(a)(1) For recipient level misexpenditures, the Secretary may
determine that a debt, or a portion thereof, may be offset against
amounts that are allotted to the recipient. Recipients must submit a
written request for an offset to the Grant Officer. Generally, the
Secretary will apply the offset against amounts that are available at
the recipient level for administrative costs.
(2) The Grant Officer may approve an offset request, under
paragraph (b)(1) of this section, if the misexpenditures were not due
to willful disregard of the requirements of the Act and regulations,
gross negligence, failure to observe accepted standards of
administration or a pattern of misexpenditure.
(b) For subrecipient level misexpenditures that were not due to
willful disregard of the requirements of the Act and regulations, gross
negligence, failure to observe accepted standards of administration or
a pattern of misexpenditure, if the Secretary has required the State to
repay such amount the State may deduct an amount equal to the
misexpenditure from its subsequent year's allocations to the local area
from funds available for the administrative costs of the local programs
involved.
(c) If offset is granted, the debt will not be fully satisfied
until the Grant Officer reduces amounts allotted to the State by the
amount of the misexpenditure.
(d) A State may not make a deduction under paragraph (b)(2) of this
section until the State has taken appropriate corrective action to
ensure full compliance within the local area with regard to appropriate
expenditure of WIA funds.
