Shortfall States described

(A) In general For purposes of paragraph (1), with respect to a fiscal year, a shortfall State described in this subparagraph is a State with a State child health plan approved under this subchapter for which the Secretary estimates on the basis of the most recent data available to the Secretary, that the projected expenditures under such plan for the State for the fiscal year will exceed the sum of— (i) the amount of the State’s allotments for any preceding fiscal years that remains available for expenditure and that will not be expended by the end of the immediately preceding fiscal year; (ii) the amount (if any) of the child enrollment contingency fund 2 2 So in original. Probably should be “Child Enrollment Contingency Fund”. payment under subsection (n); and (iii) the amount of the State’s allotment for the fiscal year.

(B) Determination of redistributed amounts if insufficient amounts available (i) Proration rule Subject to clause (ii), if the amounts available for redistribution under paragraph (1) for a fiscal year are less than the total amounts of the estimated shortfalls determined for the year under subparagraph (A), the amount to be redistributed under such paragraph for each shortfall State shall be reduced proportionally. (ii) Special rule for first half of fiscal year 2018 (I) In general For each month beginning during the period beginning on October 1, 2017 , and ending March 31, 2018 , subject to the succeeding subclauses of this clause, the Secretary shall redistribute any amounts available for redistribution under paragraph (1) for fiscal year 2018, to each State that is an emergency shortfall State (as defined in subclause (II)) for the month such amount as the Secretary determines will eliminate the estimated shortfall described in subclause (II) for such State for the month (as may be adjusted under subparagraph (C)) before the Secretary may redistribute such amounts to any shortfall State that is not an emergency shortfall State. In the case of any amounts redistributed under this subclause to a State that is not an emergency shortfall State, such amounts shall be determined in accordance with clause (i). (II) Emergency shortfall State defined For purposes of this clause, the term “emergency shortfall State” means, with respect to a month beginning during the period beginning October 1, 2017 , and ending March 31, 2018 , a shortfall State for which the Secretary estimates, in accordance with subparagraph (A) (unless otherwise specified in this subclause) and on a monthly basis using the most recent data available to the Secretary as of such month, that the projected expenditures under the State child health plan and under section 1397ee(g) of this title (calculated as if the reference under section 1397ee(g)(4)(A) of this title , as in effect on the day before January 22, 2018 , to “2017” were a reference to “2018” and insofar as the allotments are available to the State under this subsection or subsection (e) or (m)) for such month will exceed the sum of the amounts described in clauses (i) through (iii) of subparagraph (A) for such month, including after application of any amount redistributed under paragraph (1) for a previous month for fiscal year 2018 in accordance with this clause, to such State. A shortfall State may be an emergency shortfall State under the previous sentence without regard to whether any amounts were redistributed to such State under paragraph (1) for a previous month in fiscal year 2018. (III) Funds redistributed in the order in which States realize funding shortfalls The Secretary shall redistribute the amounts available for redistribution under paragraph (1) to emergency shortfall States described in subclause (II) in the order in which such States realize monthly funding shortfalls under this subchapter for fiscal year 2018. The Secretary shall only make redistributions under this clause to the extent that such amounts are available for such redistributions. (IV) Proration rule If the amounts available for redistribution under paragraph (1) for a month during the period described in subclause (I) are less than the total amounts of the estimated shortfalls determined for the month for emergency shortfall States described in subclause (II), the amount computed under subclause (I) for each emergency shortfall State shall be reduced proportionally. (V) Unobligated redistributed funds The Secretary shall withhold any funds redistributed under paragraph (1) for fiscal year 2018 before January 1, 2018 , but which have not been obligated for amounts expended by a State as of that date, and shall redistribute such funds in accordance with the preceding subclauses of this clause. (VI) Application of qualifying State option During the period described in subclause (I), section 1397ee(g)(4) of this title , as in effect on the day before January 22, 2018 , shall apply to a qualifying State (as defined in section 1397ee(g)(2) of this title ) as if under section 1397ee(g)(4) of this title , as so in effect— (aa) the reference to “2017” were a reference to “2018”; and (bb) the reference to “under subsections (e) and (m) of such section” were a reference to “under subsections (e), (f), and (m) of such section”.

(C) Retrospective adjustment The Secretary may adjust the estimates and determinations made under paragraph (1) and this paragraph with respect to a fiscal year as necessary on the basis of the amounts reported by States not later than November 30 of the succeeding fiscal year, as approved by the Secretary.

(D) Rule of construction Nothing in this paragraph may be construed as preventing a commonwealth or territory described in subsection (c)(3) from being treated as a shortfall State or an emergency shortfall State.