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Step 5 - Notification of Findings, Program Improvement Plans and Penalties
If the state is not in substantial conformity, a program improvement plan (PIP) is to be developed to improve the state's conformity. Time frames for the PIP will be determined by ACF and will depend upon the severity of the noncompliance. The timelines to implement the plan cannot exceed two years, with a one-year extension granted in rare circumstances. ACF will provide technical assistance to the state when developing the PIP. ACF has final authority regarding the PIP. It will:
- Be developed jointly;
- Identify areas of non-conformity;
- Set forth goals and action steps with dates for completion;
- Set forth the amount of progress that will be made to meet national data standards;
- Establish benchmarks to measure progress;
- Identifies technical assistance needs; and
- Identify how the action steps build on and make progress over prior PIPs.
The PIP must be submitted to ACF within 90 days of receiving written notice of non-conformity. If ACF does not approve the plan, the state has 30 days from the date of receipt of notice to resubmit the revised plan.
Once the PIP is approved, the state must provide quarterly progress reports to ACF. ACF and the state team will evaluate progress no less than annually. The PIP must be incorporated into the Child and Family Services State Plan (CFSP).
Penalties will be assessed at the time the non-conformity is determined but will be suspended if the state develops and implements a time-limited PIP. Penalties are assessed to each outcome and systemic factor that fails to be in conformity. The pool of funds from which the penalties will be assessed are:
- The state's allotment of IV-B funds for each year withholding applies; and
- An amount equivalent to 10% of the Federal claims for the IV-E foster care administrative costs for each of the years withholding applies.
Penalties will be one-percent (1%) for each outcome/factor that is found to be in non-conformity, up to 14% of IV-E administrative funds and IV-B funds subpart 1 and 2. If the state fails to improve after the second full review, the penalties are graduated (2% for each outcome/factor, up to 28%) for non-conformity that increase substantially over time. The penalties for the third non-conformity funding are, 3% for each outcome/factor, up to 42%.
If Michigan were found to be in noncompliance in five (5) of the fourteen (14) areas, the penalty amount of Title IV-B funds would total $1,000,000 per year, and Title IV-E funds would total $4,600,000 per year.
Actual withholding of funds will take place if a state fails to successfully implement the PIP. Notification of withholding, including the amount, will be sent to the state within 10 business days after the relevant completion date specified in the plan. Withholding will be based on:
- Failure to submit status reports or if the reports indicate unsatisfactory progress and will begin October 1 of the fiscal year which the determination of non-conformity is made and ending on the completion date of the affected goal or action step;
- Funds related to the goals and action steps that are not achieved by the completion date will be withheld in the same manner described above; and
- The level of non-conformity at the end of the PIP. Penalties will begin at the latest completion date and will continue until a subsequent full review determines the state to be in substantial conformity or the state successfully completes the PIP after the subsequent review.
Penalties will be terminated at the end of the quarter when the state is determined to be in substantial compliance or the state has successfully implemented a PIP. The state is also liable for interest on the amount of funds withheld.
If a state refuses to develop a PIP, the state will be subject to withholding of 42% for each year.
Appeal of the Findings and Penalties
An appeal may be made to the Departmental Appeals Boards (DAB) if there is a finding of non-conformity or penalties are levied. If an adverse ruling is made by the DAB, an appeal may be made to the US District Court in the state's judicial district.