the basic State laws enabling and limiting the administration of public assistance; a description of the agency's organization and functions; its methods of administration, including the rules and regulations governing personnel administration; policies and interpretations with regard to eligibility for and extent of assistance; a description of its plan for social services and for training of public assistance personnel; fiscal operations; and reporting and research activities. Pertinent Federal policies are set forth in the Handbook of Public Assistance Administration, which also contains detailed instructions and suggestions for the content and submittal of the documents comprising the State public assistance plan. Copies of the Handbook are furnished to each State agency. § 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 and medical assistance for the aged (title I); aid and services to needy families with children (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 and medical assistance for the aged (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 under each public assistance title. A plan submitted under title XVI encompasses, under a single plan, the groups otherwise included in the three separate plans under titles I, X, and XIV. After approval of the original plan by the Commissioner, all relevant changes, such as new statutes, rules, regulations, interpretations, and court decisions, are required to be submitted currently so that the Commissioner may determine whether the plan continues to meet Federal requirements and policies.

(a) Submittal. State public assistance plans and revisions of the plans are submitted to the central office through the regional offices. The States are encouraged to obtain consultation of the regional staff when a plan is in process of preparation or revision.

(b) Review. The family service representatives 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 decision. Comments and suggestions, including those of consultants in specified areas of public assistance administration, may be prepared by the central office for use by the regional representatives in negotiations with the State agency.

(c) Approval. The Bureau has been delegated authority to take action on amendments to State plans on the basis of policy statements or precedents previously approved by the Commissioner; the Commissioner has final authority for approval of new or substantially rewritten plans, or amendments to plans that are not within established policy. The Commissioner also has final authority for determining that proposed plan material is not approvable, or that a previously approved plan no longer meets the requirements for approval. The Bureau formally notifies the State agency of the action taken on State plans or revisions, or the need for clarifying information.

(d) Basis for approval. Determinations as to whether State plans (including plan amendments and administrative practice under the plans) orginally meet, or continue to meet, the requirements for approval are based on relevant Federal statutes and regulations and the requirements and policies set forth in the Handbook of Public Assistance Administration and other official issuances to the States.

§ 201.4 Grants.

To States with approved plans, grants are made each quarter for assistance and administration. The determination as to the amount of a grant to be made to a State is based upon three documents submitted by the State agency containing information required under the Act and such other pertinent facts 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 are forwarded to the regional office 45 days prior to the period

of the estimate, together with a certifilcation of State funds available and a justification statement in support of the estimates. The statement of quarterly expenditures and any necessary supporting schedules are forwarded to the Department of Health, Education, and Welfare, Bureau of Family Services, Attention: State Grants Branch, Washington, D.C. 20201, not later than 30 days after the end of the quarter.

(2) Description of forms. (1) "Report of Estimated Expenditures and Funds to be Available" represents the State agency's estimate of the total amount of expenditures for assistance and for administration to be made during the quarter for each of the public assistance programs under the Act. The forms also contain the State agency's estimates of the number of recipients to receive aid during each month of the quarter and of the amount of money payments to recipients and of the amount of payments to vendors for medical or remedial care in behalf of recipients. From these estimates the State and Federal shares of the total expenditures are computed and reported on the form. The State's computed share of the 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.

(ii) In addition, the State agency must certify as to 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 material, or a person officially designated by him, or by a fiscal officer of the State if required by State law or regulation. ("Certificate of Availability of State funds for Assistance and for Administration during Quarter" is available for submitting the information but is not required to be used.) 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 should 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.

(iii) The third document submitted by the State agency is the 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 expenditure also shows the share of the Federal Government in any recovery of assistance from recipients and also in expenditures not properly subject to Federal financial participation which are acknowledged by the State agency or have been revealed in the course of the fiscal 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) Estimate of amount due and certification. After consideration and approval of the grant request for the quarter by the Commissioner, the amount to be paid to the State is certified (by delegation to certifying officer in the Bureau) to the Secretary of the Treasury for payment for each month of the quarter.

§ 201.5 Withholding_certification; reduction of Federal financial partici

pation in the costs of social services and training.

(a) When withheld. Certification of grants to a State is withheld if the Commissioner, 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 has been so changed that it 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.

(b) When Federal financial participation is reduced. 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 Commissioner, after rea

sonable notice and opportunity for hearing to the State agency, finds:

(1) That the plan provision for prescribed services has been so changed that it 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) Informal 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 regional and central office representatives 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. Applicable requirements of the Administrative ProIcedure Act are observed in conducting the hearings referred to in paragraphs (a) and (b) of this section.

(e) Notification of noncertification. If the Commissioner 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 the case of a plan approved under title XVI, in his discretion, that payments will be limited to categories under or parts of the plan not affected by such failure), until the Commissioner 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 title XVI plan not affected by such failure).

(f) Notification of reduction in Federal financial participation. If the Commissioner 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 Commissioner is satisfied that there will no longer be any failure to comply.

Subpart B-Review and Audits § 201.6

Continuing 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 Bureau conducts a continuing review of State and local public assistance administration.

(b) The administrative review includes analysis of procedures and policies of State and local agencies and review of decisions in case records of individual recipients. 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 Bureau conducts a continuing observation of these State systems. Selected case records and agency operations are also reviewed for evaluating adherence to the other Federal requirements set forth in the pertinent titles of the Act. If the Federal or State review reveals cases in which there appear to have been an improper claim for Federal funds, the State agency is given an opportunity to provide information to substantiate the payment, or to make an adjustment on its expenditure report. If serious problems are revealed in respect to compliance with any Federal requirement, action to adjust Federal funds in all cases affected is required of the State agency, and the State agency is also required to correct its practice so that there will be no recurrence of the problem in the future. § 201.7 Personnel merit system review,

A personnel merit system review is carried out by the Division of State Merit Systems of the Office of Field 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.

under the appropriate title of the Act; administrative expenditures claimed for Federal financial participation are proper under the Act and State plan, including State laws and regulations; amounts expended and used as the basis for claiming Federal funds under title I, IV, X, XIV, or XVI were not derived from other Federal sources or were not used as a basis for other Federal matching; and the share of the Federal Government in any recovery was accurately and promptly adjusted.

(b) 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 Commissioner, the Bureau 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. Expendi

tures 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.

PART 202-MEDICAL ASSISTANCE TO STATE RESIDENTS

Sec. 202.1 Condition of plan approval; prohibition against exclusion of residents. 202.2 Furnishing of assistance to eligible residents absent from the State. AUTHORITY: The provisions of this Part 202 issued under sec. 601, 74 Stat. 987, sec. 141, 76 Stat. 197, sec. 121, 79 Stat. 343, sec. 1102, 49 Stat. 647; 42 U.S.C. 302, 1382, 1396a, 1302. Interprets or applies sec. 601, 74 Stat. 987, sec. 141, 76 Stat. 197, sec. 121, 79 Stat. 343, 42 U.S.C. 302, 1382, 1396a.

§ 202.1 Condition of plan approval; prohibition against exclusion of residents.

A State plan under Title I or XVI of the Social Security Act, as amended,

99-197-69- -32

insofar as it relates to medical assistance for the aged, or a State plan for medical assistance under Title XIX of such Act to be approved under sections 2, 1602, or 1902, respectively, of such Act (42 U.S.C. 302, 1382, 1396a), may not impose, as a condition of eligibility for medical assistance for the aged or medical assistance, as the case may be, any residence requirement which excludes any individual who resides in the State. [31 F.R. 10576, Aug. 6, 1966]

§ 202.2 Furnishing of assistance to eligible residents absent from the State. A State plan referred to in section 202.1 must provide for the furnishing of medical assistance for the aged or medical assistance, as the case may be, to eligible individuals who are residents of the State but are absent therefrom to the same extent that such assistance is furnished under the plan to meet the cost of medical care and services rendered to eligible individuals in such State, at least to the extent that medical care and services are needed in any other State (as defined in section 1101 (a) (1) of the Social Security Act, as amended, 42 U.S.C. 1301(a)(1)), under any of the following circumstances: (a) Where an emergency arises from accident or illness; (b) where the health of the individual would be endangered if the care and services are postponed until he returns to the State in which he resides; or (c) where his health would be endangered if he undertook travel to return to such State.

[31 F.R. 10576, Aug. 6, 1966]

PART 203-DEPRIVATION OF PARENTAL SUPPORT OR CARE

§ 203.1

Condition of plan approval; bases for determining eligibility of a child.

(a) A State plan for aid and services. to needy families with children under part A of title IV of the Social Security Act, to be approved under section 402 of such Act (42 U.S.C. 602), must provide that 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 father, will be made only in relation to the child's natural or adoptive parent, or in relation to a child's.