--- kind: "section" citation: "45 C.F.R. § 261.51" title: "45" number: "261.51" heading: "Under what circumstances will we reduce the amount of the penalty below the maximum?" url: "https://uscodex.org/cfr/45/261.51" --- # §261.51. Under what circumstances will we reduce the amount of the penalty below the maximum? - (a) We will reduce the amount of the penalty based on the degree of the State's noncompliance. - (1) If the State fails only the two-parent participation rate specified at [§ 261.23](/cfr/45/261.23.md), reduced by any applicable caseload reduction credit, its maximum penalty will be a percentage of the penalty specified at [§ 261.50](/cfr/45/261.50.md). This percentage will equal the percentage of two-parent cases in the State's total caseload. - (2) If the State fails the overall participation rate specified at [§ 261.21](/cfr/45/261.21.md), reduced by any applicable caseload reduction credit, or both rates, its maximum penalty will be the penalty specified at [§ 261.50](/cfr/45/261.50.md). - (b) - (1) In order to receive a reduction of the penalty amounts determined under paragraphs [(a)(1)](#a-1) or [(a)(2)](#a-2) of this section: - (i) The State must achieve participation rates equal to a threshold level defined as 50 percent of the applicable minimum participation rate at [§ 261.21](/cfr/45/261.21.md) or [§ 261.23](/cfr/45/261.23.md), minus any caseload reduction credit determined pursuant to [subpart D](/cfr/45/subpartD.md) of this part; and - (ii) The adjustment factor for changes in the number of individuals engaged in work, described in [paragraph (b)(4)](#b-4) of this section, must be greater than zero. - (2) If the State meets the requirements of [paragraph (b)(1)](#b-1) of this section, we will base its reduction on the severity of the failure. For this purpose, we will calculate the severity of the State's failure based on: - (i) The degree to which it missed the target rate; - (ii) An adjustment factor that accounts for changes in the number of individuals who are engaged in work in the State since the prior year; and - (iii) The number of consecutive years in which the State failed to meet the participation rates and the number of rates missed. - (3) We will determine the degree to which the State missed the target rate using the ratio of the following two factors: - (i) The difference between the participation rate achieved by the State and the 50-percent threshold level (adjusted for any caseload reduction credit determined pursuant to [subpart D](/cfr/45/subpartD.md) of this part); and - (ii) The difference between the minimum applicable participation rate and the threshold level (both adjusted for any caseload reduction credit determined pursuant to [subpart D](/cfr/45/subpartD.md) of this part). - (4) We will calculate the adjustment factor for changes in the number of individuals engaged in work using the following formula: - (i) The average monthly number of individuals engaged in work in the penalty year minus the average monthly number of individuals engaged in work in the prior year, divided by, - (ii) The product of 0.15 and the average monthly number of individuals engaged in work in the prior year. - (5) Subject to [paragraph (c)](#c) of this section, if the State fails only the two-parent participation rate specified at [§ 261.23](/cfr/45/261.23.md), and qualifies for a penalty reduction under [paragraph (b)(1)](#b-1) of this section, its penalty reduction will be the product of: - (i) The amount determined in [paragraph (a)(1)](#a-1) of this section; - (ii) The ratio described in [paragraph (b)(3)](#b-3) of this section computed with respect to two-parent families; and - (iii) The adjustment factor described in [paragraph (b)(4)](#b-4) of this section computed with respect to two-parent families. - (6) Subject to [paragraph (c)](#c) of this section, if the State fails the overall participation rate specified at [§ 261.21](/cfr/45/261.21.md), or both rates, and qualifies for a penalty reduction under [paragraph (b)(1)](#b-1) of this section, its penalty reduction will be the product of: - (i) The amount determined in [paragraph (a)(2)](#a-2) of this section; - (ii) The ratio described in [paragraph (b)(3)](#b-3) of this section computed with respect to all families; and - (iii) **The adjustment factor described in paragraph (b)(4) of this section.** - (7) Pursuant to [§ 260.58](/cfr/45/260.58.md) of this chapter, we will adjust the calculations in this section to exclude cases for which a State has granted federally recognized good cause domestic violence waivers. - (c) - (1) If the State was not subject to a penalty the prior year, the State will receive: - (i) The full applicable penalty reduction described in paragraph [(b)(5)](#b-5) or [(b)(6)](#b-6) of this section if it failed only one participation rate; or - (ii) 50 percent of the penalty reduction described in [paragraph (b)(6)](#b-6) of this section if it failed both participation rates. - (2) If the penalty year is the second successive year in which the State is subject to a penalty, the State will receive: - (i) 50 percent of the applicable penalty reduction described in paragraph [(b)(5)](#b-5) or [(b)(6)](#b-6) of this section if it failed only one participation rate; or - (ii) 25 percent of the penalty reduction described in [paragraph (b)(6)](#b-6) of this section if it failed both participation rates. - (3) If the penalty year is the third or greater successive year in which the State is subject to a penalty, the State will not receive a penalty reduction described in paragraph [(b)(5)](#b-5) or [(b)(6)](#b-6) of this section. - (d) - (1) We may reduce the penalty if the State failed to achieve a participation rate because: - (i) It meets the definition of a needy State, specified at [§ 260.30](/cfr/45/260.30.md) of this chapter; or, - (ii) Noncompliance is due to extraordinary circumstances such as a natural disaster, regional recession, or substantial caseload increase. - (2) In determining noncompliance under [paragraph (d)(1)(ii)](#d-1-ii) of this section, we will consider such objective evidence of extraordinary circumstances as the State chooses to submit. ## Notes ### Authority Authority: 42 U.S.C. 601, 602, 607, and 609; Pub. L. 109-171. ### Source Source: 64 FR 17884, Apr. 12, 1999, unless otherwise noted.