Review of compliance

Section 658I(b) of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858g(b)) is amended— (1) by striking paragraph (1) and inserting the following: (1) Review of compliance (A) In general Not less often than once every 3 years, the Secretary shall review and monitor State compliance with this subchapter, including with the plan approved under section 658E(c) for the State. (B) Heightened monitoring States designated as high-risk under subparagraph (C) shall be subject to monitoring, of that State compliance, that is more frequent than the monitoring required under subparagraph (A), with the frequency determined by the Secretary. (C) High-risk The Secretary shall designate as high-risk any State with— (i) unresolved or repeated audit findings under section 658K(b); (ii) an improper payment rate that exceeds 6 percent, as reflected in 2 consecutive reports described in section 658K(a)(3)(A)(i); or (iii) an improper payment rate that exceeds 9 percent, as reflected in such a report.; (2) in paragraph (2)— (A) in subparagraph (B)— (i) by striking Secretary may and inserting Secretary shall; and (ii) by striking subchapter, and and inserting subchapter, withholding of funds or a percentage reduction of funds from the State allotment for the following fiscal year, or; and (B) in subparagraph (C), by striking additional sanction being imposed under subparagraph (B) and inserting additional sanction or penalty being imposed under subparagraph (B) or (C); (3) by redesignating paragraph (3) as paragraph (5); and (4) by inserting after paragraph (2) the following: (3) Penalties If the Secretary determines that an amount shall be reimbursed, deducted, recouped, withheld, or reduced under subparagraph (A) or (B) of paragraph (2) for a State, the Secretary shall increase that amount by adding a penalty equal to 5 percent of the amount against the State. (4) Corrective action plans (A) Submission If the Secretary finds under paragraph (2) that a State has made an improper expenditure of funds, and the Secretary does not disqualify the State under that paragraph from receiving financial assistance, then the Secretary shall require the State to submit to the Secretary for approval, not later than the date that is 60 days after that finding, a corrective action plan with an implementation date. (B) Failure to submit (i) Extension of submission date A State may request from the Secretary an extension of the submission date determined by the Secretary under paragraph (1). (ii) Withholding If the State fails to submit the plan by that submission date (including any extension granted under clause (i)), the Secretary shall withhold funds for the program carried out under this subchapter for that State until the State submits the plan. (C) Failure to implement (i) In general Subject to clause (ii), if the Secretary determines that the State fails to implement the corrective actions in the plan by that implementation date, the Secretary shall withhold funds for the program carried out under this subchapter for that State until the Secretary determines that the State has implemented those corrective actions. (ii) Good faith exception If the Secretary determines that the State is acting in good faith to implement the corrective actions as soon as is practicable, the Secretary may elect not to withhold funds, or to postpone that withholding, under clause (i)..