10544. (Amended by Stats. 2025, Ch. 79, Sec. 7.)

(a) If the department finds that a county is experiencing significantly worsened outcomes, it shall report this finding to the Chairs of the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Senate Committee on Health and Human Services, and the Assembly Committee on Human Services.

(b) If the state does not achieve the outcomes required by federal law and, as a result, is subject to a fiscal penalty, the penalty shall be shared equally by the state and the counties after exhaustion of all reasonable and available federal administrative remedies. If a county’s single allocation pursuant to Section 15204.2 is reduced by the state to offset the county’s share of any federal penalty imposed pursuant to this section, the county shall be required to utilize county general funds to replace the offset amount, so that total funding remains equal to the county’s single allocation. These funds shall be in addition to the funds required to meet the maintenance-of-effort requirement pursuant to Section 15204.4. Only those counties that have failed to meet the federal requirements shall be required to share in the fiscal penalty imposed on the state. Those counties’ share of the penalty imposed on the state shall equal 50 percent of that penalty. Each county’s share of the penalty shall be based, in consultation with the County Welfare Directors Association, on the county’s degree of performance that contributes to the failure to meet the federal requirement.

(c) A county may be provided relief, in whole or in part, from a penalty imposed pursuant to subdivision (b) if the department determines that there were circumstances beyond the control of the county. A county may also be provided relief based on the degree of success or progress in meeting federal requirements, and, to the extent that there are differences between state and federal program requirements, the degree of success in meeting state participation requirements. Any adjustment made pursuant to this subdivision shall be reported to the Chair of the Joint Legislative Budget Committee. If a county is granted relief, that portion of the total penalty shall not be imposed on the other counties that failed to meet the federal requirements.

(d) A county that fails, without good cause, to submit accurate and timely data used to measure work participation, as required by the department, shall be deemed to have failed to meet applicable federal requirements. For purposes of this subdivision, good cause includes, but is not limited to, the lack of accurate, timely, and complete instructions from the department.

(e) The amendments made to subdivision (b) by the amendment of this section in 2006 by Chapter 75 of the Statutes of 2006, clarify existing law, as enacted by Assembly Bill 1542 (Ch. 270, Stats. 1997).

(f) (1) The department shall consult with the workgroup created pursuant to Section 11523, in the fall of 2022, to develop recommendations to address the existing emphasis on the federal work participation rate and penalty pass-on structure, as described in this section, while optimizing the implementation of the first cycle of the CalWORKs Outcomes and Accountability Review (Cal-OAR) process. The department shall submit a report of recommendations to the Legislature on or before April 15, 2023.

(2) A report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.

(g) This section does not apply to any federal fiscal penalties imposed as a result of not meeting federal work participation rate requirements on or after October 1, 2025.