1. To encourage the development of community based treatment services, the director is hereby authorized to administer an incentive subsidy program to assist local units of government in the development, implementation, and operation of community based treatment programs including, but not limited to, preventive or diversionary programs, probation services, community based treatment centers, and facilities for the detention, confinement, care and treatment of children under the purview of chapter 211.

2. The director shall, pursuant to the administrative procedures act, chapter 536, promulgate rules establishing standards of eligibility for local units of government to receive funds under sections 219.011 to 219.086. Rule and regulation making power shall be subject to the provisions of section 219.016, subsection 6.

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3. In determining the purposes for which funds will be expended by the juvenile court judge, he shall appoint an advisory committee representative of the county’s population. The committee shall actively participate in the formulation of plans for the proper expenditure of funds and shall cooperate and assist in the implementation of these plans. Members of the advisory committee shall receive no compensation.

4. The juvenile court judge shall submit to the director a written report containing a program description, method of implementation, and budget of all projects proposed to be funded under this provision. Upon approval of this report by the director, the county shall be eligible to receive subsidy.

5. The director shall visit or cause to be visited each program and facility funded by this provision, the purpose of such visits to be the examination of facilities, programs, books, and records. He shall make written recommendations for needed changes or improvements.

6. When the director shall determine that there are reasonable grounds to believe that a county is not in compliance with the operating standards established pursuant to subsection 2 of this section, at least thirty days’ notice shall be given the county and a hearing shall be held to ascertain whether progress has been made toward compliance. The director may suspend all or a portion of any subsidy until the required standard of operation has been met.

7. Any county may purchase selected services from the division by contract as provided in sections 219.011 to 219.086. The director shall annually determine the costs of providing such services and all charges shall be deducted from the subsidy due and payable to the county concerned, provided that no contract shall exceed in cost the amount of subsidy to which the participating county is eligible.

8. Participating counties shall not diminish or reduce their level of spending for juvenile correctional programs in order to remain eligible to receive subsidy for the specific program being subsidized.