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$ 201.3 (e) or (f) that a plan or amend- nated by him, or by a fiscal officer of the ment is not approvable shall not be State if required by State law or regulastayed pending the reconsideration, but tion. (A form “Certificate of Availability in the event that the Administrator sub- of State Funds for Assistance and Adsequently determines that his original ministration during Quarter" is available decision was incorrect he shall certify for submitting this information, but its restitution forthwith in a lump sum of use is optional.) If the amount of State any funds incorrectly withheld or other- funds (or State and local funds if localwise denied.

ities participate in the program), shown

as available for expenditures is not suf§ 201.5 Grants.

ficient to cover the State's proportionate To States with approved plans, grants share of the amount estimated to be are made each quarter for expenditures expended, the certification must contain under the plan for assistance, services, a statement showing the source from training and administration. The deter- which the amount of the deficiency is mination as to the amount of a grant to expected to be derived and the time when be made to a State is based upon docu- this amount is expected to be made ments submitted by the State agency available. containing information required under (3) The State agency must also subthe Act and such other pertinent facts mit a quarterly statement of expenditures as may be found necessary.

for each of the public assistance pro(a) Form and manner of submittal. grams under the Act. This is an account(1) Time and place: The estimates for ing statement of the disposition of the public assistance grants for each quar- Federal funds granted for past periods terly period must be forwarded to the and provides the basis for making the regional office 45 days prior to the period adjustments necessary when the State's of the estimate. They include a certifica- estimate for any prior quarter was tion of State funds available and a justi- greater or less than the amount the fication statement in support of the esti- State actually expended in that quarter. mates. A statement of quarterly expendi- The statement of expenditures also shows tures and any necessary supporting the share of the Federal Government in schedules must be forwarded to the De- any recoupment, from whatever source, partment of Health, Education, and of expenditures claimed in any prior peWelfare, Social and Rehabilitation Serv- riod, and also in expenditures not propice, Attention: Finance Division, Wash- erly subject to Federal financial particiington, D.C. 20201, not later than 30 days pation which are acknowledged by the after the end of the quarter.

State agency or have been revealed in (2) Description of forms: “State the course of an audit. Agency Expenditure Projection-Quar- (b) Reveiw. The State's estimates are terly Projection by Program” represents analyzed by the regional office staff and the State agency's estimate of the total are forwarded with recommendations as amount and the Federal share of expend- required to the central office. The central itures for assistance, services, training, office reviews the State's estimate, other and administration to be made during relevant information, and any adjustthe quarter for each of the public assist- ments to be made for prior periods, and ance programs under the Act. From these computes the grant. estimates the State and Federal shares (c) Grant award. The grant award of the total expenditures are computed. computation form shows, by program, the The State's computed share of total esti- amount of the estimate for the ensuing mated expenditures is the amount of quarter, and the amounts by which the State and local funds necessary for the estimate is reduced or increased because quarter. The Federal share is the basis of over- or under-estimate for the prior for the funds to be advanced for the quarter and for other adjustments. This quarter. The State agency must also cer- form is trans

to the State agency tify, on this form or otherwise, the to draw the amount of the grant award, amount of State funds (exclusive of any as needed, to meet the Federal share of balance of advances received from the disbursements. The draw is through a Federal Government) actually on hand commercial bank and the Federal Reand available for expenditure; this cer- serve system against a continuing letter tification must be signed by the execu- of credit certified to the Secretary of the tive officer of the State agency submitting Treasury in favor of the State payee. A the estimate or a person officially desig- copy of the grant award notice is sent

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to the State Central Information Recep- (c) Information discussions. Hearings tion Agency in accord with section 201 with respect to matters under paragraph of the Intergovernmental Cooperation (a) or (b) of this section are generally Act of 1968.

not called, however, until after reason(d) Letter of credit payment system. able effort has been made by the Service The letter of credit system for payment to resolve the questions involved by conof advances of Federal funds was estab- ference and discussion with State offilished pursuant to Treasury Department cials. Formal notification of the date and regulations (Circular No. 1075), pub- place of hearing does not foreclose furlished in the FEDERAL REGISTER on July ther negotiations with State officials. 11, 1967 (32 F.R. 10201). The HEW “In- (d) Conduct of hearings. For hearing structions to Recipient Organizations for procedures, see Part 213 of this chapter. Use of Letter of Credit” was transmitted (e) Notification of withholding. If the to all grantees by memorandum from the Administrator makes a finding of nonAssistant Secretary-Comptroller on

compliance with respect to a matter January 15, 1968.

under paragraph (a) of this section, the 201.6 Withholding of payment; reduc

State agency is notified that further paytion of Federal financial participation

ments will not be made to the State (or, in the costs of social services and in his discretion, that payments will be training.

limited to categories under or parts of (a) When withheld. Further payments

the plan not affected by such failure),

until the Administrator is satisfied that to a State are withheld in whole or in

there will no longer be any such failure part if the Administrator, after reason

to comply. Until he is so satisfied, no able notice and opportunity for hearing

further payments will be made to the to the State agency administering or

State (or will be limited to categories supervising the administration of an ap

under or parts of the plan not affected proved plan, finds: (1) That the plan no longer complies

by such failure). with the provisions of section 2, 402, 1002,

(f) Notification of reduction in the 1402, 1602, or 1902 of the Act; or

rate of Federal financial participation. If (2) That in the administration of the

the Administrator makes a finding of plan there is failure to comply substan

noncompliance with respect to a matter tially with any such provision.

under paragraph (b) of this section, the

State agency is notified that further payA question of noncompliance of a Statt ments will be made to the State at the plan may arise from an unapprovable rate of 50 per centum of the costs of serychange in the approved State plan, the ices and training, until the Administrafailure of the State to change its ap- tor is satisfied that there will no longer proved plan to conform to a new Fed- be any failure to comply. eral requirement for approval of State plans, or the failure of the State in prac

8 201.7 Judicial review. tice to comply with a Federal require- Any State dissatisfied with a final ment, whether or not its State plan has determination of the Secretary pursuant been amended to conform to such re- to $ 201.4 or 8 201.6(a) may, within 60 quirement.

days after it has been notified of such (b) When the rate of Federal finan- determination, file with the U.S. Court cial participation is reduced. Under title of Appeals for the circuit in which such I, X, XIV, or XVI of the Act, Federal State is located a petition for review of financial participation in the costs of such determination. After a copy of the social services and training approved at petition is transmitted by the clerk of the rate of 75 per centum is reduced to 50 the court to the Secretary, the Secretary per centum if the Administrator, after thereupon shall file in the court the reasonable notice and opportunity for a record of proceedings upon which such hearing to the State agency, finds: determination was based as provided in

(1) That the plan provision under section 2112 of title 28, United States such title for prescribed services no long- Code. The court is bound by the Secreer complies with the Federal require- tary's findings of fact, if supported by ments with respect to such prescribed substantial evidence. The court has services; or

jurisdiction to affirm the Secretary's (2) That in the administration of the decision, or set it aside in whole or in plan there is a failure to comply sub- part, or, for good cause, to remand the stantially with such plan provision. case for additional evidence. If the case

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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 Service 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. 8 201.11 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. 8 201.12 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. 8 201.13 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 Service 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.






Submittal of State plans for Governor's review. A State plan under title I, IV-A, IV-B, X, XIV, XVI, or XIX of the Social Security Act, section 5 or 15 of the Vocational Rehabilitation Act, title I of the Mental Retardation Facilities and Community Mental Health Centers Construction Act, title III of the Older Americans Act, or title I of the Juvenile Delinquency Prevention and Control Act of 1968, 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 Social and Rehabilitation Service with the documents. (Secs. 7, 101 et seq., 131, 139, 401, 1102, 68 Stat. 658, 79 Stat. 218–226; 82 Stat. 466, 84 Stat. 1323, 82 Stat. 471, 49 Stat. 647; 29 U.S.C. 37, 42 U.S.C. 3001 et seq., 3841, 2677b, 3881, 1302) [36 F.R. 3860, Feb. 27, 1971]

Sec. 205.190 Standard-setting authority for insti

tutions. 205.200 Standards of personnel administra

tion. 205.202 Staff development.

AUTHORITY: The provisions of this part 205 issued under sec. 1102, 49 Stat. 647; 42 U.S.C. 1302. $ 205.5 Plan amendments.

(a) State plan requirements. A State plan under title I, IV-A, X, XIV, XVI, or XIX 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. (36 F.R. 3860, Feb. 27, 1971) $ 205.10 Fair hearings.

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

(1) The single State agency responsible for the program will be responsible for fulfillment of fair hearings provisions.

(2) Every claimant will be informed in writing at the time of application and at the time of any action affecting his claim:

(i) Of his right to fair hearing;

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

(iii) That he may be represented by legal counsel, or by a relative, friend, or other spokesman, or he may represent himself; and

(iv) Of any provision for payment of legal fees by the agency.

(3) An opportunity for a fair hearing before the State agency will be granted to any individual requesting a hearing because his claim for financial or medical assistance is denied, or is not acted upon with reasonable promptness, or because he is aggrieved by any other agency action affecting receipt, suspension, reduction, or termination of such assist



Sec. 205.5 Plan amendments. 205.10 Fair hearings. 205.20 Methods for determination of eligi

bility. 205.30 Methods of administration. 205.40 Quality control system. 205.50 Safeguarding information. 205.60 Reports and maintenance of records. 205.70 Availability of agency program man

uals. 205.100 Single State agency. 205.101 Organization for administration. 205.120 Statewide operation. 205.130 State financial participation. 205.145 Fiscal policies and accountability. 205.150 Cost allocation. 205.170 State standards for office space,

equipment, and facilities.



ance or by agency policy as it affects his each individual claimant must be persituation. Under this requirement:

mitted to present his own case and be (i) A request for a hearing is defined represented by his own lawyer. as any clear expression (oral or written) (vi) The agency shall not deny or disby the claimant (or person acting for miss a request for a hearing except where him, such as his legal representative, rel- it has been withdrawn by claimant in ative, or friend) to the effect that he writing, or abandoned. wants the opportunity to present his case (4) Hearing procedures will be issued to higher authority.

and publicized by the State agency for (ii) The freedom to make such a re- the guidance of all concerned. quest must not be limited or interfered (5) In cases of any proposed action to with in any way, and agency emphasis terminate, suspend or reduce assistance: must be on helping the claimant to sub- (i) The State or local agency will give mit and process his request, and in pre- timely and adequate advance notice deparing his case, if needed.

tailing the reasons for the proposed ac(iii) The claimant must be provided tion. Under this requirement: reasonable time in which to appeal an (a) “Timely" means that the notice is agency action.

mailed at least 15 days before the action (iv) The fair hearing shall include is to be taken. consideration of:

(b) "Adequate advance notice” means (a) Any agency action, or failure to a written notice that includes details of act with reasonable promptness, on a reasons for the proposed agency action, claim for financial or medical assistance, explanation of the individual's right to which includes urdue delay in reaching a conference, his right to request a fair decision on eligibility or in making a hearing and the circumstances under payment, refusal to consider a request which assistance is continued if a fair for or undue delay in making an adjust- hearing is requested. ment in payment, and suspension or dis- (ii) If, within the advance notice pecontinuance of such assistance in whole riod, the individual responds by indicator in part;

ing his wish for an agency conference, an (6) The agency's interpretation of the opportunity is provided for the recipient law, and the reasonableness and equita- (or his representative) to discuss his sitbleness of the policies promulgated uation with agency staff, obtain an exunder the law, if the claimant is ag- planation of the reasons for the proposed grieved by their application to his situa- action, and present information to show tion;

that the proposed action is incorrect. (c) Agency decision regarding:

Under this requirement: (1) Eligibility for financial or medical (a) During this conference, the reassistance in both initial and subsequent cipient is given the opportunity to speak determinations,

for himself or be represented by legal (2) Amount of financial or medical counsel or by friend or other assistance or change in payments,

spokesman. (3) The manner or form of payment, (b) The opportunity for a conference including restricted or protective pay- does not in any way diminish the rements, even though no Federal financial cipient's right to a fair hearing. participation is claimed, and

(iii) (a) In cases in which there is a (4) Conditions of payment, including request for a fair hearing within the work requirements.

advance notice period: (V) States may respond to a series of (1) Assistance is continued until the individual requests for fair hearings by fair hearing decision is rendered and conducting a single group hearing. States through a period consistent with the may only consolidate cases in which the State's established policies for issuance sole issue involved is one of an agency of payments unless a determination is policy. In such a situation, each individ- made by the State agency, in accordance ual must be given the right to withdraw with criteria issued by the Social and from the group hearing in favor of an Rehabilitation Service, that the issue is individual hearing. If recipients request one of State agency policy and not one of a group hearing on such an issue the fact or judgment relating to the indiState must grant it. In all group hear- vidual case, including a question of ings, whether initiated by the State or whether the State agency rules or poliby the claimants, the policies governing cies were correctly applied to the facts fair hearings must be followed. Thus, of the particular case.


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