Your office has requested our advice on whether a request can be made for payments
                  from the State of Kentucky for any Social Security Administration (SSA) funds utilized
                  in the processing of non-SSA matters prior to 1983. The facts presented indicate that
                  the Kentucky Department of Disability Determinations has been using SSA resources
                  to process Medicaid cases for the Kentucky Cabinet for Human Resources. This procedure
                  was being carried out pursuant to a March 27, 1975, administrative order from the
                  Kentucky Secretary for Human Resources.
               
               For the past two years there have been negotiations with the State of Kentucky with
                  respect to the processing of non-SSA workloads. Although the Disability Determination
                  Service (DDS) began processing Medicaid cases in 1975, the State contends that they
                  are not required to reimburse SSA for the period prior to 1983 since there have been
                  audit closures through 1982.
               
               We have reviewed the Section 221 agreement dated December 23, 1975, Section 221 of
                  the Social Security Act, as amended (effective June 1981) and pertinent regulations.
                  Paragraph G of the Section 221 agreement pertaining to fiscal matters provides, in
                  pertinent part, that:
               
               1. The Secretary will provide funds in advance, as may be mutually agreed upon, for
                  the necessary cost to the State agency of making determinations of disability authorized
                  by this agreement ....
               
               2. Such funds will be used solely for such expenses.
               3. ... The Secretary will determine whether such expenditures were necessary in making
                  determinations of disability authorized by this agreement under standards in effect
                  at the time such expenditures were made o~ incurred. If, pursuant to such standards,
                  the Secretary determines that any such expenditure was not necessary for such purpose,
                  the Secretary shall so inform the State agency of tentative exceptions taken, with
                  full explanation of such tentative exceptions. The State agency will be given a reasonable
                  length of time to justify such expenditures. If such expenditures cannot be justified
                  by the State agency, the total amount of expenditures actually made and incurred in
                  such period shall be reduced by any expenditures determined by the Secretary to be
                  not necessary in making determinations of disability authorized by this agreement.
               
               4. Any monies paid to the State which are used for purposes not within the scope of
                  this agreement shall be returned to the Treasury of the United States for deposit
                  in the Trust Fund from which payment was certified.
               
               Likewise, Section 221 of the Social Security Act, 42 U.S.C. §421, provides, in part,
                  that:
               
               (e) Each State which is making disability determinations under subsection (a)(1) under
                  this section shall be entitled to receive from the Trust Funds, in advance or by way
                  of reimbursement, as determined by the Secretary, the cost to the State of making
                  disability determinations under subsection (a)(1). The Secretary shall from time to
                  time certify such amount as is necessary for this purpose to the Managing Trustee,
                  reduced or increased, as the case may be, by any sum (for which adjustment hereunder
                  has not previously been made) by which the amount certified for any prior period was
                  greater or less than the amount which should have been paid to the State under this
                  subsection for such period. (Emphasis added.)
               
               (f) All money paid to a State under this section shall be used solely for the purposes
                  for which it is paid; and any money so paid which is not used for such purposes shall
                  be returned to the Treasury of the United States for deposit in the Trust Funds.
               
               Both the 1975 Section 221 agreement and Section 221 of the Social Security Act provides
                  for adjustment for incorrect payments in a prior year. There are no time limitations
                  contained in either the agreement or the statute. Therefore, it is our opinion that
                  the Social Security Administration may request payments from the State for periods
                  covered by closed Federal or State audits. If there is any disagreement, the State
                  can appeal these determinations pursuant to 20 C.F.R. §416.1027(b)