State Legalization Impact Assistance Grants (SLIAG)

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 402

RIN: 0970-AB28

State Legalization Impact Assistance Grants (SLIAG)

AGENCY: Administration for Children and Families, HHS, Office of

Refugee Resettlement.

ACTION: Final rule.

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SUMMARY: This rule implements section 204(b)(4) of the Immigration

Reform and Control Act of 1986, as amended by the Labor/Health and

Human Services FY 1993 Appropriations Act, Public Law 102-394, and the

Labor/Health and Human Services FY 1995 Appropriations Act, Public Law

103-333. Section 204(b)(4) provides that SLIAG grant funds unexpended

as of December 30, 1994, be reallocated to States with unreimbursed

SLIAG-related costs, to the extent to which funds are available. The

reallocated funds will be available to States for reimbursement of

SLIAG-related costs through July 31, 1995.

DATES: The rule is effective December 21, 1994.

FOR FURTHER INFORMATION CONTACT: David B. Smith, Director, Division of

State Legalization and Repatriation, Office of Refugee Resettlement,

Administration for Children and Families, 370 L'Enfant Promenade, SW.,

6th floor, Washington, DC 20447. Telephone: (202) 401-9255.

SUPPLEMENTARY INFORMATION:

Background

State Legalization Impact Assistance Grants (SLIAG) are mandated by

the Immigration Reform and Control Act (IRCA) (Pub. L. 99-603), as

amended. The purpose of SLIAG is to lessen the financial impact on

State and local governments that resulted from the legalization of

certain previously illegal aliens under IRCA. The SLIAG program

provides reimbursement to States for the costs of certain public

assistance, public health, and education services they have provided to

these eligible legalized aliens through September 30, 1994.

The Labor/Health and Human Services FY 1993 Appropriations Act,

Public Law 102-394, dated October 6, 1992, amended section 204(b)(4) of

IRCA to provide that any funds not expended as of December 30 1994, be

reallocated to participating States which have expended their entire

allotments and which have incurred unreimbursed SLIAG-related costs.

The basis for the reallocation is each State's percentage share of

total unreimbursed SLIAG-related costs in all States with such costs.

In order to implement the amendment, the Department published a

notice of proposed rulemaking on May 31, 1994. We received nine

comments from two commenters on the proposed rule. Our response to

these comments is set forth below.

In addition, we have revised the final rule to make it consistent

with the amendment to IRCA in the Labor/Health and Human Services FY

1995 Appropriations Act, Public Law 103-333. The amendment provides

that States use reallocated funds to reimburse accepted SLIAG-related

costs within 90 days of the award of the funds but no later than July

31, 1995. This change to the final rule is also discussed below.

Section 402.2, Definitions

The amendment to IRCA requires that unexpended funds from SLIAG

grants be reallocated to States with unreimbursed SLIAG-related costs.

In the final rule, ``unexpended funds'' is defined as the amount by

which a State's allotments through FY 1994 exceed the State's SLIAG-

related costs as of December 30, 1994.

Comment (Definition of ``Unexpended Funds'')

One commenter suggested that the definition of unexpended funds

should be revised to mean the amount by which a State's allotments

exceed the amount of the State's drawdowns from its allotments as of

December 30, 1994. The commenter suggested that States' drawdowns may

be higher than their accepted SLIAG-related costs and that the

definition of unexpended funds in the proposed rule would be unworkable

unless the rule were further amended to require States to repay amounts

by which drawdowns exceed accepted costs. The commenter also noted that

States can appeal any order for repayment of funds and that an appeal

can be time-consuming.

Response

We have chosen to use SLIAG-related costs rather than drawdowns in

calculating unexpended funds for the following reasons. First, the

current SLIAG regulation at Sec. 402.20 provides that Department rules

at 45 CFR part 92 apply to grants awarded under the SLIAG program. Part

92 requires that grantees refund to the Department any unobligated

grant funds after the end of the funding period (45 CFR 92.50(d)(2)).

Grantees are further required to liquidate obligations of grant funds

no later than 90 days following the end of the funding period of a

grant (45 CFR 92.23(b)). We believe that the regulation does therefore

already meet one concern of the commenter, since it requires that

States refund the amounts by which their drawdowns from their

allotments exceed their SLIAG-related costs. In the case of SLIAG

grants, refund of unobligated amounts is required after the due date of

the final cost reports on December 29, 1994.

Second, if we had chosen to use drawdowns rather than SLIAG-related

costs to determine unexpended funds, the total amount of unexpended

funds might be lower than if we use SLIAG-related costs. The commenter,

for instance, suggests that States' drawdowns may be higher than their

accepted SLIAG-related costs. If a State with drawdowns higher than its

accepted SLIAG-related costs were, in its final cost report, unable to

document the additional costs for which it was claiming reimbursement,

the State would be required to refund the amount of the excess

drawdown. If we were to use the definition proposed by the commenter,

we would be precluded from including that amount (i.e., the amount of

the excess drawdown) in the total of unexpended funds. We believe that

using accepted SLIAG-related costs instead of drawdowns will ensure

that the maximum amount of unexpended funds is available for

reallocation.

The commenter also suggests that drawdowns rather than SLIAG-

related costs be used in determining unexpended funds because States

with drawdowns greater than accepted SLIAG-related costs can appeal an

order for repayment and such an appeal can be time-consuming. In the

final rule, we have allowed 90 days for States to submit their final

cost reports; we have allowed an additional 76 days for States to

respond to our comments on their final cost reports and to submit

revisions. In view of the amount of time we have allowed in the final

rule to States to submit their final cost reports and to submit revised

reports, if necessary, we believe that the likelihood of any appeal is

slight. Although an appeal would reduce the unexpended funds available

for reallocation as of March 15, 1995, we believe that the total amount

of unexpended funds available for reallocation will be greater using

SLIAG-related costs, rather than drawdowns, as the basis for

determining unexpended funds.

Finally, although some States may have drawdowns which exceed their

accepted SLIAG-related costs as of December 30, 1994, other States have

chosen, during the course of the SLIAG program, to draw down funds only

after SLIAG-related costs have been accepted by the Department. We

believe that the definition proposed by the commenter might unfairly

penalize States which have chosen to draw down funds after acceptance

by the Department of their SLIAG-related costs. In particular, use of

this commenter's suggested definition might require us to take back and

reallocate to other States funds granted to such States which exceed

their drawdowns but are less than their accepted SLIAG-related costs,

leaving these States with unreimbursed SLIAG-related costs. To avoid

creating a new group of States with SLIAG-related costs for which they

would not receive reimbursement, we have not incorporated the

suggestion of this commenter in the final rule.

Section 402.11, Limitations on Use of SLIAG Funds

In the SLIAG regulation, States are required to document and report

to the Department the SLIAG-related costs they have incurred in

providing services to eligible legalized aliens through September 30,

1994. The cost reports are due 90 days after the end of the final year.

The final cost reports for grants awarded under Secs. 402.31 and 402.33

are therefore due December 29, 1994. In the final rule, Sec. 402.11 has

been amended to provide that, for States to receive reimbursement from

SLIAG funds, costs submitted by States must be accepted by the

Department as allowable by March 15, 1995.

Comment (Limitations on Use of SLIAG Funds)

One commenter suggested that the requirement that SLIAG funds be

available for reimbursement only for SLIAG-related costs accepted as

allowable by the Department as of March 15, 1995, be deleted. The

commenter suggested that this requirement would be unfair to local

governments which cannot report SLIAG-related costs directly to the

Department nor respond directly to comments. The commenter also noted

that the proposed rule provided no mechanism for appealing decisions by

the Department not to accept costs while under the existing regulation,

States can appeal disallowances before repaying funds.

Response

In the proposed rule, we established the deadline of March 15,

1995, for accepting SLIAG-related costs for two reasons. We believe

that this date provides as long a period of time as possible for States

to respond to our comments on their final cost reports and to submit

revised cost reports while ensuring that there is adequate time for the

Department to complete the reallocation process and for States with

unreimbursed SLIAG-related costs to draw down reallocated funds by July

31, 1995. Specifically, we are allowing 76 days between the due date of

the final cost reports on December 29, 1994, and the final date for

acceptance by the Department of SLIAG-related costs on March 15, 1995,

to States for revisions of their costs reports.

Although the commenter expressed concern about the impact of the

deadline of March 15, 1995, on local governments, we believe that this

deadline does allow adequate time for States (the grantees under the

SLIAG program) to document, review, submit, and revise their SLIAG-

related costs, incurred by both State and local governments,

Furthermore, we have no reason to believe that any extension of the

March 15, 1995, deadline would necessarily ensure that local

governments would be able to work out with State grantees problems with

the cost submissions of the local governments. We have retained the

deadline of March 15, 1995, in the final rule as we believe it provides

sufficient time both for States to report their SLIAG-related costs and

for States with unreimbursed SLIAG-related costs to draw down their

reallocated funds.

Finally, the commenter notes that the proposed rule provides no

mechanism for appealing decisions by the Department not to accept costs

after March 15, 1995. In developing the parameters for reallocating

unexpended funds to States with unreimbursed SLIAG-related costs, we

were concerned with ensuring that the reallocation of unexpended funds

and the drawdown of the reallotted funds by States would be completed

by the statutory deadline. In order to ensure that the reallocation

takes place in a timely manner, we have established the date of March

15, 1995, as the final date on which SLIAG-related costs will be

accepted by the Department prior to the reallocation of unexpended

funds. We have not included in the final rule any mechanism for

revisiting the Department's decision not to consider in its

reallocation determinations any costs which have not been submitted to

the Department by March 15, 1995. However, with respect to costs which

a State has submitted by March 15, 1995, but which have not been

accepted by the Department, Sec. 402.25 of the regulation permits such

a State to appeal to the Departmental Appeals Board an order requiring

the State to repay amounts disallowed.

The Labor/Health and Human Services FY 1995 Appropriations Act,

Public Law 103-333, amended 204(b)(4) of IRCA to provide that States

use reallocated funds to reimburse SLIAG-related costs within 90 days

of the award of the reallotted funds but no later than July 31, 1995.

We have therefore revised Sec. 402.11(q) to incorporate this provision.

States are reimbursed for their SLIAG-related costs when they draw down

funds from their allotments. This provision applies also to a State's

reimbursing other governmental entities within the State for SLIAG-

related costs they have incurred. These costs must have been submitted

by the State in annual cost reports by December 29, 1994, and accepted

by the Department by March 15, 1995.

Section 402.26, Time Period for Obligation and Expenditure of Grant

Funds

This section of the rule stated that any obligations of grant funds

by a State must be expended within the time limit set by 45 CFR

92.23(b). It also stated that this deadline could be extended by the

Secretary at the request of a State. We proposed to revise this section

by establishing the deadline for expending obligations as December 29,

1994, and by deleting the provision allowing a State to request an

extension of this deadline. We noted in the preamble of the Notice of

Proposed Rulemaking that we were proposing this revision to ensure that

we would be able to determine the amount of unexpended funds as of

December 30, 1994, as mandated by the amendment to IRCA.

Comment

We received two comments on this section of the proposed rule. The

first commenter suggested a revision to specify that only obligations

from grant funds awarded under Secs. 402.31 and 402.33 must be

liquidated by December 29, 1994, and that grant funds awarded under

Sec. 402.34 be available for obligation and expenditure through June

30, 1995. The second commenter suggested that the section be revised to

allow obligations incurred through September 30, 1994, to be expended

through June 30, 1995, with funds awarded under Sec. 402.34.

Response

With regard to the first comment, it was not our intent in our

proposed wording of this provision to limit what States could do with

funds received under Sec. 402.34. The provision to which the commenter

refers; i.e., that obligations be expended by December 29, 1994, was

intended, as noted above, to provide a basis for determining the total

amount of unexpended funds from grants awarded under Secs. 402.31 and

402.33 as of December 30, 1994, as required by the amendment to IRCA.

Since the purpose of the reallocation of unexpended funds is to

reimburse States for costs incurred prior to October 1, 1994, we do not

believe that the time limit of 45 CFR 92.23(b) is applicable to the

reallotted funds. In response to this comment and to clarify our intent

in this provision, we are revising the wording of the first sentence of

Sec. 402.26(b) to specify that the time limit for liquidating

obligations pertains only to funds awarded under Sec. 402.31 and

Sec. 402.33. We are further revising Sec. 402.26(b) to state explicitly

that the time limit of 45 CFR 92.23(b) does not apply to funds awarded

under Sec. 402.34.

As noted above, we also have revised the final rule to be

consistent with the amendment to IRCA made by the FY 1995 Labor/Health

and Human Services Appropriations Act, Public Law 103-333. Section

402.11(q) provides that States use reallocated funds to reimburse

SLIAG-related costs within 90 days of the award of the funds but no

later than July 31, 1995.

Finally, we have revised Sec. 402.51 to indicate that no reporting

on obligations or expenditures is required for funds allotted under

Sec. 402.34.

The second commenter suggested that States be allowed to liquidate

obligations incurred before October 1, 1994, through the statutory

deadline with funds allocated under Sec. 402.34. From the beginning of

the SLIAG program, the regulation has defined SLIAG-related cost as an

expenditure by a State or local government. Costs incurred by private

providers and State obligations with private providers have, therefore,

not been accepted as SLIAG-related costs for reimbursement. This

definition of SLIAG-related costs incorporates IRCA's goal of

reimbursing State and local governments for their costs resulting from

the legalization of certain aliens. It also has ensured that

allocations of SLIAG funds are based on actual costs incurred by States

and that allocations have not been influenced by States' obligating

large amounts of funds. In view of this existing definition,

obligations incurred by States prior to October 1, 1994, but not

expended by December 29, 1994, cannot be considered SLIAG-related costs

acceptable for reimbursement with reallocated funds. This suggestion

has therefore not been incorporated in the final rule.

Section 402.30, Basis of awards; Section 402.40, General

The final rule in Sec. 402.30 states that no application is

necessary for receiving reallocated funds; reallocated funds will be

awarded to States whose annual cost reports show that their accepted

SLIAG-related costs exceed their allotments under Secs. 402.31 and

402.33. Section 402.40 provides that, to be eligible for reallocated

funds, States must submit annual reports which document that their

SLIAG-related costs exceed the amount of their allotments under

Secs. 402.31 and 402.33.

Comment

One commenter suggested that both of these sections be revised.

According to this commenter, Sec. 402.30 should be revised to state

that reallocated funds would be awarded to States which have drawn down

the full amount of their allotments as of December 30, 1994. The

commenter also suggested that Sec. 402.40 be revised to provide that,

to be eligible for reallocated funds, States must have drawn down their

entire allotments as of December 30, 1994.

Response

As we noted above, we believe that the best way to meet the goal of

the amendment to IRCA is to define unexpended funds as the difference

between a State's allotments through FY 1994 and the State's SLIAG-

related costs. The final rule therefore incorporates this definition.

For this reason, we believe that the basis of eligibility and the basis

of awards should also be based on a State's SLIAG-related costs, rather

than on drawdowns. The final rule therefore states that reallocated

funds will be awarded to States whose annual cost reports show that

their accepted SLIAG-related costs exceed their allotments under

Sec. 402.31 and Sec. 402.33. It also states that, to be eligible for

reallocated funds, States must submit annual reports which document

that their SLIAG-related costs exceed the amount of their allotments

under Sec. 402.31 and Sec. 402.33.

Section 402.34 Allocation of unexpended funds

This section provides that unexpended funds will be reallocated

based on the percentage share of unreimbursed SLIAG-related costs of

each State with such costs to the total of all unreimbursed SLIAG-

related costs. The section provides further that the allotments awarded

to States will be the amount of the reallocation or the amount of each

State's unreimbursed SLIAG-related costs, whichever is less.

Comment

We received comments from both commenters on this section. Both

suggested that the reallocated amounts should be each State's

percentage share of the unexpended funds even if that amount exceeds

the amount of a State's total unreimbursed SLIAG-related costs. One

commenter suggested that reallocating all unexpended funds would make

it possible for States with unreimbursed SLIAG-related costs as of

December 30, 1994, to be reimbursed for any additional SLIAG-related

costs they might be able to identify, document, and submit to the

Department after March 15, 1995.

Response

There are two reasons why we are not revising the rule in

accordance with these suggestions. First, the purpose of funds

reallocated under this amendment to IRCA is to reimburse States for

costs they incurred in providing services to eligible legalized aliens

prior to October 1, 1994. Under this final rule, States are allowed 90

days (until December 29, 1994) to submit final reports documenting

their SLIAG-related costs. They are allowed an additional 76 days

(until March 15, 1995) to respond to comments and revise their

submissions before the unexpended funds are reallocated. We believe

that the amount of time we are already providing to States is adequate

to document and submit SLIAG-related costs incurred prior to October 1,

1994.

Second, and more important, we believe that extending the period

during which States with unreimbursed SLIAG-related costs could

continue to attempt to identify and document SLIAG-related costs would

not be in accordance with the intent of the amendment to IRCA. We

believe that it was intended that all States participating in SLIAG

would have the same amount of time to identify, document, and submit

SLIAG-related costs and that the purpose of the amendment was to

provide reimbursement to States with unreimbursed SLIAG-related costs

only for those costs documented and submitted during that equal period

of time. Since extending the period of time for identifying additional

costs for all States would make it impossible to determine the total

amount of unexpended funds for reallocation, we conclude that the

intent of the amendment was to provide reimbursement only for SLIAG-

related costs submitted by participating States by December 29, 1994.

For these two reasons, we are not incorporating these suggestions in

the final rule.

Section 402.51, Reporting

In this section, we revised the reporting requirements to provide

for funds awarded under Sec. 402.34. Since all SLIAG-related costs will

have been submitted to, and accepted by, the Department by March 15,

1995, we attempted to keep reporting as simple as possible by not

requiring that States with unreimbursed SLIAG-related costs submit an

additional annual cost report after July 31, 1995.

Comment

One commenter suggested that the rule be revised to allow States to

submit reports on their SLIAG-related costs by September 28, 1995. The

commenter suggested that this change would be necessary if the

regulation were also revised to allow States to continue to identify,

document, and submit SLIAG-related costs for reimbursement until June

30, 1995.

Response

As we have noted above, we believe that the amount of time we have

allowed in the regulation for documenting and submitting SLIAG-related

costs is both adequate and equitable. Since States will not be allowed

to submit additional SLIAG-related costs to the Department after March

15, 1995, we have not incorporated this suggestion in the final rule.

Effective Date

This rule is effective upon publication. While this rule would not

normally be effective until 30 days after its publication, we have

found, pursuant to 5 U.S.C. 553(d)(3) that good cause exists for

waiving the waiting period for this rule. Specifically, we have

determined that an immediate effective date is necessary to provide

States with adequate notice of the procedures which will be used to

reallocate unexpended SLIAG funds as mandated by IRCA. If the effective

date for this rule is delayed, States may not have sufficient time to

gather and submit to the Department the cost information which is

integral to the reallocation process. Accordingly, we have found that

the usual 30 day waiting period is impracticable and unnecessary.

Regulatory Procedures

Executive Order 12866

Executive Order 12866 requires that regulations be reviewed to

ensure that they are consistent with priorities and principles set

forth in the Executive Order. The Department has determined that this

rule is consistent with these priorities and principles. An assessment

of the costs and benefits of available regulatory alternatives

(including not regulating) demonstrated that the approach taken in the

regulation is the most cost-effective and least burdensome while still

achieving the regulatory objectives.

Paperwork Reduction Act

This rule imposes no new reporting or recordkeeping requirements,

and therefore, no approvals are necessary under section 3504 of the

Paperwork Reduction Act of 1980 (Pub. L. 96-511).

Regulatory Flexibility Act

The Regulatory Flexibility Act (Pub. L. 96-354) requires the

Federal government to anticipate and reduce the impact of regulations

and paperwork requirements on small entities.

The primary impact of this rule is on State governments. Therefore,

we certify that this rule will not have a significant economic impact

on a substantial number of small entities because it affects the

reallocation and reallotment of SLIAG funds to State governments. Thus,

a regulatory flexibility analysis is not required.

(Catalogue of Federal Domestic Assistance Program No. 93.565, State

Legalization Impact Assistance Grants)

List of Subjects in 45 CFR Part 402

Administrative cost, Aliens, Allocation formula, Allotment,

Education, Grant programs, Immigration, Immigration Reform and Control

Act, Public assistance, Public health assistance, Reporting and

recordkeeping requirements, State Legalization Impact Assistance

Grants.

Dated: October 27, 1994.

Mary Jo Bane,

Assistant Secretary for Children and Families.

Dated: December 15, 1994.

Donna Shalala,

Secretary, Department of Health and Human Services.

For the reasons set out in the preamble, 45 CFR part 402 is amended

as set forth below.

PART 402--STATE LEGALIZATION IMPACT ASSISTANCE GRANTS

1. The authority citation for Part 402 continues to read as

follows:

Authority: 8 U.S.C. 1255a note, as amended.

2. Section 402.2 is amended by revising the definitions of

``allocation'' and ``allotment'' and by adding definitions for

``unexpended funds'' and ``unreimbursed SLIAG-related costs'' to read

as follows:

Sec. 402.2 Definitions.

* * * * *

Allocation means an amount designated for a State, as determined

under Sec. 402.31, Sec. 402.33, or Sec. 402.34.

Allotment means the total amount awarded to a State, as determined

under Sec. 402.31, Sec. 402.33, or Sec. 402.34.

* * * * *

Unexpended funds means the amount by which allotments awarded to a

State, as determined under Sec. 402.31 and Sec. 402.33 of this part,

exceed the State's SLIAG-related costs, as defined in this part,

reported in annual reports pursuant to Sec. 402.51 and accepted by the

Department as of March 15, 1995.

Unreimbursed SLIAG-related costs means the amount by which a

State's total SLIAG-related costs, as defined in this part, reported in

annual reports pursuant to Sec. 402.51 and accepted by the Department

as of March 15, 1995, exceed the allotments awarded to a State, as

determined under Sec. 402.31 and Sec. 402.33 of this part.

3. Section 402.10(a) is revised to read as follows:

Sec. 402.10 Allowable use of funds.

(a) Funds provided under Sec. 402.31 and 402.33 of this part for a

fiscal year may be used only with respect to SLIAG-related costs

incurred in that fiscal year or succeeding fiscal years, except that

funds provided for FY 1993 and FY 1994 may be used for SLIAG-related

costs incurred in FY 1990 or succeeding years. Funds provided under

Sec. 402.34 of this part may be used with respect to SLIAG-related

costs incurred in any fiscal year of the program. Funds may be used,

subject to Secs. 402.11 and 402.26, for the following activities, as

defined in this part:

(1) Public assistance;

(2) Public health assistance;

(3) Educational services;

(4) Employment discrimination education and outreach;

(5) Phase II outreach;

(6) SLIAG administrative costs; and

(7) Program administrative costs.

* * * * *

4. In Sec. 402.11, paragraphs (p) and (q) are added to read as

follows:

Sec. 402.11 Limitations on use of SLIAG funds.

* * * * *

(p) Funds provided under this part may be used only for SLIAG-

related costs submitted to the Department pursuant to Sec. 402.51 and

accepted as allowable costs by March 15, 1995.

(q) Funds made available to a State pursuant to Sec. 402.34 shall

be utilized by the State to reimburse all allowable costs within 90

days after such State has received a reallocation of funds from the

Secretary, but in no event later than July 31, 1995.

5. In Sec. 402.26, paragraph (b) is revised to read as follows:

Sec. 402.26 Time period for obligation and expenditure of grant funds.

* * * * *

(b) Obligations by the State of funds awarded under Sec. 402.31 and

Sec. 402.33 must be liquidated within the time limit set by 45 CFR

92.23(b). This time limit will not be extended. The time limit

established by 45 CFR 92.23(b) does not apply to funds awarded under

Sec. 402.34.

6. Section 402.30 is amended by revising the first sentence and

adding a second sentence to read as follows:

Sec. 402.30 Basis of awards.

The Secretary will award funds in a fiscal year under Sec. 402.31

or Sec. 402.33 to States with approved applications for that fiscal

year in accordance with the apportionment of funds from the Office of

Management and Budget. The Secretary will award funds under Sec. 402.34

to States whose annual reports submitted pursuant to Sec. 402.51

establish that their allowable SLIAG-related costs exceed the total of

their allotments, as determined under Sec. 402.31 and Sec. 402.33. * *

*

7. Section 402.34 is added to read as follows:

Sec. 402.34 Allocation of unexpended funds.

(a) Any unexpended funds, as defined in this part, from allotments

awarded to States under Sec. 402.31 and Sec. 402.33 of this part, will

be allocated to States with unreimbursed SLIAG-related costs, as

defined in this part.

(b) To determine the allocations, the ratio of each State's

unreimbursed SLIAG-related costs to the total of all such costs in all

States will be calculated. The ratio for each State with unreimbursed

SLIAG-related costs will be multiplied by total unexpended funds to

determine the allocation for each State. The amount allotted to a State

will be the amount of the State's allocation under this section or the

amount of the State's unreimbursed SLIAG-related costs, whichever is

less.

8. Section 402.40 is amended by revising the first sentence and

adding a third sentence to read as follows:

Sec. 402.40 General.

In order to be eligible for funds available under Sec. 402.31 and

Sec. 402.33 of this part in a fiscal year, a State must submit an

annual application. * * * In order to be eligible for funds under

Sec. 402.34 of this part, a State must submit annual reports pursuant

to Sec. 402.51 which establish that the State has incurred SLIAG-

related costs in excess of the amount of the allotments it received

under Sec. 402.31 and Sec. 402.33 of this part.

9. Section 402.51 is amended by redesignating paragraph (a) as

paragraph (a)(1) and revising the first sentence of that paragraph, by

adding paragraph (a)(2), and by revising the introductory text of

paragraph (c) to read as follows:

Sec. 402.51 Reporting.

(a)(1) After the end of each Federal fiscal year through FY 1994

for which it received or during which it obligated or expended SLIAG

funds and by the due date indicated below, a State must submit annual

reports containing the information identified in (c) and (e) of this

section. * * *

(2) A State which receives funds pursuant to Sec. 402.31 and

Sec. 402.33 and which expends funds pursuant to Sec. 402.26(b) must

submit a report containing the information identified in paragraph (e)

of this section. The report is due no later than December 29, 1994.

* * * * *

(c) A State's annual report must provide information on the status

of each fiscal year's funds, as of September 30, for the fiscal year

for funds received under Sec. 402.31 and Sec. 402.33, including:

* * * * *

(Approved by the Office of Management and Budget under control

number 0970-0079)

[FR Doc. 94-31312 Filed 12-20-94; 8:45 a.m.]

BILLING CODE 4184-01-M