(a) Administrative costs
Subject to subsection (k), the Secretary is authorized to pay to each State agency an amount equal to 50 per centum of all administrative costs involved in each State agency's operation of the supplemental nutrition assistance program, which costs shall include, but not be limited to, the cost of (1) the certification of applicant households, (2) the acceptance, storage, protection, control, and accounting of benefits after their delivery to receiving points within the State, (3) the issuance of benefits to all eligible households, (4) informational activities relating to the supplemental nutrition assistance program, including those undertaken under section 2020(e)(1)(A) of this title, but not including recruitment activities designed to persuade an individual to apply for program benefits or that promote the program through television, radio, or billboard advertisements, (5) fair hearings, (6) automated data processing and information retrieval systems subject to the conditions set forth in subsection (g), (7) supplemental nutrition assistance program investigations and prosecutions, (8) implementing and operating the immigration status verification system established under section 1137(d) of the Social Security Act (42 U.S.C. 1320b–7(d)), and (9) establishing and operating a longitudinal database in accordance with section 2026(n) of this title: Provided, That the Secretary is authorized at the Secretary's discretion to pay any State agency administering the supplemental nutrition assistance program on all or part of an Indian reservation under section 2020(d) of this title or in a Native village within the State of Alaska identified in section 1610(b) of title 43, such amounts for administrative costs as the Secretary determines to be necessary for effective operation of the supplemental nutrition assistance program, as well as to permit each State to retain 35 percent of the value of all funds or allotments recovered or collected pursuant to sections 2015(b) and 2022(c) of this title and 20 percent of the value of any other funds or allotments recovered or collected, except the value of funds or allotments recovered or collected that arise from an error of a State agency. The officials responsible for making determinations of ineligibility under this chapter shall not receive or benefit from revenues retained by the State under the provisions of this subsection.

(b) Work supplementation or support program

(1) "Work supplementation or support program" defined
In this subsection, the term "work supplementation or support program" means a program under which, as determined by the Secretary, public assistance (including any benefits provided under a program established by the State and the supplemental nutrition assistance program) is provided to an employer to be used for hiring and employing a public assistance recipient who was not employed by the employer at the time the public assistance recipient entered the program.

(2) Program
A State agency may elect to use an amount equal to the allotment that would otherwise be issued to a household under the supplemental nutrition assistance program, but for the operation of this subsection, for the purpose of subsidizing or supporting a job under a work supplementation or support program established by the State.

(3) Procedure
If a State agency makes an election under paragraph (2) and identifies each household that participates in the supplemental nutrition assistance program that contains an individual who is participating in the work supplementation or support program—

(A) the Secretary shall pay to the State agency an amount equal to the value of the allotment that the household would be eligible to receive but for the operation of this subsection;

(B) the State agency shall expend the amount received under subparagraph (A) in accordance with the work supplementation or support program in lieu of providing the allotment that the household would receive but for the operation of this subsection;

(C) for purposes of—

(i) sections 2014 and 2017(a) of this title, the amount received under this subsection shall be excluded from household income and resources; and

(ii) section 2017(b) of this title, the amount received under this subsection shall be considered to be the value of an allotment provided to the household; and

(D) the household shall not receive an allotment from the State agency for the period during which the member continues to participate in the work supplementation or support program.

(4) Other work requirements
No individual shall be excused, by reason of the fact that a State has a work supplementation or support program, from any work requirement under section 2015(d) of this title, except during the periods in which the individual is employed under the work supplementation or support program.

(5) Length of participation
A State agency shall provide a description of how the public assistance recipients in the program shall, within a specific period of time, be moved from supplemented or supported employment to employment that is not supplemented or supported.

(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 2012(u)(4) of this title 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 December 20, 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 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 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 2022(a)(2) of this title.

(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).

(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) Error rate definitions
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) Exclusions
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 chapter 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 the performance measures under subsection (d). The Secretary shall initiate efforts to collect the amount owed by the State agency as a claim established under paragraph (1) for a fiscal year, subject to the conclusion of any formal or informal appeal procedure and administrative or judicial review under section 2023 of this title (as provided for in paragraph (7)), before the end of the fiscal year following such fiscal year.

(6) National performance measure for payment error rates

(A) Announcement
At the time the Secretary makes the notification to State agencies of their error rates, the Secretary shall also announce a national performance measure that shall be the sum of the products of each State agency's error rate as developed for the notifications under paragraph (8) times that State agency's proportion of the total value of national allotments issued for the fiscal year using the most recent issuance data available at the time of the notifications issued pursuant to paragraph (8).

(B) Use of alternative measure of State error
Where a State fails to meet reporting requirements pursuant to paragraph (4), the Secretary may use another measure of a State's error developed pursuant to paragraph (5), to develop the national performance measure.

(C) Use of national performance measure
The announced national performance measure shall be used in determining the liability amount of a State under paragraph (1)(C) for the fiscal year whose error rates are being announced under paragraph (8).

(D) No administrative or judicial review
The national performance measure announced under this paragraph shall not be subject to administrative or judicial review.

(7) Administrative and judicial review

(A) In general
Except as provided in subparagraphs (B) and (C), if the Secretary asserts a financial claim against or establishes a liability amount with respect to a State agency under paragraph (1), the State may seek administrative and judicial review of the action pursuant to section 2023 of this title.

(B) Determination of payment error rate
With respect to any fiscal year, a determination of the payment error rate of a State agency or a determination whether the payment error rate exceeds 105 percent of the national performance measure for payment error rates shall be subject to administrative or judicial review only if the Secretary establishes a liability amount with respect to the fiscal year under paragraph (1)(C).

(C) Authority of Secretary with respect to liability amount
An action by the Secretary under subparagraph (D) or (F)(iii) of paragraph (1) shall not be subject to administrative or judicial review.

(8) Criteria for payment by a State agency

(A) This paragraph applies to the determination of whether a payment is due by a State agency for a fiscal year under paragraph (1).

(B) Not later than the first May 31 after the end of the fiscal year referred to in subparagraph (A), the case review and all arbitrations of State-Federal difference cases shall be completed.

(C) Not later than the first June 30 after the end of the fiscal year referred to in subparagraph (A), the Secretary shall—

(i) determine final error rates, the national average payment error rate, and the amounts of payment claimed against State agencies or liability amount established with respect to State agencies;

(ii) notify State agencies of the payment claims or liability amounts; and

(iii) provide a copy of the document providing notification under clause (ii) to the chief executive officer and the legislature of the State.

(D) A State agency desiring to appeal a payment claim or liability amount determined under subparagraph (C) shall submit to an administrative law judge—

(i) a notice of appeal, not later than 10 days after receiving a notice of the claim or liability amount; and

(ii) evidence in support of the appeal of the State agency, not later than 60 days after receiving a notice of the claim or liability amount.

(E) Not later than 60 days after a State agency submits evidence in support of the appeal, the Secretary shall submit responsive evidence to the administrative law judge to the extent such evidence exists.

(F) Not later than 30 days after the Secretary submits responsive evidence, the State agency shall submit rebuttal evidence to the administrative law judge to the extent such evidence exists.

(G) The administrative law judge, after an evidentiary hearing, shall decide the appeal—

(i) not later than 60 days after receipt of rebuttal evidence submitted by the State agency; or

(ii) if the State agency does not submit rebuttal evidence, not later than 90 days after the State agency submits the notice of appeal and evidence in support of the appeal.

(H) In considering a claim or liability amount under this paragraph, the administrative law judge shall consider all grounds for denying the claim or liability amount, in whole or in part, including the contention of a State agency that the claim or liability amount should be waived, in whole or in part, for good cause.

(I) The deadlines in subparagraphs (D), (E), (F), and (G) shall be extended by the administrative law judge for cause shown.

(9) "Good cause" defined
As used in this subsection, the term "good cause" includes—

(A) a natural disaster or civil disorder that adversely affects supplemental nutrition assistance program operations;

(B) a strike by employees of a State agency who are necessary for the determination of eligibility and processing of case changes under the supplemental nutrition assistance program;

(C) a significant growth in the caseload under the supplemental nutrition assistance program in a State prior to or during a fiscal year, such as a 15 percent growth in caseload;

(D) a change in the supplemental nutrition assistance program or other Federal or State program that has a substantial adverse impact on the management of the supplemental nutrition assistance program of a State; and

(E) a significant circumstance beyond the control of the State agency.

(d) State performance indicators

(1) Fiscal years 2003 and 2004

(A) Guidance
With respect to fiscal years 2003 and 2004, the Secretary shall establish, in guidance issued to State agencies not later than October 1, 2002—

(i) performance criteria relating to—

(I) actions taken to correct errors, reduce rates of error, and improve eligibility determinations; and

(II) other indicators of effective administration determined by the Secretary; and

(ii) standards for high and most improved performance to be used in awarding performance bonus payments under subparagraph (B)(ii).

(B) Performance bonus payments
With respect to each of fiscal years 2003 and 2004, the Secretary shall—

(i) measure the performance of each State agency with respect to the criteria established under subparagraph (A)(i); and

(ii) subject to paragraph (3), award performance bonus payments in the following fiscal year, in a total amount of $48,000,000 for each fiscal year, to State agencies that meet standards for high or most improved performance established by the Secretary under subparagraph (A)(ii).

(2) Fiscal years 2005 through 2017

(A) Regulations
With respect to fiscal year 2005 through fiscal year 2017, the Secretary shall—

(i) establish, by regulation, performance criteria relating to—

(I) actions taken to correct errors, reduce rates of error, and improve eligibility determinations; and

(II) other indicators of effective administration determined by the Secretary;

(ii) establish, by regulation, standards for high and most improved performance to be used in awarding performance bonus payments under subparagraph (B)(ii); and

(iii) before issuing proposed regulations to carry out clauses (i) and (ii), solicit ideas for performance criteria and standards for high and most improved performance from State agencies and organizations that represent State interests.

(B) Performance bonus payments
With respect to fiscal year 2005 through fiscal year 2017, the Secretary shall—

(i) measure the performance of each State agency with respect to the criteria established under subparagraph (A)(i); and

(ii) subject to paragraph (3), award performance bonus payments in the following fiscal year, in a total amount of $48,000,000 for each fiscal year, to State agencies that meet standards for high or most improved performance established by the Secretary under subparagraph (A)(ii).

(3) Prohibition on receipt of performance bonus payments
A State agency shall not be eligible for a performance bonus payment with respect to any fiscal year for which the State agency has a liability amount established under subsection (c)(1)(C).

(4) Payments not subject to judicial review
A determination by the Secretary whether, and in what amount, to award a performance bonus payment under this subsection shall not be subject to administrative or judicial review.

(5) Use of performance bonus payments
A State agency may use a performance bonus payment received under this subsection only to carry out the program established under this chapter, including investments in—

(A) technology;

(B) improvements in administration and distribution; and

(C) actions to prevent fraud, waste, and abuse.

(6) Fiscal year 2018 and fiscal years thereafter

(A) With respect to fiscal year 2018 and each fiscal year thereafter, the Secretary shall establish, by regulation, performance criteria relating to—

(i) actions taken to correct errors, reduce rates of error, and improve eligibility determinations; and

(ii) other indicators of effective administration determined by the Secretary.

(B) The Secretary shall not award performance bonus payments to State agencies in fiscal year 2019 for fiscal year 2018 performance.

(e) Use of social security account numbers; access to information
The Secretary and State agencies shall (1) require, as a condition of eligibility for participation in the supplemental nutrition assistance program, that each household member furnish to the State agency their social security account number (or numbers, if they have more than one number), and (2) use such account numbers in the administration of the supplemental nutrition assistance program. The Secretary and State agencies shall have access to the information regarding individual supplemental nutrition assistance program applicants and participants who receive benefits under title XVI of the Social Security Act [42 U.S.C. 1381 et seq.] that has been provided to the Commissioner of Social Security, but only to the extent that the Secretary and the Commissioner of Social Security determine necessary for purposes of determining or auditing a household's eligibility to receive assistance or the amount thereof under the supplemental nutrition assistance program, or verifying information related thereto.

(f) Payment of certain legal fees
Notwithstanding any other provision of law, counsel may be employed and counsel fees, court costs, bail, and other expenses incidental to the defense of officers and employees of the Department of Agriculture may be paid in judicial or administrative proceedings to which such officers and employees have been made parties and that arise directly out of their performance of duties under this chapter.

(g) Cost sharing for computerization

(1) In general
Except as provided in paragraph (2), the Secretary is authorized to pay to each State agency the amount provided under subsection (a)(6) for the costs incurred by the State agency in the—

(A) planning, design, development, or installation of 1 or more automatic data processing and information retrieval systems that the Secretary determines—

(i) would assist in meeting the requirements of this chapter;

(ii) meet such conditions as the Secretary prescribes;

(iii) are likely to provide more efficient and effective administration of the supplemental nutrition assistance program;

(iv) would be compatible with other systems used in the administration of State programs, including the program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.);

(v) would be tested adequately before and after implementation, including a requirement that—

(I) such testing shall be accomplished through pilot projects in limited areas for major systems changes (as determined under rules promulgated by the Secretary);

(II) each pilot project described in subclause (I) that is carried out before the implementation of a system shall be conducted in a live-production environment; and

(III) the data resulting from each pilot project carried out under this clause shall be thoroughly evaluated before the Secretary approves the system to be implemented more broadly;

(vi) would be operated in accordance with an adequate plan for—

(I) continuous updating to reflect changed policy and circumstances; and

(II) testing the effect of the system on access for eligible households and on payment accuracy; and

(vii) would be accessible by the Secretary for inspection and audit under section 2020(a)(3)(B) of this title; and

(B) operation of 1 or more automatic data processing and information retrieval systems that the Secretary determines may continue to be operated in accordance with clauses (i) through (vii) of subparagraph (A).

(2) Limitation
The Secretary shall not make payments to a State agency under paragraph (1) to the extent that the State agency—

(A) is reimbursed for the costs under any other Federal program; or

(B) uses the systems for purposes not connected with the supplemental nutrition assistance program.

(h) Funding of employment and training programs

(1) In general.—

(A) Amounts.—To carry out employment and training programs, the Secretary shall reserve for allocation to State agencies, to remain available for 24 months, from funds made available for each fiscal year under section 2027(a)(1) of this title, $103,900,000 for each fiscal year.

(B) Allocation.—Funds made available under subparagraph (A) shall be made available to and reallocated among State agencies under a reasonable formula that—

(i) is determined and adjusted by the Secretary; and

(ii) takes into account the number of individuals who are not exempt from the work requirement under section 2015(o) of this title.

(C) Reallocation.—

(i) In general.—If a State agency will not expend all of the funds allocated to the State agency for a fiscal year under subparagraph (B), the Secretary, subject to clauses (ii) through (v), shall reallocate the unexpended funds to other States (during the fiscal year or the subsequent fiscal year) as the Secretary considers appropriate and equitable.

(ii) Timing.—The Secretary shall collect such information as the Secretary determines to be necessary about the expenditures and anticipated expenditures by the State agencies of the funds initially allocated to the State agencies under subparagraph (A) to make reallocations of unexpended funds under clause (i) within a timeframe that allows each State agency to which funds are reallocated at least 270 days to expend the reallocated funds.

(iii) Opportunity.—The Secretary shall ensure that all State agencies have an opportunity to obtain reallocated funds.

(iv) Priority.—The Secretary shall reallocate funds under this subparagraph as follows:

(I)

(aa) Subject to items (bb) and (cc), not less than 50 percent shall be reallocated to State agencies requesting such funds to conduct employment and training programs and activities for which such State agencies had previously received funding under subparagraph (F)(viii) that the Secretary determines have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance.

(bb) The Secretary shall base the determination under item (aa) on—

(AA) project results from the independent evaluations conducted under subparagraph (F)(vii)(I); or

(BB) if the project results from the independent evaluations conducted under subparagraph (F)(vii)(I) are not yet available, the reports under subparagraph (F)(vii)(II) or other information relating to performance of the programs and activities funded under subparagraph (F)(viii).

(cc) Employment and training activities funded under this subclause are not subject to subparagraph (F)(vii), but are subject to monitoring under paragraph (h)(5).

(II) Not less than 30 percent shall be reallocated to State agencies requesting such funds to implement or continue employment and training programs and activities under section 2015(d)(4)(B)(i) of this title that the Secretary determines have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance, including programs and activities that are targeted to—

(aa) individuals 50 years of age or older;

(bb) formerly incarcerated individuals;

(cc) individuals participating in a substance abuse treatment program;

(dd) homeless individuals;

(ee) people with disabilities seeking to enter the workforce;

(ff) other individuals with substantial barriers to employment; or

(gg) households facing multi-generational poverty, to support employment and workforce participation through an integrated and family-focused approach in providing supportive services.

(III) The Secretary shall reallocate any remaining funds available under this subparagraph, to State agencies requesting such funds to use for employment and training programs and activities that the Secretary determines have the most demonstrable impact on the ability of participants to find and retain employment that leads to increased household income and reduced reliance on public assistance under section 2015(d)(4)(B)(i) of this title.

(v) Consideration.—In reallocating funds under this subparagraph, a State agency that receives reallocated funds under clause (iv)(I) may also be considered for reallocated funding under clause (iv)(II).

(D) Minimum allocation.—Notwithstanding subparagraph (B), the Secretary shall ensure that each State agency operating an employment and training program shall receive not less than $100,000 for each fiscal year.

(E) Additional allocations for states that ensure availability of work opportunities.—

(i) In general.—In addition to the allocations under subparagraph (A), from funds made available under section 2027(a)(1) of this title, the Secretary shall allocate not more than $20,000,000 for each fiscal year to reimburse a State agency that is eligible under clause (ii) for the costs incurred in serving members of households receiving supplemental nutrition assistance program benefits who—

(I) are not eligible for an exception under section 2015(o)(3) of this title; and

(II) are placed in and comply with a program described in subparagraph (B) or (C) of section 2015(o)(2) of this title.

(ii) Eligibility.—To be eligible for an additional allocation under clause (i), a State agency shall make and comply with a commitment to offer a position in a program described in subparagraph (B) or (C) of section 2015(o)(2) of this title to each applicant or recipient who—

(I) is in the last month of the 3-month period described in section 2015(o)(2) of this title;

(II) is not eligible for an exception under section 2015(o)(3) of this title;

(III) is not eligible for a waiver under section 2015(o)(4) of this title; and

(IV) is not exempt under section 2015(o)(6) of this title.

(F) Pilot projects to reduce dependency and increase work requirements and work effort under supplemental nutrition assistance program.—

(i) Pilot projects required.—

(I) In general.—The Secretary shall carry out pilot projects under which State agencies shall enter into cooperative agreements with the Secretary to develop and test methods, including operating work programs with certain features comparable to the program of block grants to States for temporary assistance for needy families established under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), for employment and training programs and services to raise the number of work registrants under section 2015(d) of this title who obtain unsubsidized employment, increase the earned income of the registrants, and reduce the reliance of the registrants on public assistance, so as to reduce the need for supplemental nutrition assistance benefits.

(II) Requirements.—Pilot projects shall—

(aa) meet such terms and conditions as the Secretary considers to be appropriate; and

(bb) except as otherwise provided in this subparagraph, be in accordance with the requirements of sections 2015(d) and 2029 of this title.

(ii) Selection criteria.—

(I) In general.—The Secretary shall select pilot projects under this subparagraph in accordance with the criteria established under this clause and additional criteria established by the Secretary.

(II) Qualifying criteria.—To be eligible to participate in a pilot project, a State agency shall—

(aa) agree to participate in the evaluation described in clause (vii), including providing evidence that the State has a robust data collection system for program administration and cooperating to make available State data on the employment activities and post-participation employment, earnings, and public benefit receipt of participants to ensure proper and timely evaluation;

(bb) commit to collaborate with the State workforce board and other job training programs in the State and local area; and

(cc) commit to maintain at least the amount of State funding for employment and training programs and services under paragraphs (2) and (3) and under section 2029 of this title as the State expended for fiscal year 2013.

(III) Selection criteria.—In selecting pilot projects, the Secretary shall—

(aa) consider the degree to which the pilot project would enhance existing employment and training programs in the State;

(bb) consider the degree to which the pilot project would enhance the employment and earnings of program participants;

(cc) consider whether there is evidence that the pilot project could be replicated easily by other States or political subdivisions;

(dd) consider whether the State agency has a demonstrated capacity to operate high quality employment and training programs; and

(ee) ensure the pilot projects, when considered as a group, test a range of strategies, including strategies that—

(AA) target individuals with low skills or limited work experience, individuals subject to the requirements under section 2015(o) of this title, and individuals who are working;

(BB) are located in a range of geographic areas and States, including rural and urban areas;

(CC) emphasize education and training, rehabilitative services for individuals with barriers to employment, rapid attachment to employment, and mixed strategies; and

(DD) test programs that assign work registrants to mandatory and voluntary participation in employment and training activities.

(iii) Accountability.—

(I) In general.—The Secretary shall establish and implement a process to terminate a pilot project for which the State has failed to meet the criteria described in clause (ii) or other criteria established by the Secretary.

(II) Timing.—The process shall include a reasonable time period, not to exceed 180 days, for State agencies found noncompliant to correct the noncompliance.

(iv) Employment and training activities.—Allowable programs and services carried out under this subparagraph shall include those programs and services authorized under this chapter and employment and training activities authorized under the program of block grants to States for temporary assistance for needy families established under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), including:

(I) Employment in the public or private sector that is not subsidized by any public program.

(II) Employment in the private sector for which the employer receives a subsidy from public funds to offset all or a part of the wages and costs of employing an adult.

(III) Employment in the public sector for which the employer receives a subsidy from public funds to offset all or a part of the wages and costs of employing an adult.

(IV) A work activity that—

(aa) is performed in return for public benefits;

(bb) provides an adult with an opportunity to acquire the general skills, knowledge, and work habits necessary to obtain employment;

(cc) is designed to improve the employability of those who cannot find unsubsidized employment; and

(dd) is supervised by an employer, work site sponsor, or other responsible party on an ongoing basis.

(V) Training in the public or private sector that—

(aa) is given to a paid employee while the employee is engaged in productive work; and

(bb) provides knowledge and skills essential to the full and adequate performance of the job.

(VI) Job search, obtaining employment, or preparation to seek or obtain employment, including—

(aa) life skills training;

(bb) substance abuse treatment or mental health treatment, determined to be necessary and documented by a qualified medical, substance abuse, or mental health professional; and

(cc) rehabilitation activities, supervised by a public agency or other responsible party on an ongoing basis.

(VII) Structured programs and embedded activities—

(aa) in which adults perform work for the direct benefit of the community under the auspices of public or nonprofit organizations;

(bb) that are limited to projects that serve useful community purposes in fields such as health, social service, environmental protection, education, urban and rural redevelopment, welfare, recreation, public facilities, public safety, and child care;

(cc) that are designed to improve the employability of adults not otherwise able to obtain unsubsidized employment;

(dd) that are supervised on an ongoing basis; and

(ee) with respect to which a State agency takes into account, to the maximum extent practicable, the prior training, experience, and skills of a recipient in making appropriate community service assignments.

(VIII) Career and technical training programs that are—

(aa) directly related to the preparation of adults for employment in current or emerging occupations; and

(bb) supervised on an ongoing basis.

(IX) Training or education for job skills that are—

(aa) required by an employer to provide an adult with the ability to obtain employment or to advance or adapt to the changing demands of the workplace; and

(bb) supervised on an ongoing basis.

(X) Education that is—

(aa) related to a specific occupation, job, or job offer; and

(bb) supervised on an ongoing basis.

(XI) In the case of an adult who has not completed secondary school or received a certificate of general equivalence, regular attendance that is—

(aa) in accordance with the requirements of the secondary school or course of study, at a secondary school or in a course of study leading to a certificate of general equivalence; and

(bb) supervised on an ongoing basis.

(XII) Providing child care to enable another recipient of public benefits to participate in a community service program that—

(aa) does not provide compensation for the community service;

(bb) is a structured program designed to improve the employability of adults who participate in the program; and

(cc) is supervised on an ongoing basis.

(v) Sanctions.—Subject to clause (vi), no work registrant shall be eligible to participate in the supplemental nutrition assistance program if the individual refuses without good cause to participate in an employment and training program under this subparagraph, to the extent required by the State agency.

(vi) Standards.—

(I) In general.—Employment and training activities under this subparagraph shall be considered to be carried out under section 2015(d) of this title, including for the purpose of satisfying any conditions of participation and duration of ineligibility.

(II) Standards for certain employment activities.—The Secretary shall establish standards for employment activities described in subclauses (I), (II), and (III) of clause (iv) that ensure that failure to work for reasons beyond the control of an individual, such as involuntary reduction in hours of employment, shall not result in ineligibility.

(III) Participation in other programs.—Before assigning a work registrant to mandatory employment and training activities, a State agency shall—

(aa) assess whether the work registrant is participating in substantial employment and training activities outside of the pilot project that are expected to result in the work registrant gaining increased skills, training, work, or experience consistent with the objectives of the pilot project; and

(bb) if determined to be acceptable, count hours engaged in the activities toward any minimum participation requirement.

(vii) Evaluation and reporting.—

(I) Independent evaluation.—

(aa) In general.—The Secretary shall, under such terms and conditions as the Secretary determines to be appropriate, conduct for each State agency that enters into a cooperative agreement under clause (i) an independent longitudinal evaluation of each pilot project of the State agency under this subparagraph, with results reported not less frequently than in consecutive 12-month increments.

(bb) Purpose.—The purpose of the independent evaluation shall be to measure the impact of employment and training programs and services provided by each State agency under the pilot projects on the ability of adults in each pilot project target population to find and retain employment that leads to increased household income and reduced reliance on public assistance, as well as other measures of household well-being, compared to what would have occurred in the absence of the pilot project.

(cc) Methodology.—The independent evaluation shall use valid statistical methods that can determine, for each pilot project, the difference, if any, between supplemental nutrition assistance and other public benefit receipt expenditures, employment, earnings and other impacts as determined by the Secretary—

(AA) as a result of the employment and training programs and services provided by the State agency under the pilot project; as compared to

(BB) a control group that is not subject to the employment and training programs and services provided by the State agency under the pilot project.

(II) Reporting.—Not later than December 31, 2015, and each December 31 thereafter until the completion of the last evaluation under subclause (I), the Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate and share broadly, including by posting on the Internet website of the Department of Agriculture, a report that includes a description of—

(aa) the status of each pilot project carried out under this subparagraph;

(bb) the results of the evaluation completed during the previous fiscal year;

(cc) to the maximum extent practicable, baseline information relevant to the stated goals and desired outcomes of the pilot project;

(dd) the employment and training programs and services each State tested under the pilot, including—

(AA) the system of the State for assessing the ability of work registrants to participate in and meet the requirements of employment and training activities and assigning work registrants to appropriate activities; and

(BB) the employment and training activities and services provided under the pilot;

(ee) the impact of the employment and training programs and services on appropriate employment, income, and public benefit receipt as well as other outcomes among households participating in the pilot project, relative to households not participating; and

(ff) the steps and funding necessary to incorporate into State employment and training programs and services the components of the pilot projects that demonstrate increased employment and earnings.

(viii) Funding.—

(I) In general.—Subject to subclause (II), from amounts made available under section 2027(a)(1) of this title, the Secretary shall use to carry out this subparagraph—

(aa) for fiscal year 2014, $10,000,000; and

(bb) for fiscal year 2015, $190,000,000.

(II) Limitations.—

(aa) In general.—The Secretary shall not fund more than 10 pilot projects under this subparagraph.

(bb) Duration.—Each pilot project shall be in effect for not more than 3 years.

(III) Availability of funds.—Funds made available under subclause (I) shall remain available through September 30, 2018.

(ix) Use of funds.—

(I) In general.—Funds made available under this subparagraph for pilot projects shall be used only for—

(aa) pilot projects that comply with this chapter;

(bb) the program and administrative costs of carrying out the pilot projects;

(cc) the costs incurred in developing systems and providing information and data for the independent evaluations under clause (vii); and

(dd) the costs of the evaluations under clause (vii).

(II) Maintenance of effort.—Funds made available under this subparagraph shall be used only to supplement, not to supplant, non-Federal funds used for existing employment and training activities or services.

(III) Other funds.—In carrying out pilot projects, States may contribute additional funds obtained from other sources, including Federal, State, or private funds, on the condition that the use of the contributions is permissible under Federal law.

(2) If, in carrying out such program during such fiscal year, a State agency incurs costs that exceed the amount allocated to the State agency under paragraph (1), the Secretary shall pay such State agency an amount equal to 50 per centum of such additional costs, subject to the first limitation in paragraph (3), including the costs for case management and casework to facilitate the transition from economic dependency to self-sufficiency through work.

(3) The Secretary shall also reimburse each State agency in an amount equal to 50 per centum of the total amount of payments made or costs incurred by the State agency in connection with transportation costs and other expenses reasonably necessary and directly related to participation in an employment and training program under section 2015(d)(4) of this title or a pilot project under paragraph (1)(F), except that the amount of the reimbursement for dependent care expenses shall not exceed an amount equal to the payment made under section 2015(d)(4)(I)(i)(II) of this title but not more than the applicable local market rate, and such reimbursement shall not be made out of funds allocated under paragraph (1).

(4) Funds provided to a State agency under this subsection may be used only for operating an employment and training program under section 2015(d)(4) of this title or a pilot project under paragraph (1)(F), and may not be used for carrying out other provisions of this chapter.

(5) Monitoring.—

(A) In general.—The Secretary shall monitor the employment and training programs carried out by State agencies under section 2015(d)(4) of this title and assess the effectiveness of the programs in—

(i) preparing members of households participating in the supplemental nutrition assistance program for employment, including the acquisition of basic skills necessary for employment; and

(ii) increasing the number of household members who obtain and retain employment subsequent to participation in the employment and training programs.

(B) Reporting measures.—

(i) In general.—The Secretary, in consultation with the Secretary of Labor, shall develop State reporting measures that identify improvements in the skills, training, education, or work experience of members of households participating in the supplemental nutrition assistance program.

(ii) Requirements.—Measures shall—

(I) be based on common measures of performance for Federal workforce training programs; and

(II) include additional indicators that reflect the challenges facing the types of members of households participating in the supplemental nutrition assistance program who participate in a specific employment and training component.

(iii) State requirements.—The Secretary shall require that each State employment and training plan submitted under section 2020(e)(19) of this title identifies appropriate reporting measures for each proposed component that serves a threshold number of participants determined by the Secretary of at least 100 people a year.

(iv) Inclusions.—Reporting measures described in clause (iii) may include—

(I) the percentage and number of program participants who received employment and training services and are in unsubsidized employment subsequent to the receipt of those services;

(II) the percentage and number of program participants who obtain a recognized credential, including a registered apprenticeship, or a regular secondary school diploma or its recognized equivalent, while participating in, or within 1 year after receiving, employment and training services;

(III) the percentage and number of program participants who are in an education or training program that is intended to lead to a recognized credential, including a registered apprenticeship or on-the-job training program, a regular secondary school diploma or its recognized equivalent, or unsubsidized employment;

(IV) subject to terms and conditions established by the Secretary, measures developed by each State agency to assess the skills acquisition of employment and training program participants that reflect the goals of the specific employment and training program components of the State agency, which may include, at a minimum—

(aa) the percentage and number of program participants who are meeting program requirements in each component of the education and training program of the State agency;

(bb) the percentage and number of program participants who are gaining skills likely to lead to employment as measured through testing, quantitative or qualitative assessment, or other method; and

(cc) the percentage and number of program participants who do not comply with employment and training requirements and who are ineligible under section 2015(b) of this title; and

(V) other indicators approved by the Secretary.

(v) State option.—The State agency may report relevant data from a workforce partnership carried out under section 2015(d)(4)(N) of this title to demonstrate the number of program participants served by the workforce partnership.

(C) Oversight of state employment and training activities.—The Secretary shall assess State employment and training programs on a periodic basis to ensure—

(i) compliance with Federal employment and training program rules and regulations;

(ii) that program activities are appropriate to meet the needs of the individuals referred by the State agency to an employment and training program component;

(iii) that reporting measures are appropriate to identify improvements in skills, training, work and experience for participants in an employment and training program component; and

(iv) for States receiving additional allocations under paragraph (1)(E), any information the Secretary may require to evaluate the compliance of the State agency with paragraph (1), which may include—

(I) a report for each fiscal year of the number of individuals in the State who meet the conditions of paragraph (1)(E)(ii), the number of individuals the State agency offers a position in a program described in subparagraph (B) or (C) of section 2015(o)(2) of this title, and the number who participate in such a program;

(II) a description of the types of employment and training programs the State agency uses to comply with paragraph (1)(E) and the availability of those programs throughout the State; and

(III) any additional information the Secretary determines to be appropriate.

(D) State report.—Each State agency shall annually prepare and submit to the Secretary a report on the State employment and training program that includes, using measures identified under subparagraph (B), the numbers of supplemental nutrition assistance program participants who have gained skills, training, work, or experience that will increase the ability of the participants to obtain regular employment.

(E) Modifications to the state employment and training plan.—Subject to terms and conditions established by the Secretary, if the Secretary determines that the performance of a State agency with respect to employment and training outcomes is inadequate, the Secretary may require the State agency to make modifications to the State employment and training plan to improve the outcomes.

(F) Periodic evaluation.—Subject to terms and conditions established by the Secretary, not later than October 1, 2016, and not less frequently than once every 5 years thereafter, the Secretary shall conduct a study to review existing practice and research to identify employment and training program components and practices that—

(i) effectively assist members of households participating in the supplemental nutrition assistance program in gaining skills, training, work, or experience that will increase the ability of the participants to obtain regular employment; and

(ii) are best integrated with statewide workforce development systems.

(i) Geographical error-prone profiles

(1) The Department of Agriculture may use quality control information made available under this section to determine which project areas have payment error rates (as defined in subsection (d)(1)) that impair the integrity of the supplemental nutrition assistance program.

(2) The Secretary may require a State agency to carry out new or modified procedures for the certification of households in areas identified under paragraph (1) if the Secretary determines such procedures would improve the integrity of the supplemental nutrition assistance program and be cost effective.

(j) Training materials regarding certification of farming households
Not later than 180 days after September 19, 1988, and annually thereafter, the Secretary shall publish instructional materials specifically designed to be used by the State agency to provide intensive training to State agency personnel who undertake the certification of households that include a member who engages in farming.

(k) Reductions in payments for administrative costs

(1) Definitions
In this subsection:

(A) AFDC program
The term "AFDC program" means the program of aid to families with dependent children established under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq. (as in effect, with respect to a State, during the base period for that State)).

(B) Base period
The term "base period" means the period used to determine the amount of the State family assistance grant for a State under section 403 of the Social Security Act (42 U.S.C. 603).

(C) Medicaid program
The term "medicaid program" means the program of medical assistance under a State plan or under a waiver of the plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

(2) Determinations of amounts attributable to benefiting programs
Not later than 180 days after June 23, 1998, the Secretary of Health and Human Services, in consultation with the Secretary of Agriculture and the States, shall, with respect to the base period for each State, determine—

(A) the annualized amount the State received under section 403(a)(3) of the Social Security Act (42 U.S.C. 603(a)(3) (as in effect during the base period)) for administrative costs common to determining the eligibility of individuals, families, and households eligible or applying for the AFDC program and the supplemental nutrition assistance program, the AFDC program and the medicaid program, and the AFDC program, the supplemental nutrition assistance program, and the medicaid program that were allocated to the AFDC program; and

(B) the annualized amount the State would have received under section 403(a)(3) of the Social Security Act (42 U.S.C. 603(a)(3) (as so in effect)), section 1903(a)(7) of the Social Security Act (42 U.S.C. 1396b(a)(7) (as so in effect)), and subsection (a) of this section (as so in effect), for administrative costs common to determining the eligibility of individuals, families, and households eligible or applying for the AFDC program and the supplemental nutrition assistance program, the AFDC program and the medicaid program, and the AFDC program, the supplemental nutrition assistance program, and the medicaid program, if those costs had been allocated equally among such programs for which the individual, family, or household was eligible or applied for.

(3) Reduction in payment

(A) In general
Notwithstanding any other provision of this section, the Secretary shall reduce, for each fiscal year, the amount paid under subsection (a) to each State by an amount equal to the amount determined for the supplemental nutrition assistance program under paragraph (2)(B). The Secretary shall, to the extent practicable, make the reductions required by this paragraph on a quarterly basis.

(B) Application
If the Secretary of Health and Human Services does not make the determinations required by paragraph (2) by September 30, 1999—

(i) during the fiscal year in which the determinations are made, the Secretary shall reduce the amount paid under subsection (a) to each State by an amount equal to the sum of the amounts determined for the supplemental nutrition assistance program under paragraph (2)(B) for fiscal year 1999 through the fiscal year during which the determinations are made; and

(ii) for each subsequent fiscal year, subparagraph (A) applies.

(4) Appeal of determinations

(A) In general
Not later than 5 days after the date on which the Secretary of Health and Human Services makes any determination required by paragraph (2) with respect to a State, the Secretary shall notify the chief executive officer of the State of the determination.

(B) Review by administrative law judge

(i) In general
Not later than 60 days after the date on which a State receives notice under subparagraph (A) of a determination, the State may appeal the determination, in whole or in part, to an administrative law judge of the Department of Health and Human Services by filing an appeal with the administrative law judge.

(ii) Documentation
The administrative law judge shall consider an appeal filed by a State under clause (i) on the basis of such documentation as the State may submit and as the administrative law judge may require to support the final decision of the administrative law judge.

(iii) Review
In deciding whether to uphold a determination, in whole or in part, the administrative law judge shall conduct a thorough review of the issues and take into account all relevant evidence.

(iv) Deadline
Not later than 60 days after the date on which the record is closed, the administrative law judge shall—

(I) make a final decision with respect to an appeal filed under clause (i); and

(II) notify the chief executive officer of the State of the decision.

(C) Review by Departmental Appeals Board

(i) In general
Not later than 30 days after the date on which a State receives notice under subparagraph (B) of a final decision, the State may appeal the decision, in whole or in part, to the Departmental Appeals Board established in the Department of Health and Human Services (referred to in this paragraph as the "Board") by filing an appeal with the Board.

(ii) Review
The Board shall review the decision on the record.

(iii) Deadline
Not later than 60 days after the date on which the appeal is filed, the Board shall—

(I) make a final decision with respect to an appeal filed under clause (i); and

(II) notify the chief executive officer of the State of the decision.

(D) Judicial review
The determinations of the Secretary of Health and Human Services under paragraph (2), and a final decision of the administrative law judge or Board under subparagraphs (B) and (C), respectively, shall not be subject to judicial review.

(E) Reduced payments pending appeal
The pendency of an appeal under this paragraph shall not affect the requirement that the Secretary reduce payments in accordance with paragraph (3).

(5) Allocation of administrative costs

(A) In general
No funds or expenditures described in subparagraph (B) may be used to pay for costs—

(i) eligible for reimbursement under subsection (a) (or costs that would have been eligible for reimbursement but for this subsection); and

(ii) allocated for reimbursement to the supplemental nutrition assistance program under a plan submitted by a State to the Secretary of Health and Human Services to allocate administrative costs for public assistance programs.

(B) Funds and expenditures
Subparagraph (A) applies to—

(i) funds made available to carry out part A of title IV, or title XX, of the Social Security Act (42 U.S.C. 601 et seq., 1397 et seq.);

(ii) expenditures made as qualified State expenditures (as defined in section 409(a)(7)(B) of that Act (42 U.S.C. 609(a)(7)(B)));

(iii) any other Federal funds (except funds provided under subsection (a)); and

(iv) any other State funds that are—

(I) expended as a condition of receiving Federal funds; or

(II) used to match Federal funds under a Federal program other than the supplemental nutrition assistance program.