(a) The Department may annually negotiate a fiscal year interagency agreement with the Departments of Health Care Services (DHCS) and Social Services (DSS), pursuant to Military and Veterans Code Section 972.5, to obtain sufficient federal funds to reimburse participating counties a portion of their costs of performing cost avoidance activities as identified in the agreement. The interagency agreement shall also contain provisions for paying a portion of the Department's administrative costs of managing the program.

(b) By May 15th of each year, the Department shall make a midyear advance of a percentage of the available funds, as determined by the Department, to participating counties calculated by prorating the number of each county's reported first six months fiscal year's reported cost avoidance workload activities against the statewide total.

(c) The Department shall audit each county as defined in Section 453(a).

(d) By December 15th of each year, the Department shall calculate the cost avoidance allocation of federal funds for the full term of the agreement based on the authenticated workload activities verified by the Department's audit. The total amount of federal funds available under contract, after reduction for reimbursement of the Department's administrative costs, will be allocated to all participating counties by prorating each county's audited cost avoidance workload against the statewide total.

(e) Each county's annual cost avoidance allocation shall not exceed the difference between the total fiscal year CVSO expenditure and the total of the subvention payments made pursuant to Section 453.

(f) The Department shall disburse the allocated funds semi-annually, by May 15th and December 15th. Each participating county's payment shall be the difference between the midyear advance and the annual cost avoidance allocation.

(g) In the event an individual county's annual cost avoidance allocation is less than the midyear advance, the county shall repay any overpayment to the Department within 30 days of written notice to the Board of Supervisors.