and when the applicant or recipient has a legal interest in a liquidated sum and has the legal ability to make such sum available for support and maintenance. (E) For AFDC, income tax refunds, but such payments shall be considered as resources; and (F) When the AFDC assistance unit's income, after applying applicable disregards, exceeds the State need standard for the family because of receipt of nonrecurring earned or unearned lump sum income (including for AFDC, title II and other retroactive monthly benefits, and payments in the nature of a windfall, e.g., inheritances or lottery winnings, personal injury and worker compensation awards, to the extent it is not earmarked and used for the purpose for which it is paid, i.e., monies for back medical bills resulting from accidents or injury, funeral and burial costs, replacement or repair of resources, etc.), the family will be ineligible for aid for the full number of months derived by dividing the sum of the lump sum income and other income by the monthly need standard for a family of that size. Any income remaining from this calculation is income in the first month following the period of ineligibility. The period of ineligibility shall begin with the month of receipt of the nonrecurring income or, at State option, as late as the corresponding payment month. For purposes of applying the lump sum provision, family includes all persons whose needs are taken into account in determining eligibility and the amount of the assistance payment, and includes solely for determining the income and resources of a family an individual who must be in a family pursuant to 206.10(a)(1)(vii) but who does not meet a condition of his or her eligibility due to a failure to cooperate or is required by law to have his or her needs excluded from an assistance unit's AFDC grant calculation due to the failure to perform some action. A State may shorten the remaining period of ineligibility when: the standard of need increases and the amount the family would have received also changes (e.g., situations involving additions to the family unit during the period of ineligibility of persons who are otherwise eligible for assistance); the lump sum income or a portion thereof becomes unavailable to the family for a reason beyond the control of the family; or the family incurs and pays for medical expenses. If the State chooses to shorten the period of ineligibility, the State plan shall: (1) Identify which of the above situations are included; (2) In the case of situations involving an increase in the need standard and changes in the amount that should have been paid to the family, specify the types of circumstances which will be included; (3) In the case of situations involving the unavailability of the lump sum income, include a definition of unavailability, and specify what reasons will be considered beyond the control of the family; and (4) In the case of situations involving the payment of medical expenses, specify the types of medical expenses the State will allow to be offset against the lump sum income. For purposes of this paragraph (a)(3): Automobile means a passenger car or other motor vehicle used to provide transportation of persons or goods. (In AFDC, in appropriate geographic areas, one alternate primary mode of transportation may be substituted for the automobile); Equity value means fair market value minus encumbrances (legal debts); Fair market value means the price an item of a particular make, model, size, material or condition will sell for on the open market in the geographic area involved (If a motor vehicle is especially equipped with apparatus for the handicapped, the apparatus shall not increase the value of the vehicle); Liquid assets are those properties in the form of cash or other financial instruments which are convertible to cash and include savings accounts, checking accounts, stocks, bonds, mutual fund shares, promissory notes, mortgages, cash value of insurance policies, and similar properties; Need standard means the money value assigned by the State to the basic and special needs it recognizes as essential for applicants and recipients; Payment standard means the amount from which non-exempt income is subtracted; (iii) States may prorate income received by individuals employed on a contractual basis over the period of the contract or may prorate intermittent income received quarterly, semiannually, or yearly over the period covered by the income. In OAA, AB, APTD and AABD, they may use the prorated amount to determine need under 233.23 and the amount of the assistance payment under 233.24 and 233.25. In AFDC, they may use the prorated amount to determine need under 233.33 and the amount of the assistance payment under 233.34 and 233.35. (iv) Provide that in determining the availability of income and resources, the following will not be included as income: (A) Except for AFDC, income equal to expenses reasonably attributable to the earning of income (including earnings from public service employment); (B) Loans and grants, such as scholarships, obtained and used under conditions that preclude their use for current living costs; (C) Home produce of an applicant or recipient, utilized by him and his household for their own consumption; (D) For AFDC, any amounts paid by a State IV-A agency from State-only funds to meet needs of children receiving AFDC, if the payments are made under a statutorily-established State program which has been continuously in effect since before January 1, 1979; (E) For AFDC, income tax refunds, but such payments shall be considered as resources; and (F) At State option, small nonrecurring gifts, such as those for Christmas, birthdays and graduations, not to exceed $30 per recipient in any quarter; and (G) For AFDC, the amount paid to the family by the IV-A agency under 232.20(d) or, in a State that treats direct support payments as income under 233.20(a)(3)(v)(B), the first $50 received by the assistance unit which represents a current monthly support obligation or a voluntary support payment. In no case shall the total amount disregarded exceed $50 per month per assistance unit. (v) Provide that agency policies will assure that: (A) In determining eligibility for an assistance payment, support payments assigned under 232.11 of this chapter will be treated in accordance with 232.20 and 232.21 of this chapter; and (B) In determining the amount of an assistance payment, assigned support payments retained in violation of 232.12(b)(4) of this chapter, will be counted as income to meet need unless the approved IV - A State plan provides that such support payments are subject to IV - D recovery under 302.31(a)(3) and 303.80 of this title or unless such payments are sufficient to render the family ineligible as provided at 232.20 of this chapter. (vi)(A) In family groups living together, income of the spouse is considered available for his spouse and income of a parent is considered available for children under 21, except as provided in paragraphs (a)(3)(xiv) and (a)(3)(xviii) of this section for AFDC. If an individual is a spouse or parent who is a recipient of SSI benefits under title XVI, an individual with respect to whom Federal foster care payments are made, an individual with respect to whom State or local foster care payments are made, an individual with respect to whom Federal adoption assistance payments are made, or an individual with respect to whom State or local adoption assistance payments are made, then, for the period for which such benefits or payments are received, his or her income and resources shall not be counted as income and resources available to the AFDC unit except that a child receiving adoption assistance payments will not be excluded if such exclusion would cause the AFDC benefits of the assistance unit of which the child would otherwise be considered a member to be reduced. For purposes of this exception, ``a recipient of SSI benefits under title XVI'' includes a spouse or parent receiving mandatory or optional State supplementary payments under section 1616(a) of the Social Security Act or under section 212 of Public Law 93 - 66 and an ``individual with respect to whom Federal foster care payments are made'' means a child with respect to whom Federal foster care maintenance payments are made under section 472(b) and defined in section 475(4)(A) of the Act, and a child whose costs in a foster family home or child-care institution are covered by the foster care maintenance payments made with respect to his or her minor parent under sections 472(h) and 475(4)(B) of the Act. ``Individuals with respect to whom Federal adoption assistance payments are made'' means a child who receives payments made under an approved title IV - E plan based on an adoption assistance agreement between the State and the adoptive parents of a child with special needs, pursuant to sections 473 and 475(3) of the Social Security Act. (vii) If the State agency establishes policy under which assistance from other agencies and organizations will not be deducted in determining the amount of assistance to be paid, provide that no duplication shall exist between such other assistance and that provided by the public assistance agency. In such complementary program relationships, nonduplication shall be assured by provision that such aid will be considered in relation to: (a) The different purpose for which the other agency grants aid such as vocational rehabilitation; (b) the provision of goods and services that are not included in the statewide standard of the public assistance agency, e.g., a private agency might provide money for special training for a child or for medical care when the public assistance agency does not carry this responsibility; or housing and urban development payments might be provided to cover moving expenses that are not included in the assistance standard; or (c) the fact that public assistance funds are insufficient to meet the total amount of money determined to be needed in accordance with the statewide standard. In such instances, grants by other agencies in an amount sufficient to make it possible for the individual to have the amount of money determined to be needed, in accordance with the public assistance agency standard, will not constitute duplication. (viii) Provide that: (A) Payment will be based on the determination of the amount of assistance needed; (B) if full individual payments are precluded by maximums or insufficient funds, adjustments will be made by methods applied uniformly statewide; (C) in the case of AFDC no payment of aid shall be made to an assistance unit in any month in which the amount of aid prior to any adjustments is determined to be less than $10; and (D) an individual who is denied aid because of the limitation specified in (C) of this section, or because the payment amount is determined to be zero as a result of rounding the payment amount as required by 233.20(a)(2)(iv), shall be deemed a recipient of aid for all other purposes except participation in the Community Work Experience Program. (ix) Provide that the agency will establish and carry out policies with reference to applicants' and recipients' potential sources of income that can be developed to a state of availability. (x) Provide that the income and resources of individuals receiving SSI benefits under title XVI, individuals with respect to whom Federal foster care payments are made, individuals with respect to whom State or local foster care payments are made, individuals with respect to whom Federal adoption assistance payments are made, or individuals with respect to whom State or local adoption assistance payments are made, for the period for which such benefits or payments are received, shall not be counted as income and resources of an assistance unit applying for or receiving assistance under title IV - A; except that a child receiving adoption assistance payments will not be excluded if such exclusion would cause the AFDC benefits of the assistance unit of which the child would otherwise be considered a member to be reduced. Under this requirement, ``individuals receiving SSI benefits under title XVI'' include individuals receiving mandatory or optional State supplementary payments under section 1616(a) of the Social Security Act or under section 212 of Public Law 93 - 66 and, ``individuals with respect to whom Federal foster care payments are made'' means a child with respect to whom Federal foster care maintenance payments are made under section 472(b) and defined in section 475(4)(A) of the Act, and a child whose costs in a foster family home or child-care institution are covered by foster care maintenance payments made with respect to his or her minor parent under sections 472(h) and 475(4)(B) of the Act. ``Individuals with respect to whom Federal adoption assistance payments are made'' made a child who receives payments made under an approved title IV - E plan based on an adoption assistance agreement between the State and the adoptive parents of a child with special needs, pursuant to sections 473 and 475(3) of the Social Security Act. (xi) In the case of AFDC if the State chooses to count the value of the food stamp coupons as income, provide that the State plan shall: (A) Identify the amount for food included in its need and payment standards for an assistance unit of the same size and composition. (States which have a flat grant system must estimate the amount based on historical data or some other justifiable procedure.); and (B) Specify the amount of such food stamp coupons that it will count as income. Under this requirement, the amount of food stamp coupons which a State may count as income may not exceed the amount for food established in its payment standard for an assistance unit of the same size and composition. (xii) In the case of AFDC if the State chooses to count the value of the governmental rent or housing subsidies as income, provide that the State plan shall: (A) Identify the amount for shelter included in its need and payment standards for an assistance unit of the same size and composition. (States which have a flat grant system must estimate this amount based on historical data or some other justifiable procedure.); and (B) Specify the amount of such housing assistance that it will count as income. Under this requirement, the amount of such rent or housing subsidies which a State may count as income may not exceed the amount for shelter established in its payment standard for assistance unit of the same size and composition. (xiii) Under the AFDC plan, provide that no assistance unit is eligible for aid in any month in which the unit's income (other than the assistance payment) exceeds 185 percent of the State's need standard (including special needs) for a family of the same composition (including special needs), without application of the disregards in paragraph (a)(11)(i) (except to the extent provided for under paragraph (a)(3)(xix)), paragraph (a)(11)(ii) and paragraph (a)(11)(viii) of this section. (xiv) For AFDC, in States that do not have laws of general applicability holding the stepparent legally responsible to the same extent as the natural or adoptive parent, the State agency shall count as income to the assistance unit the income of the stepparent (i.e., one who is married, under State law, to the child's parent) of an AFDC child who is living in the household with the child after applying the following disregards (exception: if the stepparent is included in the assistance unit, the disregard under paragraph (a)(11) (i) and (ii) of this section apply instead: (A) The first $75 of the gross earned income of the stepparent; (B) An additional amount for the support of the stepparent and any other individuals who are living in the home, but whose needs are not taken into account in making the AFDC eligibility determinations except for sanctioned individuals or individuals who are required to be included in the assistance unit but have failed to cooperate and are or could be claimed by the stepparent as dependents for purposes of determining his or her Federal personal income tax liability. This disregarded amount shall equal the State's need standard amount for a family group of the same composition as the stepparent and those other individuals described in the preceding sentence; (C) Amounts actually paid by the stepparent to individuals not living in the home but who are or could be claimed by him or her as dependents for purposes of determining his or her Federal personal income tax liability; and (D) Payments by such stepparent of alimony or child support with respect to individuals not living in the household. (xv) For AFDC, provide for the consideration of the income and resources of an alien's sponsor who is an individual as provided in 233.51. (xvi) For AFDC, provide that in considering the availability of income and resources, support and maintenance assistance (including home energy assistance) will be taken into account in accordance with 233.53. (xvii) In the case of AFDC, if the State chooses to disregard monthly income of any dependent child when the income is derived from participation in a program under the JTPA, provide that the State plan shall: (A) Identify from which programs under the JTPA, income will be disregarded; (B) In the case of earned income, specify what amount will be disregarded, and the length of time the disregard will be applicable (up to six months per calendar year); and (C) In the case of unearned income, specify what amount will be disregarded, and the length of time per calendar year the disregard will be applicable if any such limit is chosen. (xviii) For AFDC, in the case of a dependent child whose parent or legal guardian (as defined under State law) is a minor under the age of 18 (without regard to school attendance), the State shall count as income to the assistance unit the income, after appropriate disregards, of such minor's own parent(s) or legal guardian(s) living in the same household as the minor and dependent child. The disregards to be applied are the same as are applied to the income of a stepparent pursuant to paragraph (a)(3)(xiv) of this section. However, in applying the disregards, each employed parent or legal guardian will receive the benefit of the work expense disregard in paragraph (a)(3)(xiv)(A) of this section. (xix) In the case of AFDC, if the State chooses to disregard monthly earned income of dependent children who are full-time students in the determination of whether the family's income exceeds the limit under 233.20(a)(3)(xiii) of this section, provide that the State plan shall specify what amounts will be disregarded and the length of time the disregard will be applicable (up to six months per calendar year) except that earned income derived from participation in a program under the JTPA may only be disregarded under this paragraph, aragraph (a)(3)(xvii) or a combination of both paragraphs for a total of 6 months per calendar year. (xx) In the case of AFDC, if the State chooses to disregard in the determination of eligibility the monthly earned income of dependent children applying for AFDC who are full-time students, provide that the State plan shall: (A) Specify the amount that will be disregarded, and (B) Provide that the disregard shall only apply to the extent that the earned income is also disregarded pursuant to paragraph (a)(3)(xix) of this section. (4) Disregard of income in OAA, AFDC, AB, APTD, OR AABD. (i) For all programs except AFDC. If the State chooses to disregard income from all sources before applying other provisions for disregarding or setting aside income, specify the amount that is first to be disregarded, but not more than $7.50 per month, of any income of an individual, child or relative claiming assistance. All income must be included such as social security or other benefits, earnings, contributions from relatives, or other income the individual may have. (ii) Provide that in determining eligibility for public assistance and the amount of the assistance payment, the following will be disregarded as income and resources: (a) In OAA, AB, APTD, and AABD, the value of the coupon allotment under the Food Stamp Act of 1964 in excess of the amount paid for the coupons; (b) The value of the U.S. Department of Agriculture donated foods (surplus commodities); (c) Any payment received under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; (d) Any grant or loan to any undergraduate student for educational purposes made or insured under any programs administered by the Commissioner of Education; (e) Any funds distributed per capita to or held in trust for members of any Indian tribe under Public Law 92 - 254 or Pub. L. 94 - 540; (f) Any benefits received under Title VII, Nutrition Program for the Elderly, of the Older Americans Act of 1965, as amended; (g) Payments for supporting services or reimbursement of out-of-pocket expenses made to individual volunteers serving as foster grandparents, senior health aides, or senior companions, and to persons serving in the Service Corps of Retired Executives (SCORE) and Active Corps of Executives (ACE) and any other programs under titles II and III, pursuant to section 418 of Pub. L. 93 - 113; (h) Payments to applicants or recipients participating in the Volunteers in Service to America (VISTA) Program, except that this disregard will not be applied when the Director of ACTION determines that the value of all such payments, adjusted to reflect the number of hours such volunteers are serving, is equivalent to or greater than the minimum wage then in effect under the Fair Labor Standards Act of 1938, or the minimum wage under the laws of the States where the volunteers are serving, whichever is greater. (Section 404(g) of Pub. L. 93 - 113, as amended by section 9 of Pub. L. 96 - 143); (i) The value of supplemental food assistance received under the Child Nutrition Act of 1966 as amended, and the special food service program for children under the National School Lunch Act, as amended (Pub. L. 92 - 433 and Pub. L. 93 - 150); (j) [Reserved] (k) Pursuant to section 15 of Public Law 100 - 241, any of the following distributions made to a household, an individual Native, or a descendant of a Native by a Native Corporation established pursuant to the Alaska Native Claims Settlement Act (ANCSA) (Pub. L. 92 - 203, as amended): (1) Cash distributions (including cash dividends on stock from a Native Corporation) received by an individual are never counted as income or resources to the extent that such cash does not, in the aggregate, exceed $2,000 in a year. Cash which, in the aggregate, is in excess of $2,000 in a year is not subject to the income and resources disregards in this paragraph (a)(4)(ii)(k)(1); (2) Stock (including stock issued or distributed by a Native Corporation as a dividend or distribution on stock); (3) A partnership interest; (4) Land or an interest in land (including land or an interest in land received from a Native Corporation as a dividend or distribution on stock); and (5) An interest in a settlement trust. (l) Benefits paid to eligible households under the Low Income Home Energy Assistance Act of 1981 pursuant to section 2605(f) of Pub. L. 97 - 35; (m) Effective October 17, 1975, pursuant to section 6 of Pub. L. 94 - 114 (89 Stat. 577, 25 U.S.C. 459e) receipts distributed to members of certain Indian tribes which are referred to in section 5 of Pub. L. 94 - 114 (89 Stat. 577, 25 U.S.C. 459d). (n) Pursuant to section 7 of Public Law 93 - 134, as amended by section 4 of Public Law 97 - 458, Indian judgment funds that are held in trust by the Secretary of the Interior (including interest and investment income accrued while such funds are so held in trust), or distributed per capita to a household or member of an Indian tribe pursuant to a plan prepared by the Secretary of the Interior and not disapproved by a joint resolution of the Congress, and initial purchases made with such funds. This disregard does not apply to proceeds from the sale of initial purchases, subsequent purchases made with funds derived from the sale or conversion of the initial purchases, or to funds or initial purchases which are inherited or transferred. (o) Pursuant to section 2 of Public Law 98 - 64, all funds held in trust by the Secretary of the Interior for an Indian tribe (including interest and investment income accrued while such funds are so held in trust) and distributed per capita to a household or member of an Indian tribe, and initial purchases made with such funds. This disregard does not apply to proceeds from the sale of initial purchases, subsequent purchases made with funds derived from the sale or conversion of initial purchases, or to funds or initial purchases which are inherited or transferred. (iii) Provide that income and resources which are disregarded or set aside under this part will not be taken into consideration in determining the need of any other individual for assistance. (iv) For AFDC, any amounts determined to have been paid by a State from State-only funds to supplement or otherwise increase the amount of aid paid to an assistance unit as computed under 233.35 for a month in recognition of current or anticipated needs of the assistance unit for that same month shall not be counted as income -- to the extent that the total of the State supplemental payment, the AFDC payment and actual income (i.e., the amount of income received during the payment month after subtracting from gross income the $75 work expense disregard (to recognize mandatory payroll deductions, transportation costs, and other work expenses), child care and other applicable disregards) received in that month are not in excess of what the State would have paid for that month to an assistance unit of the same size and composition with no income -- in computing the assistance payment under 233.35 for the corresponding payment month. (5) Proration of shelter, utilities, and similar needs in AFDC. (i) Provide that the State agency may prorate allowances in the need and payment standards for shelter, utilities, and similar needs when the AFDC assistance unit lives together with other individuals as a household; except that, the State shall not prorate with respect to any person receiving SSI to whom the statutory one-third reduction (section 1612(a)(2)(A)(i) of the Act) is applied, or prorate when a bona fide landlord-tenant relationship exists. If the State chooses to prorate under this paragraph, it must prorate both the need standard and payment standard. (ii) If the State agency elects to prorate allowances for shelter, utilities, and similar needs the State plan must: (A) Indicate which allowances will be prorated, and describe the procedure which will be used to prorate the allowances; (B) Provide that the allowances will be prorated on a reasonable basis; and (C) Specify the circumstances under which proration will occur, including a description of which individuals are considered to be living with an AFDC assistance unit as a household. (6) Disregard of earned income; definition. Provide that for purposes of disregarding earned income the agency policies will include: (i) A definition of earned income in accordance with the provisions of paragraphs (a)(6) (iii) through (ix) of this section; and (ii) Provision for disregarding earned income for the period during which it is earned, rather than when it is paid, in cases of lump-sum payment for services rendered over a period of more than 1 month. (iii) The term earned income encompasses income in cash or in kind earned by an individual through the receipt of wages, salary, commissions, or profit from activities in which he is engaged as a self-employed individual or as an employee. For AFDC, earned income means gross earned income prior to any deductions for taxes or for any other purposes, except as provided in paragraph (a)(6)(v). Such earned income may be derived from his own employment, such as a business enterprise, or farming; or derived from wages or salary received as an employee. It includes earnings over a period of time for which settlement is made at one given time, as in the instance of sale of farm crops, livestock, or poultry. For OAA, AB, APTD and AABD only, in considering income from farm operation, the option available for reporting under OASDI, namely the cash receipts and disbursements method, i.e., a record of actual gross, of expenses, and of net, is an individual determination and is acceptable also for these assistance programs. (iv) With reference to commissions, wages, or salary, the term earned income means the total amount, irrespective of personal expenses, such as income-tax deductions, lunches, and transportation to and from work, and irrespective of expenses of employment which are not personal, such as the cost of tools, materials, special uniforms, or transportation to call on customers. (v) (A) For OAA, AB, APTD, and AABD, with respect to self-employment, the term earned income means the total profit from business enterprise, farming, etc., resulting from a comparison of the gross income received with the business expenses, i.e., total cost of the production of the income. Personal expenses, such as income-tax payments, lunches, and transportation to and from work, are not classified as business expenses. (B) For AFDC, with respect to self-employment the term earned income means the total profit from business enterprise, farming, etc., resulting from a comparison of the gross receipts with the business expenses, i.e., expenses directly related to producing the goods or services and without which the goods or services could not be produced. However, items such as depreciation, personal business and entertainment expenses, personal transportation, purchase of capital equipment and payments on the principal of loans for capital assets or durable goods are not business expenses. (vi) The definition shall exclude the following from earned income: Returns from capital investment with respect to which the individual is not himself actively engaged, as in a business (for example, under most circumstances, dividends and interest would be excluded from earned income); benefits (not in the nature of wages, salary, or profit) accruing as compensation, or reward for service, or as compensation for lack of employment (for example, pensions and benefits, such as United Mine Workers' benefits or veterans' benefits). (vii) With regard to the degree of activity, earned income is income produced as a result of the performance of services by a recipient; in other words, income which the individual earns by his own efforts, including managerial responsibilities, would be properly classified as earned income, such as management of capital investment in real estate. Conversely, for example, in the instance of capital investment wherein the individual carries no specific responsibility, such as where rental properties are in the hands of rental agencies and the check is forwarded to the recipient, the income would not be classified as earned income. (viii) Reserves accumulated from earnings are given no different treatment than reserves accumulated from any other sources. (7) Disregard of earned income; method. (i) Provide that for other than AFDC, the following method will be used for disregarding earned income: The applicable amounts of earned income to be disregarded will be deducted from the gross amount of earned income, and all work expenses, personal and non-personal, will then be deducted. Only the net amount remaining will be applied in determining need and the amount of the assistance payment. (ii) In applying the $30 and one-third disregard under paragraph (a)(11)(i)(D) of this section to an applicant for AFDC, there will be a preliminary step to determine whether the assistance unit is eligible without applying the disregard to the individual's earned income, by comparing the applicant's gross earned income (less the disregards in paragraphs (a)(11)(i) (A), (B) and (C)) and all of the assistance unit's other income to the State need standard. This preliminary step does not apply if the individual has received AFDC in one of the four months prior to the month of application. (8) Disregard of earned income applicable only to OAA, APTD, or AABD. If the State chooses to disregard earned income, specify the amount to be disregarded of the first $80 per month of income that is earned by an aged or disabled individual claiming OAA, APTD, or AABD, who is not blind, but not more than $20 per month plus one-half of the next $60 of such earned income. (9) Disregard of income and resources applicable only to APTD or AABD. If the State chooses to disregard income (which may be additional to the income disregarded under paragraph (a)(8) of this section) or resources for a disabled individual to achieve the fulfillment of a plan of self-support, provide that the amounts of additional income and resources will not exceed those found necessary for the period during which the individual is actually undergoing vocational rehabilitation, and specify the period, not in excess of 36 months, for which such amounts are to be disregarded. (10) Disregard of income and resources applicable only to AB or AABD. Provide that, in determining the need of individuals who are blind, (i) the first $85 per month of earned income of the individual plus one-half of earned income in excess of $85 per month will be disregarded; and (ii) if the individual has a plan for achieving self-support, such additional income and resources as are necessary to fulfill such plan will be disregarded for a period not in excess of 12 months. Such additional income and resources may be disregarded for an additional period not in excess of 24 months (for a total of 36 months), as specified in the State plan. (11) Disregard of income and resources applicable only to AFDC. (i) For purposes of eligibility determination, the State must disregard from the monthly earned income, i.e., earned income as defined in 233.20(a)(6)(iii), of each individual whose needs are included in the eligibility determination: (A) Disregard all of the monthly earned income of each child receiving AFDC if the child is a full-time student or is a part-time student who is not a full-time employee. A student is one who is attending a school, college, or university or a course of vocational or technical training designed to fit him or her for gainful employment and includes a participant in the Job Corps program under the Job Training Partnership Act (JTPA). (B) The first $90. (C) Where appropriate, an amount equal to $30 plus one-third of the earned income not already disregarded under paragraphs (a)(11)(i), (a)(11)(v) and (a)(11)(vi) of this section of an individual who received assistance in one of the four prior months. (D) An amount equal to the actual cost for the care of each dependent child or incapacitated adult living in the same home and receiving AFDC, but not to exceed $175 for each dependent child who is at least age two or each incapacitated adult, and not to exceed $200 for each dependent child who is under age two. For individuals not engaged in full-time employment or not employed throughout the month, the $175 and $200 disregard limits may be applied, or the State agency may establish disregard limits less than $175 and $200. (E) Where appropriate, $30 of the earned income not already disregarded under paragraphs (a)(11) (i), (v), and (vi) of this section, in the case of an individual who reapplies for assistance within the eight-month period that he/she is eligible for the $30 disregard. (ii) For purposes of benefit calculation for individuals found eligible under paragraph (a)(11)(i) of this section, the following disregards must be made by the State: (A) Disregard all of the monthly earned income of each child receiving AFDC if the child is a full-time student or is a part-time student who is not a full-time employee. A student is one who is attending a school, college, or university or a course of vocational or technical training designed to fit him or her for gainful employment and includes a participant in the Job Corps program under the Job Training Partnership Act (JTPA). (B) Disregard from any other individual's earned income the amounts specified in paragraphs (a)(11)(i)(B) and (a)(11)(i)(D) of this section, and $30 plus one-third of the individual's earned income not already disregarded under paragraphs (a)(11)(ii) and (a)(11)(v) of this section. However, the State may not provide the one-third portion of the disregard to an individual after the fourth consecutive month (any month for which the unit loses the $30 plus one-third disregard because of a provision in paragraph (a)(11)(iii) of this section, shall be considered as one of these months) it has been applied to the individual's earned income and may not apply the $30 disregard after the eighth month following the fourth consecutive month (regardless of whether the $30 disregard was actually applied in those months) unless twelve consecutive months have passed during which the individual is not a recipient of AFDC. If income from a recurring source resulted in suspension or termination due to an extra paycheck, the month of ineligibility does not interrupt the accumulation of consecutive months of the $30 plus one-third disregard, nor does it count as one of the consecutive months. (iii) The applicable earned income disregards in paragraphs (i) (B) and (C) and (ii)(B) of this paragraph do not apply to the earned income of the individual for the month in which one of the following conditions apply to him: (A) An individual terminated his employment or reduced his earned income without good cause (as specified in the State plan) within the period of 30 days preceding such month; (B) An individual refused without good cause (as specified in the State plan) within the period of 30 days preceding such month to accept employment in which he is able to engage which is offered through the public employment offices of the State, or is otherwise offered by an employer if the offer of such employer is determined by the State or local agency administering the State plan, after notification by him, to be a bona fide offer of employment; (C) An individual failed without good cause (as specified in the State plan) to make a timely report (as defined in 233.37(c)) of that income; or (D) The individual voluntarily requests assistance to be terminated for the primary purpose of avoiding receiving the $30 and one-third disregard for four consecutive months. (iv) The treatment of earned income and expenses under WIN is as follows: (A) For earned income from regular employment or on-the-job training, pursuant to section 432(b)(1) of the Act the disregards in subdivisions (i) and(ii)(B) of this subparagraph shall apply. (B) For institutional and work experience training, pursuant to section 432(b)(2) of the Act, the $30 monthly incentive payment and the reimbursement for training related expenses made by the manpower agency are totally disregarded; and (C) For public service employment, pursuant to section 432(b)(3) of the Act, work related expenses (the disregards in subdivision (i) (B) and (C)) are deducted, but the $30 plus one-third disregard of subdivision (i)(D) or (ii)(B) does not apply. (v) The treatment of earned income and expenses under JOBS is as follows: (A) For earned income from regular employment or on-the-job training, as described at 250.61, the disregards in paragraphs (a)(11)(i) and (a)(11)(ii)(B) shall apply. (B) For earned income from a job under the work supplementation component, as described at 250.62, the disregards in paragraphs (a)(11)(i) and (a)(11)(ii)(B) shall apply unless the State IV - A agency in its State JOBS plan, has elected to provide otherwise under 250.62(j) and 250.62(k). (C) For all activities under JOBS and self-initiated education and training in non-JOBS areas, advance payment or reimbursement to the individual for child care, transportation, work-related expenses, or work-related supportive services is disregarded. (D) Payment or reimbursement of child care pursuant to Part 255 for employed individuals who are not JOBS participants and one-time work-related expenses for individuals who are not JOBS participants pursuant to Part 255 are disregarded. (vi) At State option, disregard all or part of the monthly income of any dependent child applying for or receiving AFDC when the income is derived from a program carried out under the Job Training Partnership Act of 1982, except that in respect to earned income such disregard may not exceed six months per calendar year. (vii) At State option, disregard all or part of the monthly earned income of any dependent child applying for AFDC, if the child is a full-time student, and that income has been disregarded for purposes of paragraph (a)(3)(xiii) of this section. (viii) Disregard as income the amount of any earned income tax credit payments received by an applicant or recipient. Disregard as resources, in the month of receipt and the following month, the amount of any earned income tax credit payments received by an applicant or recipient. ``Earned income tax credit payments'' include: Any advance earned income tax credit payment made to a family by an employer and any earned income tax credit payment made as a refund of Federal income taxes. (12) Recoupment of overpayments and correction of underpayments for programs other than AFDC. Specify uniform Statewide policies for: (i) Recoupment of overpayments of assistance, including certain overpayments resulting from assistance paid pending hearing decisions. (A) The State may not recoup any overpayment previously made to a recipient: (1) Unless the recipient has income or resources exclusive of the current assistance payment currently available in the amount by which the agency proposes to reduce payments: except that, (2) Where such overpayments were occassioned or caused by the recipient's willful withholding of information concerning his income, resources or other circumstances which may affect the amount of payment, the State may recoup prior overpayments from current assistance grants irrespective of current income or resources. (B) Withholding of information which is subject to the provisions of paragraph (a)(12)(i)(A)(2) of this section includes the following: (1) Willful misstatements (either oral or written) made by a recipient in response to oral or written questions from the State agency concerning the recipient's income, resources or other circumstances which may affect the amount of payment. Such misstatements may include understatements of amounts of income or resources and omission of an entire category of income or resources; (2) A willful failure by the recipient to report changes in income, resources or other circumstances which may affect the amount of payment, if the State agency has clearly notified the recipient of an obligation to report such changes. The recipient shall be given such notification periodically at times (not less frequently than semi-annually) and by methods which the State agency determines will effectively bring such reporting requirements to the recipient's attention: (3) A willfull failure by the recipient (i) to report receipt of a payment which the recipient knew represented an erroneous overpayment, or (ii) to notify the State agency of receipt of a check which exceeded the prior check by at least the amount which the State agency had previously notified the recipient (pursuant to the provisions of paragraph (a)(12)(i)(A)(4) of this section) might represent an overpayment and constitute a sum to which the recipient would not be entitled. In making a determination pursuant to this paragraph (a)(12)(i)(B)(3), all relevant circumstances including the amount by which the erroneous payment exceeded the previous payment shall be considered. (C) Each periodic notification under paragraph (a)(12)(i)(B)(2) of this section shall: (1) Include a reminder that it is the recipient's continuing obligation to furnish to the State agency accurate and timely information concerning changes in income, resources, or other circumstances which may affect the amount of payment, within a reasonable specified period after such change. The recipient may also be notified that a failure to so notify the State agency within the designated time period may constitute a willful withholding of such information and permit the State agency to recover any overpayment occasioned or caused by the willful withholding; (2) Specifically and comprehensibly in simple phraseology indicate the type of information to be disclosed by the recipient. Examples shall be furnished of the most frequent types of newly acquired income or resources (e.g., inheritance, wages from a part-time job); (3) Require that, if there is any doubt whether a particular change in circumstances constitutes such reportable information, the recipient contact the State agency or a designated representative thereof within a reasonable specified period of time after such change in circumstances; (4) If the State plan provides for recoupment in the circumstances described in paragraph (a)(12)(i)(B)(3)(ii) of this section, notify the recipient that if the check received exceeds the prior check by a specified amount (which amount may not be less than that which a reasonable man should have known was erroneous), this increased check may constitute a sum to which the recipient is not entitled. In such instances, the notification may require that the recipient notify the State agency or a designated representative thereof prior to the negotiation of such check, so that corrective action may be taken; the State agency shall respond to such notification within 24 hours. The recipient may also be notified that a failure to so notify the State agency within the designated time period may constitute a willful withholding of such information and permit the State agency to recover such overpayment. (D) The State agency shall require periodic formal acknowledgement by recipients (on a form utilized for this purpose) that the reporting obligations of this paragraph had been brought to the recipient's attention and that they were understood. (E) Any recoupment of overpayments made under circumstances other than those specified in paragraph (a)(12)(i)(B) of this section shall be limited to overpayments made during the 12 months preceding the month in which the overpayment was discovered. (F) Any recoupment of overpayments permitted by paragraph (a)(12)(i)(A)(2) of this section may be made from available income and resources (including disregarded, set-aside or reserved items) or from current assistance payment or from both. If recoupments are made from current assistance payments, the State shall, on a case-by-case basis, limit the proportion of such payments that may be deducted in each case, so as not to cause undue hardship to recipients. (G) The plan may provide for recoupment in all situations specified herein, or only in certain of the circumstances specified herein, and for waiver of the overpayment where the cost of collection would exceed the amount of the overpayment. (H) Election by the State not to recoup overpayments shall not waive the provisions of 205.40, and 205.41, or any other quality control requirement. (ii) Prompt correction of underpayments to current recipients, resulting from administrative error where the State plan provides for recoupment of overpayments. Under this requirement: (a) Retroactive corrective payment shall be made only for the 12 months preceding the month in which the underpayment is discovered; (b) For purposes of determining continued eligibility and amount of assistance, such retroactive corrective payments shall not be considered as income or as a resource in the month paid nor in the next following month; and (c) No retroactive payment need be made where the administrative cost would exceed the amount of the payment. (13) Recovery of overpayments and correction of underpayments for AFDC.(i) Specify uniform Statewide policies for recovery of overpayments of assistance, including overpayments resulting from assistance paid pending hearing decisions. Overpayment means a financial assistance payment received by or for an assistance unit for the payment month which exceeds the amount for which that unit was eligible. (The agency may deny assistance for the corresponding payment month rather than recover if the assistance unit was ineligible for the budget month, the State becomes aware of the ineligibility when the monthly report is submitted, the recipient accurately reported the budget month's income and other circumstances, and the assistance unit will be eligible for the following payment month.) (A) The State must take all reasonable steps necessary to promptly correct any overpayment, except that, as set forth in the plan, a State may waive any overpayment which occurred because receipt of an earned income tax credit payment by a family during the period January 1, 1990, to December 31, 1990, caused ineligibility under the 185 percent gross income limitation in paragraph (a)(3)(xiii) of this section. (B) The State shall recover an overpayment from (1) the assistance unit which was overpaid, or (2) any assistance unit of which a member of the overpaid assistance unit has subsequently become a member, or (3) any individual members of the overpaid assistance unit whether or not currently a recipient. If the State recovers from individuals who are no longer recipients, or from recipients who refuse to repay the overpayment from their income and resources, recovery shall be made by appropriate action under State law against the income or resources of those individuals. (C) If through recovery, the amount payable to the assistance unit is reduced to zero, members of the assistance unit are still considered recipients of AFDC. (D) In cases which have both an underpayment and an overpayment, the State may offset one against the other in correcting the payment. (E) Prompt recovery of an overpayment: A State must take one of the following three actions by the end of the quarter following the quarter in which the overpayment is first identified: (1) Recover the overpayment, (2) initiate action to locate and/or recover the overpayment from a former recipient, or (3) execute a monthly recovery agreement from a current recipient's grant or income/resources. (ii) Specify uniform Statewide policies for prompt correction of any underpayments to current recipients and those who would be a current recipient if the error causing the underpayment had not occurred. Underpayment means a financial assistance payment received by or for an assistance unit for the payment month which is less than the amount for which the assistance unit was eligible, or failure by the State to issue a financial assistance payment for the payment month to an eligible assistance unit if such payment should have been issued. Under this requirement, for purposes of determining continued eligibility and amount of assistance, such retroactive corrective payments shall not be considered as income, or as a resource in the month paid nor in the next following month. (iii) Paragraph (a)(13) of this section is effective for incorrect payments which are identified subsequent to September 30, 1981. (iv) In locating former recipients who have outstanding overpayments the State should use appropriate data sources such as State unemployment insurance files, State Department of Revenue information from tax returns, State automobile registration, Bendex, and other files relating to current or former recipients. (v) The State must maintain information on the individual and total number and amount of overpayments identified and their disposition for current and former recipients. (vi) The State may elect not to attempt recovery of an overpayment from an individual no longer receiving aid where the overpayment amount is less than $35. Where the overpayment amount owed by an individual no longer receiving aid is $35 or more, the State can determine when it is no longer cost-effective to continue overpayment recovery efforts, provided it has made reasonable efforts to recover the overpayment from the individual. Reasonable efforts must include notification of the amount of and reason for the overpayment and that repayment is required. States must also maintain information regarding uncollected overpayments as provided under paragraph (a)(13)(v) of this section, to enable the State to recover those overpayments if the individual subsequently becomes a recipient. In cases involving fraud, States must make every effort to recover the overpayment, regardless of the amount. (14) For Medicaid eligibility only, beginning October 1, 1998, pursuant to section 402(a)(37) of the Act, an assistance unit will be deemed to be receiving AFDC, but only for the purposes of this paragraph, for a period of nine months after the last month the family actually received aid if the loss of AFDC eligibility was solely because a member of the unit was no longer eligible due to the 4 and 12 month time limitations to have the $30 and one-third or the $30 disregard in paragraph (a)(11)(ii)(B) applied to his or her earned income. At State option, an additional period of Medicaid coverage for up to six months may be provided when the assistance unit would be eligible during such additional period to receive AFDC if the $30 and one-third or the $30 disregards were applied to the assistance unit's earned income. [34 FR 1394, Jan. 29, 1969] Editorial Note: For Federal Register citations to 233.20, see the List of CFR Sections Affected in the Finding Aids section of this volume. Effective Date Note: Paragraph (a)(13)(v) was added to 233.20 at 47 FR 5678, Feb. 5, 1982. The effectiveness of this paragraph is pending OMB approval. The agency will publish a document in the Federal Register when approval is obtained. 233.21 Budgeting methods for OAA, AB, APTD, and AABD. (a) Requirements for State plans. A State plan for OAA, AB, APTD, and AABD shall specify if assistance payments shall be computed using a prospective budgeting system or a retrospective budgeting system. A State electing retrospective budgeting shall specify which options it selects and the State plan shall state that it shall meet the requirements in 233.21 through 233.29. Budgeting methods for AFDC are described in 233.31 through 233.37. (b) Definitions. The following definitions apply to 233.21 through 233.29: (1) ``Prospective budgeting'' means that the agency shall compute the amount of assistance for a payment month based on its best estimate of income and circumstances which will exist in that month. This estimate shall be based on the agency's reasonable expectation and knowledge of current, past or future circumstances. (2) ``Retrospective budgeting'' means that the agency shall compute the amount of assistance for a payment month based on actual income or circumstances which existed in a previous month, the ``budget month''. (3) ``Budget month'' means the fiscal or calendar month from which the agency shall use income or circumstances of the family to compute the amount of assistance. (4) ``Payment month'' means the fiscal or calendar month for which an agency shall pay assistance. Payment is based upon income or circumstances in the budget month. In prospective budgeting, the budget month and the payment month are the same. In retrospective budgeting, the payment month follows the budget month and the payment month shall begin within 32 days after the end of the budget month. (5) ``Make an assistance payment.'' In the context of retrospective budgeting, to make an assistance payment means that the check shall be deposited in the U.S. mail, hand delivered to the recipient, or deposited with an intermediary organization, such as a bank. (6) ``Supplemental payment.'' In the context of retrospective budgeting, a supplemental payment is a payment which maintains a family during the time it takes for the monthly assistance payment to reflect a change in circumstances or income. [44 FR 26082, May 4, 1979, as amended at 47 FR 5678, Feb. 5, 1982] 233.22 Determining eligibility under prospective budgeting. In States which compute the amount of the assistance payment prospectively, the State plan shall provide that the State shall also determine all factors of eligibility prospectively. Thus, the State agency shall establish eligibility based on its best estimate of income and circumstances which will exist in the month for which the assistance payment is made. [44 FR 26082, May 4, 1979] 233.23 When assistance shall be paid under retrospective budgeting. (a) A State which uses retrospective budgeting shall specify in its plan that it will make assistance payments within the following time limits to recipients who file a completed report on time, and to those who are not required to file a report. A State shall choose one of two time periods for making assistance payments. The State plan shall provide that payment must be made: (1) Within 25 days from the close of the budget month; or (2) Between 25 and 45 days from the close of the budget month. (b)(1) Where a State makes payments between 25 and 45 days from the close of the budget month, the State plan shall provide that the State will make supplemental payments as provided in 233.27. (2) If a State makes payments within 25 days from the close of the budget month, and also makes supplemental payments as provided in 233.27, the State plan shall so specify. (c) In States which issue two checks for each payment month, these time periods apply to the first check. [44 FR 26083, May 4, 1979] 233.24 Retrospective budgeting; determining eligibility and computing the assistance payment in the initial one or two months. (a) States which make assistance payments within 25 days of the close of the budget month shall determine eligibility and compute the amount of the payment for all recipients prospectively for the initial month of assistance. These States may choose to determine eligibility and compute the payment prospectively for the second month, also. (b) States which make assistance payments between 25 and 45 days from the close of the budget month shall determine eligibility and compute the amount of the payment prospectively for the initial two months of assistance. (c) When a person who previously received assistance reapplies during the same month in which a termination became effective, eligibility shall be determined according to paragraph (a) or (b) of this section. However, the amount of the assistance payment for the month of the reapplication shall be computed retrospectively. [44 FR 26083, May 4, 1979] 233.25 Retrospective budgeting; computing the assistance payment after the initial one or two months. The State plan shall provide: (a) After the initial one or two payment months of assistance under 233.24, the amount of each subsequent month's payment shall be computed retrospectively, i.e., shall be based on earned and unearned income received in the corresponding budget month. (b) In these subsequent months, other factors of need which affect the amount of the assistance payment may also be based on circumstances in the corresponding budget month, or they may be based on circumstances in the payment month. (c) For the first month in which retrospective budgeting is used, a State shall not consider income received by the recipient before the date of application. When a person reapplies during the same month in which a termination became effective, the State may consider income received before the date of application. [44 FR 26083, May 4, 1979] 233.26 Retrospective budgeting; determining eligibility after the initial one or two months. (a) Under retrospective budgeting, there are three options for determining eligibility. The State plan shall specify that eligibility, following the initial one or two months under 233.24, shall be determined by one of the following methods: (1) A State may consider all factors, including income retrospectively, i.e., only from the budget month. For example, if a change in circumstances occurs which affects eligibility, e.g., deprivation ceases, the change may be reported at the end of the budget month and assistance shall be terminated for the corresponding payment month. Thus, even if the agency could have terminated assistance earlier than the corresponding payment month, it shall not do so under retrospective determination of eligibility. (2) A State may consider all factors, including income, prospectively. For example, if deprivation ceases, and the family becomes ineligible, the agency shall immediately take steps to terminate assistance. (3) A State may use a combination of the options in paragraphs (a) and (b) of this section by considering factors related to earned and unearned income retrospectively and all other factors prospectively. For example, if a change in income makes the family ineligible, the agency shall wait until the corresponding payment month to terminate assistance. On the other hand, if a change of circumstances other than income makes the family ineligible, the agency shall immediately take steps to terminate assistance. [44 FR 26083, May 4, 1979; 44 FR 29065, May 18, 1979, as amended at 47 FR 47828, OCt. 28, 1982] 233.27 Supplemental payments under retrospective budgeting. (a) General requirements. A State plan which provides for payments between 25 and 45 days from the close of a budget month, shall provide for supplemental payments to eligible recipients who request them. A State plan which provides for payments within 25 days may provide for supplemental payments: (1) The supplemental payment shall be paid for the month in which it was requested. (2) The recipient family is eligible for a supplemental payment if its income for the month is less than 80 percent of the amount the State would pay for a similar family with no income. However, this percentage of the amount the State would pay for a similar family with no income may be set between 80 and 100 percent, as specified in the State plan. The supplemental payment equals the difference between the family's income in the payment month and that percentage. (3) Supplemental payments shall be issued within 5 working days of request. (b) How income is treated. For purposes of supplemental payments, income includes that month's assistance payment and any income received or expected to be received by the recipient, but does not include work-related expenses. (1) The amount used for the assistance payment shall be the monthly assistance payment without regard to any recoupments made for prior overpayments or adjustments for prior underpayments. (2) The agency may include as income cash in hand or available in bank accounts. It may also include as income any cash disregarded in determining need or the amount of the assistance payment, but not cash payments that are disregarded by 233.20(a)(4)(ii), paragraphs (c) on relocation assistance, (d) on educational grants or loans and (g) on payments for certain services. [44 FR 26083, May 4, 1979, as amended at 51 FR 9205, Mar. 18, 1986] 233.28 Monthly reporting. (a) State plans specifying retrospective budgeting shall require that recipients with earned income, other than income from self-employment, report that income to the agency monthly. The State may require recipients with unearned income, no income, or income from self-employment to report monthly. The agency shall provide a form for this purpose, which: (1) Is written in clear simple language; (2) Specifies the date by which the agency must receive the form and the consequences of a late or incomplete form, including whether the agency will delay or withhold payment if the form is not returned by the specified date; (3) Identifies an individual or agency unit the recipient should contact to receive prompt answers to questions about information requested on the form, and provides a telephone number for this purpose; (4) Includes a statement, to be signed by the recipient, that he or she understands that the information he or she provides may result in changes in assistance, including reduction or termination; (5) Advises the recipient if supplemental payments are available and the proper procedures for initiating a request; and (6) Advises the recipient of his or her right to a fair hearing on any decrease or termination of assistance or denial of a supplemental payment. (b) The agency shall specify the date by which it must receive the monthly report. This date shall be at least 5 days from the end of the budget month and shall also allow the recipient at least 5 days to complete the report. (c) The agency may consider a monthly report incomplete only if it is unsigned or omits information necessary to determine eligibility or compute the payment amount. (d) The agency shall provide a stamped, self-addressed envelope for returning the monthly report. (e) The agency shall make special provisions for persons who are illiterate or have other handicaps so that they cannot complete a monthly report form. [44 FR 26083, May 4, 1979] 233.29 How monthly reports are treated and what notices are required. (a) What happens if a completed monthly report is received on time. When the agency receives a completed monthly report by the date specified in 233.28 it shall process the payment. The agency shall notify the recipient of any changes from the prior payment and the basis for its determinations. This notice must meet the requirements of 205.10(a)(4)(i)(B) of this chapter on adequate notice if the payment is being reduced or assistance is being terminated. This notice must be received by the recipient no later than his or her resulting payment or in lieu of the payment. (b) What happens if the completed monthly report is received before the extension deadline. (1) If the completed monthly report is not received by the date specified in 233.28, the agency shall send a notice to the recipient. This notice shall inform him or her that the monthly report is overdue or is not complete and that he or she has at least 10 additional days to file. It must inform the recipient that termination may result if that is the agency's policy, if the report is not filed within the extension period. This notice must reach the recipient at least 10 days before the expected payment. However, in States in which the date specified in 233.28 is within 10 days of the expected payment date, the notice must reach the recipient on or before the expected payment date. (2) When the report is received within the extension period, the agency may delay payment to the recipient, as follows: (i) In a State that pays within 25 days of the budget month the payment may be delayed 10 days; (ii) In a State that pays within 25 to 45 days of the budget month, the payment may not be delayed beyond the 45th day. (c) What happens if a monthly report is not received by the end of the extension period. An agency may terminate assistance if it has not received a report or has received an incomplete report, and the 10 day extension period has expired. If the State decides to terminate assistance, it must send the recipient a notice which meets the requirements of 205.10(a)(4)(i)(B) on adequate notice. (d) How a recipient may delay an adverse action based on a monthly report. If a recipient's assistance is reduced or terminated based on information in the monthly report, and he or she requests a fair hearing within 10 days, the assistance payment shall be reinstated immediately at the previous month's level pending the hearing decision. The payment shall be made effective from the date assistance was reduced or terminated. [44 FR 26084, May 4, 1979] 233.31 Budgeting methods for AFDC. (a) Requirements for State plans. A State plan for AFDC shall specify that all factors of eligibility shall be determined prospectively and the amount of the assistance for any month for all assistance units required to file a monthly report for the month designated as the budget month under the State's retrospective budgeting procedures shall be determined using retrospective budgeting as provided in 233.31 - 233.37 except as provided in 233.34. The State plan shall specify whether the State uses prospective or retrospective budgeting to determine the amount of the assistance payments for recipients not required to report monthly. Budgeting methods for OAA, AB, APTD, and AABD are described in 233.21 - 233.29. (b) Definitions. The following definitions apply to 233.31 through 233.37: (1) ``Prospective budgeting'' means that the agency shall determine eligibility (and compute the amount of assistance for the first one or two months) based on its best estimate of income and circumstances which will exist in that month. This estimate shall be based on the agency's reasonable expectation and knowledge of current, past or future circumstances. (2) ``Retrospective budgeting'' means that the agency shall compute the amount of assistance for a payment month based on actual income or circumstances which existed in a previous month, the ``budget month.'' (3) ``Budget month'' means the fiscal or calendar month from which the agency shall use income or circumstances of the family to compute the amount of assistance. (4) ``Payment month'' means the fiscal or calendar month for which an agency shall pay assistance. Payment is based upon income or circumstances in the budget month. In prospective budgeting, the budget month and the payment month are the same. In retrospective budgeting, the payment month follows the budget month. (5) ``Recent work history'' means the individual received earned income in any one of the two months prior to the budget month. [47 FR 5678, Feb. 5, 1982 as amended at 49 FR 35602, Sept. 10, 1984; 57 FR 30160, July 8, 1992] 233.32 Payment and budget months (AFDC). A State shall specify in its plan for AFDC the time period covered by the payment (payment month) and the time period used to determine that payment (budget month) and whether it adopts (a) a one-month or two-month retrospective system; and (b) a one-month or two-month prospective system for the initial payment months. If a State elects to have a two-month retrospective system it must also elect a two-month prospective system. [47 FR 5678, Feb. 5, 1982] 233.33 Determining eligibility prospectively for all payment months (AFDC). (a) The State plan for AFDC shall provide that the State shall determine all factors of eligibility prospectively for all payment months. Thus, the State agency shall establish eligibility based on its best estimate of income and circumstances which will exist in the month for which the assistance payment is made. (b) When a IV - A agency receives an official report of a child support collection it shall consider that information as provided in 232.20(a) of this chapter. (232.20(a) explains the treatment of child support collections.) [47 FR 5678, Feb. 5, 1982] 233.34 Computing the assistance payment in the initial one or two months (AFDC). A State shall compute the amount of the AFDC payment for the initial month of eligibility: (a) Prospectively (except as in paragraphs (b) and (c) of this section); or (b) Retrospectively if the applicant received assistance (or would have except for the prohibition on payments of less than $10) for the immediately preceding payment month (except where the State pays the second month after application prospectively); or (c) Retrospectively if: (1) Assistance had been suspended as defined in paragraph (d) of this section; and (2) The initial month follows the month of suspension; and (3) The family's circumstances for the initial month had not changed significantly from those reported in the corresponding budget month, e.g., loss of job. (d) A State may suspend, rather than terminate, assistance when: (1) The agency has knowledge of, or reason to believe that ineligibility would be only for one payment month; and (2) Ineligibility for that one payment month was caused by income or other circumstances in the corresponding budget month. (e) If the initial month is computed prospectively as in paragraph (a) of this section, the second month shall be prospective if the State elects a 2-month retrospective budgeting system. [47 FR 5679, Feb. 5, 1982] 233.35 Computing the assistance payment under retrospective budgeting after the initial one or two months (AFDC). The State plan for AFDC shall provide: (a) After the initial one or two payment months of assistance under 233.34, the amount of each subsequent month's payment shall be computed retrospectively, i.e., shall be based on income and other relevant circumstances in the corresponding budget month except as provided in 233.20(a)(3)(iii). In any month for which an individual will be determined eligible prospectively and will be added to an existing AFDC assistance unit, the State must meet the individual's needs to the same extent it would if the individual were an applicant for AFDC. (b) Except as provided in 233.34(b), for the first and second payment month for which retrospective budgeting is used, the State shall not count income from the budget month already considered for any payment month determined prospectively which is not of a continuous nature. [47 FR 5679, Feb. 5, 1982] 233.36 Monthly reporting (AFDC). (a) Except as provided in paragraph (b) of this section, a State plan for AFDC shall require the caretaker relative, or another person designated by the State, to submit, on behalf of each assistance unit whose members have earned income or recent work history, each assistance unit which has income deemed to it from individuals living with the unit who have earned income or a recent work history and, at State option, other assistance units, a completed report form to the agency monthly on: (1) Budget month income, family composition, and other circumstances relevant to the amount of the assistance payment; and (2) Any changes in income, resources, or other relevant circumstances affecting continued eligibility which the assistance unit expects to occur in the current month or in future months. (3) The income of a parent or a legal guardian of a minor parent, a stepparent, or an alien sponsor, as well as the resources of an alien sponsor, where appropriate. (b) A State may exempt categories of recipients otherwise required to report monthly from reporting each month with prior approval by the Secretary if the State can demonstrate that not requiring these cases to file monthly reports is cost effective. The Secretary will grant waivers under this provision for a period up to one year, at the end of which time the State may request an extension of the waiver. A decision by the Secretary not to approve a request for an exemption is not appealable. The plan shall include criteria for assuring (1) that exempted cases are unlikely to incur changes in circumstances from month to month which would impact their eligibility or amount of assistance and (2) that the administrative cost of requiring those categories to report monthly will be greater than the program savings which would accrue. (c) States shall also direct recipients to report information as defined in paragraph (a)(2) of this section to the agency as they become aware of expected changes rather than waiting to inform the State on the monthly report. [47 FR 5679, Feb. 5, 1982 as amended at 49 FR 35602, Sept. 10, 1984; 57 FR 30160, July 8, 1992] 233.37 How monthly reports are treated and what notices are required (AFDC). (a) What happens if a completed monthly report is received on time. When the agency receives a completed monthly report as specified in 233.36, and if all eligibility conditions are met, it shall process the payment. The agency shall notify the recipient of any changes from the prior payment and the basis for its determinations. This notice must meet the requirements of 205.10(a)(4)(i)(B) of this chapter on adequate notice if the payment is being reduced or assistance is terminated as a result of information provided in the monthly report. The notice must be mailed to arrive no later than the resulting payment or in lieu of the payment. A recipient has 10 days from the date of the notice to request a hearing in order to receive reinstatement. (b) What happens if a completed monthly report is not received by the agency. An agency may terminate assistance if it has received no report or has received only an incomplete report as defined by the State. In this case, the agency must send the recipient a notice meeting the requirements of 205.10(a)(4)(i)(B) to arrive not later than the date it would have made payment if the agency had received a completed monthly report on time. If the recipient notifies the agency and files a completed report within 10 days of the date of this notice, the agency must accept the replacement form and make a payment based on the information on the form if the information indicates that the person is still eligible (without the applicable earned income disregards if the State agency determines no good cause exists for failing to file a timely report of earnings). If the recipient is found ineligible or eligible for an amount less than the prior month's payment, the State must promptly notify the recipient of his or her right to a fair hearing and his or her right to have assistance reinstated. A recipient has 10 days from the date of the notice to request a hearing in order to receive reinstatement. (c) What happens if a completed monthly report is received but is not timely. States must specify in their plans a definition of timeliness related to the filing of a monthly report and the number of days an individual has to report changes in earnings which impact eligibility. States must inform recipients what constitutes timeliness and that no disregard of earnings as described in 233.20(a)(11)(i) and (ii)(B) ($30 and one-third, child care, and work expenses) will be applied to any earnings which are not reported in a timely manner without good cause. The State must provide recipients an opportunity to show good cause for not filing a timely report of earnings. If the State finds good cause, then applicable earned income disregards will be applied in determining payment. If the State does not find good cause, then applicable earned income disregards will not be applied. If the recipient is found ineligible or eligible for an amount less than the prior month's payment, the State must promptly notify the recipient of his or her right to a fair hearing and his or her right to have assistance reinstated. A recipient has 10 days from the date of the notice to request a hearing in order to receive reinstatement. [47 FR 5679, Feb. 5, 1982] 233.38 Waiver of monthly reporting and retrospective budgeting requirements; AFDC. (a) States may request waivers of the requirements at 233.31 - 233.37 to promote compatibility with monthly reporting and budgeting requirements of the Food Stamp Act of 1977 as amended. (b) The Secretary will not approve requests for waivers unless the information documenting the need for the waiver shows that the waiver would simplify administration of both programs and would not result in a net cost to the Federal government. Approvals for waivers will be for periods up to one year, after which time the State may request an extension of the waiver. (c) Any decision by the Secretary not to approve a request for a waiver is not appealable. [49 FR 35602, Sept. 10, 1984] 233.39 Age. (a) Condition for plan approval. A State plan under title I or XVI of the Social Security Act may not impose any age requirement of more than 65 years. (b) Federal financial participation. (1) Federal financial participation is available in financial assistance provided to otherwise eligible persons who were, for any portion of the month for which assistance is paid: (i) In OAA or AABD with respect to the aged, 65 years of age or over; (ii) In AFDC, under 18 years of age; or age 18 if a full-time student in a secondary school, or in the equivalent level of vocational or technical training, and reasonably expected to complete the program before reaching age 19. (iii) In AB or AABD with respect to the blind, any age; (iv) In APTD or AABD with respect to the disabled, 18 years of age or older. (2) Federal determination of whether an individual meets the age requirements of the Social Security Act will be made according to the common-law method (under which a specific age is attained the day before the anniversary of birth), unless the State plan specifies that the popular usage method (under which an age is attained on the anniversary of birth), is used. (3) The State agency may adopt an arbitrary date such as July 1 as the point from which age will be computed in all instances where the month of an individual's birth is not available, but the year can be established. [36 FR 3866, Feb. 27, 1971. Redesignated and amended at 47 FR 5678, Feb. 5, 1982] 233.40 Residence. (a) Condition for plan approval. A State plan under title I, IV - A, X, XIV, or XVI of the Social Security Act may not impose any residence requirement which excludes any individual who is a resident of the State except as provided in paragraph (b) of this section. For purposes of this section: (1) A resident of a State is one: (i) Who is living in the State voluntarily with the intention of making his or her home there and not for a temporary purpose. A child is a resident of the State in which he or she is living other than on a temporary basis. Residence may not depend upon the reason for which the individual entered the State, except insofar as it may bear upon whether the individual is there voluntarily or for a temporary purpose; or (ii) Who, is living in the State, is not receiving assistance from another State, and entered the State with a job commitment or seeking employment in the State (whether or not currently employed). Under this definition, the child is a resident of the State in which the caretaker is a resident. (2) Residence is retained until abandoned. Temporary absence from the State, with subsequent returns to the State, or intent to return when the purposes of the absence have been accomplished, does not interrupt continuity of residence. (b) Exception. A State plan under title I, X, XIV, or XVI need not include an individual who has been absent from the State for a period in excess of 90 consecutive days (regardless of whether the individual has maintained his or her residence in the State during this period) until he or she has been present in the State for a period of 30 consecutive days (or a shorter period specified by the State) in the case of such individual who has maintained residence in the State during such period of absence or for a period of 90 consecutive days (or a shorter period as specified by the State) in the case of any other such individual. An individual thus excluded under any such plan may not, as a consequence of that exclusion, be excluded from assistance under the State's title XIX plan if otherwise eligible under the title XIX plan (see 42 CFR 436.403). [45 FR 26962, Apr. 22, 1980] 233.50 Citizenship and alienage. A State plan under title I (OAA); title IV - A (AFDC); title X (AB); title XIV (APTD); and title XVI (AABD-disabled) of the Social Security Act shall provide that an otherwise eligible individual, dependent child, or a caretaker relative or any other person whose needs are considered in determining the need of the child or relative claiming aid, must be either: (a) A citizen, or (b) An alien lawfully admitted for permanent residence or otherwise permanently residing in the United States under color of law, including certain aliens lawfully present in the United States as a result of the application of the following provisions of the Immigration and Nationality Act: (1) Section 207(c), in effect after March 31, 1980 -- Aliens Admitted as Refugees. (2) Section 203(a)(7), in effect prior to April 1, 1980 -- Individuals who were Granted Status as Conditional Entrant Refugees. (3) Section 208 -- Aliens Granted Political Asylum by the Attorney General. (4) Section 212(d)(5) -- Aliens Granted Temporary Parole Status by the Attorney General, or (c) An alien granted lawful temporary resident status pursuant to section 201, 302, or 303 of the Immigration Reform and Control Act of 1986 (Pub. L. 99 - 603) who must be either: (1) A Cuban and Haitian entrant as defined in paragraph (1) or (2)(A) of section 501(e) of Pub. L. 96 - 422, as in effect on April 1, 1983, or (2) An adult assistance applicant for OAA, AB, APTD, or AABD, or (3) An applicant for AFDC who is not a Cuban and Haitian applicant under paragraph (c)(1) of this section who was adjusted to lawful temporary resident status more than five years prior to application. All other aliens granted lawful temporary or permanent resident status, pursuant to sections 201, 302, or 303 of the Immigration Reform and Control Act of 1986, are disqualified for five years from the date lawful temporary resident status is granted. [47 FR 5680, Feb. 5, 1982; 47 FR 43383, Oct. 1, 1982, as amended at 52 FR 48689, Dec. 24, 1987 (interim); 53 FR 30433, Aug. 12, 1988 (final); 54 FR 10544, Mar. 14, 1989] 233.51 Eligibility of sponsored aliens. Definition: Sponsor is any person who, or any public or private agency or organization that, executed an affidavit(s) of support or similar agreement on behalf of an alien (who is not the child of the sponsor or the sponsor's spouse) as a condition of the alien's entry into the United States. Paragraphs (a) through (d) of this section apply only to aliens who are sponsored by individuals and who filed applications for the first time after September 30, 1981. Paragraphs (e) and (f) apply only to aliens sponsored by public or private agencies or organizations with respect to periods after October 1, 1984. A State plan under title IV - A of the Act shall provide that: (a) For a period of three years following entry for permanent residence into the United States, a sponsored alien who is not exempt under paragraph (g) of this section, shall provide the State agency with any information and documentation necessary to determine the income and resources of the sponsor and the sponsor's spouse (if applicable and if living with the sponsor) that can be deemed available to the alien, and obtain any cooperation necessary from the sponsor. (b) The income and resources of a sponsor and the sponsor's spouse shall be deemed to be the unearned income and resources of an alien for three years following the alien's entry into the United States: (1) Monthly income deemed available to the alien from the sponsor and the sponsor's spouse not receiving AFDC or SSI shall be: (i) The total monthly unearned and earned income of the sponsor and sponsor's spouse reduced by 20 percent (not to exceed $175) of the total of any amounts received by them in the month as wages or salary or as net earnings from self-employment. (ii) The amount described in paragraph (b)(1)(i) of this section reduced by: (A) The cash needs standard under the plan in the alien's State of residence for a family of the same size and composition as the sponsor and those other people living in the same household as the sponsor who are or could be claimed by the sponsor as dependents to determine his or her Federal personal income tax liability but whose needs are not taken into account in making a determination under 233.20 of this chapter; (B) Any amounts actually paid by the sponsor or sponsor's spouse to people not living in the household who are or could be claimed by them as dependents to determine their Federal personal income tax liability; and (C) Actual payments of alimony or child support, with respect to individuals not living in the household. (2) Monthly resources deemed available to the alien from the sponsor and sponsor's spouse shall be the total amount of their resources determined as if they were applying for AFDC in the alien's State of residence, less $1500. (c) In any case where a person is the sponsor of two or more aliens, the income and resources of the sponsor and sponsor's spouse, to the extent they would be deemed the income and resources of any one of the aliens under the provisions of this section, shall be divided equally among the sponsored aliens. (d) Income and resources which are deemed to a sponsored alien shall not be considered in determining the need of other unsponsored members of the alien's family except to the extent the income or resources are actually available. (e) For a period of three years following entry for permanent residence into the United States, any alien who is not exempt under paragraph (g) of this section and has been sponsored by a public or private agency or organization, shall be ineligible for assistance unless the State agency determines (in accordance with paragraph (f)) that the sponsor no longer exists or has become unable to meet the alien's needs. (f) The State plan shall set forth the criteria the State agency will use in determining whether an agency or organization no longer exists or is unable to meet the alien's needs and the documentation the agency will require of the alien in making such determination. The sponsored alien shall provide the State agency with any information and documentation necessary for such determination and obtain any cooperation necessary from the sponsor. (g) The provisions of this section shall not apply to any alien who is: (1) Admitted as a conditional entrant refugee to the United States as a result of the application, of the provisions of section 203(a)(7) (in effect prior to April 1, 1980) of the Immigration and Nationality Act; (2) Admitted as a refugee to the United States as a result of the application of the provisions of section 207(c) (in effect after March 31, 1980) of the Immigration and Nationality Act; (3) Paroled into the United States as a refugee under section 212(d)(5) of the Immigration and Nationality Act; (4) Granted political asylum by the Attorney General under section 208 of the Immigration and Nationality Act; (5) A Cuban or Haitian entrant, as defined in section 501(e) of the Refugee Education Assistance Act of 1980 (Pub. L. 96 - 422); or (6) The dependent child of the sponsor or sponsor's spouse. (h) The Secretary shall make information necessary to make a determination under this section and supplied under agreement with the Secretary of State and the Attorney General, available upon request to a concerned State Agency. [47 FR 5680, Feb. 5, 1982; 47 FR 43383, Oct. 1, 1982; 47 FR 47828, Oct. 28, 1982; 49 FR 35602, Sept. 10, 1984; 57 FR 30160, July 8, 1992] 233.52 Overpayment to aliens. A State Plan under Title IV - A of the Social Security Act, shall provide that: (a) Any sponsor of an alien and the alien shall be jointly and severally liable for any overpayment of aid under the State plan made to the alien during the three years after the alien's entry into the United States due to the sponsor's failure to provide correct information under the provisions of 233.51, except as provided in paragraph (b) of this section. (b) When a sponsor is found to have good cause or to be without fault (as defined in the State plan) for not providing information to the agency, the sponsor will not be held liable for the overpayment and recovery will not be made from this sponsor. (c) An overpayment for which the alien or the sponsor and the alien are liable (as described in paragraphs (a) and (b) of this section) shall be repaid to the State or recovered in accordance with 233.20(a)(13). If the agency is unable to recover the overpayment through this method, funds to reimburse the agency for the overpayment shall be withheld from future payments to which the alien or the alien and the individual sponsor are entitled under: (1) Any State administered or supervised program established by the Social Security Act, or (2) Any federally administered cash benefit program established by the Social Security Act. [47 FR 5680, Feb. 5, 1982 as amended at 49 FR 35602, Sept. 10, 1984] 233.53 Support and maintenance assistance (including home energy assistance) in AFDC. (a) General. At State option, certain support and maintenance assistance (including home energy assistance) may be excluded from income and resources. (b) Definitions. The following definitions are limited to the support and maintenance assistance provisions of this section. ``Appropriate State agency'' means the agency designated by the chief executive officer of the State to handle the State's responsibilities with respect to support and maintenance assistance under paragraph (c) of this section. ``Based on need'' means that the assistance is given to or on behalf of an applicant or recipient for the purpose of support and maintenance (including home energy) and meets the criteria established by the State for determining the need for such assistance. ``In kind assistance'' means assistance furnished in any form except direct cash payments to an applicant or recipient or direct payments to an applicant or recipient through other financial instruments which are convertible to cash. ``Private, nonprofit organization'' means a religious, charitable, educational, or other organization such as described in section 501(c) of the Internal Revenue Code of 1954. (Actual tax exempt certification by IRS is not necessary). ``Rate-of-return entity'' means an entity whose revenues are primarily received from the entity's charges to the public for goods or services, and such charges are based on rates regulated by a State or Federal governmental body. ``Support and maintenance assistance'' means any assistance designed to meet the expenses of day to day living. Support and maintenance assistance includes home energy assistance. Home energy assistance means any assistance related to meeting the cost of heating or cooling a home. Home energy assistance includes such items as payments for utility service or bulk fuels; assistance in kind such as portable heaters, fans, blankets, storm doors, or other items which help reduce the costs of heating and cooling such as conservation or weatherization materials and services; etc. (c) Requirements for State Plans. If a State elects to exclude from income and resources support and maintenance assistance, the State plan for AFDC must as specified below: (1) Provide that an appropriate State agency will certify that support and maintenance assistance is based on need (as defined in paragraph (b) of this section), and that such certification will be accepted for purposes of determining eligibility for and the amount of payments under the AFDC program. (2) Provide that in joint AFDC/SSI households, support and maintenance assistance furnished to the household which is not excluded under this paragraph will be prorated on a reasonable basis to determine the amount provided to the AFDC assistance unit. The State plan must describe the method that will be used to prorate the assistance in these circumstances. (3) Provide that the types and amount of support and maintenance assistance that are excluded when received by an AFDC applicant or recipient will also be excluded in determining the income and resources of a parent, stepparent, spouse or alien sponsor whose income is considered available to an AFDC applicant or recipient. (4) Provide that the State may exclude, from income and resources, support and maintenance assistance (as defined in paragraph (b) of this section) which the appropriate State agency certifies is based on need, if the assistance is furnished by: (i) A supplier of home heating gas or oil, regardless of whether the assistance is in cash or in kind; or (ii) A municipal utility providing home energy, regardless of whether the assistance is in cash or in kind; or (iii) A rate-of-return entity which provides home energy, regardless of whether the assistance is in cash or in kind; or (iv) A private nonprofit organization, but only if such assistance is in kind. (5) Provide that, if the State elects to exclude from income and resources any support and maintenance assistance, the State plan must: (i) Describe the criteria that will be used to determine the need for the assistance; (ii) Identify the types and amounts of assistance which will be excluded; and (iii) Provide that any limitations will be made on a reasonable basis. [51 FR 39533, Oct. 29, 1986, as amended at 56 FR 64204, Dec. 9, 1991] 233.60 Institutional status. (a) Federal financial participation. (1) Federal financial participation under Title I, X, XIV, or XVI of the Social Security Act is not available in payments to or in behalf of any individual who is an inmate of a public institution except as a patient in a medical institution. (2) (i) Federal financial participation under title X or XIV of the Social Security Act is not available in payments to or in behalf of any individual who is a patient in an institution for tuberculosis or mental diseases. (ii) Federal financial participation under title XVI of the Social Security Act is not available in payments to or in behalf of any individual who has not attained 65 years of age and who is a patient in an institution for tuberculosis or mental diseases. (3) For purposes of this paragraph: (i) Federal financial participation is available in payments for the month in which an individual (if otherwise eligible) became an inmate of a public institution, or a patient in an institution for tuberculosis or mental diseases; (ii) Whether an institution is one for tuberculosis or mental diseases will be determined by whether its overall character is that of a facility established and maintained primarily for the care and treatment of individuals with tuberculosis or mental diseases (whether or not it is licensed); (iii) An institution for the mentally retarded is not an institution for mental diseases; (iv) An individual on conditional release or convalescent leave from an institution for mental diseases is not considered to be a patient in such institution. (b) Definitions. For purposes of Federal financial participation under paragraph (a) of this section: (1) ``Institution'' means an establishment which furnishes (in single or multiple facilities) food and shelter to four or more persons unrelated to the proprietor, and in addition, provides some treatment or services which meet some need beyond the basic provision of food and shelter. (2) ``In an institution'' refers to an individual who is admitted to participate in the living arrangements and to receive treatment or services provided there which are appropriate to his requirements. (3) ``Public institution'' means an institution that is the responsibility of a governmental unit or over which a governmental unit exercises administrative control. (4) ``Inmate of a public institution'' means a person who is living in a public institution. An individual is not considered an inmate when: (i) He is in a public educational or vocational training institution, for purposes of securing education or vocational training, or (ii) He is in a public institution for a temporary emergent period pending other arrangements appropriate to his needs. (5) ``Medical institution'' means an institution which: (i) Is organized to provide medical care, including nursing and convalescent care; (ii) Has the necessary professional personnel, equipment, and facilities to manage the medical, nursing, and other health needs of patients on a continuing basis in accordance with accepted standards; (iii) Is authorized under State law to provide medical care; (iv) Is staffed by professional personnel who have clear and definite responsibility to the institution in the provision of professional medical and nursing services including adequate and continual medical care and supervision by a physician; sufficient registered nurse or licensed practical nurse supervision and services and nurse aid services to meet nursing care needs; and appropriate guidance by a physician(s) on the professional aspects of operating the facility. (6) ``Institution for tuberculosis'' means an institution which is primarily engaged in providing diagnosis, treatment, or care of persons with tuberculosis, including medical attention, nursing care, and related services. (7) ``Institution for mental diseases'' means an institution which is primarily engaged in providing diagnosis, treatment or care of persons with mental diseases, including medical attention, nursing care, and related services. (8) ``Patient'' means an individual who is in need of and receiving professional services directed by a licensed practitioner of the healing arts toward maintenance, improvement, or protection of health, or alleviation of illness, disability, or pain. [36 FR 3867, Feb. 27, 1971] 233.70 Blindness. (a) State plan requirements. A State plan under title X or XVI of the Social Security Act must: (1) Contain a definition of blindness in terms of ophthalmic measurement. The following definition is recommended: An individual is considered blind if he has central visual acuity of 20/200 or less in the better eye with correcting glasses or a field defect in which the peripheral field has contracted to such an extent that the widest diameter of visual field subtends an angular distance of no greater than 20. (2) Provide, in any instance in which a determination is to be made whether an individual is blind or continues to be blind as defined under the State plan, that there will be an initial examination or re-examination performed by either a physician skilled in the diseases of the eye or by an optometrist, whichever the individual so selects. (i) No examination is necessary when both eyes are missing. (ii) Where an initial eye examination or re-examination is necessary, the physician or optometrist conducting such examination will submit to the State agency a report thereof, on such forms and in such manner, as may be prescribed for such purpose. A determination whether the individual meets the State's definition of blindness under the State plan will be based upon a review of such eye examination report as provided for in paragraph (a)(3) of this section, and other information or additional examination reports as the State deems necessary. (3) Provide that each initial eye examination report and any subsequent re-examination report will be reviewed by a State reviewing physician skilled in the diseases of the eye (e.g., an ophthalmologist or an eye, ear, nose and throat specialist). Such physician is responsible for making the agency's decision that the applicant or recipient does or does not meet the State's definition of blindness, and for determining if and when reexaminations are necessary in periodic reviews of eligibility, as required in 206.10(a)(9)(iii) of this chapter. (b) Federal financial participation -- (1) Assistance payments. Federal financial participation is available in assistance provided to or in behalf of any otherwise eligible person who is blind under the State's title X or XVI plan. Blindness may be considered as continuing until a determination by the reviewing physician establishes the fact that the recipient's vision has improved beyond the State's definition of blindness set forth under its State title of X or XVI plan. (2) Administrative expenses. Federal financial participation is available in any expenditures incident to the eye examination necessary to determine whether an individual is blind. [36 FR 3867, Feb. 27, 1971, as amended at 40 FR 25819, June 19, 1975] 233.80 Disability. (a) State plan requirements. A State plan under title XIV or XVI of the Social Security Act must: (1) Contain a definition of permanently and totally disabled, showing that: (i) ``Permanently'' is related to the duration of the impairment or combination of impairments; and (ii) ``Totally'' is related to the degree of disability. The following definition is recommended: ``Permanently and totally disabled'' means that the individual has some permanent physical or mental impairment, disease, or loss, or combination thereof, this substantially precludes him from engaging in useful occupations within his competence, such as holding a job. Under this definition: ``Permanently'' refers to a condition which is not likely to improve or which will continue throughout the lifetime of the individual; it may be a condition which is not likely to respond to any known therapeutic procedures, or a condition which is likely to remain static or to become worse unless certain therapeutic measures are carried out, where treatment is unavailable, inadvisable, or is refused by the individual on a reasonable basis; ``permanently'' does not rule out the possibility of vocational rehabilitation or even possible recovery in light of future medical advances or changed prognosis; in this sense the term refers to a condition which continues indefinitely, as distinct from one which is temporary or transient; ``Totally'' involves considerations in addition to those verified through the medical findings, such as age, training, skills, and work experience, and the probable functioning of the individual in his particular situation in light of his impairment; an individual's disability would usually be tested in relation to ability to engage in remunerative employment; the ability to keep house or to care for others would be the appropriate test for (and only for) individuals, such as housewives, who were engaged in this occupation prior to the disability and do not have a history of gainful employment; eligibility may continue, even after a period of rehabilitation and readjustment, if the individual's work capacity is still very considerably limited (in comparison with that of a normal person) in terms of such factors as the speed with which he can work, the amount he can produce in a given period of time, and the number of hours he is able to work. (2) Provide for the review of each medical report and social history by technically competent persons -- not less than a physician and a social worker qualified by professional training and pertinent experience -- acting cooperatively, who are responsible for the agency's decision that the applicant does or does not meet the State's definition of permanent and total disability. Under this requirement: (i) The medical report must include a substantiated diagnosis, based either on existing medical evidence or upon current medical examination; (ii) The social history must contain sufficient information to make it possible to relate the medical findings to the activities of the ``useful occupation'' and to determine whether the individual is totally disabled, and (iii) The review physician is responsible for setting dates for reexamination; the review team is responsible for reviewing reexamination reports in conjunction with the social data to determine whether disabled recipients whose health condition may improve continue to meet the State's definition of permanent and total disability. (3) Provide for cooperative arrangements with related programs, such as vocational rehabilitation services. (b) Federal financial participation -- (1) Assistance payments. Federal financial participation is available in payments to or in behalf of any otherwise eligible individual who is permanently and totally disabled. Permanent and total disability may be considered as continuing until the review team establishes the fact that the recipient's disability is no longer within the State's definition of permanent and total disability. (2) Administrative expenses. Federal financial participation is available in any expenditures incident to the medical examinations necessary to determine whether an individual is permanently and totally disabled. [36 FR 3867, Feb. 27, 1971] 233.90 Factors specific to AFDC. (a) State plan requirements. A State plan under title IV - A of the Social Security Act shall provide that: (1) The determination whether a child has been deprived of parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent, or (if the State plan includes such cases) the unemployment of his or her parent who is the principal earner will be made only in relation to the child's natural or adoptive parent, or in relation to the child's stepparent who is married, under State law, to the child's natural or v optive parent and is legally obligated to support the child under State law of general applicability which requires stepparents to support stepchildren to the same extent that natural or adoptive parents are required to support their children. Under this requirement, the inclusion in the family, or the presence in the home, of a ``substitute parent'' or ``man-in-the-house'' or any individual other than one described in this paragraph is not an acceptable basis for a finding of ineligibility or for assuming the availability of income by the State; and (2) Where it has reason to believe that the home in which a relative and child receiving aid reside is unsuitable because of the neglect, abuse, or exploitation of such child, the State or local agency will: (i) Bring such condition to the attention of a court, law-enforcement agency, or other appropriate agency in the State, providing whatever data it has with respect to the situation; (ii) In reporting such conditions, use the same criteria as are used in the State for all other parents and children; and (iii) Cooperate with the court or other agency in planning and implementing action in the best interest of the child. (b) Conditions for plan approval. (1) A child may not be denied AFDC either initially or subsequently ``because of the conditions of the home in which the child resides'', or because the home is considered ``unsuitable'', unless ``provision is otherwise made pursuant to a State statute for adequate care and assistance with respect to such child''. (Section 404(b) of the Social Security Act.) (2) An otherwise eligible child who is under the age of 18 years may not be denied AFDC, regardless of whether she attends school (unless she is required to participate in the JOBS program pursuant to 250.30 and she is assigned to educational activities) or makes satisfactory grades. (3) A state may elect to include in its AFDC program children age 18 who are full-time students in a secondary school, or in the equivalent level of vocational or technical training, and who may reasonably be expected to complete the program before reaching age 19. (4)(i) A child may not be denied AFDC either initially or subsequently because a parent or other caretaker relative fails to cooperate with the child support agency in performing any of the activities needed to: (A) Establish the paternity of a child born out of wedlock; or (B) Obtain support from a person having a legal duty to support the child. (ii) Any parent or caretaker relative who fails to so cooperate shall be treated in accordance with 232.12 of this chapter. (5) [Reserved] (6) An otherwise eligible child may not be denied AFDC if a parent is mentally or physically incapacitated as defined in paragraph (c)(1)(iv) of this section. (c) Federal financial participation. (1) Federal financial participation under title IV - A of the Social Security Act in payments with respect to a ``dependent child,'' as defined in section 406(a) of the Act, is available within the following interpretations: (i) Needy child deprived by reason of. The phrase ``needy child * * * deprived * * * by reason of'' requires that both need and deprivation of parental support or care exist in the individual case. The phrase encompasses the situation of any child who is in need and otherwise eligible, and whose parent -- father or mother -- either has died, has a physical or mental incapacity, or is continually absent from the home. This interpretation is equally applicable whether the parent was the chief bread winner or devoted himself or herself primarily to the care of the child, and whether or not the parents were married to each other. The determination whether a child has been deprived of parental support or care is made in relation to the child's natural parent or, as appropriate, the adoptive parent or stepparent described in paragraph (a) of this section. (ii) Death of a parent. If either parent of a child is deceased, the child is deprived of parental support or care, and may, if he is in need and otherwise eligible, be included within the scope of the program. (iii) Continued absence of the parent from the home. Continued absence of the parent from the home constitutes the reason for deprivation of parental support or care when the parent is out of the home, the nature of the absence is such as either to interrupt or to terminate the parent's functioning as a provider of maintenance, physical care, or guidance for the child, and the known or indefinite duration of the absence precludes counting on the parent's performance of the function of planning for the present support or care of the child. If these conditions exist, the parent may be absent for any reason, and may have left only recently or some time previously; except that a parent whose absence is occasioned solely by reason of the performance of active duty in the uniformed services of the United States (as defined in section 101(3) of Title 37, United States code) is not considered absent from the home. A parent who is a convicted offender but is permitted to live at home while serving a court-imposed sentence by performing unpaid public work or unpaid community service during the workday is considered absent from the home. (iv) ``Physical or mental incapacity''. ``Physical or mental incapacity'' of a parent shall be deemed to exist when one parent has a physical or mental defect, illness, or impairment. The incapacity shall be supported by competent medical testimony and must be of such a debilitating nature as to reduce substantially or eliminate the parent's ability to support or care for the otherwise eligible child and be expected to last for a period of at least 30 days. In making the determination of ability to support, the agency shall take into account the limited employment opportunities of handicapped individuals. A finding of eligibility for OASDI or SSI benefits, based on disability or blindness is acceptable proof of incapacity for AFDC purposes. (v) ``Living with [a specified relative] in a place of residence maintained * * * as his * * * own home''. (A) A child may be considered to meet the requirement of living with one of the relatives specified in the Act if his home is with a parent or a person in one of the following groups: (1) Any blood relative, including those of half-blood, and including first cousins, nephews, or nieces, and persons of preceding generations as denoted by prefixes of grand, great, or great-great. (2) Stepfather, stepmother, stepbrother, and stepsister. (3) Person who legally adopt a child or his parent as well as the natural and other legally adopted children of such persons, and other relatives of the adoptive parents in accordance with State law. (4) Spouses of any persons named in the above groups even after the marriage is terminated by death or divorce. (B) A home is the family setting maintained or in process of being established, as evidenced by assumption and continuation of responsibility for day to day care of the child by the relative with whom the child is living. A home exists so long as the relative exercises responsibility for the care and control of the child, even though either the child or the relative is temporarily absent from the customary family setting. Within this interpretation, the child is considered to be ``living with'' his relative even though: (1) He is under the jurisdiction of the court (e.g., receiving probation services or protective supervision); or (2) Legal custody is held by an agency that does not have physical possession of the child. (2) Federal financial participation is available in: (i) Initial payments made on behalf of a child who goes to live with a relative specified in section 406(a)(1) of the Social Security Act within 30 days of the receipt of the first payment, provided payments are not made for concurrent period for the same child in the home of another relative or as foster care under title IV - E; (ii) Payments made for the entire month in the course of which a child leaves the home of a specified relative, provided payments are not made for a concurrent period for the same child in the home of another relative or as foster care under title IV - E; and (iii) Payments made to persons acting for relatives specified in section 406(a)(1) of the Act in emergency situations that deprive the child of the care of the relative through whom he has been receiving aid, for a temporary period necessary to make and carry out plans for the child's continuing care and support. (iv) At State option, (A) payments with respect to a pregnant woman with no other children receiving assistance, and additionally, at State option, (B) payments for the purpose of meeting special needs occasioned by or resulting from pregnancy both for the pregnant woman with no other children as well as for the pregnant woman receiving AFDC. However, for both paragraphs (c)(2)(iv) (A) and (B) of this section it must be medically verified that the child is expected to be born in the month such payments are made or within the three-month period following such month of payment, and who, if such child had been born and was living with her in the month of payment, would be eligible for aid to families with dependent children. Federal financial participation is not available to meet the needs of the unborn child. (Refer to Medicaid regulations at 42 CFR 435.115 for Medicaid coverage of pregnant women.) (3) Federal financial participation (at the 50 percent rate) is available in any expenses incurred in establishing eligibility for AFDC, including expenses incident to obtaining necessary information to determine the existence of incapacity of a parent or pregnancy of a mother. [36 FR 3868, Feb. 27, 1971 as amended at 39 FR 34038, Sept. 23, 1974; 40 FR 27156, June 26, 1975; 44 FR 12424, Mar. 7, 1979; 47 FR 5681, Feb. 5, 1982; 47 FR 41114, Sept. 17, 1982; 48 FR 28409, June 21, 1983; 51 FR 9206, Mar. 18, 1986; 52 FR 28824, Aug. 4, 1987; 54 FR 42243, Oct. 13, 1989] 233.100 Dependent children of unemployed parents. (a) Requirements for State Plans. If a State wishes to provide AFDC for children of unemployed parents, the State plan under title IV - A of the Social Security Act must: (1) Include a definition of an unemployed parent who is the principal earner which shall apply only to families determined to be needy in accordance with the provisions in 233.20. Such definition must include any such parent who: (i) Is employed less than 100 hours a month; or (ii) Exceeds that standard for a particular month, if the work is intermittent and the excess is of a temporary nature as evidenced by the fact that he or she was under the 100-hour standard for the prior 2 months and is expected to be under the standard during the next month; except that at the option of the State, such definition need not include a principal earner who is unemployed because of participation in a labor dispute (other than a strike) or by reason of conduct or circumstances which result or would result in disqualification for unemployment compensation under the State's unemployment compensation law. (2) Include a definition of a dependent child which shall include any child of an unemployed parent (as defined by the State pursuant to paragraph (a) (1)of this section) who would be, except for the fact that his parent is not dead, absent from the home, or incapacitated, a dependent child under the State's plan approved under section 402 of the Act. (3) Provide for payment of aid with respect to any dependent child (as defined by the State pursuant to paragraphs (a)(2) of this section) when the conditions set forth in paragraphs (a)(3) (i), (ii), (iii), and (vii) of this section are met: (i) His or her parent who is the principal earner has been unemployed for at least 30 days prior to the receipt of such aid. (ii) Such parent has not without good cause, within such 30-day period prior to the receipt of such aid, refused a bona fide offer of employment or training for employment. Before it is determined that such parent has refused a bona fide offer of employment or training for employment without good cause, the agency must make a determination that such an offer was actually made. (In the case of offers of employment made through the public employment or manpower agencies, the determination as to whether the offer was bona fide, or whether there was good cause to refuse it, will be made by that office or agency.) The parent must be given an opportunity to explain why such offer was not accepted. Questions with respect to the following factors must be resolved: (a) That there was a definite offer of employment at wages meeting any applicable minimum wage requirements and which are customary for such work in the community; (b) Any questions as to the parent's inability to engage in such employment for physical reasons or because he has no way to get to or from the particular job; and (c) Any questions of working conditions, such as risks to health, safety, or lack of worker's compensation protection. (iii) Such parent (a) has six or more quarters of work (as defined in paragraph (a)(3)(iv) of this section), within any 13-calendar-quarter period ending within 1 year prior to the application for such aid, or (b) within such 1-year period, received unemployment compensation under an unemployment compensation law of a State or of the United States, or was qualified under the terms of paragraph (a)(3)(v) of this section) for such compensation under the State's unemployment compensation law. (iv) A ``quarter of work'' with respect to any individual means a period (of 3 consecutive calendar months ending on March 31, June 30, September 30, or December 31) in which he or she received earned income of not less than $50 (or which is a ``quarter of coverage'' as defined in section 213(a)(2) of the Act), or in which he or she participated in a community work experience program under section 409 of the Act or the work incentive program established under title IV - C of the Act. (v) An individual shall be deemed ``qualified'' for unemployment compensation under the State's unemployment compensation law if he would have been eligible to receive such benefits upon filing application, or he performed work not covered by such law which, if it had been covered, would (together with any covered work he performed) have made him eligible to receive such benefits upon filing application. (vi)(A) The ``parent who is the principal earner'' means, in the case of any child, whichever parent, in a home in which both parents of such child are living, earned the greater amount of income in the 24-month period the last month of which immediately precedes the month in which an application is filed for aid under this part on the basis of the unemployment of a parent. If the State cannot secure primary evidence of earnings for this period, the State shall designate the principal earner, using the best evidence available. The earnings of each parent are considered in determining the principal earner egardless of when their relationship began. The principal earner so defined remains the principal earner for each consecutive month for which the family receives such aid on the basis of such application. This requirement applies to both new applicants and current AFDC unemployed parent families who were eligible and receiving aid prior to October 1, 1981. (B) If both parents earned an identical amount of income (or earned no income) in such 24-month period, the State shall designate which parent shall be the principal earner. (vii) The parent who is the principal earner (unless exempt under 240.14) has met the requirements for participation in an employment search program under Part 240 of this chapter. (4) Provide for entering into cooperative arrangements with the State agency responsible for administering or supervising the administration of vocational education to assure maximum utilization of available public vocational education services and facilities in the State to encourage the retraining of individuals capable of being retrained. (5) Provide for the denial of such aid to any such dependent child or the relative specified in section 406(a)(1) of the Act with whom such child is living, (i) If and for so long as such child's parent, unless exempt under 224.20, is not currently registered for the work incentive program or if exempt under 224.20(b)(6), is not currently registered with a public employment office in the State, except that in a State with an approved JOBS plan under 250.20, such child's parent, unless exempt under 250.30(b), must be currently participating (or available for participation) in a program under Part 250, or, if he is exempt under 250.30(b)(5), must be registered with a public employment office in the State, and (ii) With respect to any week for which such child's parent qualifies for unemployment compensation under an unemployment compensation law of the State or of the United States but refuses to apply for or accept such unemployment compensation, and (iii) If the parent who is the principal earner (unless exempt under 240.14) fails to meet the requirements for participation in a program of employment search established under Part 240 of this chapter. (6) Provide that within 30 days after the receipt of such aid, unemployed principal earners will be certified for participation in the Work Incentive program under Part 224 or, if the State IV - A agency has an approved JOBS plan pursuant to 250.20, will participate or apply for participation in a program under Part 250 unless the program is not available in the area where the parent is living. (b) [Reserved] (c) Federal financial participation. (1) Federal financial participation is available in payments authorized in accordance with the State plan approved under section 402 of the Act as aid to families with dependent children with respect to a child. (i) Who meets the requirements of section 406(a)(2) of the Act; (ii) Who is living with any of the relatives specified in section 406(a)(1) of the Act in a place of residence maintained by one or more of such relatives as his (or their) own home; (iii) Who has been deprived of parental support or care by reason of the fact that his or her parent who is the principal earner is employed less than 100 hours a month; or exceeds that standard for a particular month if his or her work is intermittent and the excess is of a temporary nature as evidenced by the fact that he or she was under the 100-hour standard for 2 prior months and is expected to be under the standard during the next month. (iv) Whose parent who is the principal earner (a) has six or more quarters of work (as defined in paragraph (a)(3)(iv) of this section) within any 13-calendar-quarter period ending within 1 year prior to the application for such aid, (b) within such 1-year period, received unemployment compensation under an unemployment compensation law of a State or of the United States, or was qualified (under the terms of paragraph (a)(3)(v) of this section) for such compensation under the State's unemployment compensation law; and (v) Whose parent who is the principal earner (a) is currently registered with the WIN program unless exempt or is registered with the public employment office in the State if exempt from WIN registration under 224.20(b)(6) or because there is no WIN program in which he can effectively participate; and (b) has not refused to apply for or accept unemployment compensation with respect to any week for which such child's parent qualifies for unemployment compensation under an unemployment compensation law of a State or of the United States. (2) The State may not include in its claim for Federal financial participation payments made as aid under the plan with respect to a child who meets the conditions set forth in paragraph (c)(1) of this section, where such payments were made. (i) For any part of the 30-day period specified in paragraph (a)(3)(i) of this section; (ii) For such 30-day period if during that period the parent refused without good cause a bona fide offer of employment or training for employment; (iii) For any period beginning with the 31st day after receipt of aid, if and for as long as no action is taken during the period to certify the parent for participation in the Work Incentive program under Part 224, or if the State IV - A agency has an approved JOBS plan pursuant to 250.20, no action is taken during the period to undertake appropriate steps directed toward the participation of such parent in a program under Part 250; and (iv) For any part of the sanction period imposed under 240.22 (for failure to meet the requirements for participation in the employment search program). (d) For all States (other than Puerto Rico, American Samoa, Guam, and the Virgin Islands) the provisions of this section are suspended through September 30, 1998. For Puerto Rico, American Samoa, Guam, and the Virgin Islands, the provisions of this section are suspended from October 1, 1992, through September 30, 1998. [34 FR 1146, Jan. 24, 1969, as amended at 36 FR 13604, July 22, 1971; 38 FR 18549, July 12, 1973; 38 FR 26608, Sept. 24, 1973; 46 FR 46769, Sept. 21, 1981; 47 FR 5681, Feb. 5, 1982; 47 FR 41114, Sept. 17, 1982; 47 FR 43383, Oct. 1, 1982; 48 FR 28409, June 21, 1983; 51 FR 9206, Mar. 18, 1986; 54 FR 42244, Oct. 13, 1989; 57 FR 30426, July 9, 1992] 233.101 Dependent children of unemployed parents. (a) Requirements for State Plans. Effective October 1, 1990 (for Puerto Rico, American Samoa, Guam, and the Virgin Islands, October 1, 1992), a State plan must provide for payment of AFDC for children of unemployed parents. A State plan under title IV - A for payment of such aid must: (1) Include a definition of an unemployed parent who is the principal earner which shall apply only to families determined to be needy in accordance with the provisions in 233.20 of this part. Such definition must include any such parent who: (i) Is employed less than 100 hours a month; or (ii) Exceeds that standard for a particular month, if the work is intermittent and the excess is of a temporary nature as evidenced by the fact that he or she was under the 100-hour standard for the prior 2 months and is expected to be under the standard during the next month; except that at the option of the State, such definition need not include a principal earner who is unemployed because of participation in a labor dispute (other than a strike) or by reason of conduct or circumstances which result or would result in disqualification for unemployment compensation under the State's unemployment compensation law. (2) Include a definition of a dependent child which shall include any child of an unemployed parent (as defined by the State pursuant to paragraph (a)(1) of this section) who would be, except for the fact that his parent is not dead, absent from the home, or incapacitated, a dependent child under the State's plan approved under section 402 of the Act. (3) Provide for payment of aid with respect to any dependent child (as defined by the State pursuant to paragraph (a)(2) of this section) when the conditions set forth in paragraphs (a)(3)(i), (a)(3)(ii), and (a)(3)(iii) of this section are met. (i) His or her parent who is the principal earner has been unemployed for at least 30 days prior to the receipt of such aid; (ii) Such parent has not without good cause, within such 30-day period prior to the receipt of such aid, refused a bona fide offer of employment or training for employment. Before it is determined that such parent has refused a bona fide offer of employment or training for employment without good cause, the agency must make a determination that such offer was actually made. (In the case of offers of employment made through the public employment or manpower agencies, the determination as to whether the offer was bona fide, or whether there was good cause to refuse it, shall be made by the title IV - A agency. The IV - A agency may accept the recommendations of such agencies.) The parent must be given an opportunity to explain why such offer was not accepted. Questions with respect to the following factors must be resolved: (A) That there was a definite offer of employment at wages meeting any applicable minimum wage requirements and which are customary for such work in the community; (B) Any questions as to the parent's inability to engage in such employment for physical reasons or because he has no way to get to or from the particular job; and (C) Any questions of working conditions, such as risks to health, safety, or lack of worker's compensation protection. (iii) Such parent: (A) Has six or more quarters of work (as defined in paragraph (a)(3)(iv) of this section), within any 13-calendar-quarter period ending within one year prior to the application for such aid, or (B) Within such 1-year period, received unemployment compensation under an unemployment compensation law of a State or of the United States, or was qualified under the terms of paragraph (a)(3)(v) of this section for such compensation under the State's unemployment compensation law. (iv) A ``quarter of work'' with respect to any individual means a period (of 3 consecutive calendar months ending on March 31, June 30, September 30, or December 31): (A) In which an individual received earned income of not less than $50 (or which is a ``quarter of coverage'' as defined in section 213(a)(2) of the Social Security Act) or participated in a program under part 250 of this chapter; or (B) At State option (as specified in the plan), in one or more subdivisions of the State, in which he or she attended, full-time, an elementary school, a secondary school, or a vocational or technical training course that is designed to prepare the individual for gainful employment, or in which the individual participated in an educational or training program established under the Job Training Partnership Act, provided that an individual may qualify for no more than four quarters of work under this paragraph for purposes of the requirement set forth in paragraph (a)(3)(iii)(A) of this section; and (C) A calendar quarter ending before October 1990 in which an individual participated in CWEP under section 409 of the Social Security Act or the WIN program established under title IV - C of the Social Security Act (as in effect for a State immediately before the effective date of that State's JOBS program). (v) An individual shall be deemed ``qualified'' for unemployment compensation under the State's unemployment compensation law if he or she would have been eligible to receive such benefits upon filing an application, or he performed work not covered by such law, which, if it had been covered, would (together with any covered work he performed) have made him eligible to receive such benefits upon filing an application. (vi)(A) The ``parent who is the principal earner'' means, in the case of any child, whichever parent, in a home in which both parents of such child are living, earned the greater amount of income in the 24-month period the last month of which immediately precedes the month in which an application is filed for aid under this part on the basis of the unemployment of a parent. If the State cannot secure primary evidence of earnings for this period, the State shall designate the principal earner, using the best evidence available. The earnings of each parent are considered in determining the principal earner regardless of when their relationship began. The principal earner so defined remains the principal earner for each consecutive month for which the family receives such aid on the basis of such application. This requirement applies to both new applicants and current AFDC unemployed parent families who were eligible and receiving aid prior to October 1, 1981. (B) If both parents earned an identical amount of income (or earned no income) in such 24-month period, the State shall designate which parent shall be the principal earner. (4) Provide for entering into cooperative arrangements with the State agency responsible for administering or supervising the administration of vocational education to assure maximum utilization of available public vocational education services and facilities in the State to encourage the retraining of individuals capable of being retrained. (5) Provide that the needs of the child's parent(s) shall not be taken into account in determining the needs and amount of assistance of the child's family: (i) If and for so long as such child's parent(s), unless exempt under 250.30(b) of this chapter, is not currently participating (or available for participation) in a program under part 250 of this chapter or, if they are exempt under 250.30(b)(5) of this chapter (or because a JOBS program has not been established in the subdivision where they reside or they reside in a JOBS subdivision but there is no appropriate JOBS activity in which they can participate), are not registered with a public employment office in the State, and (ii) With respect to any week for which such child's parent qualifies for unemployment compensation under an unemployment compensation law of the State or of the United States but refuses to apply for or accept such unemployment compensation. (6) Provide that medical assistance will be furnished under the State's approved plan under title XIX during any month in which an otherwise eligible individual is denied assistance solely by reason of the time limitation provided under paragraph (b)(3) of this section. (b) State Plan Options. A State plan under title IV - A may: (1) Require the principal earner or both parents to participate in an activity in the JOBS program under part 250 of this chapter, subject to the limitations and conditions of part 250 of this chapter, provided that the participation of each parent in all required activities under the JOBS program does not exceed 40 hours per week, per parent. (2) Provide cash assistance after the performance of assigned program activities by parents required to participate in an activity in the JOBS program under part 250 of this chapter (as provided in paragraph (b)(1) of this section) so long as the State: (i) Makes assistance payments at regular intervals at least monthly, (ii) Prescribes a set of criteria which defines goals or standards for each assigned activity in the JOBS program which must be completed by the participant prior to payment, and (iii) Prior to, or concurrent with, assignment to an activity, notifies the participant of the prescribed goals or standards and that payment for a period will be withheld unless performance of each assigned activity for that period is completed. (3) Provide for a State to operate a payment after performance system under which a family is issued an assistance payment after the applicable family member has successfully completed her obligation to participate in JOBS for a specific period. If the applicable family member fails without good cause to satisfy the obligation, the State may: (i) Impose a sanction in accordance with the JOBS program rules at 250.34, 250.35 and 250.36 of this chapter; (ii) Reduce the family's assistance payment to which the specific period applies by the amount of the payment attributable to the family member for that period or do not make the payment to the family; or (iii) Reduce the family's assistance payment to which the specific period applies (or the amount of the payment attributable to the family member for that period) in proportion to the number of required hours that were not completed. For States that elect to implement paragraphs (b)(3) (ii) or (iii) of this section, the fair hearing requirements set forth at 205.10(a)(4)(ii)(K) of this chapter apply. (4) Limit the number of months that a family may receive AFDC - UP under this section when the following conditions are met: (i) The State did not have on September 26, 1988, an approved AFDC - UP program under section 407 of the Social Security Act. (ii) The family received such aid (on the basis of the unemployment of the parent who is the principal earner) in at least 6 of the preceding 12 months. (iii) The State has in effect a program (described in the plan) for providing education, training, and employment services to assist parents in preparing for and obtaining employment throughout the year. Such a program may include education, training and employment activities under the JOBS program which are provided in part 250 of this chapter or under a State-designed program which provides: (A) Education and instruction for individuals who have not graduated from a secondary school or obtained an equivalent degree, (B) Training whereby an individual acquires market-oriented skills necessary for self-support, and (C) Employment services which seek to place individuals in jobs. (iv) The State must guarantee child care necessary for an individual to participate in an approved, State-designed, non-JOBS program. The regulations at part 255 of this chapter apply to such care. (v) The State has the option of providing necessary supportive services associated with an individual's participation in a State-designed, non-JOBS program. Federal financial participation is available under sections 403 (k) and (l) of the Social Security Act. The regulations at part 255 of this chapter apply to such supportive services. (vi) The State must inform an AFDC - UP family at the time of application that AFDC - UP cash assistance will terminate due to a time limitation, that any family with a child who is (or becomes) deprived due to the death, continued absence, or incapacity of a parent may receive cash assistance under the AFDC program during the time limitation for AFDC - UP, and that a program of training, education, and employment services is available to prepare the family to become self-supporting. (vii) Prior to termination due to a time limitation, the State must notify an AFDC - UP recipient family of the earliest month that it may receive AFDC - UP cash assistance again. This notification may be included in the notice of proposed action which is required pursuant to 205.10(a)(4) of this chapter. To receive assistance again, the family must make a new application. (viii) In establishing eligibility upon re-application following months of nonpayment due to the time limitation, an otherwise eligible family that does not receive aid in a month solely by reason of the option to limit assistance under this paragraph shall be deemed, for purposes of determining the period under paragraph (a)(3)(iii)(A) of this section, to be receiving AFDC - UP cash assistance in that month. This provision also applies if, at the time of the family's original application for assistance, eligibility was established based on the provisions of paragraph (a)(3)(iii)(B) of this section, but eligibility could have been established based on the provisions of paragraph (a)(3)(iii)(A) of this section. (c) Federal Financial Participation. (1) Federal financial participation is available for payments authorized in accordance with the State plan approved under section 402 of the Act as aid to families with dependent children with respect to a child: (i) Who meets the requirements of section 406(a)(2) of the Act; (ii) Who is living with any of the relatives specified in section 406(a)(1) of the Act in a place of residence maintained by one or more of such relatives as his (or their) own home; (iii) Who has been deprived of parental support or care by reason of the fact that his or her parent who is the principal earner is employed less than 100 hours a month; or exceeds that standard for a particular month if his or her work is intermittent and the excess is of a temporary nature as evidenced by the fact that he or she was under the 100-hour standard for 2 prior months and is expected to be under the standard during the next month; (iv) Whose parent who is the principal earner: (A) Has six or more quarters of work (as defined in paragraph (a)(3)(iv) of this section) within any 13-calendar-quarter period ending within 1 year prior to the application for such aid, (B) Within such 1-year period, received unemployment compensation under an unemployment compensation law of a State or of the United States, or was qualified (under the terms of paragraph (a)(3)(v) of this section) for such compensation under the State's unemployment compensation law; and (v) Whose parent who is the principal earner: (A) Is currently participating in or available to participate in an activity in the JOBS program under part 250 of this chapter, unless exempt, or is registered with the public employment office in the State if exempt from the JOBS program under 250.30(b)(5) of this chapter; and (B) Has not refused to apply for or accept unemployment compensation with respect to any week for which such child's parent qualifies for unemployment compensation under an unemployment compensation law of the State or of the United States. (2) The State may not include in its claim for Federal financial participation payments made as aid under the plan with respect to a child who meets the conditions set forth in paragraph (c)(1) of this section, where such payments were made: (i) For any part of the 30-day period specified in paragraph (a)(3)(i) of this section; (ii) For such 30-day period if during that period the parent refused without good cause a bona fide offer of employment or training for employment; (iii) For any period beginning with the 31st day after the receipt of aid, if and for as long as no action is taken during the period to undertake appropriate steps directed toward the participation of the parent who is the principal earner in a program under part 250 of this chapter; (iv) To the extent that such payments are made to meet the need of an individual who is subject to a sanction imposed, under part 250 of this chapter (for failure to meet the requirements for participation in the JOBS program). (3) Federal financial participation is available for child care and supportive services expenditures associated with participation in an approved State-designed program (as provided in paragraph (b)(3)(iii) of this section) under titles IV - A and IV - F of the Act respectively. However, Federal financial participation is not available for any other costs, program or administrative, associated with State-designed programs. (d) For all States (other than Puerto Rico, American Samoa, Guam, and the Virgin Islands) the provisions of this section are in effect through September 30, 1998. For Puerto Rico, American Samoa, Guam, and the Virgin Islands, the provisions of this section are in effect from October 1, 1992, through September 30, 1998. [57 FR 30426, July 9, 1992] 233.106 Denial of AFDC benefits to strikers. (a) Condition for plan approval. A State plan under title IV - A of the Social Security Act must: (1) Provide that participation in a strike shall not constitute good cause to leave, or to refuse to seek or accept, employment. (2)(i) Provide for the denial of AFDC benefits to any family for any month in which any caretaker relative with whom the child is living is, on the last day of such month, participating in a strike; and (ii) Provide that no individual's needs shall be included in determining the amount of aid payable for any month to a family under the plan if, on the last day of such month, such individual is participating in a strike. (b) Definitions. (1) The State must define ``strike'' by using the National Labor Relations Board definition (29 U.S.C. 142(2)) or another definition of the term that is currently in State law. (2) The State must define the term ``participating in a strike.'' (3) For purposes of paragraph (a)(2)(i) of this section, ``caretaker relative'' means any natural or adoptive parent. [47 FR 5682, Feb. 5, 1982] 233.107 Restriction in payment to households headed by a minor parent. (a) State plan requirements. A State in its title IV - A State plan may provide that a minor parent and the dependent child in his or her care must reside in the household of a parent, legal guardian, or other adult relative, or in an adult-supervised supportive living arrangement in order to receive, AFDC unless: (1) The minor parent has no living parent or legal guardian whose whereabouts is known; (2) No living parent or legal guardian of the minor parent allows the minor parent to live in his or her home; (3) The minor parent lived apart from his or her own parent or legal guardian for a period of at least one year before either the birth of the dependent child or the parent's having made application for AFDC; (4) The physical or emotional health or safety of the minor parent or dependent child would be jeopardized if they resided in the same residence with the minor parent's parent or legal guardian; (5) There is otherwise good cause for the minor parent and dependent child to receive assistance while living apart from the minor parent's parent, legal guardian, or other adult relative, or an adult-supervised supportive living arrangement. (b) Allegations. If a minor parent makes allegations supporting the conclusion that paragraph (a)(4) of this section applies, the State agency shall determine whether it is justified. (c) Good Cause. The circumstances justifying a determination of good cause must be set forth in the State plan. (d) Protective Payments. When a minor parent and his or her dependent child are required to live with the minor parent's parent, legal guardian, or other adult relative, or in an adult-supervised supportive living arrangement, then AFDC is paid (where possible) in the form of a protective payment. (e) Definitions: For purposes of this section: (1) A minor parent is an individual who (i) is under the age of 18, (ii) has never been married, and (iii) is either the natural parent of a dependent child living in the same household or eligible for assistance paid under the State plan to a pregnant woman as provided in 233.90(c)(2)(iv) of this part. (2) A household of a parent, legal guardian, or other adult relatives means the place of residence of (i) a natural or adoptive parent or a stepparent, or (ii) a legal guardian as defined by the State, or (iii) another individual who is age 18 or over and related to the minor parent as specified in 233.90(c)(1)(v) of this part provided that the residence is maintained as a home for the minor parent and child as provided in 233.90(c)(1)(v)(B) of this part. (3) An adult-supervised supportive living arrangement means a private family setting or other living arrangement (not including a public institution), which, as determined by the State, is maintained as a family setting, as evidenced by the assumption of responsibility for the care and control of the minor parent and dependent child or the provision of supportive services, such as counseling, guidance, or supervision. For example, foster homes and maternity homes are ``adult-supervised supportive living arrangements.'' (f) Notice Requirements. Minor applicants shall be informed about the eligibility requirements and their rights and obligations consistent with the provisions at 206.10(a)(2)(i). For example, a State may wish to: (1) Advise the minor of the possible exemptions and specifically ask whether one or more of these exemptions is applicable; and (2) assist the minor in attaining the necessary verifications if one or more of these exemptions is alleged. [57 FR 30428, July 9, 1992] 233.110 Foster care maintenance and adoption assistance. (a) State plan requirements. A State plan under title IV - A of the Social Security Act must provide that the State has in effect a plan approved under Part E, title IV of the Social Security Act, and operates a foster care maintenance and adoption assistance program in conformity with such a plan. [51 FR 9206, Mar. 18, 1986] 233.120 Emergency assistance to needy families with children. (a) Requirements for State plans. A State plan under Title IV, Part A, of the Social Security Act, providing for emergency assistance to needy families with children must: (1) Specify the eligibility conditions imposed for the receipt of emergency assistance. These conditions may be more liberal than those applicable to other parts of the plan. (See paragraph (b)(1) of this section for scope of Federal financial participation.) (2) Specify if migrant workers with families will be included and, if emergency assistance will not be available to them Statewide, the part or parts of the State in which it will be provided. (3) Specify the emergency needs that will be met, whether mass feeding or clothing distribution are included, and the methods of providing payments, medical care, and other remedial care. (4) Specify which of the following services will be provided: Information, referral, counseling, securing family shelter, child care, legal services, and any other services that meet needs attributable to the emergency or unusual crisis situations. (5) Provide that emergency assistance will be given forthwith. (b) Federal financial participation. Beginning with the effective date of approval of the amendment to the State plan for AFDC which provides for emergency assistance to needy families with children pursuant to section 406(e) of the Act: (1) Federal financial participation is available for emergency assistance to or on behalf of a needy child under the age of 21 and any other member of the household in which he is living if: (i) Such child is (or, within 6 months prior to the month in which such assistance is requested, has been) living with any of the relatives specified in section 406(a)(1) of the Act in a place of residence maintained by one or more of such relatives as his or their own home, (ii) Such child is without resources immediately accessible to meet his needs, (iii) The emergency assistance is necessary to avoid destitution of such child or to provide living arrangements for him in a home, and (iv) His destitution or need for living arrangements did not arise because he or such relative refused without good cause to accept employment or training for employment. (2) The rate of Federal financial participation in expenditures during a quarter as emergency assistance in accordance with the provisions of an approved State plan is 50 percent of the total amount of such expenditures which are (i) in the form of money payments, payments in kind, or such other payments as the State agency specifies, including loans and vendor payments, or medical or remedial care recognized under State law, with respect to or on behalf of individuals described in paragraph (b)(1) of this section; (ii) for administration, including costs incurred in determining eligibility, in the payment process, and for other related administrative activities; and (iii) for the following services provided to individuals described in paragraph (b)(1) of this section, directly by staff of the agency, or by purchase from other sources: Information, referral, counseling, securing family shelter, child care, legal services, and any other services that meet needs attributable to the emergency or unusual crisis situations. (3) Federal matching is available only for emergency assistance which the State authorizes during one period of 30 consecutive days in any 12 consecutive months, including payments which are to meet needs which arose before such 30-day period or are for such needs as rent which extend beyond the 30-day period. Another condition for Federal participation is that the State has a reasonable method of determining the value of goods in kind or services provided for emergency assistance. [34 FR 393, Jan. 10, 1969, as amended at 39 FR 5316, Feb. 12, 1974] 233.145 Expiration of medical assistance programs under titles I, IV - A, X, XIV and XVI of the Social Security Act. (a) Under the provisions of section 121(b) of Pub. L. 89 - 97, enacted July 30, 1965, no payment may be made to any State under title I, IV - A, X, XIV or XVI of the Social Security Act for aid or assistance in the form of medical or any other type of remedial care for any period after December 31, 1969. However, these provisions do not affect the availability of Federal financial participation in the cost of medical or remedial care furnished under title IV - A of the Act (pursuant to sections 403(a)(5) and 406(e)) of the Act, as emergency assistance to needy families with children (see 233.120 of this part), subject to the provisions of paragraph (c)1 (FOOTNOTE) 002 of this section. Federal financial participation in vendor payments for medical care and services is not otherwise available except under title XIX of the Act. (FOOTNOTE) 0021See notice published Aug. 29, 1973 (38 FR 23337). (b) Under the provisions of section 4(c) of Pub. L. 92 - 223, enacted December 28, 1971, and the provisions of section 292 of Pub. L. 92 - 603, enacted October 30, 1972: (1) In the case of any State which on January 1, 1972, had in effect a State plan approved under title XIX of the Social Security Act, section 1121 of the Act authorizing payments under title I, X, XIV, or XVI of the Act for assistance in the form of institutional services in intermediate care facilities is rescinded; and (2) In the case of any State which on January 1, 1972, did not have in effect a State plan approved under title XIX of the Act, Federal financial participation is available in assistance in the form of institutional services in intermediate care facilities pursuant to section 1121 of the Act and under the provisions of 234.130 of this chapter until the first day of the first month after January 1, 1972, that the State has in effect a State plan approved under title XIX. (c)(1) Under the provisions of section 249D of Pub. L. 92 - 603, enacted October 30, 1972, Federal matching is not available for any portion of any payment by any State under titles I, IV - A, X, XIV, or XVI of the Social Security Act for or on account of any medical or any other type of remedial care provided by an institution to any individual as an inpatient thereof, in the case of any State which has a plan approved under title XIX of such Act, if such care is (or could be provided, under a State plan approved under title XIX of such Act, by an institution certified under such title XIX. The effective date of this proposed provision will be the date of publication of the final regulation in the Federal Register. (2) For purposes of this paragraph, (i) An institution (see 233.60(b)(1) of this chapter) is considered to provide medical or remedial care if it provides any care or service beyond room and board because of the physical or mental condition (or both) of its inpatients; (ii) An inpatient is an individual who is living in an institution which provides medical or remedial care and who is receiving care or service beyond room and board because of his physical or mental condition (or both). (iii) Federal financial participation is not available for any portion of the payment for care of an inpatient. It is immaterial whether such payment is made as a vendor payment or as a money payment or other cash assistance payment. It is also immaterial whether the payment is divided into components, such as separate amounts or payments for room and board, and for care or services beyond room and board, or whether the payment is considered to meet ``basic'' needs or ``special'' needs. If, however, a money payment (or protective payment) is made to an individual who is living in an institution, and such payment does not exceed a reasonable rate for room, board and laundry for individuals not living in their own homes, and no additional payment is made for such individual's care in the institution, Federal financial participation is available in the money payment (or protective payment) since the individual may spend the funds at his discretion and obtain room and board at the place of his choice. (iv) Federal financial participation is available in cash assistance payments to meet the needs of an inpatient for specific medical services, such as dental care or prescription drugs, which generally are not delivered in an institutional setting and in fact are not provided by the institution to the inpatient, provided that such services are not available to the individual under the State's approved title XIX plan. [38 FR 26379, Sept. 20, 1973, as amended at 38 FR 32912, Nov. 29, 1973] PART 234 -- FINANCIAL ASSISTANCE TO INDIVIDUALS Sec. 234.11 Assistance in the form of money payments. 234.60 Protective, vendor, and two-party payments for dependent children. 234.70 Protective payments for the aged, blind, or disabled. 234.75 Rent payments to public housing agencies. 234.120 Federal financial participation. 234.130 Assistance in the form of institutional services in intermediate care facilities. Authority: 42 U.S.C. 602, 603, 606, and 1302. 234.11 Assistance in the form of money payments. (a) Federal financial participation is available in money payments made under a State plan under title I, IV - A, X, XIV, or XVI of the Social Security Act to eligible families and individuals. Money payments are payments in cash, checks, or warrants immediately redeemable at par, made to the grantee or his legal representative with no restrictions imposed by the agency on the use of funds by the individual. (b) [Reserved] [36 FR 22238, Nov. 23, 1971, as amended at 51 FR 9206, Mar. 18, 1986] 234.60 Protective, vendor and two-party payments for dependent children. (a) State plan requirements. (1) If a State plan for AFDC under title IV - A of the Social Security Act provides for protective, vendor and two-party payments for cases other than failure to participate in the Job Opportunities and Basic Skills Training (JOBS) Program under 250.34(d), or failure by the caretaker relative to meet the eligibility requirements of 232.11, 232.12, or 232.13 of this chapter. It must meet the requirements in paragraphs (a) (2) through (11) of this section. In addition, the plan may provide for protective, vendor, and two-party payments at the request of recipients as provided in paragraph (a)(14) of this section. (2)(i) Methods will be in effect to identify children whose relatives have demonstrated such an inability to manage funds that payments to the relative have not been or are not currently used in the best interest of the child. This means that the relative has misused funds to such an extent that allowing him or her to manage the AFDC grant is a threat to the health or safety of the child. (ii) States will establish criteria to determine if mismanagement exists. Under this provision, States may elect to use as one criterion a presumption of mismanagement based on a recipient's nonpayment of rent. (iii) Under State agency procedures, the recipient shall be notified whenever a creditor requests a protective, vendor, or two-party payment for mismangement on the basis of non-payment of bills. (iv) The recipient shall be notified by the agency of a decision not to use a protective, vendor, or two-party payment if such payment has been requested by a creditor. (v) A statement of the specific reasons that demonstrate the need for making protective, vendor, and two-party payments must be placed in the file of the child involved. (3) Criteria will be established to identify the circumstances under which protective, vendor, or two-party payments will be made in whole or in part to: (i) Another individual who is interested in or concerned with the welfare of the child or relative; or (ii) A person or persons furnishing food, living accommodations or other goods, services, or items to or for the child, relative, or essential person. (4) Procedures will be established for making protective, vendor, or two-party payments. Under this provision, part of the payment may be made to the family and part may be made to a protective payee or to a vendor, or part may be made in the form of two-party payments, i.e., checks which are drawn jointly to the order of the recipient and the person furnishing goods, services, or items and negotiable only upon endorsement by both the recipient and the other person. (5) -- (6) [Reserved] (7) Standards will be established for selection: (i) Of protective payees, who are interested in or concerned with the recepient's welfare, to act for the recipient in receiving and managing assistance, with the selection of a protective payee being made by the recipient, or with his participation and consent, to the extent possible. If it is in the best interest of the recipient for a staff member of a private agency, of the public welfare department, or of any other appropriate organization to serve as a protective payee, such selection will be made preferably from the staff of an agency or that part of the agency providing protective services for families; and the public welfare department will employ such additional staff as may be necessary to provide protective payees. The selection will not include: The executive head of the agency administering public assistance; the person determining financial eligibility for the family; special investigative or resource staff; or staff handling fiscal processes related to the recipient; or landlords, grocers, or other vendors of goods, services, or items dealing directly with the recipient. (ii) Of such persons providing goods, services, or items with the selection of such persons being made by the recipient, or with his participation and consent, to the extent possible. (8) The agency will undertake and continue special efforts to develop greater ability on the part of the relative to manage funds in such manner as to protect the welfare of the family. (9) Review will be made as frequently as indicated by the individual's circumstances, and at least once every 12 months, of: (i) The need for protective, vendor, and two-party payments; and (ii) The way in which a protective payee's responsibilities are carried out. (10) Provision will be made for termination of protective payments, or payments to a person furnishing goods or services, as follows: (i) When relatives are considered able to manage funds in the best interest of the child, there will be a return to money payment status. (ii) When it appears that need for protective, vendor, or two-party payments will continue or is likely to continue beyond 2 years because all efforts have not resulted in sufficiently improved use of assistance in behalf of the child, judicial appointment of a guardian or other legal representative will be sought and such payments will terminate when the appointment has been made. (11)(i) Opportunity for a fair hearing pursuant to 205.10 will be given to any individual claiming assistance in relation to the determination: (A) That a protective, vendor, and two-party payment should be made or continued. (B) As to the payee selected. (ii) In cases where the agency has elected the option to presume mismanagement based on a recipient's nonpayment of rent pursuant to paragraph (a)(2)(ii), the agency may also elect the option to provide the opportunity for a fair hearing pursuant to 205.10 either before or after the manner or form of payment has been changed for these cases. (12) In cases where an individual is sanctioned for failure to participate in WIN, employment search, CWEP, or JOBS, the State plan must provide that when protective or vendor payments are made pursuant to 224.52(a)(1), 238.22, 240.22(a)(1), 240.22(b)(1) and 250.34(d) of this chapter, only paragraphs (a)(7), (a)(9)(ii), and (a)(11)(i) and (ii) of this section will be applicable. Under these circumstances, when protective payments are made, the entire payment will be made to the protective payee; and when vendor payments are made, at least the greater part of the payment will be through this method. However, if after making all reasonable efforts, the State agency is unable to locate an appropriate individual to whom protective payments can be made, the State may continue to make payments on behalf of the remaining members of the assistance unit to the sanctioned caretaker relative. Provision will be made for termination of protective payments, or payments to a person furnishing goods or services, with return to money payment status when adults who refused training, employment, or participation in employment search without good cause either accept training, employment, or employment search or agree to do so. In the case of continuing refusal of the relative to participate, payments will be continued for the children in the home in accordance with this paragraph. (13) For cases in which a caretaker relative fails to meet the eligibility requirements of 232.11, 232.12, or 232.13 of this chapter by failing to assign rights to support or cooperate in determining paternity, securing support, or identifying and providing information to assist the State in pursuing third party liability for medical services, the State plan must provide that only the requirements of paragraphs (a)(7) and (9)(ii) of this section will be applicable. For such cases, the entire amount of the assistance payment will be in the form of protective or vendor payments. These protective or vendor payments will be terminated, with return to money payment status, only upon compliance by the caretaker relative with the eligibility requirements of 232.11, 232.12, and 232.13 of this chapter. However, if after making reasonable efforts, the State agency is unable to locate an appropriate individual to whom protective payments can be made, the State may continue to make payments to the sanctioned caretaker relative on behalf of the remaining members of the assistance unit. (14) If the plan provides for protective, vendor, or two-party payments: (i) The State may use any combination of protective, vendor, or two-party payments (at the request of the recipient), (ii) The request must be in writing from the recipient to whom payment would otherwise be made in an unrestricted manner and must be recorded or retained in the case file, and (iii) The restriction will be discontinued promptly upon the written request of the recipient who initiated it. (b) Federal financial participation. Federal financial participation is available in payments which otherwise qualify as money payments with respect to an eligible dependent child, but which are made as protective, vendor or two-party payments under this section. Payrolls must identify protective, vendor, or two-party payments either by use of a separate payroll for these cases or by using a special identifying code or symbol on the regular payroll. The payment must be supported by an authorization of award through amendment of an existing authorization document for each case or by preparation of a separate authorization document. In either instance, the authorization document must be a formal agency record signed by a responsible agency official, showing the name of each eligible child and relative, the amount of payment authorized and the name of the protective, vendor or two-party payee. [37 FR 9025, May 4, 1972, as amended at 37 FR 12202, June 20, 1972; 45 FR 20480, Mar. 28, 1980; 47 FR 5682, Feb. 5, 1982; 49 FR 35603, Sept. 10, 1984; 51 FR 9206, Mar. 18, 1986; 54 FR 42244, Oct. 13, 1989; 56 FR 8932, Mar. 4, 1991; 57 FR 30160, July 8, 1992] 234.70 Protective payments for the aged, blind, or disabled. (a) State plan requirements. If a State plan for OAA, AB, APTD, or AABD under the Social Security Act includes provisions for protective payments, the State plan must provide that: (1) Methods will be in effect to determine that needy individuals have, by reason of physical or mental condition, such inability to manage funds that making payment to them would be contrary to their welfare; such methods to include medical or psychological evaluations, or other reports of physical or mental conditions including observation of gross conditions such as extensive paralysis, serious mental retardation, continued disorientation, or severe memory loss. (2) There will be responsibility to assure referral to social services for appropriate action to protect recipients where problems and needs for services and care of the recipients are manifestly beyond the ability of the protective payee to handle. (See paragraph (a)(5) of this section.) (3) Standards will be established for selection of protective payees who are interested in or concerned with the individual's welfare, to act for the individual in receiving and managing assistance, with the selection of a protective payee being made by the individual, or with his participation and consent, to the extent possible. If it is in the best interest of the individual for a staff member of a private agency, of the public welfare department, or of any other appropriate organization to serve as a protective payee, such selection will be made preferably from the staff of an agency or that part of the agency providing protective services for families or for the disabled or aged group of which the recipient is a member; and such staff of the public welfare department will be utilized only to the extent that the department has adequate staff for this purpose. The selection will not include: The executive head of the agency administering public assistance; the person determining financial eligibility for the individual; special investigative or resource staff, or staff handling fiscal processes related to the recipient; or landlords, grocers, or other vendors of goods or services dealing directly with the recipient -- such as the proprietor, administrator or fiscal agent of a nursing home, or social care, medical or nonmedical institution, except for the superintendent of a public institution for mental diseases or a public institution for the mentally retarded, or the designee of such superintendent, when no other suitable protective payee can be found and there are appropriate staff available to assist the superintendent in carrying out the protective payment function. (4) Protective payments will be made only in cases in which the assistance payment, with other available income, meets all the needs of the individual, using the State's standards for assistance for the pertinent program, not standards for protective payment cases only. (5) The agency will undertake and continue special efforts to protect the welfare of such individuals and to improve, to the extent possible, their capacity for self-care and to manage funds. (6) Reconsideration of the need for protective payments and the way in which a protective payee's responsibilities are carried out will be as frequent as indicated by the individual's circumstances and at least every 6 months. (7) Provision will be made for appropriate termination of protective payments as follows: (i) When individuals are considered able to manage funds in their best interest, there will be a return to money payment status. (ii) When a judicial appointment of a guardian or other legal representative appears to serve the best interest of the individual, such appointment will be sought and the protective payment will terminate when the appointment has been made. (8) Opportunity for a fair hearing will be given to any individual claiming assistance in relation to the determination that a protective payment should be made or continued, and in relation to the payee selected. (b) Federal financial participation. Federal financial participation is available for payments, which otherwise qualify as money payments with respect to a needy individual, but which are made to a protective payee under paragraph (a)(3) of this section. The payment must be supported by an authorization of award through amendment of an existing authorization document for such case or by preparation of a separate authorization document. In either instance, the authorization document must be a formal agency record signed by a responsible agency official showing the name of each eligible individual, the amount of payment authorized and the name of the protective payee. Payrolls must identify protective payment cases either by use of a separate payroll for these cases or by using a special identifying code or symbol on the regular payroll. [34 FR 1323, Jan. 28, 1969] 234.75 Rent payments to public housing agencies. At the option of a State, if its plan approved under title I, X, XIV, or XVI of the Social Security Act so provides, Federal financial participation under such title is available in rent payments made directly to a public housing agency on behalf of a recipient or a group or groups of recipients of OAA, AB, APTD, or AABD. Such Federal financial participation is available in rent payments only to the extent that they do not exceed the amount included for rent under the State's standard of assistance or the amount of rent due under applicable law, whichever is less. [38 FR 26380, Sept. 20, 1973] 234.120 Federal financial participation. Federal financial participation is available in assistance payments made under a State plan under title I, IV - A, X, XIV, or XVI of the Social Security Act to any family or individual for periods beginning with the month in which they meet all eligibility conditions under the plan and in which an application has been received by the agency. Such assistance payments include: (a) Money payments (titles I, IV - A, X, XIV, and XVI, see 234.11 of this chapter); (b) Protective and vendor payments for dependent children (title IV - A, see 234.60 of this chapter); (c) Protective payments for the aged, blind, or disabled (titles I, X, XIV, and XVI, see 234.70 of this chapter); (d) AFDC foster care payments (title IV - A, see 233.110 of this chapter); (e) Vendor payments for institutional services in intermediate care facilities (titles I, X, XIV, and XVI), but only in a State that did not, as of January 1, 1972, have an approved plan under title XIX of the act, and only until such State has such a plan in effect (see 234.130 of this chapter); (f) Emergency assistance to needy families with children (title IV - A, see 233.120 of this chapter); (g) Vendor payments for home repairs (titles I, IV - A, X, XIV, and XVI, see 233.20(c) of this chapter); and (h) Rent payments to public housing agencies (titles I, X, XIV, and XVI, see 234.75 of this chapter). [38 FR 26380, Sept. 20, 1973] 234.130 Assistance in the form of institutional services in intermediate care facilities. (a) Applicability and State plan requirements. A State which, on January 1, 1972, did not have in effect a State plan approved under title XIX of the Social Security Act may provide assistance under title I, X, XIV, or XVI of the Act in the form of institutional services in intermediate care facilities as authorized under title XI of the Act, until the first day of the first month (occurring after January 1, 1972) that such State does have in effect a State plan approved under title XIX of the Act. In any State which may provide such assistance as authorized under title XI of the Act, a State plan under title I, X, XIV, or XVI of the Act which includes such assistance must: (1) Provide that such benefits will be provided only to individuals who: (i) Are entitled (or would, if not receiving institutional services in intermediate care facilities, be entitled) to receive assistance, under the State plan, in the form of money payments; and (ii) Because of their physical or mental condition (or both) require living accommodations and care which, as a practical matter, can be made available to them only through institutional facilities; and (iii) Do not have such an illness, disease, injury, or other condition as to require the degree of care and treatment which a hospital or skilled nursing home (as that term is employed in title XIX) is designed to provide. (2) Provide that, in determining financial eligibility for benefits in the form of institutional services in intermediate care facilities, available income will be applied, first for personal and incidental needs including clothing, and that any remaining income will be applied to the costs of care in the intermediate care facility. (3) Provide methods of administration that include: (i) Placing of responsibility, within the State agency, with one or more staff members with sufficient staff time exclusive of other duties to direct and guide the agency's activities with respect to services in intermediate care facilities, including arrangements for consultation and working relationships with the State standard-setting authority and State agencies responsible for mental health and for mental retardation; (ii) In relation to authorization of benefits, provisions for evaluation by a physician of the individual's physical and mental condition and the kinds and amounts of care he requires; evaluation by the agency worker of the resources available in the home, family and community; and participation by the recipient in determining where he is to receive care, except that in the case of services being provided in a Christian Science Sanatorium, certification by a qualified Christian Science practitioner that the individual meets the requirements specified in paragraphs (a)(1) (ii) and (iii) of this section may be substituted for the evaluation by a physician; (iii) Provisions for redetermination at least semiannually that the individual is properly a recipient of intermediate care. (4) Provide for regular, periodic review and reevaluation no less often than annually (by or on behalf of the State agency administering the plan and in addition to the activities described in paragraph (a)(3) of this section) of recipients in intermediate care facilities to determine whether their current physical and mental conditions are such as to indicate continued placement in the intermediate care facility, whether the services actually rendered are adequate and responsive to the conditions and needs identified, and whether a change to other living arrangements, or other institutional facilities (including skilled nursing homes) is indicated. Such reviews must be followed by appropriate action on the part of the State agency administering the plan. They must be conducted by or under the supervision of a physician with participation by a registered professional nurse and other appropriate medical and social service personnel not employed by or having a financial interest in the facility, except that, in the case of recipients who have elected care in a Christian Science sanatorium, review by a physician or other medical personnel is not required. (5) Provide that all services with respect to social and related problems which the agency makes available to applicants and recipients of assistance under the plan will be equally available to all applicants for and recipients of benefits in the form of institutional services in intermediate care facilities. (6) Specify the types of facilities, however described, that will qualify under the State plan for participation as intermediate care facilities, and provide for availability to the Department of Health and Human Services, upon request of (i) copies of the State's requirements for licensing of such facilities, (ii) any requirements imposed by the State in addition to licensing and to definition of intermediate care facilities, and (iii) a description of the manner in which such requirements are applied and enforced including copies of agreements or contracts, if any, with the licensing authority for this purpose. (7) Provide for and describe methods of determining amounts of vendor payments to intermediate care facilities which systematically relate amounts of the payment to the kinds, levels, and quantities of services provided to the recipients by the institutions and to the cost of providing such services. (b) Other requirements. Except when inconsistent with purposes of section 1121 of the Act or contrary to any provision therein, any modification, pursuant thereto, of an approved State plan shall be subject to the same conditions, limitations, rights, and obligations as obtained with respect to such approved State plan. Included specifically among such conditions and limitations are the provisions of titles I, X, XIV, and XVI relating to payments to or care in behalf of any individual who is an inmate of a public institution (except as a patient in a medical institution). (c) Federal financial participation. (1) Federal financial participation is available under section 1121 of the Act in vendor payments for institutional services provided to individuals who are eligible under the respective State plan and who are residents in intermediate care facilities. The rate of participation is the same as for money payments under the respective title or, if the State so elects, at the rate of the Federal medical assistance percentage as defined in section 1905(b) of the Act. Such Federal financial participation ends on the date specified in paragraph (c)(2) of this section, or 12 months after the date when the State first has in effect a State plan approved under title XIX of the Act, whichever is later. (2) For the period from January 1, 1972, to the date on which a determination is made under the provisions of 42 CFR 449.33 as to a facility's eligibility to receive payments for intermediate care facility services under the medical assistance program, title XIX of the Act, but not later than 12 months following the effective date of these regulations, Federal financial participation in payments for such services under title XIX is governed by the provisions of this section, applied to State plans under title XIX. (d) Definition of terms. For purposes of section 1121 of the Social Security Act, the following definitions apply: (1) Institutional services. The term, institutional services, means those items and services provided by or under the auspices of the institution which contribute to the health, comfort, and well-being of the residents thereof; except that the term, institutional services, does not include allowances for clothing and incidental expenses for which money payments to recipients are made under the plan, nor does it include medical care, in a form identifiable as such and separable from the routine services of the facility, for which vendor payments may be made under a State plan approved under title XIX. (2) Distinct part of an institution. A distinct part of an institution is defined as a part which meets the definition of an intermediate care facility and the following conditions: (i) Identifiable unit. The distinct part of the institution is an entire unit such as an entire ward or contiguous wards, wing, floor, or building. It consists of all beds and related facilities in the unit and houses all residents, except as hereafter provided, for whom payment is being made for intermediate care. It is clearly identified and is approved, in writing, by the agency applying the definition of intermediate care facility herein. (ii) Staff. Appropriate personnel are assigned and work regularly in the unit. Immediate supervision of staff is provided in the unit at all time by qualified personnel. (iii) Shared facilities and services. The distinct part may share such central services and facilities as management services, building maintenance and laundry, with other units. (iv) Transfers between distinct parts. In a facility having distinct parts devoted to skilled nursing home care and intermediate care, which facility has been determined by the appropriate State agency to be organized and staffed to provide services according to individual needs throughout the institution, nothing herein shall be construed to require transfer of an individual within the institution when in the opinion of the individual's physician such transfer might be harmful to the physical or mental health of the individual. (3) Intermediate care facility. An intermediate care facility is an institution or a distinct part thereof which: (i) Is licensed, under State law to provide the residents thereof, on a regular basis, the range or level of care and services as defined in paragraph (d)(4) of this section, which is suitable to the needs of individuals who: (a) Because of their physical or mental limitations or both, require living accommodations and care which, as a practical matter, can be made available to them only through institutional facilities, and (b) Do not have such an illness, disease, injury, or other condition as to require the degree of care and treatment which a hospital or skilled nursing home (as that term is employed in title XIX is designed to provide: (ii) Does not provide the degree of care required to be provided by a skilled nursing home furnishing services under a State plan approved under title XIX: (iii) Meets such standards of safety and sanitation as are applicable to nursing homes under State law; and (iv) Regularly provides a level of care and service beyond board and room. The term intermediate care facility also includes a Christian Science sanatorium operated, or listed and certified, by the First Church of Christ, Scientist, Boston, Mass. (4) Range or level of care and services. The range or level of care and services suitable to the needs of individuals described in paragraph (d)(3)(i) of this section is to be defined by the State agency. The following items are recommended as a minimum. (i) Admission, transfer, and discharge of residents. The admission, transfer, and discharge of residents of the facility are conducted in accordance with written policies of the institution that include at least the following provisions. (a) Only those persons are accepted into the facility whose needs can be met within the accommodations and services the facility provides; (b) As changes occur in their physical or mental condition, necessitating service or care not regularly provided by the facility, residents are transferred promptly to hospitals, skilled nursing homes, or other appropriate facilities; (c) The resident, his next of kin, and the responsible agency if any, are consulted in advance of the discharge of any resident, and casework services or other means are utilized to assure that adequate arrangements exist for meeting his needs through other resources. (ii) Personal care and protective services. The types and amounts of protection and personal service needed by each resident of the facility are a matter of record and are known to all staff members having personal contact with the resident. At least the following services are provided. (a) There is, at all times, a responsible staff member actively on duty in the facility, and immediately accessible to all residents, to whom residents can report injuries, symptoms of illness, or emergencies, and who is immediately responsible for assuring that appropriate action is taken promptly. (b) Assistance is provided, as needed by individual residents, with routine activities of daily living including such services as help in bathing, dressing, grooming, and management of personal affairs such as shopping. (c) Continuous supervision is provided for residents whose mental condition is such that their personal safety requires such supervision. (iii) Social services. Services to assist residents in dealing with social and related problems are available to all residents through one or more caseworkers on the staff of the facility; and/or, in the case of recipients of assistance, through caseworkers on the staff of the assistance agency; or through other arrangements. (iv) Activities. Activities are regularly available for all residents, including social and recreational activities involving active participation by the residents, entertainment of appropriate frequency and character, and opportunities for participation in community activities as possible and appropriate. (v) Food service. At least three meals a day, constituting a nutritionally adequate diet, are served in one or more dining areas separate from sleeping quarters, and tray service is provided for residents temporarily unable to leave their rooms. (vi) Special diets. If the facility accepts or retains individuals in need of medically prescribed special diets, the menus for such diets are planned by a professionally qualified dietitian, or are reviewed and approved by the attending physician, and the facility provides supervision of the preparation and serving of the meals and their acceptance by the resident. (vii) Health services. Whether provided by the facility or from other sources, at least the following services are available to all residents: (a) Immediate supervision of the facility's health services by a registered professional nurse or a licensed practical nurse employed full-time in the facility and on duty during the day shift except that, where the State recognizes and describes two or more distinct levels of institutions as intermediate care facilities such personnel are not required in any level that serves only individuals who have been determined by their physicians not to be in need of such supervision and whose need for such supervision is reviewed as indicated, and at least quarterly; (b) Continuing supervision by a physician who sees the resident as needed and in no case, less often than quarterly; (c) Under direction by the resident's physician and (where applicable in accordance with (d)(4)(vii)(a) of this section), general supervision by the nurse in charge of the facility's health services, guidance, and assistance for each resident in carrying out his personal health program to assure that preventive measures, treatments, and medications prescribed by the physician are properly carried out and recorded; (d) Arrangements for services of a physician in the event of an emergency when the resident's own physician cannot be reached; (e) In the presence of minor illness and for temporary periods, bedside care under direction of the resident's physician including nursing service provided by, or supervised by, a registered professional nurse or a licensed practical nurse; (f) An individual health record for each resident including; (1) The name, address, and telephone number of his physician; (2) A record of the physician's findings and recommendations in the preadmission evaluation of the individual's condition and in subsequent reevaluations and all orders and recommendations of the physician for care of the resident; (3) All symptoms and other indications of illness or injury brought to the attention of the staff by the resident, or from other sources, including the date, time, and action taken regarding each. (viii) Living accommodations. Space and furnishings provide each resident clean, comfortable, and reasonably private living accommodations with no more than four residents occupying a room, with individual storage facilities for clothing and personal articles, and with lounge, recreation and dining areas provided apart from sleeping quarters. (ix) Administration and management. The direction and management of the facility are such as to assure that the services required by the residents are so organized and administered that they are, in fact, available to the residents on a regular basis and that this is accomplished efficiently and with consideration for the objective of providing necessary care within a homelike atmosphere. Staff are employed by the facility sufficient in number and competence, as determined by the appropriate State agency, to meet the requirements of the residents. [35 FR 8990, June 10, 1970, as amended at 39 FR 2220, Jan. 17, 1974; 39 FR 8918, Mar. 7, 1974] PART 235 -- ADMINISTRATION OF FINIACIAL ASSISTANCE PROGRAMS Sec. 235.40 [Reserved] 235.50 State plan requirements for methods of personnel administration. 235.60 Federal financial participation (FFP) for State and local training. 235.61 Definition of terms. 235.62 State plan requirements for training programs. 235.63 Conditions for FFP. 235.64 FFP rates, and activities and costs matchable as training expenditures. 235.65 Activities and costs not matchable as training expenditures. 235.66 Sources of State funds. 235.70 Prompt notice to child support or Medicaid agency. 235.110 Fraud. 235.111 Pre-eligibility fraud detection measures. 235.112 Optional AFDC Fraud Control Program. 235.113 Disqualification hearing procedures under optional AFDC fraud control. Authority: Secs. 403, 416, and 1102 of the Social Security Act (42 U.S.C. 603, 616, 1302). 235.40 [Reserved] 235.50 State plan requirements for methods of personnel administration. (a) A State plan for financial assistance programs under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act must provide that methods of personnel administration will be established and maintained in public agencies administering or supervising the administration of the program in conformity with the Standards for a Merit System of Personnel Administration, 5 CFR Part 900, Subpart F, which incorporates the Intergovernmental Personnel Act Merit Principles (Pub. L. 91 - 648, section 2, 84 Stat. 1909), prescribed by the Office of Personnel Management pursuant to section 208 of the Intergovernmental Personnel Act of 1970 as amended. [45 FR 25398, Apr. 15, 1980] 235.60 Federal financial participation (FFP) for State and local training. Sections 235.61 through 235.66 contain (a) State plan requirements for training programs and (b) conditions for Federal financial participation (FFP) for training costs under the State plans. These sections apply to the State plans for the financial assistance programs in all jurisdictions under title I, IV - A, X, XIV, or XVI (AABD) of the Social Security Act. [45 FR 29833, May 6, 1980] 235.61 Definition of terms. For purposes of 235.60 - 235.66: Act means the Social Security Act, as amended. A grant to an educational institution means payments to an educational institution for services rendered under a time limited agreement between the State agency and the eligible educational institution which provides for the training of State or local agency employees or persons preparing for employment with the State or local agency. A training program is the method through which the State agency carries out a plan of educational and training activities to improve the operation of its programs. (a) Initial in-service training means a period of intensive, task-oriented training to prepare new employees to assume job responsibilities. (b) Continuing training means an on-going program of training planned to enable employees to: (1) Reinforce their basic knowledge and develop the required skills for the performance of specific functions, and (2) acquire additional knowledge and skill to meet changes such as enactment of new legislation, development of new policies, or shifts in program emphasis. (c) Full-time training means training that requires employees to be relieved of all responsibility for performance of current work to participate in a training program. (d) Part-time training means training that allows employees to continue full time in their jobs or requires only partial reduction of work activities to participate in a training program outside of the State or local agency. (e) Long-term training means training for eight consecutive work weeks or longer. (f) Short-term training means training for less than eight consecutive work weeks. FFP or Federal financial participation means the Federal government's share of expenditures made by a State or local agency under a training program. Fringe benefits means the employer's share of premiums for industrial compensation, employee's retirement, unemployment compensation, health insurance, and similar expenses. Persons preparing for employment means individuals who are not yet employed by the State or local agency, but who have received financial assistance from the State agency for training, and have made a legally binding commitment with the State or local agency for future employment under the conditions of these regulations. Stipend means the basic living allowance paid to a student. [45 FR 29833, May 6, 1980] 235.62 State plan requirements for training programs. A State plan under title I, IV - A, X, XIV, or XVI (AABD) of the Act must provide for a training program for agency personnel. The training program must: (a) Include initial in-service training for newly appointed staff, and continuing agency training opportunities to improve the operation of the program. The training program may also include short-term and long-term training at educational institutions through grants to institutions or by direct financial assistance to students enrolled in institutions who are agency employees or persons preparing for employment with the State or local agency; (b) Be related to job duties performed or to be performed by the persons trained, and be consistent with the program objectives of the agency; and (c) Be described in an annual training plan prepared prior to the beginning of the fiscal year. Copies of the training plan shall be made available upon request to the Regional Office of Family Assistance for review by the Federal staff. [45 FR 29833, May 6, 1980, as amended at 46 FR 29264, June 1, 1981] 235.63 Conditions for FFP. (a) Who may be trained. FFP is available only for training provided personnel employed in all classes of positions, volunteers, and persons preparing for employment by the State or local agency administering the program. (b) When FFP is available. FFP is available for personnel employed and persons preparing for employment by the State or local agency provided the following conditions are met, and with the following limitations: (1) Employees in full-time, long-term training make a commitment to work in the agency for a period of time equal to the period for which financial assistance is granted. A State agency may exempt an employee from fulfilling this commitment only if failure to continue in employment is due to death, disability, employment in a financial assistance program in a public assistance agency in another State, or other emergent circumstances determined by the single State agency head to be valid for exemption; (2) An employee retains his or her rights and benefits in the agency while on full-time, long-term training leave; (3) Persons preparing for employment are selected by the State agency and accepted by the school; (4) Persons preparing for employment are pursuing educational programs approved by the State agency; (5) Persons preparing for employment are committed to work for State or local agency for a period of time at least equal to the period for which financial assistance is granted if employment is offered within 2 months after training is completed; (6) The State or local agency offers the individual preparing for employment a job upon completion of training unless precluded by merit system requirements, legislative budget cuts, position freezes, or other circumstances beyond the agency's control; and if unable to offer employment, releases the individual from his or her commitment; (7) The State agency keeps a record of the employment of persons trained. If the persons are not employed by the State or local agency, the record specifies the reason for non-employment; (8) The State agency evaluates the training programs; and (9) Any recoupment of funds by the State from trainees failing to fulfill their commitment under this section shall be treated as a refund and deducted from total training costs for the purpose of determining net costs for FFP. (c) Grants to educational institutions. FFP is available in payments for services rendered under grants to educational institutions provided all of the following conditions are met: (1) Grants are made for the purpose of developing, expanding, or improving training for personnel employed by the State or local agency or preparing for employment by the State or local agency administering the program. Grants are made for an educational program (curriculum development, classroom instruction, field instruction, or any combination of these) that is directly related to the agency's program. Grants are made for not more than 3 years, but may be renewed, subject to the conditions of this section; (2) Grants are made to educational institutions and programs that are accredited by the appropriate institutional accrediting body recognized by the U.S. Commissioner of Education. When a specialized program within the institution for which there is a specialized accrediting body is used, that program must be accredited by or have pre-accreditation status from that body. (Part 149 of this title explains the requirements and procedures for obtaining recognition as an accrediting agency or association. Lists of currently recognized accrediting bodies are published in the Federal Register periodically. See also Nationally Recognized Accrediting Agencies and Associations published by the Office of Education); (3) The State agency has written policies establishing conditions and procedures for such grants; (4) Each grant describes objectives in terms of how the educational program is related to the financial assistance programs and how it is designed to meet the State or local agency's manpower needs; and (5) An evaluation of the educational program funded by each grant is made no later than the close of the second year of the grant. The evaluation shall be conducted by representatives from the educational institution and the State agency to determine whether conditions and objectives described in the grant are being met. If the educational program does not meet these conditions and objectives, payment shall be terminated no later than the close of the second year of the grant. [45 FR 29834, May 6, 1980] 235.64 FEP rates, and activities and costs matchable as training expenditures. Under title I, X, XIV, or XVI (AABD) of the Act, FFP is available at the rate of 75 percent, and under title IV - A effective October 1, 1981, FFP is available at the rate of 50 percent for the following costs: (a) Salaries, fringe benefits, travel and per diem for: (1) Staff development personnel (including support staff) assigned full time to training functions and; (2) Staff development personnel assigned part time to training functions to the extent time is spent performing such functions. (b) For agency training sessions, FFP is available for: (1) Salaries, fringe benefits, travel and per diem for employees in initial in-service training of at least one week; (2) Travel and per diem for employees in agency training sessions away from the employee's work site, or in institutes, seminars or workshops related to the job and sponsored by professional organizations; (3) Salaries, fringe benefits, travel and per diem for experts outside the agency engaged to develop or conduct special programs; and (4) Costs of space, postage, teaching supplies, purchase or development of teaching material and equipment, and costs of maintaining and operating the agency library as an essential resource to the agency's training program. (c) For training and education outside of the agency, FFP is available for: (1) Salaries, fringe benefits, dependency allowance, travel, tuition, books, and educational supplies for employees in full-time, long-term training programs (with no assigned agency duties); (2) Salaries, fringe benefits, travel, tuition, books, and educational supplies for employees in full-time, short-term training programs of four or more consecutive work weeks; (3) Travel, per diem, tuition, books and educational supplies for employees in short-term training programs of less than four consecutive work weeks, or part-time training programs; and (4) Stipends, travel, tuition, books and educational supplies for persons preparing for employment with the State or local agency. (d) FFP is available for payments to educational institutions, as described in 235.63(c) for salaries, fringe benefits, and travel of instructors, clerical assistance, teaching materials and equipment. [45 FR 29834, May 6, 1980, as amended at 47 FR 5683, Feb. 5, 1982] 235.65 Activities and costs not matchable as training expenditures. FFP is not available for the following expenditures as training costs; however, the expenditures described in this section may be matched as administrative costs, if conditions for such matching are met: (a) Salaries of supervisors (day-to-day supervision of staff is not a training activity); and (b) Employment of students on a temporary basis, such as in the summertime. [45 FR 29835, May 6, 1980] 235.66 Sources of State funds. (a) Public funds. Public funds may be considered as the State's share in claiming Federal reimbursement where the funds: (1) Are appropriated directly to the State or local agency, or transferred from another public agency (including Indian tribes) to the State or local agency and under its administrative control, or certified by the contributing public agency as representing expenditures eligible for FFP under 235.60 - 235.66; (2) Are not used to match other Federal funds; and (3) Are not federal funds, or are Federal funds authorized by Federal law to be used to match other Federal funds. (b) Private funds. Funds donated from private sources may be considered as the State's share in claiming Federal reimbursement only where the funds are: (1) Transferred to the State or local agency and under its administrative control; (2) Donated without any restriction which would require their use for the training of a particular individual or at particular facilities or institutions; and (3) Do not revert to the donor's facility or use. [45 FR 29835, May 6, 1980] 235.70 Prompt notice to child support or Medicaid agency. (a) A State plan under title IV - A of the Social Security Act must provide for prompt notice to the State or local child support agency designated pursuant to section 454(3) of the Social Security Act and to the State title XIX agency, as appropriate, whenever: (1) Aid is furnished to a child who has been deserted or abandoned by a parent, to the parent(s) with whom the child lives, or to a pregnant woman under 233.90(c)(2)(iv), or (2) Any of the persons in paragraph (a)(1) of this section is deemed to be a recipient of aid under 233.20(a)(3)(viii)(D). (b) In this section: (1) Aid means Aid to Families with Dependent Children, or AFDC Foster Care. (2) Prompt notice means written notice including a copy of the AFDC case record, or all relevant information as prescribed by the child support agency. Prompt notice must also include all relevant information as prescribed by the State medicaid agency for the pursuit of liable third parties. The prompt notice shall be provided within two working days of the furnishing of aid or the determination that an individual is a recipient under 233.20(a)(3)(viii)(D). The title IV - A, IV - D and XIX agencies may agree to provide notice immediately upon the filing of an application for assistance. (3) Furnish means the date on which cash is given to the family, a check or warrant is mailed to the family, a deposit is made in a bank for the family, or other similar circumstances in which an assistance payment is made to the family, or the date on which individuals are determined to be recipients under 233.20(a)(3)(viii)(D). (4) A child who has been deserted or abandoned by a parent means any child whose eligibility for AFDC is based on continued absence of a parent from the home, and includes a child born out of wedlock without regard to whether the paternity of such child has been established. [47 FR 5683, Feb. 5, 1982, as amended at 56 FR 8933, Mar. 4, 1991] 235.110 Fraud. State plan requirements: A State plan under title I, IV - A, X, XIV, or XVI of the Social Security Act must provide: (a) That the State agency will establish and maintain: (1) Methods and criteria for identifying situations in which a question of fraud in the program may exist, and (2) Procedures developed in cooperation with the State's legal authorities for referring to law enforcement officials situations in which there is valid reason to suspect that fraud has been practiced. The definition of fraud for purposes of this section will be determined in accordance with State law. (b) For methods of investigation of situations which there is a question of fraud, that do not infringe on the legal rights of persons involved and are consistent with the principles recognized as affording due process of law. (c) For the designation of official position(s) responsible for referral of situations involving suspected fraud to the proper authorities. [36 FR 3869, Feb. 27, 1971] 235.111 Pre-eligibility fraud detection measures. (a) State plan requirement. A State plan under title IV, part A of the Social Security Act must contain a description of the verification measures to detect fraudulent applications for AFDC prior to the establishment of eligibility for such aid. (b) Definition. For purposes of this section, verification measures are actions taken by a State agency (including actions taken by fraud personnel assigned to the initial application unit to investigate applicants suspected of committing fraud): (1) To confirm information provided by an applicant to support his or her eligibility for AFDC; and (2) To confirm information provided by an applicant that is relevant in determining the amount of the assistance payment. Such actions involve the examination of supporting documentation in the applicant's possession and obtaining additional information, when necessary, from appropriate third party sources; also included are any periodic support activities taken by the State agency to enhance these actions. Examples of such measures include but are not limited to: Automated data matches to establish the accuracy of statements on the application; use of error prone profiles; home visists or collateral contacts; credit bureau inquiries; training on investigative interviewing techniques. (c) Annual evaluation. A State agency shall make a written evaluation for each Federal fiscal year of the effectiveness of its verification measures, submit a copy of the evaluation to the FSA Regional Office by February 15 of the following Federal fiscal year, and submit any appropriate amendments to its title IV - A State plan. The evaluation must include an assessment of verification measures such as home visits, credit bureau inquiries, data matches with entitlement programs, in addition to those included in the State's Income and Eligibility Verification System (IEVS), or other similar measures implemented by States. Information and data gathered in connection with a corrective action plan prepared pursuant to 45 CFR 205.40 may be utilized in preparing this evaluation. (d) Federal financial participation. Verification measures to detect fraudulent applications will be matched as administrative costs at a 50 percent rate. [55 FR 18728, May 4, 1990; 55 FR 43343, Nov. 16, 1990] 235.112 Optional AFDC Fraud Control Program. (a) Scope. A State agency under title IV - A may elect to establish and operate a fraud control program pursuant to section 416 of the Act. A State agency electing this optional program is required to proceed against any individual member of a family regardless of AFDC payment status who it believes to have committed an intentional program violation as described in paragraph (b) of this section through a State administrative hearing or by referring the matter to the appropriate authorities for civil or criminal action in a State or Federal court. In proceeding against such an individual, the State agency must coordinate its actions with any corresponding actions being taken under the Food Stamp program where the factual issue arise from the same or related circumstances. (b) Definition of intentional program violation. An intentional program violation is an action by an individual, for the purpose of establishing or maintaining the family's eligibility for AFDC or for increasing or preventing a reduction in the amount of the grant, which is intentionally: (1) A false or misleading statement or misrepresentation, concealment, or withholding of facts, or (2) Any act intended to mislead, misrepresent, conceal, or withhold facts or propound a falsity. (c) Disqualification penalties. (1) An individual who, on the basis of a plea of guilty or nolo contendere or otherwise, is found to have committed an intentional program violation by a State administrative disqualification hearing pursuant to this section or by a State or Federal court will be treated in the following manner. The State agency shall not take the individual's needs into account when determining the assistance unit's need and amount of the assistance. Any resources and income of the disqualified individual will be considered available to the assistance unit. The individual's needs will not be taken into account for 6 months upon the first occasion of any such offense; 12 months upon the second occasion of any such offense; and permanently upon the third or a subsequent occasion of any such offense. (2) Duration of the penalty. Any period for which a disqualification penalty is imposed shall remain in effect, without possibility of an administrative stay, unless and until the finding upon which the penalty was based is subsequently reversed by a court of appropriate jurisdiction but in no event shall the duration of the period for which such penalty is imposed be subject to review. (3) Applicability of the penalty. A disqualification penalty imposed on an individual by one IV - A State agency may be used determining the appropriate disqualification penalty for the individual by another IV - A State agency. Where an individual with a prior violation(s) moves from one State to another and has been found to have committed an intentional program violation(s), the State agency may impose the penalty based on the number of such violations committed in other States. A State may establish interstate agreements with other States to share appropriate information.