On review of the record, we agree that petitioner failed to exhaust her administrative remedies and, therefore, this proceeding was prematurely commenced. Following a fair hearing *537by the State Department of Social Services on October 22,1982, it was determined that petitioner was entitled to reimbursement. The local agency was directed to compute her financial eligibility for medical assistance for certain designated periods. Thereafter, the city agency concluded that petitioner was entitled to reimbursement of $10,977.03, of which $7,472.46 had been sent, leaving a balance of $3,504.57.
Petitioner then brought this CPLR article 78 proceeding, challenging the determination as arbitrary and capricious. However, it is undisputed that at no time did petitioner appeal to the State Commissioner from the decision of the local agency and thereby obtain a fair hearing, pursuant to New York State Department of Social Services Regulations, part 358 (18 NYCRR). Clearly, the determination by the local agency was not a final determination for purposes of commencement of an article 78 proceeding nor has a fair hearing been held before the State Department of Social Services.
Accordingly, we remand the matter to the State Commissioner for that purpose. Concur — Murphy, P. J., Kupferman, Carro and Kassal, JJ.