“Applicable percentage” defined
As used in subparagraph (A), the term “applicable percentage” means, with respect to a State—
(i)#
if a penalty was not imposed on the State under subparagraph (A) for the immediately preceding fiscal year, 5 percent; or
(ii)#
if a penalty was imposed on the State under subparagraph (A) for the immediately preceding fiscal year, the lesser of—
(I) the percentage by which the grant payable to the State under section 603(a)(1) of this title was reduced for such preceding fiscal year, increased by 2 percentage points; or
(II) 21 percent.
(ii)(I)#
the percentage by which the grant payable to the State under section 603(a)(1) of this title was reduced for such preceding fiscal year, increased by 2 percentage points; or
(ii)(II)#
21 percent.