(a) For purposes of this section, the following definitions shall apply.

(b) After a final audit report has been issued, the Department Representative or the Local Agency may request that the Director convene a hearing within 30 calendar days of the issuance of the final audit report in order to resolve any disputed findings contained in the audit report. Any such request shall be made in writing to the Director and shall include a description of the particular elements of the audit report that are disputed and the reasons for the dispute.

(c) Within 15 calendar days of receiving a request for a hearing, the Director shall assign a staff manager who has not previously been involved in any aspect of the audit to serve as the Hearing Officer and to prepare a draft final decision for the Director's review and adoption at the conclusion of the hearing process. The Hearing Officer shall promptly notify the Parties of his or her appointment.

(d) Within 30 calendar days of notice of the appointment of the Hearing Officer, the Parties shall prepare and provide to the Hearing Officer and to the other party a written statement in support of its position.

(e) Within 30 calendar days of the Hearing Officer receiving the statements, the Hearing Officer may schedule a date for oral presentations by the Parties if the Hearing Officer deems such presentations necessary to fully identify and understand the issues in dispute. The scope and manner of the oral presentations shall be within the discretion of the Hearing Officer. Any presentations shall be recorded and available for transcription at the request of either party and at the expense of the party so requesting. The Hearing Officer will set a date by which all materials requested by the Hearing Officer must be submitted.

(f) Within 30 calendar days of the date that all material requested by the Hearing Officer is submitted, the Hearing Officer shall prepare a draft determination of the dispute and provide it to the Director. The Department Representative shall have the burden of proof to establish by a preponderance of the evidence that the Local Agency's Personnel System is out of compliance with the Federal Requirements.

(g) The Director shall have 30 calendar days from receipt of the draft determination to take action. If the 30 calendar days expire without the Director taking action, the draft decision shall be deemed the final determination of the Director. The Director may adopt the draft determination or direct that additional information be provided by the Local Agency or the Department Representative to the Hearing Officer and the determination be resubmitted for the Director's review subsequent to consideration of that information.

(h) The Director's decision shall include a determination of whether any authority previously granted to the Local Agency to operate all or part of its own Personnel System for Program employees shall be rescinded or modified. In the event the Local Agency is directed to take action under the terms of the Director's final determination and fails to do so within 60 calendar days or such longer period as the Director may designate in his/her decision, the Director shall notify the state officer responsible for administering the Program of his or her decision that the Local Agency is not in conformity with Federal Requirements.