(7) Failure of any State to maintain certain level of historic effort (A) In general The Secretary shall reduce the grant payable to the State under section 603(a)(1) of this title for a fiscal year by the amount (if any) by which qualified State expenditures for the then immediately preceding fiscal year are less than the applicable percentage of historic State expenditures with respect to such preceding fiscal year. (B) Definitions As used in this paragraph: (i) Qualified State expenditures (I) In general The term “qualified State expenditures” means, with respect to a State and a fiscal year, the total expenditures by the State during the fiscal year, under all State programs, for any of the following with respect to eligible families: (aa) Cash assistance, including any amount collected by the State as support pursuant to a plan approved under part D, on behalf of a family receiving assistance under the State program funded under this part, that is distributed to the family under section 657(a)(1)(B) of this title and disregarded in determining the eligibility of the family for, and the amount of, such assistance. (bb) Child care assistance. (cc) Educational activities designed to increase self-sufficiency, job training, and work, excluding any expenditure for public education in the State except expenditures which involve the provision of services or assistance to a member of an eligible family which is not generally available to persons who are not members of an eligible family. (dd) Administrative costs in connection with the matters described in items (aa), (bb), (cc), and (ee), but only to the extent that such costs do not exceed 15 percent of the total amount of qualified State expenditures for the fiscal year. (ee) Any other use of funds allowable under section 604(a)(1) of this title . (II) Exclusion of transfers from other State and local programs Such term does not include expenditures under any State or local program during a fiscal year, except to the extent that— (aa) the expenditures exceed the amount expended under the State or local program in the fiscal year most recently ending before August 22, 1996 ; or (bb) the State is entitled to a payment under former section 603 of this title (as in effect immediately before August 22, 1996 ) with respect to the expenditures. (III) Exclusion of amounts expended to replace penalty grant reductions Such term does not include any amount expended in order to comply with paragraph (12). (IV) Eligible families As used in subclause (I), the term “eligible families” means families eligible for assistance under the State program funded under this part, families that would be eligible for such assistance but for the application of section 608(a)(7) of this title , and families of aliens lawfully present in the United States that would be eligible for such assistance but for the application of title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 [ 8 U.S.C. 1601 et seq.]. (V) Counting of spending on certain pro-family activities The term “qualified State expenditures” includes the total expenditures by the State during the fiscal year under all State programs for a purpose described in paragraph (3) or (4) of section 601(a) of this title . (ii) Applicable percentage The term “applicable percentage” means 80 percent (or, if the State meets the requirements of section 607(a) of this title , 75 percent). (iii) Historic State expenditures The term “historic State expenditures” means, with respect to a State, the lesser of— (I) the expenditures by the State under parts A and F (as in effect during fiscal year 1994) for fiscal year 1994; or (II) the amount which bears the same ratio to the amount described in subclause (I) as— (aa) the State family assistance grant, plus the total amount required to be paid to the State under former section 603 of this title for fiscal year 1994 with respect to amounts expended by the State for child care under subsection (g) or (i) of section 602 of this title (as in effect during fiscal year 1994); bears to (bb) the total amount required to be paid to the State under former section 603 of this title (as in effect during fiscal year 1994) for fiscal year 1994. Such term does not include any expenditures under the State plan approved under part A (as so in effect) on behalf of individuals covered by a tribal family assistance plan approved under section 612 of this title , as determined by the Secretary. (iv) Expenditures by the State The term “expenditures by the State” does not include— (I) any expenditure from amounts made available by the Federal Government; (II) any State funds expended for the medicaid program under subchapter XIX; (III) any State funds which are used to match Federal funds provided under section 603(a)(5) of this title ; or (IV) any State funds which are expended as a condition of receiving Federal funds other than under this part. Notwithstanding subclause (IV) of the preceding sentence, such term includes expenditures by a State for child care in a fiscal year to the extent that the total amount of the expenditures does not exceed the amount of State expenditures in fiscal year 1994 or 1995 (whichever is the greater) that equal the non-Federal share for the programs described in section 618(a)(1)(A) of this title . (v) Source of data In determining expenditures by a State for fiscal years 1994 and 1995, the Secretary shall use information which was reported by the State on ACF Form 231 or (in the case of expenditures under part F) ACF Form 331, available as of the dates specified in clauses (ii) and (iii) of section 603(a)(1)(D) of this title.