E 2. FNA-QCprovisions

Appendix E2- OMB 0584-0034
Section 16c of the FNA 2008, as amended- QC provisions.

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(6) DISPLACEMENT.—A work supplementation or support
program shall not displace the employment of individuals who
are not supplemented or supported.
(c) QUALITY CONTROL SYSTEM.—
(1) IN GENERAL.—
(A) SYSTEM.—
(i) IN GENERAL.—In carrying out the supplemental
nutrition assistance program, the Secretary shall carry
out a system that enhances payment accuracy and improves administration by establishing fiscal incentives
that require State agencies with high payment error
rates to share in the cost of payment error.
(ii) TOLERANCE LEVEL FOR EXCLUDING SMALL ERRORS.—The Secretary shall set the tolerance level for
excluding small errors for the purposes of this subsection—
(I) for fiscal year 2014, at an amount not
greater than $37; and
(II) for each fiscal year thereafter, the amount
specified in subclause (I) adjusted by the percentage by which the thrifty food plan is adjusted
under section 3(u)(4) between June 30, 2013, and
June 30 of the immediately preceding fiscal year.
(B) QUALITY CONTROL SYSTEM INTEGRITY.—
(i) IN GENERAL.—Not later than 180 days after the
date of enactment of the Agriculture Improvement Act
of 2018, the Secretary shall issue interim final regulations that—
(I) ensure that the quality control system established under this subsection produces valid statistical results;
(II) provide for oversight of contracts entered
into by a State agency for the purpose of improving payment accuracy;
(III) ensure the accuracy of data collected
under the quality control system established
under this subsection; and
(IV) for each fiscal year, to the maximum extent practicable, provide for the evaluation of the
integrity of the quality control process of not fewer
than 2 State agencies, selected in accordance with
criteria determined by the Secretary.
(ii) DEBARMENT.—In accordance with the nonprocurement debarment procedures under part 417 of
title 2, Code of Federal Regulations, or successor regulations, the Secretary shall debar any person that, in
carrying out the quality control system established
under this subsection, knowingly submits, or causes to
be submitted, false information to the Secretary.
(C) ESTABLISHMENT OF LIABILITY AMOUNT FOR FISCAL
YEAR 2003 AND THEREAFTER.—With respect to fiscal year
2004 and any fiscal year thereafter for which the Secretary
determines that, for the second or subsequent consecutive
fiscal year, a 95 percent statistical probability exists that
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the payment error rate of a State agency exceeds 105 percent of the national performance measure for payment
error rates announced under paragraph (6), the Secretary
shall establish an amount for which the State agency may
be liable (referred to in this paragraph as the ‘‘liability
amount’’) that is equal to the product obtained by multiplying—
(i) the value of all allotments issued by the State
agency in the fiscal year;
(ii) the difference between—
(I) the payment error rate of the State agency;
and
(II) 6 percent; and
(iii) 10 percent.
(D) AUTHORITY OF SECRETARY WITH RESPECT TO LIABILITY AMOUNT.—With respect to the liability amount established for a State agency under subparagraph (C) for any
fiscal year, the Secretary shall—
(i)
(I) require that a portion, not to exceed 50 percent, of the liability amount established for the fiscal
year be used by the State agency for new investment,
approved by the Secretary, to improve administration
by the State agency of the supplemental nutrition assistance program (referred to in this paragraph as the
‘‘new investment amount’’), which new investment
amount shall not be matched by Federal funds;
(II) designate a portion, not to exceed 50 percent,
of the amount established for the fiscal year for payment to the Secretary in accordance with subparagraph (E) (referred to in this paragraph as the ‘‘at-risk
amount’’); or
(III) take any combination of the actions described
in subclauses (I) and (II); or
(ii) make the determinations described in clause
(i) and enter into a settlement with the State agency,
only with respect to any new investment amount, before the end of the fiscal year in which the liability
amount is determined under subparagraph (C).
(E) PAYMENT OF AT-RISK AMOUNT FOR CERTAIN
STATES.—
(i) IN GENERAL.—A State agency shall pay to the
Secretary the at-risk amount designated under subparagraph (D)(i)(II) for any fiscal year in accordance
with clause (ii), if, with respect to the immediately following fiscal year, a liability amount has been established for the State agency under subparagraph (C).
(ii) METHOD OF PAYMENT OF AT-RISK AMOUNT.—
(I) REMISSION TO THE SECRETARY.—In the case
of a State agency required to pay an at-risk
amount under clause (i), as soon as practicable
after completion of all administrative and judicial
reviews with respect to that requirement to pay,
the chief executive officer of the State shall remit
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to the Secretary the at-risk amount required to be
paid.
(II) ALTERNATIVE METHOD OF COLLECTION.—
(aa) IN GENERAL.—If the chief executive
officer of the State fails to make the payment
under subclause (I) within a reasonable period
of time determined by the Secretary, the Secretary may reduce any amount due to the
State agency under any other provision of this
section by the amount required to be paid
under clause (i).
(bb) ACCRUAL OF INTEREST.—During any
period of time determined by the Secretary
under item (aa), interest on the payment
under subclause (I) shall not accrue under
section 13(a)(2).
(F) USE OF PORTION OF LIABILITY AMOUNT FOR NEW INVESTMENT.—
(i) REDUCTION OF OTHER AMOUNTS DUE TO STATE
AGENCY.—In the case of a State agency that fails to
comply with a requirement for new investment under
subparagraph (D)(i)(I) or clause (iii)(I), the Secretary
may reduce any amount due to the State agency under
any other provision of this section by the portion of the
liability amount that has not been used in accordance
with that requirement.
(ii) EFFECT OF STATE AGENCY’S WHOLLY PREVAILING ON APPEAL.—If a State agency begins required
new investment under subparagraph (D)(i)(I), the
State agency appeals the liability amount of the State
agency, and the determination by the Secretary of the
liability amount is reduced to $0 on administrative or
judicial review, the Secretary shall pay to the State
agency an amount equal to 50 percent of the new investment amount that was included in the liability
amount subject to the appeal.
(iii) EFFECT OF SECRETARY’S WHOLLY PREVAILING
ON APPEAL.—If a State agency does not begin required
new investment under subparagraph (D)(i)(I), the
State agency appeals the liability amount of the State
agency, and the determination by the Secretary of the
liability amount is wholly upheld on administrative or
judicial review, the Secretary shall—
(I) require all or any portion of the new investment amount to be used by the State agency
for new investment, approved by the Secretary, to
improve administration by the State agency of the
supplemental nutrition assistance program, which
amount shall not be matched by Federal funds;
and
(II) require payment of any remaining portion
of the new investment amount in accordance with
subparagraph (E)(ii).
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(iv) EFFECT OF NEITHER PARTY’S WHOLLY PREVAILING ON APPEAL.—The Secretary shall promulgate
regulations regarding obligations of the Secretary and
the State agency in a case in which the State agency
appeals the liability amount of the State agency and
neither the Secretary nor the State agency wholly prevails.
(G) CORRECTIVE ACTION PLANS.—The Secretary shall
foster management improvements by the States by requiring State agencies, other than State agencies with payment error rates of less than 6 percent, to develop and implement corrective action plans to reduce payment errors.
(2) As used in this section—
(A) the term ‘‘payment error rate’’ means the sum of the
point estimates of an overpayment error rate and an underpayment error rate determined by the Secretary from data collected in a probability sample of participating households;
(B) the term ‘‘overpayment error rate’’ means the percentage of the value of all allotments issued in a fiscal year by a
State agency that are either—
(i) issued to households that fail to meet basic program eligibility requirements; or
(ii) overissued to eligible households; and
(C) the term ‘‘underpayment error rate’’ means the ratio of
the value of allotments underissued to recipient households to
the total value of allotments issued in a fiscal year by a State
agency.
(3) The following errors may be measured for management
purposes but shall not be included in the payment error rate:
(A) Any errors resulting in the application of new regulations promulgated under this Act during the first 120 days
from the required implementation date for such regulations.
(B) Errors resulting from the use by a State agency of correctly processed information concerning households or individuals received from Federal agencies or from actions based on
policy information approved or disseminated, in writing, by the
Secretary or the Secretary’s designee.
(4) REPORTING REQUIREMENTS.—The Secretary may require a State agency to report any factors that the Secretary
considers necessary, including providing access to applicable
State records and the entire information systems in which the
records are contained, to determine a State agency’s payment
error rate, liability amount or new investment amount under
paragraph (1), or performance under the performance measures under subsection (d). If a State agency fails to meet the
reporting requirements established by the Secretary, the Secretary shall base the determination on all pertinent information available to the Secretary.
(5) PROCEDURES.—To facilitate the implementation of this
subsection, each State agency shall expeditiously submit to the
Secretary data concerning the operations of the State agency
in each fiscal year sufficient for the Secretary to establish the
State agency’s payment error rate, liability amount or new investment amount under paragraph (1), or performance under
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