AUGUSTA — Maine is getting a clearer picture of how much it may have to pay of a maximum $29 million fine for failing to meet federal welfare-to-work standards from 2007 through 2014.

The state is looking at as much as $12 million in penalties for the years 2008 through 2010 because it recently failed to meet a corrective action plan that could have eliminated penalties for that period, U.S. Department of Health and Human Services spokesman Patrick Fisher said in an email this week.

Such penalties would mean lost federal dollars for Maine’s Temporary Assistance for Needy Families program next year, which Maine would have to make up in new or existing state funds.

The federal agency has not officially informed the state that it hasn’t met the corrective action plan, and federal officials are still considering whether to reduce the figure, Fisher said. DHHS also has not decided Maine’s challenge of penalties for 2007 and other years, leaving the final financial hit unclear.

Bethany Hamm, director of the state Office for Family Independence, said the penalties could possibly impact the program as they would for any state trying to meet requirements while helping needy families. But she said she couldn’t speculate on how Maine would make up any gap due to penalties. She said state officials were still exploring how they might continue to challenge the penalties. The federal decision also can be appealed.

Republican Gov. Paul LePage’s administration is finalizing plans to contract out Maine’s welfare-to-work program to a New York nonprofit and has used the threat of federal penalties to justify the move.

Hamm said penalties aren’t the sole reason for the contract, though her department believes “that moving in this direction is going to mitigate the financial risk associated with penalties.”

“We feel the contract is going to provide (welfare recipients) a more robust and holistic approach to pathways out of poverty,” said Hamm, whose office includes the state’s welfare program.

Maine has about 3,500 welfare recipients who are required to search for jobs and meet certain standards for work participation.

Across states, federal work-participation requirements have received bipartisan resistance since 2007 changes. Fisher said states currently are challenging a total of $1.9 billion in potential penalties for 2010 through 2014.

Chris Hastedt, public policy director for Maine Equal Justice Partners, said the standard for two-parent families, in particular, is widely criticized.

“Most states pull their two-parent families out of participation by funding them with separate state dollars,” Hastedt said.

Under the standard for two-parent families, states must have 90 percent of those families participating in work activities for at least a certain number of hours per week. Maine faces about $357,000 in fines for not meeting the two-parent standard in 2013 and 2014.

DHHS spokeswoman Samantha Edwards said in an email that Maine is technically meeting work participation rates, but only doing so by using an “allowable loophole” that lets states leverage non-welfare cases to improve their rates.

This year, LePage and state Department of Health and Human Services Commissioner Mary Mayhew blamed the penalties on Democrats who supported keeping work exemptions for welfare recipients. The federal government gives states leeway to define such exemptions, such as a disability that keeps a parent from working.

This spring, the governor introduced legislation he said “could fix the problem that led to the $29 million in fines.” It would exempt only domestic violence victims and create a $1 million fund to pay federal fines. The bill died in the legislature.

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