For purposes of this chapter:

"Collections" means all overpayment monies collected, recovered or recouped by local departments of social services related to food stamps (Supplemental Nutrition Assistance Program), TANF (Temporary Assistance for Needy Families), and other federal benefit programs administered by the department.

"Department" means the state Department of Social Services.

"Direct costs" means the cost of salary, fringe benefits and supporting costs of operation. Cost for supervisory and clerical staff is excluded from reimbursement.

"Fraud Recovery Special Fund" means the special fund established under § 63.2-526 D of the Code of Virginia.

"Fraud Reduction/Elimination Effort (FREE) Program" means the program established in compliance with § 63.2-526 of the Code of Virginia to ensure that fraud prevention and investigation are aggressively pursued throughout the Commonwealth of Virginia.

"FREE prevention, detection and investigation units unit" means a person or persons whose job it is to work on all aspects of prevention, detection and investigation of fraud cases.

"General fund" means that portion of the budget of the Commonwealth of Virginia that is made up of general tax revenues, the major sources of which are sales tax, income tax, and profits from the Virginia Lottery.

"Investigation" means gathering evidence on questionable applications, on-going cases and closed cases to determine intent to defraud.

"Local department" means the local department of social services of any county or city in this Commonwealth.

"Performance expectations" means qualitative and quantitative standards or measures against which responsibilities and agency/departmental objectives are assessed.

"Private entities" means individuals or organizations other than federal, state or local personnel or agencies.

"Public assistance" means Temporary Assistance for Needy Families (TANF); auxiliary grants to the aged, blind and disabled; medical assistance; energy assistance; food stamps (Supplemental Nutrition Assistance Program (SNAP); employment services; child care and general relief.

"Reimbursement" means the process by which the Department of Social Services department provides monetary credit to local departments of social services for their approved administrative costs.

"State retained portion of collections" means the amount of collections less any refunds due to the federal government, consistent with federal reimbursement regulations.

"Supporting costs of operation" means program costs other than salaries and fringe benefits. These supporting costs of operation include travel, telephone, utilities, supplies, allowance for space and training and conference fees for positions funded by the FREE program.

A. In compliance with § 63.2-526 of the Code of Virginia, the department shall establish a statewide fraud prevention, detection, and investigation program to be named the Fraud Reduction/Elimination Effort (FREE).

1. The department shall develop and implement policies and procedures for the FREE program Program.

2. The department shall provide a detailed local reimbursement procedure, on an annual basis, to assist in the formulation of the local department's FREE program operation plan. The department's procedure shall project the available funding and the number of local fraud investigators for each local department that the FREE program will support. The number of investigators shall be based on an evaluation of the available funding and appropriate criteria from one or more of the following: a local department's average TANF and Food Stamp caseload size, average number of monthly applications for food stamps and TANF, number of local department workers, geographic location, number of fraud investigations, program compliance, collections, and performance expectations.

3. B. The department shall develop, implement, and monitor local FREE units performance expectations.

B. C. Each local department shall aggressively pursue fraud prevention, detection, and investigations.

1. Each local department shall conduct fraud prevention, detection, and investigation activities consistent with the requirements of federal regulations, the Code of Virginia, this chapter, and the department's FREE program policy Program Policy.

D. The department shall annually provide a detailed local department FREE Program reimbursement procedure to assist in the formulation of the local department's operation plan to comply with the FREE Program.

2.1. Each local department shall submit to the department for an annual operation plan for its FREE Program compliance to the department for approval a program operation plan, formatted by the department, which no later than March 31 each Fiscal year. The local department's FREE Program operation plan shall be in a format determined by the department and shall include:

a a. A description of the local department's prevention, detection, and investigative process;

an b. An agreement with the Commonwealth's attorney; for prosecution of individuals referred by the local department's Fraud Program unit;

identification c. Identification of staff charged with oversight or supervisory responsibility of the FREE program; local department's compliance with its approved operation plan and the FREE Program, including the salary, fringe benefit amounts, supporting operating costs, hours worked per week, and time dedicated to the FREE Program for such staff;

a d. A performance expectation monitoring process;

a e. A signed commitment to adhere to specified responsibilities identified in the Statement of Assurance section of the program operation plan; and,

if f. If requested, a proposed annual budget to include the identification of the FREE program Program investigators, their salary, fringe benefit amounts, supporting operating costs, hours worked per week, and time dedicated to the FREE program.

3. 2. Upon request, each local department shall provide the department with an accounting of FREE program Program expenditures.

C. Funding and requests for reimbursement under the FREE program Program shall be comprised of balances in the Fraud Recovery Special Fund, general funds appropriated for this activity, and any federal funds available for this purpose.

E. Each local department will be reimbursed for FREE Program expenses through funds appropriated for local social services staff and operations and in accordance with § 63.2-526 of the Code of Virginia.

1. In order to To receive reimbursement of direct costs and supporting costs of operation, for allowable FREE Program costs, a local department must:

a. Comply with all pertinent applicable law, regulation, and policy;

b. In accordance with the law, each local department shall establish and maintain Have established and maintained a FREE prevention, detection, and investigation unit; and

c. Recover fraud-related and nonfraud-related Receive collections of overpayments of designated federal for public assistance programs. administered by the local department. An allocation to localities 2. The funds appropriated for local department FREE Program reimbursements shall be made in accordance with the following methodology: 40% based on each agency's Temporary Assistance for Needy Families, food stamp, energy assistance, and child care caseload; 20% based on the number of investigations completed; 20% based on the number of established claims; and 20% based on the actual collections from established claims. Each local department is reimbursed for fraud-related expenses through funds appropriated for local social services staff and operations. based on the number of hours worked by Fraud Program investigator(s) during in the prior LFY (local fiscal year).

3. All participating agencies must report their investigations, collections, and established claims into the system of record. The allocation to each local department for FREE Program reimbursement shall be based upon the local department's share of the statewide total from all local departments of the number of hours worked by FREE Program investigator(s) during the prior LFY (Local fiscal year).

F. The department's FREE Program local reimbursement procedure shall project the available funding and the number of local fraud investigators the FREE Program will reimburse for each local department. The number of investigators shall be based on an evaluation of the available funding and appropriate criteria from one or more of the following based on the prior local fiscal year (June 1 - May 31):

1. A local department's average TANF and SNAP caseload size;

2. Average number of monthly applications for SNAP and TANF;

3. Number of local department workers;

4. Geographic location;

5. Number of fraud investigators; and

6. Program compliance, collections and meeting performance expectations.

2. G. Local departments may contract with other local departments to share a fraud FREE prevention, detection, and investigation unit and may contract with private entities to perform fraud investigations. Any private entity performing fraud investigations pursuant to a contract with a local department shall comply with the requirements of § 30-138 of the Code of Virginia and the restrictions of § 63.2-526 of the Code of Virginia. The local department is responsible for ensuring any private entity it contracts with to perform fraud investigations complies with all applicable federal and state laws, regulations, and policies.