AUGUSTA — The Department of Health and Human Services said Friday it is making significant changes to two welfare programs to reduce the threat of up to $29 million in fines for not meeting federal standards.

The state will hire an outside vendor to provide assessment, job training, transportation and case management services for the Temporary Assistance for Needy Families and ASPIRE programs, according to a DHHS statement.

Maine faces fines because benefit recipients have not met required TANF work participation rates over several years, dating to 2007, the agency said. In August, the federal government told the state it would need to pay the first penalty of $1.16 million.

“This issue must be addressed with aggressive action steps,” DHHS said.

DHHS didn’t disclose the cost of the program, but said it plans to sign a contract with a vendor in mid-2016. Spokeswoman Samantha Edwards said she couldn’t provide a cost estimate because of a pending request for bids.

In 2014, the LePage administration said that it was facing a fine of $7 million for inadequate TANF work participation rates. On Friday, DHHS said the potential fine was much larger, $29 million.

Edwards said the state has not paid the $1.16 million the federal government requested in August. She also said DHHS has submitted two plans to the federal government for how it would correct the shortcomings. The workforce participation rate for TANF recipients in the 2015 fiscal year was 16.3 percent in the all-families category and 17.1 percent for two-parent families, Edwards said.

The federal government’s work participation standard varies by state and can change each year. DHHS didn’t say what Maine’s was in 2015, but in 2013 it was 50 percent in the all-families category and 90 percent in the two-family category, according to the U.S. Department of Health and Human Services website.

In the past, opponents of the administration’s efforts to change the work participation guidelines have argued that the state need only demonstrate efforts to improve the participation rate to forestall fines.

Anti-poverty advocates largely dismissed the fine threat when the LePage administration cited it during its push to toughen work search requirements in 2014.

Liz Schott, a policy analyst for the Center on Budget and Policy Priorities, a national anti-poverty group in Washington, D.C., told the Press Herald in 2014 that demonstrating compliance is key to avoiding penalties, and Maine already has done that.

“Unless (Maine Department of Health and Human Services) doesn’t do their job and continue to file corrective action plans – unless they want to make political hay out of this – Maine shouldn’t have to pay the fine,” Schott said. “Even if they did have to pay, it would be a greatly reduced penalty if DHHS is doing its job.”

Work participation is a requirement to receive cash benefits from the TANF program. Recipients must engage in one or more federally outlined activities to meet the standard. States have approved different exemptions to accommodate families or individuals who may be unable to work for reasons such as taking care of an infant or an incapacitated or ill family member.

According to most recent federal data, Maine’s work participation rate in the all-families category was 76.6 percent in 2013, exceeding the target established by the federal requirement. It fell short of its target in the two-parent families category at 12.6 percent.

The state’s work participation rates don’t reflect the total number of people receiving TANF who are employed. States don’t receive credit for work participation hours if a recipient works less than the required number of hours.

According to federal data, there were 28,289 Maine families receiving TANF benefits in fiscal year 2013.

DHHS said that the low work participation rates require “aggressive action steps” and the fines it faced dated to 2007.

The agency said contracting with a private partner to bolster work participation rates has been successful in other states. Under the new model, DHHS said, recipient “families will receive comprehensive assessments, job readiness training and development, transportation and other support services, along with immediate engagement from a dedicated case management team.”

“Despite repeated failures by the Legislature to address this problem with law changes, we are moving forward with this reform. The $29 million in looming federal penalties can no longer be ignored, and our clients must be provided with the best service available to help them get back to work. The Department looks forward to the positive changes coming to the program and what it means for TANF/ASPIRE families working toward a life of independence,” DHHS Commissioner Mary Mayhew said in a statement.

Rep. Drew Gattine, D-Westbrook, co-chairman of the Legislature’s Health and Human Services Committee, wrote in an email Saturday:

“It’s ironic that the Department makes this announcement just days after the federal government released data showing the Maine is not only meeting the TANF all families rate but also meeting it with the second highest score in the nation. Maine, like the great majority of other states, isn’t yet meeting the two parent rate, but we could easily meet that rate with some simple design changes.  It’s unfortunate that the Department continues to mismanage this program in a way that exposes Maine to possible fines and penalties.

There is broad bipartisan agreement that the current TANF participation rates are badly in need of reform because they simply measure the wrong things.  States should be held accountable by measuring outcomes – a measurement that rewards states for actually helping parents find jobs that help lift their families out of poverty.  The solution isn’t to lay off 70 state workers and give their jobs away to some giant out-of-state vendor.  The solution is to focus on building a better Maine economy and removing the real barriers that keep parents out of the work force.”

Mayhew said DHHS has operated the work search program diligently, and now must add significant resources to engage recipients in education, skill-building and work-readiness activities.