Penalty for failure to establish or comply with work participation verification procedures

If the Secretary determines that a State to which a grant is made under section 603 of this title in a fiscal year has violated section 607(i)(2) of this title during the fiscal year, the Secretary shall reduce the grant payable to the State under section 603(a)(1) of this title for the immediately succeeding fiscal year by an amount equal to not less than 1 percent and not more than 5 percent of the State family assistance grant.

The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of noncompliance.