(a) (1) Any funds paid to a county pursuant to this chapter prior to June 30, 1999, which exceed the county’s cost of administering the child support program of the local child support agency pursuant to Section 17400 to that date, hereafter referred to as “excess funds,” shall be expended by the county only upon that program. All these excess funds shall be deposited by the county into a special fund established by the county for this purpose.

(2) Performance incentive funds shall include, but not be limited to, incentive funds paid pursuant to Section 17704, and performance incentive funds paid pursuant to Section 14124.93 of the Welfare and Institutions Code and all interest earned on deposits in the special fund. Performance incentive funds shall not include funds paid pursuant to Section 17706. Performance incentive funds shall be expended by the county only upon that program. All performance incentive funds shall be deposited by the county into a special fund established by the county for this purpose.

(b) All excess funds and performance incentive funds shall be expended by the county on the support enforcement program of the local child support agency within two fiscal years following the fiscal year of receipt of the funds by the county. Except as provided in subdivision (c), any excess funds or performance incentive funds paid pursuant to this chapter since July 1, 1992, that the department determines have not been spent within the required two-year period shall revert to the state General Fund, and shall be distributed by the department only to counties that have complied with this section. The formula for distribution shall be based on the number of CalWORKs cases within each county.

(c) A county that submits to the department a written plan approved by that county’s local child support agency for the expenditure of excess funds or performance incentive funds shall be exempted from the requirements of subdivision (b), if the department determines that the expenditure will be cost-effective, will maximize federal funds, and the expenditure plan will require more than the time provided for in subdivision (b) to expend the funds. Once the department approves a plan pursuant to this subdivision, funds received by a county and designated for an expenditure in the plan shall not be expended by the county for any other purpose.

(d) Nothing in this section shall be construed to nullify the recovery and reversion to the General Fund of unspent incentive funds as provided in Section 6 of Chapter 479 of the Statutes of 1999.

(Amended by Stats. 2001, Ch. 755, Sec. 20. Effective October 12, 2001.)