California Code, Welfare and Institutions Code - WIC § 16981

(a) The department shall conduct fiscal and program reviews to ensure county compliance with the provisions of this part, and shall report annually the results of these reviews to the Legislature.  The department may withhold funds, up to the total amount of funds allocated under this chapter, if a county fails to correct deficiencies in the program after receiving written notice of noncompliance from the department.

(b) The department shall recoup funds which were provided pursuant to this chapter and Chapter 4 (commencing with Section 16930) if they were not encumbered or expended according to the requirements of this chapter or Chapter 4 respectively within the fiscal year according to procedures and reports required by the department.  The funds shall revert to the CHIP Account or Rural Health Services Account respectively.