(a) If the commission believes that financial assistance to a family with a dependent child is not being, or may not be, used in the best interest of the child, the commission may provide counseling and guidance services to the relative receiving financial assistance with respect to the use of the funds and the management of other funds in the child’s best interest.
(b) The commission may advise the relative that continued failure to use the funds in the child’s best interest will result in the funds being paid to a substitute payee. If the commission determines that protective payments are required to safeguard the best interest of the child, the commission may pay the funds to a substitute payee on a temporary basis in accordance with the commission’s rules.

(c) If the situation in the home which made the protective payments necessary does not improve, and if the commission determines that the relative with whom the child is living is unable or does not have the capacity to use the funds for the best interest of the child, then the commission, with the assistance of other appropriate state agencies, may make arrangements with the family for other plans for the care of the child. The other plans may include:
(1) removing the child to the home of another relative;
(2) appointment of a guardian or legal representative for the relative with whom the child is living;
(3) imposition of criminal or civil penalties if a court determines that the relative is not using, or has not used, the payments for the benefit of the child; or
(4) referral of the case to a court for the removal of the child and the placement of the child in a foster home.
(d) The commission may make payments on behalf of a dependent child residing in a residential child-care facility in accordance with the provisions of this chapter and commission rules.