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State Vocational Rehabilitation Services Program; State Supported Employment Services Program; Limitations on Use of Subminimum Wage

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AGENCY:

Office of Special Education and Rehabilitative Services, Department of Education.

ACTION:

Final regulations.

SUMMARY:

The Secretary amends the regulations governing the State Vocational Rehabilitation Services program and the State Supported Employment Services program to implement changes to the Rehabilitation Act of 1973, as amended by the Workforce Innovation and Opportunity Act (WIOA) signed into law on July 22, 2014. The Secretary also updates, clarifies, and improves the prior regulations.

Finally, the Secretary issues new regulations regarding limitations on the use of subminimum wages that are added by WIOA and under the purview of the Department.

DATES:

These regulations are effective on September 19, 2016, except for amendatory instructions 2, 3, and 4 amending 34 CFR 361.10, 361.23, and 361.40, which are effective October 18, 2016.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Ed Anthony, U.S. Department of Education, 400 Maryland Avenue SW., Room 5086, Potomac Center Plaza (PCP), Washington, DC 20202-2800. Telephone: (202) 245-7488 or by email: Edward.Anthony@ed.gov.

If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose of This Regulatory Action: Individuals with disabilities represent a vital and integral part of our society, and we are committed to ensuring that individuals with disabilities have opportunities to compete for and enjoy high quality employment in the 21st century global economy. Some individuals with disabilities face particular barriers to employment in integrated settings that pays competitive wages, provides opportunities for advancement, and leads to economic self-sufficiency. Ensuring workers with disabilities have the supports and the opportunities to acquire the skills that they need to pursue in-demand jobs and careers is critical to growing our economy, assuring that everyone who works hard is rewarded, and building a strong middle class. To help achieve this priority for individuals with disabilities, the Rehabilitation Act of 1973 (Act), as amended by the Workforce Innovation and Opportunity Act (WIOA) (P.L. 113-128), signed into law on July 22, 2014, seeks to empower individuals with disabilities to maximize employment, economic self-sufficiency, independence, and inclusion in and integration into society.

To implement the changes to the Act made by WIOA, the Secretary amends the regulations governing the State Vocational Rehabilitation Services program (VR program) (34 CFR part 361) and State Supported Employment Services program (Supported Employment program) (34 CFR part 363), administered by the Rehabilitation Services Administration (RSA), within the Office of Special Education and Rehabilitative Services. In addition, the Secretary updates and clarifies prior regulations to improve the operation of the program. Finally, the Secretary promulgates regulations in new 34 CFR part 397 that implement the limitations on the payment of subminimum wages to individuals with disabilities in section 511 of the Act that fall under the purview of the Secretary.

Summary of the Major Provisions of This Regulatory Action: We summarize here those regulatory changes needed to implement the amendments to the Act made by WIOA for each part in the order it appears in the Code of Federal Regulations (CFR).

State Vocational Rehabilitation Services Program

WIOA makes significant changes to title I of the Act that affect the VR program. First, WIOA strengthens the alignment of the VR program with other core components of the workforce development system by imposing requirements governing unified strategic planning, common performance accountability measures, and the one-stop delivery system. This alignment brings together entities responsible for administering separate workforce and employment, educational, and other human resource programs to collaborate in the creation of a seamless customer-focused service delivery network that integrates service delivery across programs, enhances access to the programs' services, and improves long-term employment outcomes for individuals receiving assistance. In so doing, WIOA places heightened emphasis on coordination and collaboration at the Federal, State, and local levels to ensure a streamlined and coordinated service delivery system for job-seekers, including those with disabilities, and employers. Therefore, the Departments of Education and Labor are issuing joint final regulations to implement jointly administered activities under title I of WIOA (e.g., those related to Unified or Combined State Plans, performance accountability, and the one-stop delivery system), applicable to the workforce development system's core programs (Adult, Dislocated Worker, and Youth programs; Adult Education and Family Literacy Act programs; Wagner-Peyser Employment Services program; and the VR program). The joint final regulations, along with the Analysis of Comments and Changes to those regulations, are set forth in a separate regulatory action published elsewhere in this issue of the Federal Register.

To implement WIOA's corresponding major changes to title I of the Act, we:

  • Amend § 361.10 to require that all assurances and descriptive information previously submitted through the stand-alone VR State Plan and supported employment supplement be submitted through the VR services portion of the Unified or Combined State Plan under section 102 or section 103, respectively, of WIOA.
  • Clarify in § 361.29 that States report to the Secretary updates to the statewide needs assessment and goals and priorities, estimates of the numbers of individuals with disabilities served through the VR program and the costs of serving them, and reports of progress on goals and priorities at such time and in such manner determined by the Secretary to align the reporting of this information with the submission of the Unified or Combined State Plans and their modifications.
  • Clarify in § 361.20 when designated State agencies must conduct public hearings to obtain comment on substantive changes to policies and procedures governing the VR program.
  • Remove § 361.80 through § 361.89 and replace with § 361.40 to cross-reference the joint regulations for the common performance accountability measures for the core programs of the workforce development system.
  • Provide a cross-reference in § 361.23, regarding the roles and responsibilities of the VR program in the one-stop delivery system to the joint regulations implementing requirements for the one-stop delivery system.Start Printed Page 55631

Second, the Act, as amended by WIOA, emphasizes the achievement of competitive integrated employment. The foundation of the VR program is the principle that individuals with disabilities, including those with the most significant disabilities, are capable of achieving high quality, competitive integrated employment when provided the necessary services and supports. To increase the employment of individuals with disabilities in the competitive integrated labor market, the workforce system must provide individuals with disabilities opportunities to participate in job-driven training and to pursue high quality employment outcomes. The amendments to the Act—from the stated purpose of the Act, to the expansion of services designed to maximize the potential of individuals with disabilities, including those with the most significant disabilities, to achieve competitive integrated employment, and, finally, to the inclusion of limitations on the payment of subminimum wages to individuals with disabilities—reinforce the congressional intent that individuals with disabilities, with appropriate supports and services, are able to achieve the same kinds of competitive integrated employment as non-disabled individuals. Consequently, we make extensive changes to part 361, including:

  • The inclusion of a new definition of “competitive integrated employment” in § 361.5(c)(9) that combines, clarifies, and enhances the two separate definitions of “competitive employment” and “integrated setting” for the purpose of employment under the VR program in prior § 361.5(b)(11) and (b)(33)(ii).
  • The incorporation of the principle that individuals with disabilities, including those with the most significant disabilities, are capable of achieving high quality competitive integrated employment, when provided the necessary services and support, throughout part 361, from the statement of program purpose in § 361.1 to the requirement in § 361.46(a) that the individualized plan for employment include a specific employment goal consistent with the general goal of competitive integrated employment.
  • The revision of the definition of “employment outcome” in § 361.5(c)(15) that specifically identifies customized employment as an employment outcome under the VR program, and requires that all employment outcomes achieved through the VR program be in competitive integrated employment or supported employment, thereby eliminating uncompensated outcomes, such as homemakers and unpaid family workers, from the scope of the definition for purposes of the VR program.

To assist designated State units (DSUs) to implement the change in the definition of “employment outcome” and to ensure that individuals with disabilities did not experience a disruption in services, the Department proposed in the Notice of Proposed Rulemaking (NPRM) published on April 16, 2015 (80 FR 21059), a transition period of six months following the effective date of the final regulations, during which period DSUs would complete the provision of vocational rehabilitation services to, and close the service records of, individuals pursuing uncompensated outcomes, such as homemakers and unpaid family workers, in accordance with individualized plans for employment that were approved prior to the effective date of these final regulations. In consideration of the comments received, the Secretary has extended the transition period in these final regulations. DSUs may continue to provide services to individuals with uncompensated employment goals on their individualized plans for employment, approved prior to the effective date of these final regulations, until June 30, 2017, unless a longer period of time is required based on the needs of the individual with the disability as determined by the vocational rehabilitation counselor and the individual with a disability, as documented in the individual's service record.

We also amend numerous other provisions throughout part 361 to address the expansion of available services, requirements related to the development of the individualized plan for employment, and order of selection for services, all of which are intended to maximize the potential for individuals with disabilities to prepare for, obtain, retain, and advance in the same high quality jobs and high-demand careers as persons without disabilities.

Third, WIOA emphasizes the provision of services to students and youth with disabilities to ensure that they have meaningful opportunities to receive the services, including training and other supports, they need to achieve employment outcomes in competitive integrated employment. The Act, as amended by WIOA, expands not only the population of students with disabilities who may receive vocational rehabilitation services but also the breadth of services that the VR agencies may provide to youth and students with disabilities who are transitioning from school to postsecondary education and employment. We implement the emphasis on serving students and youth with disabilities contained in the amendments to the Act made by WIOA in many regulatory changes to part 361 by:

  • Including in § 361.5(c)(51) and (c)(58), respectively, new definitions of “student with a disability” and “youth with a disability.” After further analysis of the comments received, the Department has determined that the definition of “student with a disability” applies to all students enrolled in educational programs, including postsecondary education programs, so long as they satisfy the age requirements set forth in final § 361.5(c)(51). The definition is also inclusive of secondary students who are homeschooled, as well as students in other non-traditional secondary educational programs. We have incorporated this broader interpretation of the definition in final § 361.5(c)(51), which we believe will increase the potential for DSUs to maximize the use of funds reserved for the provision of pre-employment transition services by increasing the number of students who may receive these services.
  • Implementing in § 361.48(a) the requirements of new sections 110(d) and 113 of the Act requiring States to reserve at least 15 percent of their Federal allotment to provide and arrange for, in coordination with local educational agencies, the provision of pre-employment transition services to students with disabilities. We have maintained our interpretation of “potentially eligible,” for purposes of pre-employment transition services, as meaning all students with disabilities, regardless of whether they have applied for or been determined eligible for the VR program. The Department believes this is the broadest legally supportable interpretation and is consistent with the congressional intent.
  • Amending § 361.29(a) to require that the comprehensive statewide needs assessment include an assessment of the needs of students and youth with disabilities for vocational rehabilitation services, including the needs of students with disabilities for pre-employment transition services.
  • Clarifying in § 361.49 the technical assistance DSUs may provide to educational agencies and permitting the provision of transition services for the benefit of groups of students and youth with disabilities.
  • Clarifying in § 361.22(c) that nothing in this part is to be construed as reducing the responsibility of the local educational agencies or any other Start Printed Page 55632agencies under the Individuals with Disabilities Education Act (IDEA) to provide or pay for transition services that are also considered to be special education or related services under the IDEA necessary for the provision of a free appropriate public education to students with disabilities.

In addition to the preceding changes implementing the three major goals of the Act, as amended by WIOA, we have made changes to the regulations governing the comprehensive system of personnel development and the fiscal administration of the VR program. In order for DSUs to recruit qualified personnel to provide services to individuals with disabilities, including students and youth with disabilities, and carry out their responsibilities under the Act, we have made changes by:

  • Amending § 361.18 governing the comprehensive system of personnel development by establishing minimum educational and experience requirements and eliminating the requirement to retrain staff not meeting the DSU's personnel standard for qualified staff.
  • Revising proposed § 361.18(c)(2)(ii) in these final regulations to provide a more complete list of the skills and knowledge needed to meet the needs of employers and individuals with disabilities in the 21st century evolving labor market.

Finally, we make changes to part 361 to improve the fiscal administration of the VR program by:

  • Clarifying in § 361.5(b) the applicability to the VR program of the definitions contained in 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements and making numerous other conforming changes to align this part with 2 CFR part 200 to ensure consistency.
  • Adding a new paragraph (a)(3) to § 361.65 requiring the State to reserve not less than 15 percent of its allotment for the provision of pre-employment transition services.
  • Amending § 361.65(b)(2) to clarify that reallotment occurs in the fiscal year the funds were appropriated and the funds may be obligated or expended during the period of performance, provided that matching requirements are met.
  • Adding a new paragraph (b)(3) to § 361.65 establishing the Secretary's authority to determine the criteria to be used to reallot funds when the amount requested exceeds the amount of funds available for reallotment.

Since publication of the NPRM, as a result of further Departmental review, we clarify in § 361.63 the requirements for the use of program income.

State Supported Employment Services Program

Under the State Supported Employment Services program (Supported Employment program) authorized under title VI of the Act (29 U.S.C. 795g et seq.), the Secretary provides grants to assist States in developing and implementing collaborative programs with appropriate entities to provide supported employment services for individuals with the most significant disabilities, including youth with the most significant disabilities, to enable them to achieve supported employment outcomes in competitive integrated employment. Grants made under the Supported Employment program supplement grants issued to States under the VR program (34 CFR part 361).

WIOA makes several significant changes to title VI of the Act, which governs the Supported Employment program. All of the amendments to title VI are consistent with those made throughout the Act, namely to maximize the potential of individuals with disabilities, especially those with the most significant disabilities, to achieve competitive integrated employment and to expand services for youth with the most significant disabilities. We implement the changes made to the Supported Employment program by WIOA in these final regulations by:

  • Requiring in § 363.1 that supported employment be in competitive integrated employment or, if not, in an integrated setting in which the individual is working toward competitive integrated employment on a short-term basis. As a result of comments received, we revised the proposed short-term basis period to allow for an extension of the six-month period for up to a total of 12 months based on the needs of the individual, and the individual has demonstrated progress toward competitive earnings based on information contained in the service record.
  • Extending in § 363.50(b)(1) the time from 18 months to 24 months for the provision of supported employment services.
  • Requiring in § 363.22 a reservation of 50 percent of a State's allotment under this part for the provision of supported employment services, including extended services, to youth with the most significant disabilities.
  • Requiring in § 363.23 not less than a 10 percent match for the amount of funds reserved to serve youth with the most significant disabilities.
  • Reducing in § 363.51 the amount of funds that may be spent on administrative costs.

In response to comments received, we revised §§ 363.53, 363.54, and 363.55 to clarify the requirements for the transition of individuals with the most significant disabilities from supported employment services to extended services, the achievement of a supported employment outcome, and the closure of service records. We have redesignated proposed § 363.55 as final § 363.56.

Limitations on the Use of Subminimum Wage

Section 511 of the Act, as added by WIOA, imposes requirements on employers who hold special wage certificates under the Fair Labor Standards Act (FLSA) that must be satisfied before the employers may hire youth with disabilities at subminimum wages or continue to employ individuals with disabilities of any age at the subminimum wage level. Section 511 also establishes the roles and responsibilities of the DSUs for the VR program and State and local educational agencies in assisting individuals with disabilities, including youth with disabilities, to maximize opportunities to achieve competitive integrated employment through services provided by VR and local educational agencies.

The addition of section 511 to the Act is consistent with all other amendments to the Act made by WIOA. Throughout the Act, Congress emphasizes that individuals with disabilities, including those with the most significant disabilities, can achieve competitive integrated employment if provided the necessary supports and services. The limitations imposed by section 511 reinforce this belief by requiring individuals with disabilities, including youth with disabilities, to satisfy certain service-related requirements in order to start or maintain, as applicable, subminimum wage employment. To implement the requirements of section 511 that fall under the purview of the Department, we are issuing new regulations in part 397, including:

  • Section 397.1, describing the purpose of this part and § 397.2 setting forth the Department's jurisdiction.
  • Section 397.10, requiring the DSU, in consultation with the State educational agency, to develop a process that ensures students and youth with disabilities receive documentation demonstrating completion of the various activities required by section 511 of the Act, such as, to name a few, the receipt of transition services under the IDEA Start Printed Page 55633and pre-employment transition services under section 113 of the Act, as appropriate.
  • Sections 397.20 and 397.30, establishing the activities that must be completed by youth with disabilities prior to obtaining employment at subminimum wage and the documentation that the DSUs and local educational agencies, as appropriate, must provide to demonstrate completion of those activities, required by section 511(a)(2) of the Act. These include completing pre-employment transition services in final § 361.48(a) and the determination of eligibility or ineligibility for vocational rehabilitation services in final §§ 361.42 and 361.43.
  • Section 397.40, establishing the documentation that DSUs must provide to individuals with disabilities of any age who are employed at a subminimum wage upon the completion of certain information and career counseling-related services, as required by section 511(c) of the Act.
  • Section 397.31, prohibiting a local educational agency or a State educational agency from entering into a contract with an entity that employs individuals at subminimum wages for the purpose of operating a program under which a youth with a disability is engaged in work compensated at a subminimum wage.
  • Section 397.50 authorizing a DSU to review individual documentation, required by this part, for all individuals with disabilities who are employed at the subminimum wage level, that is maintained by employers who hold special wage certificates under the FLSA.

In response to comments received, we made revisions to the final regulations to specify that intervals for providing career counseling and information and referral services to individuals of any age employed by section 14(c) entities will be calculated based upon the date the individual becomes known to the DSU starting July 22, 2016. Additionally, we included a time frame in the final regulations of 45 days but, in the case of extenuating circumstances, no later than 90 days, for the DSU to provide documentation of completed activities to individuals with disabilities. We also added provisions that establish minimal information that must be contained in the documentation required by part 397, as well as other administrative requirements related to the documentation process. Finally, we determined that section 14(c) entities have a potential financial interest in providing some of the services and activities required in the final regulations. Consequently, we inserted language prohibiting the use of these entities in providing these required services or activities, stating that a contractor may not be an entity holding a special wage certificate under section 14(c) of the FLSA and that a DSU's contractor, for the purpose of conducting the review of documentation authorized under the final regulations, may not be an entity holding a special wage certificate under section 14(c) of the FLSA.

We fully explain the regulations described in this Executive Summary, along with all other significant changes to parts 361, 363, and 397 following the publication of the NPRM, in the Analysis of Comments and Changes section of this preamble.

Costs and Benefits: The potential costs associated with this regulatory action are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities. Further information related to costs and benefits may be found in the Regulatory Impact Analysis section later in this preamble.

Public Comment: In response to our invitation in the NPRM, more than 1,100 parties submitted comments on the proposed regulations amending the VR program (part 361), amending the Supported Employment program (part 363), and adding part 397 implementing the new provisions in section 511 of the Act, as amended by WIOA. We discuss substantive issues within each part, by section or subject. Generally, we do not address technical and other minor changes.

Analysis of Comments and Changes:

Part 361 State Vocational Rehabilitation Services Program

Following a description of the organizational changes to part 361 in these final regulations, we present the Analysis of Comments and Changes in three sections. In section A, we discuss provisions in part 361 that apply generally to the administration of the VR program and to the provision of vocational rehabilitation services to individuals with disabilities. In section B, we discuss provisions related to the transition of students and youth with disabilities from school to postsecondary education and employment. Finally, in section C, we discuss the fiscal administration of the VR program.

Due to extensive changes, we published the entire part 361 in the NPRM, which included conforming and technical changes. We did not propose substantive changes to all sections of this part. Thus, we did not intend to make all regulations within this part available for public comment. Consequently, we do not address the comments we received on the following sections: §§ 361.5(c)(18), 361.5(c)(24), 361.5(c)(27), 361.5(c)(28), 361.5(c)(29), 361.5(c)(30), 361.5(c)(34), 361.5(c)(40), 361.5(c)(43), 361.5(c)(57), 361.47, 361.52, 361.56, and 361.57. Finally, we generally do not discuss differences between the NPRM and these final regulations that are technical or conforming in nature.

Organizational Changes

Although the regulations maintain subparts A, B, and C of part 361, we make organizational changes to other subparts within this part. First, we incorporate new subparts D, E, and F, where we place the three subparts discussed in a separate, but related, regulatory action (the joint regulations issued by the Departments of Education and Labor implementing jointly administered requirements governing all six core programs of the workforce development system, including the VR program, contained in title I of WIOA) published elsewhere in this issue of the Federal Register. Please see that regulatory action for more information about how these subparts are incorporated into part 361. Second, we remove prior §§ 361.80 through 361.89, since the VR program-specific standards and indicators are no longer applicable. Finally, we eliminate Appendix A to prior part 361—Questions and Responses. The Department intends to issue guidance on various areas covered in the final regulations, including some that had been covered by prior Appendix A, in the near future.

A. Provisions of General Applicability

Section A includes the Analysis of Comments and Changes to the regulations in subparts A and B of part 361 that pertain to the administration of the VR program generally and to the provision of vocational rehabilitation services to individuals with disabilities of any age. The analysis is presented by topical headings relevant to sections of the regulations in the order they appear in part 361 as listed. We discuss some of these same regulations in section B of the Analysis of Comments and Changes as they relate specifically to the transition of students and youth with disabilities from school to post-school activities, including final §§ 361.24, 361.46, 361.48(b), and 361.49.

Topical Headings

Purpose (§ 361.1)

Authorized Activities (§ 361.3)Start Printed Page 55634

Applicable Regulations (§ 361.4)

Training on 2 CFR part 200 Requirements

Third-Party In-Kind Contributions

Applicable Definitions (§ 361.5)

Administrative Cost (§ 361.5(c)(2))

Supervisory Personnel

Travel Costs

Depreciation

Infrastructure Costs for the Workforce Development System and Capital Expenditures

Assessment for Determining Eligibility and Vocational Rehabilitation Needs (§ 361.5(c)(5))

Competitive Integrated Employment (§ 361.5(c)(9))

Competitive Integrated Employment

Subminimum Wage and Sheltered Employment

Public Benefits

Full- and Part-Time Employment

Minimum Wage Rates

Customary Wages

Comparable Training, Skills, and Experience

Self-Employment

Documentation of Competitive Earnings

Subsistence Occupations

Integrated Location—General

Typically Found in the Community

Level of Interaction Among Individuals With and Without Disabilities

Work Unit

Interaction During Performance of Job Duties

Opportunities for Advancement

Construction of a Facility for a Public or Nonprofit Community Rehabilitation Program (§ 361.5(c)(10))

Customized Employment (§ 361.5(c)(11))

Employment Outcome (§ 361.5(c)(15))

Statutory Basis

Informed Choice

Legitimacy of Homemaker Outcomes

Availability of Services

Disproportionate Impact

Resources for Service Provision

Feasibility Studies

Transition Period

Indian; American Indian; Indian American; Indian Tribe (§ 361.5(c)(25))

Informed Choice

Supported Employment Definitions

Transition-Related Definitions

Submission, Approval, and Disapproval of the State Plan (§ 361.10)

Content and Submission of the VR Services Portion of the Unified or Combined State Plan

Time Estimated for Submission

Alignment of Program and Fiscal Years

Other Comments

Requirements for a State Rehabilitation Council (§ 361.17)

Establishment of a State Rehabilitation Council

Additional Members

Terms of Appointment

Coordination With One-Stop Centers

Comprehensive System of Personnel Development (§ 361.18)

Data Report for Comprehensive System of Personnel Development (§ 361.18(a))

Applicability of Educational and Experiential Requirements to Vocational Rehabilitation Counselors (§ 361.18(c)(1))

Applicability of Standards to Other Personnel

De-Professionalization and Diminution of Vocational Rehabilitation Counseling

State Job Classification Minimum Qualifications

Additional or Substitute Qualifications

Interplay Between National or State-Approved Certification or Licensure Standards and Minimal Educational and Experiential Requirements

Succession Planning

Re-Training of Staff Not Meeting Personnel Standards

Standards of Personnel Development—Other Comparable Requirements (§ 361.18(c)(1))

Meaning of “A 21st Century Understanding of the Evolving Labor Force and the Needs of Individuals with Disabilities”

Staff Development (§ 361.18(d))

Training Areas for Staff Development

Public Participation Requirements (§ 361.20)

Public Hearings for Changes in an Order of Selection

Public Meetings of the State Rehabilitation Council

Substantive and Administrative Changes

Public Comment Through Electronic Means

Requirements Related to the Statewide Workforce Development System (§ 361.23)

Cooperation and Coordination With Other Entities (§ 361.24)

General

Cooperation and Collaboration With Other Agencies and Entities

Non-Educational Agencies

Federal Agreements

Guidance on the Braiding of Funds

Requirements for Training

Notification of the Client Assistance Program

Requirements for Third-Party Cooperative Arrangements (§ 361.28)

In-Kind Contributions

Students Who Are Eligible or Potentially Eligible for Services

Statewide Assessment; Annual Estimates; Annual State Goals and Priorities; Strategies; and Reports of Progress (§ 361.29)

Comprehensive Statewide Needs Assessment

Annual Estimates and Reports of Progress

Provision of Training and Services for Employers (§ 361.32)

Innovation and Expansion Activities (§ 361.35)

Resource Plans for Statewide Independent Living Councils

Innovative Approaches With Components of the Workforce Development System

Ability To Serve All Eligible Individuals; Order of Selection for Services (§ 361.36)

Individuals Who Require Specific Services and Equipment To Maintain Employment

Information and Referral

Monitoring by the State Rehabilitation Council

Order of Selection Criteria

Prohibited Factors

Pre-Employment Transition Services

Information and Referral Programs (§ 361.37)

Benefits Planning

Referral Options

Follow-Up

Independent Living Services

Protection, Use, and Release of Personal Information (§ 361.38)

Reports; Evaluation Standards and Performance Indicators (§ 361.40)

Pre-Employment Transition Services

Standards and Indicators

Program Year

Performance Accountability Regulations

Cumulative Caseload Report (RSA-113)

States With Two VR Agencies

Reporting Burden

RSA-911 Case Service Report

Assessment for Determining Eligibility and Priority for Services (§ 361.42)

Advancing in Employment and Other Eligibility Criteria

Substantial Impediment to Employment

Prohibited Factors

Residency

Compliance Threshold

Entities Holding Special Wage Certificates

Extended Evaluation and Trial Work Experiences

Development of the Individualized Plan for Employment (§ 361.45)

Time Frame for Developing the Individualized Plan for Employment

Options for Developing the Individualized Plan for Employment

Data for Preparing the Individualized Plan for Employment

Content of the Individualized Plan for Employment (§ 361.46)

Scope of Vocational Rehabilitation Services for Individuals With Disabilities

Services for Individuals Who Have Applied or Been Determined Eligible for Vocational Rehabilitation Services (§ 361.48(b))

Advanced Training

Other Services

Scope of Vocational Rehabilitation Services for Groups of Individuals With Disabilities (§ 361.49(a))

Establishment, Development, or Improvement of Community Rehabilitation Programs

Technical Assistance to Businesses

Establishment, Development, or Improvement of Assistive Technology Programs

Advanced Training

Comparable Services and Benefits (§ 361.53)

Accommodations and Auxiliary Aids and Services

Pre-Employment Transition Services and Personally Prescribed Devices

Interagency Agreements

Semi-Annual and Annual Review of Individuals in Extended Employment and Other Employment Under Special Certificate Provisions of the Fair Labor Standards Act (§ 361.55)

Effective Date

Who is subject to the requirements?

Documentation

Costs of Conducting the Reviews

Informed Choice

Retroactive Reviews

Cross-Reference With 34 CFR 397.40

Individuals With a Record of Service

Start Printed Page 55635

Purpose (§ 361.1)

Comments: A few commenters supported the replacement of the term “gainful employment” with the term “competitive integrated employment” and the inclusion of the term “economic self-sufficiency” in proposed § 361.1. In addition, many commenters sought clarification of the term “economic self-sufficiency” as used in this regulation and requested that we define it in § 361.5(c). Of these commenters, most suggested that the term “economic self-sufficiency” may deter individuals with disabilities who are receiving public benefits from applying for vocational rehabilitation services. Additionally, some commenters suggested that DSUs may use economic self-sufficiency to determine that individuals with disabilities who wish to maintain their public benefits are ineligible for vocational rehabilitation services. Some commenters indicated that individuals with intellectual or developmental disabilities may never achieve earnings, through competitive integrated employment, sufficient to cease receiving public benefits. Two commenters viewed “economic self-sufficiency” as a criterion within both the definitions of “employment outcome” and “competitive integrated employment,” and requested that we identify criteria that DSUs may use to determine when individuals achieve this level of employment and are rehabilitated enough to no longer need vocational rehabilitation services.

Discussion: We appreciate comments supporting inclusion of the terms “competitive integrated employment” and “economic self-sufficiency” in final § 361.1. We agree that inclusion of these terms in the regulation reflects the spirit of the Act in general, and is consistent with specific amendments to section 100(a) of the Act made by WIOA. While we understand commenters' requests for a definition of “economic self-sufficiency,” the Act, as amended by WIOA, does not define the term. We believe that the use of the term in final § 361.1(b) is consistent with its common understanding and refers to the situation in which an individual can support him- or herself financially with minimal or no reliance on public benefits or assistance from other persons. Therefore, we do not define the term “economic self-sufficiency.” In addition, use of the term “economic self-sufficiency” in section 100(a)(2)(B) of the Act, as amended by WIOA, and in final § 361.1(b) does not require the individual to achieve economic self-sufficiency—either as a prerequisite for receipt of services or as an outcome resulting from vocational rehabilitation services provided. Rather, the term as used in the Act, as amended by WIOA, and in these final regulations merely requires that the vocational rehabilitation services provided to an individual be consistent with the individual's strengths, resources, priorities, concerns, abilities, capabilities, interests, informed choice, and economic self-sufficiency. Vocational rehabilitation services ideally should assist an individual to achieve a competitive integrated employment outcome that will enable the individual to become economically self-sufficient, but there is no requirement in either the Act or these final regulations that an individual achieve economic self-sufficiency or a specific level of financial independence.

Section 102(a) of the Act, as amended by WIOA, does not include economic self-sufficiency among the eligibility criteria. Inclusion of the term in final § 361.1(b) does not alter the eligibility criteria for the program in final § 361.42(a)(1). We encourage DSUs to conduct outreach to individuals with disabilities and service providers to clarify any misperception that the use of this term implies that individuals with disabilities may no longer receive vocational rehabilitation services for the purpose of achieving an employment outcome in competitive integrated employment or supported employment if they wish to maintain their public benefits. We also encourage DSUs to provide vocational counseling and guidance and benefits planning services to these individuals to assist them in better understanding the impact of participation in the VR program and employment on their public benefits.

Economic self-sufficiency is not a component of the definitions of “competitive integrated employment” and “employment outcome” in sections 7(5) and 7(11), respectively, of the Act, as amended by WIOA. We disagree that the implementing regulations for the definitions of these terms in final §§ 361.5(c)(9) and 361.5(c)(15) should be revised to incorporate criteria related to the achievement of economic self-sufficiency as suggested by the commenter. We believe the wages and benefits criteria, especially as contained in the definition for “competitive integrated employment” in final § 361.5(c)(9), are consistent with those set forth in the statutory definition in section 7(5) of the Act.

Changes: None.

Authorized Activities (§ 361.3)

Comments: None.

Discussion: Upon further review of § 361.3, we have determined a change is needed to clarify that the use of VR program funds to pay for the infrastructure costs of the one-stop delivery system established by title I of WIOA is an authorized activity under the VR program. Section 121(h) of title I of WIOA requires one-stop partners, including the VR program, to pay a proportional share of the one-stop system's infrastructure costs. These costs satisfy the definition of “administrative costs” in final § 361.5(c)(2) because such expenditures constitute operating and maintenance costs, which are permissible administrative costs under the VR program. We have revised final § 361.3(b) to specify that one-stop infrastructure costs are considered administrative costs under the VR services portion of the Unified or Combined State Plan and, therefore, are authorized activities under the VR program. In making this change, we ensure consistency with final § 361.5(c)(2)(viii), as well as jointly administered requirements governing the one-stop delivery system contained in joint regulations published elsewhere in this issue of the Federal Register.

Changes: We have revised final § 361.3(b) to specify that the use of VR program funds to pay for one-stop system infrastructure costs is an authorized activity of the program as an administrative cost.

Applicable Regulations (§ 361.4)

Training on 2 CFR Part 200 Requirements

Comments: Two commenters requested the Department provide training on 2 CFR part 200 requirements, focusing on definitions and general applicability.

Discussion: The Department has conducted a number of Webinars and developed technical assistance materials to assist grantees in implementing 2 CFR part 200 requirements and will continue to do so as needed. The Department maintains a technical assistance Web page for grantees regarding the requirements set forth in 2 CFR part 200, which may be accessed at www.ed.gov. The Department will consider future Webinars, as appropriate.

Changes: None.

Third-Party In-Kind Contributions

Comments: None.

Discussion: As specified under final § 361.60(b)(2), third-party in-kind contributions may not be used to meet the non-Federal share for match Start Printed Page 55636purposes under the VR program. This prohibition against the use of third-party in-kind contributions under the VR program has been in place since 1997. Upon further Departmental review regarding this long-standing prohibition, we have determined it necessary to revise final § 361.4(d). In so doing, the Secretary clarifies that 2 CFR 200.306(b), which allows third party in-kind contributions to be used as part of a non-Federal entity's cost sharing or matching when such contributions meet certain criteria, does not apply to the VR program. The Secretary believes this technical change will eliminate any confusion expressed by commenters in relation to final § 361.60(b)(2).

Changes: We have amended the applicable regulations in final § 361.4(d) to specify that 2 CFR 200.306(b), as it pertains to the acceptance of third-party in-kind contributions, is not applicable to the VR program.

Applicable Definitions (§ 361.5)

Administrative Cost (§ 361.5(c)(2))

Supervisory Personnel

Comments: One commenter recommended that we consider costs for local level supervisors who do not perform counseling duties, but who directly supervise counselors, to be direct service costs rather than administrative costs.

Discussion: We disagree with the recommendation to consider the costs for local level supervisors who do not perform counseling duties, but who directly supervise counselors, to be direct service costs, rather than “administrative costs.” Final § 361.5(c)(2)(xi) specifies that administrative salaries constitute “administrative costs.” Administrative salaries are those personnel costs paid to individuals who are not providing direct services to VR program applicants and consumers, and may include clerical and managerial salaries. Therefore, we consider costs for supervisors who do not provide direct services to be administrative costs in support of vocational rehabilitation services, rather than costs for the actual provision of such services.

Changes: None.

Travel Costs

Comments: Two commenters indicated that the instructions for completing the Annual Vocational Rehabilitation Program/Cost Report (RSA-2) in Policy Directive (PD) 14-02 requiring DSUs to report staff travel costs as “administrative costs” appear to conflict with proposed § 361.5(c)(2)(xii), which specifically excludes travel costs related to the provision of services from “administrative costs.”

One commenter recommended we clarify that grantees may consider travel costs incurred in the provision of vocational rehabilitation services as a service-related cost, rather than an administrative cost. Specifically, the commenter requested that the final regulations clarify that travel costs incurred in the provision of pre-employment transition services may be paid from the funds reserved for that purpose. This commenter also suggested that the Department update reporting instructions accordingly.

Discussion: We appreciate the commenters' observation that the definition of “administrative costs” in proposed § 361.5(c)(2)(xii) appears to conflict with the instructions for completing the RSA-2 with regard to staff travel costs. The Department will review and update previously issued guidance as necessary to ensure consistency with these final regulations.

We agree that travel costs incurred directly as a result of providing vocational rehabilitation services constitute service-related costs, not “administrative costs” for purposes of the VR program. Therefore, DSUs may pay for travel costs incurred as a direct result of providing pre-employment transition services to students with disabilities, including travel to individualized education program meetings, from the funds reserved for the provision of those services. Travel costs incurred as a result of providing other vocational rehabilitation services to students with disabilities may not be paid from the funds reserved for the provision of pre-employment transition services because such travel would be beyond the scope of section 113 of the Act, as amended by WIOA, and final § 361.48(a). While travel costs incurred as a result of providing other vocational rehabilitation services to students with disabilities who have been determined eligible for vocational rehabilitation services may not be paid from the funds reserved for the provision of pre-employment transition services, they still would be service-related, not administrative, costs. Staff travel costs incurred for other purposes, such as attending regional meetings or trainings, satisfy the definition of “administrative costs” and must be reported as such on the RSA-2. DSUs must have an established system of internal controls sufficient to record and track administrative expenditures associated with authorized activities so they can be distinguished from authorized service-related costs. In this way, DSUs are able to satisfy accounting and reporting requirements set forth in final § 361.12 and Uniform Guidance on financial management in 2 CFR 200.302.

Changes: None.

Depreciation

Comments: One commenter requested that we clarify whether DSUs must classify depreciation for administrative facilities as administrative costs.

Discussion: Final § 361.5(c)(2) provides several examples of administrative costs; however, the examples provided are not exhaustive. DSUs must treat depreciation in accordance with the Uniform Guidance requirements, as set forth in 2 CFR 200.436, and report it accordingly. Therefore, DSUs must report depreciation for facilities used for the administration of the VR program as administrative costs.

Changes: None.

Infrastructure Costs for the Workforce Development System and Capital Expenditures

Comments: None.

Discussion: After further analysis of proposed § 361.5(c)(2), we made a technical change in final § 361.5(c)(2)(viii) to specify that costs to support the infrastructure of the one-stop delivery system established under title I of WIOA are “administrative costs” for purposes of the VR program. Section 121(h) of WIOA requires one-stop partners, including the VR program, to pay a proportional share of the one-stop system's infrastructure costs. We believe these costs satisfy the definition of “administrative costs” in final § 361.5(c)(2)(viii) because these expenditures constitute operational and maintenance costs. We have revised final § 361.5(c)(2)(viii) to specify operational and maintenance costs, for purposes of the definition of “administrative costs” under the VR program, include one-stop system infrastructure costs. This technical change ensures consistency with final § 361.3(b) and the jointly administered requirements governing the one-stop system, as set forth in the joint regulations published elsewhere in this issue of the Federal Register.

Additionally, we made a change to final § 361.5(c)(2)(viii) to conform to the Uniform Guidance in 2 CFR part 200. In accordance with 2 CFR 200.439(b)(3), capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost, except with the prior written approval of the Department. Therefore, we have revised final § 361.5(c)(2)(viii) to delete a clause that had excluded capital Start Printed Page 55637expenditures from the definition of “administrative costs” for purposes of the VR program. Pursuant to this change, DSUs must treat capital expenditures as “administrative costs” for purposes of the VR program. This technical change enables grantees to report these costs more accurately as an administrative cost on the RSA-2 VR Program Cost Report.

Changes: We have revised final § 361.5(c)(2)(viii) to specify that the definition of “administrative costs” includes those costs associated with operating and maintaining the infrastructure of the one-stop system.

In addition, we have deleted the reference to “not including capital expenditures as defined in 2 CFR 200.13” from final § 361.5(c)(2)(viii).

Assessment for Determining Eligibility and Vocational Rehabilitation Needs (§ 361.5(c)(5))

Comments: A few commenters supported the definition of “assessment for determining eligibility and vocational rehabilitation needs” in proposed § 361.5(c)(5). Some commenters disagreed with the requirement in the definition that, if additional data are needed to determine the employment outcome and the vocational rehabilitation services to be included in the individualized plan for employment, the DSU can conduct a comprehensive assessment that, in part, relies to the maximum extent possible on information obtained from experiences in integrated employment and other settings in the community. Another commenter requested clarification as to whether the use of information obtained from prior experiences within integrated employment settings or other integrated community settings could include internships or other unpaid work experiences.

Discussion: We appreciate the support for proposed § 361.5(c)(5), as well as the concerns and requests for clarification. Section 7(2)(B)(v) of the Act, as amended by WIOA, and final § 361.5(c)(5)(ii)(E) allow a DSU, when conducting the comprehensive assessment to determine the vocational rehabilitation needs and employment outcome for inclusion in the individualized plan for employment, to rely, in part, on the applicant's participation in integrated employment settings to the maximum extent possible. However, neither the Act nor the final regulations require that the individual be paid during these experiences. Therefore, section 7(2) of the Act and final § 361.5(c)(5)(ii) do not prohibit DSUs from using unpaid internships or work experiences during the assessment process. We received other comments concerning a perceived conflict between this definition and proposed § 361.42(c)(2), which prohibits a DSU from considering an individual's work history when determining an applicant's eligibility for vocational rehabilitation services, and contracting with community rehabilitation programs that hold subminimum wage certificates issued by the Department of Labor under section 14(c) of the FLSA when conducting assessments. We address these comments in the Analysis of Comments and Changes of the Assessment for Determining Eligibility and Priority for Services section.

Changes: None.

Competitive Integrated Employment (§ 361.5(c)(9))

Competitive Integrated Employment

The overarching principle of the Act, as amended by WIOA, that individuals with disabilities are capable of achieving full integration into all aspects of life, including employment, is most evident in the definition of “competitive integrated employment” in section 7(5) of the Act and the interweaving of the term throughout the many provisions of the statute. Because of its central importance to the purpose of the VR program, we received extensive comments on the definition in proposed § 361.5(c)(9), expressing both strong support for, and opposition to, the proposed definition. The vast majority of public comment on the definition focused on the criteria that an employment location must satisfy if it is to be considered integrated. Some commenters expressed support for the definition in general, and the criteria for an integrated location specifically, for several reasons, including the definition's specificity that the commenters believe will ensure individuals with disabilities are working in integrated employment settings, and the impact the definition can have in curtailing the low expectations for individuals with disabilities who are relegated to segregated employment with little opportunity for advancement. However, many commenters opposed the definition, expressing concern that it would restrict or eliminate subminimum wage and sheltered employment for individuals with disabilities, or limit the ability of these individuals to choose among these options. We appreciate the support for the definition, and discuss the detailed comments in opposition to, and requests for clarification of, the proposed definition under the topical headings that follow.

Subminimum Wage and Sheltered Employment

Comments: Many commenters urged us to protect or not to eliminate the payment of subminimum wages to individuals with disabilities and sheltered employment. One of these commenters stated that not all individuals can be paid minimum wages, and that the employment must be profitable for both parties. Similarly, another commenter stated that if entities holding subminimum wage certificates were forced to pay less productive individuals with disabilities minimum wages, they would lose business to companies overseas. Likewise, some commenters stated that sheltered employment is needed to protect individuals with intellectual disabilities and other significant disabilities from abuse. A few commenters expressed their concern that the integrated location criteria of the definition devalue the employment of individuals with disabilities who cannot work in these settings.

Many commenters opposed the definition because it would limit an individual's choice of subminimum wage and sheltered employment options. Some of these commenters asked that we create an exception from the criteria for individuals who choose to work in a segregated or sheltered setting if all other criteria regarding competitive earnings and opportunities for advancement are satisfied.

Discussion: We acknowledge that many commenters on part 361 in general, and the definition of “competitive integrated employment” specifically, are concerned that these final regulations will eliminate or restrict the ability of individuals with disabilities, particularly those with the most significant disabilities, to be paid subminimum wages by entities holding certificates issued by the Department of Labor under section 14(c) of the FLSA, as well as sheltered employment. Although we recognize the concerns expressed by these commenters, we emphasize that the definition of “competitive integrated employment” and its use throughout final part 361 are intended to ensure that all individuals with disabilities served through the VR program are provided every opportunity to achieve employment with earnings comparable to those paid to individuals without disabilities in a setting that allows them to interact with individuals who do not have disabilities. Nonetheless, nothing in title I of the Act, as amended by WIOA, or the Start Printed Page 55638regulations in final part 361 affects the FLSA in any manner. Later in this Analysis of Comments and Changes, we address limitations on the use of subminimum wage in section 511 of the Act and final 34 CFR part 397. In addition, the definition “competitive integrated employment” in final § 361.5(c)(9) does not prohibit or eliminate sheltered employment. As explained in final regulations published on January 21, 2001, we agree that extended employment programs have traditionally served as a safety net for individuals with significant disabilities who cannot perform work in an integrated setting in the community or who choose to work only among their disabled peers (66 FR 7250). The Secretary does not devalue the dignity or the worth of extended employment programs or the individuals who work in those settings. Rather, the definition of “competitive integrated employment” reflects the heightened emphasis throughout the Act, as amended by WIOA, that individuals with disabilities, including those with the most significant disabilities, can achieve employment in the community and economic self-sufficiency if provided appropriate services and supports. Because DSUs have been unable to assist individuals with disabilities to obtain sheltered employment through the VR program since October 2001, the vast majority of individuals have accessed sheltered employment through other sources or on their own initiative. Therefore, the Secretary believes the definition in final § 361.5(c)(9) will not affect the availability of sheltered employment for individuals who choose this form of employment, or for whom it is a legitimate and necessary option.

Furthermore, while the Act, as amended by WIOA, places a premium on the ability of individuals with disabilities to exercise informed choice throughout the vocational rehabilitation process, we do not agree that the final regulations in part 361 generally and the definition specifically are inconsistent with that emphasis. In fact, an individual with a disability may pursue any form of employment he or she chooses. However, if the individual wishes to receive vocational rehabilitation services, he or she must intend to achieve an “employment outcome,” which is defined in final § 361.5(c)(15) for purposes of the VR program as employment in competitive integrated employment or supported employment. If the individual chooses to pursue work that does not satisfy the definition of “employment outcome” for purposes of the VR program, such as sheltered employment, the individual must seek services from another agency or provider. In such circumstances, these final regulations require the DSU to refer that individual to local extended employment providers or other Federal, State, or local programs (e.g., community rehabilitation programs, State Use programs, and centers for independent living) that can meet the individual's needs. The referral requirements in final § 361.37 also ensure that individuals receive sufficient information concerning the scope of the VR program and opportunities for individuals with disabilities to pursue competitive integrated employment. This information enables individuals to make a fully informed choice regarding whether to pursue competitive integrated employment through the VR program or subminimum wage and extended employment through other sources.

The Secretary believes these final regulations ensure that the VR program promotes to the maximum extent possible opportunities for individuals with disabilities, particularly those with significant disabilities, to pursue competitive integrated employment options. Moreover, final § 361.52 requires each DSU to preserve individual choice in the manner in which the Act intends for individuals who choose to pursue employment outcomes within the scope of the VR program.

Finally, section 7(5) of the Act, as amended by WIOA, does not permit an exception to the definition's requirements for individuals who choose subminimum wage and or sheltered employment. In fact, such an exception would be inconsistent with the plain meaning of the criteria contained in the statutory definition in section 7(5) of the Act. Therefore, we lack the statutory authority to create such an exception in final § 361.5(c)(9).

Changes: None.

Public Benefits

Comments: One commenter requested that we clarify the effect of the definition of “competitive integrated employment” on the eligibility of individuals with disabilities for Social Security benefits. One commenter expressed concern that the criteria would cause individuals to lose needed benefits provided through Medicaid and other sources.

Discussion: We recognize that some individuals are reluctant to pursue employment through the VR program due to their perceptions of the negative impact employment may have on the public benefits, including Medicaid and other sources, on which they rely for financial and medical support. To enable individuals with disabilities to better understand the effects of employment on Social Security and other benefits and make well-informed decisions about the employment goals that best suit their needs, section 102(b)(2) of the Act, as amended by WIOA, and final § 361.45(c)(2) require DSUs to provide benefits planning information, including information about work incentives provided through the Social Security Administration (SSA), to these individuals during the process for developing the individualized plan for employment. For further information, see the Development of the Individualized Plan for Employment section later in this Analysis of Comments and Changes.

Changes: None.

Full- and Part-Time Employment

Comments: A few commenters requested that we define or clarify the terms “full-time” and “part-time” employment as they are used in the definition of “competitive integrated employment.” These commenters asked whether there is a minimum number of hours that an individual must work for the employment to satisfy the requirements of the definition, as well as the definition of an “employment outcome.” A few commenters expressed concern that on-call or temporary employment is not within the scope of the definition because it is not considered full- or part-time scheduled employment. They stated that many entry-level individuals are employed in on-call positions and that permitting this form of employment could enable individuals with intellectual disabilities to maintain employment.

Discussion: The reference to full- and part-time work in the definitions for the terms “employment outcome” and “competitive integrated employment,” for purposes of the VR program, is not new. The definition for “employment outcome” has remained consistent since the 1992 Amendments to the Act and the 1997 VR program regulations (62 FR 6334 (Feb. 11, 1997)). Although “competitive integrated employment” is a new term in the Act, as amended by WIOA, and these final regulations, the term and its definition are consistent with that for “competitive employment” in prior § 361.5(b)(11), which dates back to the 1997 VR program regulations. Because these definitions have existed for approximately 20 years without substantial change, we do not believe it necessary to define “full-time” or “part-time” in final part 361. “Full-time” and Start Printed Page 55639“part-time” have their common meanings and may vary across sectors of the economy. Generally, individuals are considered to be employed full-time if they work 40 hours per week. However, it is not uncommon for full-time employees to work fewer hours, such as 35 hours per week, depending on the terms of employment established by the employer. “Part-time” employment is employment for any number of hours less than that of full-time employment for the particular work performed. Nowhere in the statutory definitions of “competitive integrated employment” or “employment outcome,” or any other provision of the Act, as amended by WIOA, is a minimum number of hours that an individual must work for the employment to be considered full- or part-time specified, and we decline to do so in these final regulations, relying on the terms' common understanding. Finally, we clarify in this discussion that the definitions of “competitive integrated employment” and “employment outcome,” as set forth in the Act and these final regulations, do not require that the individual's employment be regularly scheduled, as suggested by the commenter. Thus, DSUs may assist individuals to obtain temporary or on-call employment so long as all the criteria of the definitions are satisfied.

Changes: None.

Minimum Wage Rates

Comments: Some commenters expressed strong support for the competitive earnings criteria in proposed § 361.5(c)(9)(i). We also received comments recommending changes to the criteria or requesting clarification. One commenter stated that the requirement that the individual's wages equal or exceed the higher of the Federal, or applicable State or local minimum wage rates adds unnecessary complexity to the vocational rehabilitation process. This commenter recommended that we apply a single standard of the Federal minimum wage rate to all employment outcomes achieved through the VR program, or that we apply the minimum wage rate in effect in the place of the individual's employment, and not the individual's place of residence.

Discussion: We appreciate the strong support for the competitive earnings criteria and respond here to the requests for clarification. We disagree with the request to avoid complexity by using only the Federal minimum wage as the measure of competitive earnings. Section 7(5)(A)(i)(I)(aa) of the Act, as amended by WIOA, requires that the individual's earnings equal or exceed the Federal, State, or applicable local minimum wage rate, whichever is higher, for the employment to satisfy the definition of “competitive integrated employment.” Final § 361.5(c)(9)(i)(A) mirrors the statutory definition in this respect. Given the specific statutory requirement, we lack the statutory authority to restrict this requirement in the final regulation. In addition, the definition focuses on the wages paid by the employer, who is subject to the minimum wage laws applicable to the place of employment. Consequently, we agree with the commenter that the determination of whether the individual's earnings satisfy the definition's criteria should be based on the minimum wage rate applicable to the individual's place of employment, and not his or her place of residence.

Changes: We have revised final § 361.5(c)(9)(i)(A) to clarify that the applicable State and local minimum wage laws are those that apply to the place of employment.

Customary Wages

Comments: One commenter recommended that we revise the definition to emphasize that the intent of the law and the regulations is to ensure that wages and benefits paid to individuals with disabilities are comparable to the prevailing wage and benefits of individuals without disabilities.

Discussion: Section 7(5)(A)(i)(I)(bb) of the Act, as amended by WIOA, and final § 361.5(c)(9)(i)(B) require that the individual with the disability be compensated at a rate comparable to the customary rate paid by the employer for the same or similar work performed by individuals without disabilities for the employment to be considered competitive integrated employment. The Secretary emphasizes that this provision in both the Act and the final regulations mirrors the definition of “competitive employment” in prior § 361.5(b)(11)(ii) (see 66 FR 4379 (Jan. 17, 2001)), which formed the basis for the definition in the Act. We also note that the commenter's recommendation would not limit the criterion to the wages paid by the employer, as do the statutory and final regulatory definition, but would appear to extend the criterion to the prevailing wages paid to individuals without disabilities in similar positions generally. For these reasons the recommendation is not consistent with the criterion in the statutory definition and, thus, we do not have the authority to expand the regulatory definition in final § 361.5(c)(9)(i)(B) as the commenter suggests.

Changes: None.

Comparable Training, Skills, and Experience

Comments: Two commenters requested that we clarify the meaning of “comparable training, skills, and experience” as used in the definition, and how this concept could be quantified.

Discussion: Section 7(5)(A)(i)(I)(bb) of the Act, as amended by WIOA, and final § 361.5(c)(9)(i)(B) require the DSU to take into account the training, experience, and level of skills possessed by employees without disabilities in similar positions when determining whether the earnings of the individual with a disability are comparable. We do not believe that it is possible to quantify this comparison. Instead, the determination is based on the vocational rehabilitation counselor's knowledge of the training, skills, and experience needed to perform the job generally and required by the employer specifically. In this way, the DSU can ensure that the individual with the disability is compensated in a manner comparable to that of employees without disabilities in all critical respects, and is not paid at a lower rate simply on the basis of his or her disability.

Changes: None.

Self-Employment

Comments: One commenter noted the proposed definition recognizes that individuals, with or without disabilities, in self-employment may not receive an income from the business equal to or exceeding applicable minimum wage rates, particularly in the early stages of operation. The commenter requested clarification regarding the reason the definition proscribes an individual with a disability in self-employment from what other successful entrepreneurs have the option to practice. Another commenter asked if individuals who achieve self-employment are included in the calculations of the performance accountability measures assessing employment in the second and fourth quarters after exit from the VR program, since their employment and wages are not captured in Unemployment Insurance wage systems.

Discussion: We want to clarify that section 7(5)(A)(i)(II) of the Act, as amended by WIOA, and final § 361.5(c)(9)(i)(C) do not prevent, as the commenter indicates, an individual with a disability who is self-employed from receiving earnings comparable to those achieved by individuals without disabilities in similar occupations. As explained in the preamble to the NPRM, the statutory and regulatory definitions Start Printed Page 55640recognize that individuals with disabilities, as well as individuals without disabilities, may experience difficulty in generating sufficient income from their self-employment ventures, that will enable them to achieve earnings equal to or exceeding the applicable minimum wage rate, especially in the early stages of the business operations. Thus, final § 361.5(c)(9)(i)(C) provides that a self-employed individual with a disability in the start-up phase of a business venture who is making less than the applicable minimum wage can meet the definition of “competitive integrated employment.”

Furthermore, individuals who receive services through the VR program to assist with the achievement of self-employment outcomes are considered “participants” as that term is defined under the joint final regulations implementing the jointly administered performance accountability system requirements of section 116 of title I of WIOA, published elsewhere in this issue of the Federal Register, and must be taken into account when calculating a DSU's performance on those measures. Since the employment status and earnings of self-employed individuals are not captured through the unemployment insurance wage system, a DSU may use supplemental wage information to obtain the data necessary for the calculation of its performance. For further information concerning the definition of “participant” for purposes of the performance accountability measures under section 116 of WIOA and the data needed to calculate these measures, particularly data related to supplemental information when quarterly wage records are not available, see the analysis of comments on the joint performance final regulations published elsewhere in this issue of the Federal Register.

Changes: None.

Documentation of Competitive Earnings

Comments: One commenter asked what documentation a DSU is required to use when verifying the criteria for competitive earnings, including that the wages are equal to, or exceed, the applicable wage rate for the locality; that the individual's wages and benefits are comparable to those earned by individuals without disabilities in similar positions and who possess the same level of training, skills, and experience; that the individual has the same opportunities for advancement as do persons without disabilities in similar positions; and the income level of an individual who has achieved self-employment.

Discussion: Final § 361.47(a)(9) requires the DSU to maintain a record of services for each individual served through the VR program that includes documentation verifying if the individual has achieved competitive integrated employment, including whether the individual has obtained employment with competitive earnings. Final § 361.47(b) does not prescribe the necessary documentation, but directs the DSU, in consultation with the State Rehabilitation Council, to determine the type of documentation needed to meet the requirements of § 361.47(a). However, examples of documentation that a DSU may use include, as appropriate for the type of employment, unemployment insurance wage records, tax returns, earnings statements from the employer, and self-reported information.

Changes: None.

Subsistence Occupations

Comments: Some commenters responded to the statement in the NPRM's preamble indicating that we interpret subsistence employment as a form of self-employment common to cultures of many American Indian tribes, or to the definition of “subsistence” under 34 CFR part 371 governing the American Indian Vocational Rehabilitation Services (AIVRS) program (see NPRM, Workforce Innovation and Opportunity Act, Miscellaneous Program Changes, 80 FR 20988, 20994-20998 (April 16, 2015)). Several commenters asked whether the interpretation of the self-employment criteria within the definition of “competitive integrated employment” in proposed § 361.5(c)(9) that includes subsistence activities is limited to individuals served through the AIVRS program under 34 CFR part 371 or to American Indians and Alaska Natives. Of these, one commenter noted that subsistence activities are not only culturally relevant for American Indians and Alaska Natives, but that they are also vital to many individuals who live in rural areas with limited competitive employment options. One commenter requested that we clarify the meaning of “culturally appropriate” as used in the definition of “subsistence” and the preamble to the NPRM by providing examples. Another commenter asked what limits would be placed on hobbies as self-employment outcomes if subsistence outcomes were available to all individuals served through the VR program. In addition, several commenters requested that we revise the definition of “employment outcome” for purposes of the VR program to include within its scope subsistence activities.

Discussion: In the NPRM covering amendments made by WIOA to the miscellaneous programs authorized by the Act, the Secretary proposed a definition of “subsistence” in 34 CFR 371.6 for purposes of the AIVRS program (80 FR 20988, 20995). Under that definition, “subsistence” means a form of self-employment in which individuals use culturally relevant or traditional methods to produce goods or services for household consumption or non-commercial barter and trade that constitute an important basis for the individual's livelihood. To ensure consistency in the interpretation of the definition of “competitive integrated employment” for the purposes of the VR program and the AIVRS program, and in light of the definition of “subsistence” in final 34 CFR 371.6, the Secretary stated in the preamble to the NPRM to the VR regulations that the Department interprets subsistence employment as a form of self-employment common to cultures of many American Indian tribes. The Secretary believes that consistency in interpretation and implementation of the regulations governing the VR and AIVRS programs is essential given the large number of American Indians and Alaska Natives with disabilities who are eligible for services from both programs, some of whom may be served by the programs sequentially or even simultaneously.

The Secretary does not intend the statement in the NPRM covering the proposed regulations in part 361, or the inclusion of the definition of “subsistence” only in 34 CFR 371.6, to limit the provision of services designed to assist individuals to achieve subsistence occupations to those served through the AIVRS program. DSUs may assist American Indians and Alaska Natives served through the VR program to achieve subsistence occupations as a form of self-employment under the limited circumstances set forth in the definition in 34 CFR 371.6, which the Department applies in the same manner to the VR program.

While the Secretary believes that, as the statement in the NPRM indicates, subsistence occupations are most culturally relevant to American Indian and Alaska Native tribes, the Secretary recognizes that they may also be culturally relevant to other small groups of individuals who may traditionally engage in these occupations, such as those in the outlying areas. Thus, DSUs may find it appropriate to assist individuals from cultures other than American Indian and Alaska Native tribes to achieve self-employment in Start Printed Page 55641subsistence occupations that meet the definition of 34 CFR 371.6. However, because the definition of “subsistence” in 34 CFR 371.6 requires that the subsistence occupation be culturally relevant to the individual, the Secretary declines to extend the applicability of subsistence occupations to other individuals with disabilities served through the VR and AIVRS programs solely on the basis of their location in rural areas.

Examples of subsistence occupations that are culturally relevant to American Indians or Alaska Natives include the exchange of fish caught, or grain raised, by the individual with the disability for other goods produced by other members of the tribe that are needed by the individual to live and maintain his or her home. Given, however, the large number of American Indian tribes, including Alaska Native villages and regional corporations, and their widely varying cultural practices, any list of further examples of culturally relevant practices would also be incomplete and may exclude cultural practices that are unique to some tribes. Since the definition of “subsistence” in final 34 CFR 371.6 requires that the activity constitute an important basis of the individual's livelihood, DSUs cannot provide vocational rehabilitation services to individuals to enable them to engage in mere hobbies that do not serve this same purpose.

Finally, the definition of “employment outcome” in final § 361.5(c)(15) encompasses all forms of competitive integrated employment, including self-employment. Because we consider subsistence occupations to be a form of self-employment, these occupations are already within the scope of the definition of “employment outcome” and it is not necessary to revise the definition to include a specific reference to subsistence.

Changes: None.

Integrated Location—General

Comments: As stated in the introduction to this section, the majority of commenters who commented on the definition of “competitive integrated employment” focused on the integrated location component of the definition in proposed § 361.5(c)(9)(ii), which requires that the individual perform work in a location that meets two distinct criteria. The location must be a setting: (1) Typically found in the community; and (2) where the employee with a disability interacts for the purpose of performing the duties of the position with other employees within the particular work unit and the entire work site, and, as appropriate to the work performed, other persons (e.g., customers and vendors), who are not individuals with disabilities (not including supervisory personnel or individuals who are providing services to the employee) to the same extent that employees who are not individuals with disabilities and who are in comparable positions interact with these persons.

Of the commenters who strongly supported the criteria, several requested that we make additional changes to this particular component of the definition by: (1) Adding language that the criteria should not be used to exclude individuals from the VR program due to concerns about their ability to meet the standard, and emphasizing that individuals with disabilities, including those with the most significant disabilities, are capable of achieving high quality competitive integrated employment when provided the necessary skills and supports; (2) specifically excluding from the scope of the definition employment in businesses owned by community rehabilitation providers, group or enclave settings, affirmative industries, social enterprises, or any other form of non-traditional work unit; and (3) changing the term “competitive integrated employment” to “competitive integrated individualized employment” to be clear that employment through the VR program is individualized.

Many of the commenters who opposed the integrated location criteria in proposed § 361.5(c)(9)(ii) requested that we replace them with those in the statutory definition because they believe that: (1) Some of the proposed criteria are not mandated by WIOA; (2) some of the proposed criteria are too strict and would result in the loss of employment opportunities that pay good wages and benefits; and (3) the statutory language would maintain work options and choice for consumers.

Some commenters inquired about the impact of the definition on the employment, by community rehabilitation programs, of individuals with disabilities, particularly those who are blind and visually impaired, in managerial and other positions. These commenters stated that employment in these positions was in an integrated location under prior guidance issued by the Department, specifically technical assistance circular 06-01 entitled “Factors State Vocational Rehabilitation Agencies Should Consider When Determining Whether a Job Position Within a Community Rehabilitation Program is Deemed to be in an Integrated Setting for Purposes of the Vocational Rehabilitation Program” and dated November 21, 2005. One commenter requested that we clarify whether the employment of individuals with disabilities in call centers operated by community rehabilitation providers occurs in an integrated location.

Another commenter requested that we clarify the impact of the criteria on employment in the business enterprise (vending) program for individuals who are blind under the Randolph-Sheppard Act, as well as State industries programs for the blind.

Discussion: We appreciate the strong support for § 361.5(c)(9)(ii). We also recognize those comments opposing, and requesting clarification of, the criteria. Before addressing the specific comments, the Secretary believes, as stated in the NPRM, that the definition of “competitive integrated employment” in section 7(5) of the Act, as amended by WIOA, for the most part incorporates the definition of “integrated setting” in prior § 361.5(b)(33)(ii). Therefore, the substance of the definitions of “competitive integrated employment” in final § 361.5(c)(9)(ii) and “integrated setting” in final § 361.5(c)(32)(ii), for purposes of the VR program, with respect to the integrated nature of the employment location is familiar to DSUs and does not diverge from prior regulations, long-standing Department policy, practice, and the heightened emphasis on competitive integrated employment throughout the Act, as amended by WIOA.

The Secretary believes that final § 361.5(c)(9)(ii) and the explanation in the following paragraphs provide sufficient guidance to enable DSUs to determine whether a particular work location satisfies the definition of “competitive integrated employment.” The Secretary does not believe it necessary to revise the definition by adding language emphasizing that individuals with disabilities, including those with the most significant disabilities, are capable of achieving high quality competitive integrated employment when provided the necessary services and supports. This principle is clearly expressed in final § 361.1 describing the purpose of the VR program, thereby forming the foundation for all provisions of final part 361, including the definition of “competitive integrated employment.” Therefore, there is no need to restate the principle in the definition.

We do not believe that it is possible to identify all types of non-integrated employment settings in the definition, as the specific exclusion of one type of non-integrated employment setting from the definition could result in a misperception that settings not mentioned are within the scope of the Start Printed Page 55642definition. Instead, we explain in the following paragraphs the application of the integrated location criteria to these types of work settings. When the criteria are properly applied by DSUs, group and enclave employment settings operated by businesses formed for the purpose of employing individuals with disabilities will not satisfy the definition of “competitive integrated employment.” Therefore, the Secretary disagrees with the recommendation to add language to the definition expressly excluding from the scope of the definition employment in businesses owned by community rehabilitation providers, group and enclave settings, affirmative industries, social enterprises, and other forms of non-traditional work settings.

In addition, we disagree with the recommendation to change the term “competitive integrated employment” to “competitive integrated individualized employment.” Section 7(5) of the Act, as amended by WIOA, defines “competitive integrated employment,” and that definition forms the basis for the definition in final § 361.5(c)(9). Moreover, the many provisions of the Act and the final regulations in final part 361, including those governing the selection of an employment outcome, the vocational rehabilitation services provided, the exercise of informed choice, and the closure of an individual's service record, underscore the individualized nature of the VR program, thereby making it unnecessary to add the word “individualized” to the term “competitive integrated employment” in these final regulations.

Furthermore, the Secretary disagrees with the commenters' recommendation that we replace the regulatory criteria in proposed § 361.5(c)(9)(ii) with the statutory criteria, verbatim, in section 7(5)(B) of the Act, as amended by WIOA. As stated in the NPRM, the integrated setting criteria in proposed § 361.5(c)(9)(ii), although not verbatim, are nevertheless consistent with the statutory definition in section 7(5)(B) of the Act, as amended by WIOA, with respect to the integrated nature of the employment setting, and, in turn, are consistent with the definition of “integrated setting” in prior § 361.5(b)(33)(ii). Also in light of the consistency of section 7(5)(B) of the Act with the prior regulatory definition of “integrated setting,” as well as the Department's long-standing interpretation of that definition, the Secretary does not believe that the criteria in the statutory definition of “competitive integrated employment” would permit within its scope work options that would not have satisfied the criteria in prior § 361.5(b)(32)(ii). There is no indication in the Act, as amended by WIOA, or the limited legislative history, that Congress intended to narrow the scope of the integrated setting criterion of the definition of “competitive integrated employment.” Therefore, the Secretary believes the definition of “competitive integrated employment” in final § 361.5(c)(9)(ii), while not verbatim, is nonetheless consistent with the Act, prior regulations, and long-standing Department policy. This means employment that would have satisfied the definition of “integrated settings” in prior regulations and Department guidance would satisfy the definition of “competitive integrated employment” in these final regulations.

We emphasize that it is the DSU's responsibility to apply final § 361.5(c)(9)(ii) in a manner consistent with long-standing Departmental policy. The DSU must apply the criteria equally to any position, whether it involves the management or administration of, or the production and delivery of goods and services by, the organization, and without regard to the type of business operation, such as, but not limited to, a call center within a community rehabilitation program, the manufacture of office supplies by a State industries program for individuals who are blind, or a contract for landscaping services. The criteria contained in final §§ 361.5(c)(9)(ii) and 361.5(c)(32)(ii) provide important clarifications that are necessary to better enable a DSU to determine, on a case-by-case basis, whether a particular position in an organization's specific work unit is in an integrated location.

The Randolph-Sheppard Act provides opportunities for self-employment and entrepreneurship in the community to individuals who are blind. As a form of self-employment and business ownership, the outcomes of individuals in the vending facilities established under the Randolph-Sheppard Act are deemed to be in integrated settings and specifically within the definition of “employment outcome” in final § 361.5(c)(15).

Changes: None.

Typically Found in the Community

Comments: One commenter stated that work opportunities established by community rehabilitation programs specifically for the purpose of employing individuals with disabilities in the community constitute an integrated setting, and that these jobs enable people to become more self-sufficient and live a more rewarding life.

A few commenters asked whether the criteria would prohibit the employment of individuals with disabilities in work settings operated by community rehabilitation providers that exclusively serve other persons with disabilities (e.g., group homes, inclusive child care centers, adult day programs, or peer support programs), because these locations are not typically found in the community or do not afford the level of interaction among individuals with and without disabilities required by the definition.

One commenter specifically addressed the criterion requiring the work location to be a setting typically found in the community, stating that the criterion does not exist in the statutory definition and it would limit opportunities for individuals with disabilities to participate in new and innovative employment models and businesses that are not yet typical. The commenter recommended that we remove this requirement.

Discussion: The Secretary has incorporated language contained in the prior regulatory definition of “integrated setting” requiring that the work location be in “a setting typically found in the community,” meaning that an integrated setting must be one that is typically found in the competitive labor market. This long-standing Departmental interpretation is consistent with the Act, as amended by WIOA, as well as with express congressional intent as set forth in prior legislative history. Specifically, integrated setting “is intended to mean a work setting in a typical labor market site where people with disabilities engage in typical daily work patterns with co-workers who do not have disabilities; and where workers with disabilities are not congregated . . .” (Senate Report 105-166, page 10, March 2, 1998). Nothing in the Act suggests that Congress intended a different interpretation of the integrated setting criterion in the amendments made by WIOA. Rather, Congress demonstrated a continuation of this interpretation by incorporating into the statute, almost verbatim, a criterion from prior § 361.5(b)(33)(ii) into the definition of “competitive integrated employment” in section 7(5)(B) of the Act. Therefore, the Secretary maintains the long-standing Departmental policy that settings established by community rehabilitation programs specifically for the purpose of employing individuals with disabilities (e.g., sheltered workshops) do not constitute integrated settings because these settings are not typically found in the competitive labor market—the first of two criteria that must be satisfied if a DSU is to Start Printed Page 55643determine that a work setting is an integrated location under final § 361.5(c)(9).

As we made clear in the discussion of Integrated Location—General previously and have stated in long-standing Departmental policy, DSUs must apply the integrated location criteria in a consistent manner and on a case-by-case basis to any work setting, including settings operated by community rehabilitation providers that exclusively serve other persons with disabilities (e.g., group homes, inclusive child care centers, adult day programs, or peer support programs). Nonetheless, we note that the settings described in the comments, though formed for the unique purpose of serving individuals with disabilities, have not been established for the purpose of employing them. Thus, the settings in question in the comments would appear to satisfy the first criterion that the setting is typically found in the community. If this is the case, it would remain for the DSU to determine if the setting is one in which the employee with the disability interacts with employees without disabilities in the work unit and across the work site to the degree that employees without disabilities in similar positions interact with these same persons.

With respect to the comment specifically about proposed § 361.5(c)(9)(ii)(A), which requires that the location be a setting typically found in the community, the Secretary disagrees with the commenter's request to remove the criterion from the definition. The criterion does not exclude from competitive integrated employment any innovative or unique business models that otherwise satisfy the definition's criteria. Instead, the Secretary interprets the criterion to be more narrowly focused on the purpose for which the business is formed. As explained earlier, businesses established by community rehabilitation programs or any other entity for the primary purpose of employing individuals with disabilities do not satisfy this criterion, and, therefore, are not considered integrated settings, because these settings are not within the competitive labor market. The Department has long considered several factors to typically distinguish positions in these types of businesses from those that satisfy the criterion. The factors that generally would result in a business being considered “not typically found in the community,” include: (1) The funding of positions through Javits-Wagner-O'Day Act (JWOD) contracts; (2) allowances under the FLSA for compensatory subminimum wages; and (3) compliance with a mandated direct labor-hour ratio of persons with disabilities. It is the responsibility of the DSU to take these factors into account when determining if a position in a particular work location is an integrated setting.

Changes: None.

Level of Interaction Among Individuals With and Without Disabilities

Comments: Of those commenters who commented specifically on the level of interaction among individuals with and without disabilities, one commenter asked that we include language to require individuals with disabilities to interact with other employees and individuals without disabilities to the same extent that employees without disabilities paid directly by the employer interact with these persons. The commenter stated that the additional language would help to emphasize that individuals can exercise informed choice in the selection of service providers under the VR program.

One commenter suggested that we define “integrated location” as a ratio of individuals with disabilities and individuals without disabilities, stating that true integrated employment consists of a mix of workers with and without disabilities.

Another commenter recommended that we adopt the prior Departmental guidance in technical assistance circular 06-01 mentioned in the Integrated Location—General discussion. The commenter believed that the guidance required DSUs to give equal weight to the interaction of individuals with disabilities with other individuals without disabilities, including employees in the work unit and across the work site, and customers as well as vendors.

Discussion: In response to those comments addressing proposed § 361.5(c)(9)(ii)(B), the second criterion of integrated location, section 102(d) of the Act and final § 361.52 require that individuals be able to exercise informed choice in the selection of service providers. Therefore, it is not necessary to amend the definition to require that individuals with disabilities interact with employees and other persons without disabilities to the same extent that employees without disabilities paid directly by the employer interact with these persons. We do not believe that including the additional language in final § 361.5(c)(9)(ii)(B) would further protect the ability of individuals to choose among service providers.

The Secretary appreciates the commenter's recommendation that we revise this criterion and define an integrated setting as being comprised of a ratio (not specified by the commenter) of employees with disabilities in comparison to individuals without disabilities. Since “integrated setting” was first defined in VR program regulations, we have considered how best to capture the intent of Congress and long-standing Department policy in its criteria. In doing so, we considered whether to establish a numerical ratio and have rejected this as impractical and unworkable. Given the many and varied types of employment settings in today's economy, we cannot determine a single ratio that could be used to satisfactorily determine the level of interaction required to meet the intent underlying the definition. Rather than using a numerical standard, we believe that an “integrated setting” is best viewed in light of the quality of the interaction among employees with disabilities and persons without disabilities when compared to that of employees without disabilities in similar positions, and have not added a numerical ratio to final § 361.5(c)(9).

The Secretary disagrees with the commenter's interpretation of the prior guidance provided in technical assistance circular 06-01 and the assertion that factors such as the level of interaction of employees with disabilities with other employees in the work unit and across the work site, as well as with customers and vendors, should be weighted equally. As stated in the NPRM, the Secretary believes the focus of whether the setting is integrated should be on the interaction between employees with and without disabilities, and not solely on the interaction of employees with disabilities with people outside of the work unit. For example, the interaction of individuals with disabilities employed in a customer service center with other persons over the telephone, regardless of whether these persons have disabilities, would be insufficient by itself to satisfy the definition. Instead, the interaction of primary consideration should be that between the employee with the disability and his or her colleagues without disabilities in similar positions.

Changes: None.

Work Unit

Comments: Commenters supporting and opposing the integrated location criteria commented specifically on the use of “work unit” in final § 361.5(c)(9)(ii)(B). Some in support requested that we clarify the meaning of the term with respect to the numbers of individuals with disabilities as compared to those without disabilities Start Printed Page 55644to ensure that the standard is consistently applied to work units of different sizes, and the effect of the term on the ability of individuals to choose to work alone. One commenter suggested that we clarify that the employment of individuals with disabilities in non-traditional work units who perform their duties of the position in isolation or separate from other employees in the work unit satisfies the definition of “competitive integrated employment” as long as all other criteria are met.

A few commenters asked whether “work unit” refers to all employees in a certain job category or program, or to groups of employees working together to accomplish tasks. These commenters stated that certain categories of employees (such as temporary office workers and certain kinds of contract workers) regularly interact with others within the work site (including other employees, customers, or vendors), but do not work side by side or in collaboration with others within the same job category. Similarly, a few commenters requested that we clarify the effect of the criteria on employment in scattered work sites.

Of those in opposition, some requested that we remove “work unit” from the definition because they were concerned that its use prohibits mobile work crews and enclaves unless very restrictive criteria are met, and that if Congress had intended to eliminate group work opportunities, it would have done so in the law. Other commenters requested clarification of the effect of the term on group employment under the JWOD Act commonly used in Ability One and long-term commercial contracts, stating that these settings provide well-paying jobs for persons with the most significant disabilities.

Discussion: In response to those comments that address the use of the term “work unit,” the Secretary disagrees with the recommendation to remove the term from the definition because it properly focuses the consideration of the interaction of the individual with the disability with employees without disabilities within the environment in which the work is performed. As used in the definition, “work unit” may refer to all employees in a particular job category or to a group of employees working together to accomplish tasks, depending on the employer's organizational structure. In addition, its use is consistent with prior guidance issued by the Department. The Secretary emphasizes that the Department has long maintained that the interaction required between employees with disabilities and employees without disabilities is not dependent on the number of individuals in the work unit and that the criterion must be applied consistently to work units of any size. The Department also has long-held that the interaction between employees with and without disabilities need not be face to face. Nor do we interpret the criterion as necessarily excluding employment settings in which individuals work alone, such as telecommuting, temporary employment, and work in mobile or scattered locations, from the scope of the definition of “competitive integrated employment,” so long as the employee with the disability interacts with employees of the employer in similar positions and interacts with other persons without disabilities to the same extent that employees without disabilities interact with others.

As stated earlier in this section, the Department has long considered the funding of positions through JWOD contracts to be a distinguishing characteristic when determining if a business is typically found in the community. Likewise, the use of the term “work unit” in the definition does not change its application with respect to the required interaction among employees with and without disabilities in the work setting. Entities that are set up specifically for the purpose of providing employment to individuals with disabilities will likely not satisfy the definition's criteria. The high percentage of individuals with disabilities employed with these entities most likely would result in little to no opportunities for interaction between individuals with disabilities and non-disabled individuals. These entities, therefore, likely would be considered sheltered or non-integrated employment sites. Nonetheless, DSUs must apply these criteria on a case-by-case basis when determining if an individual's employment is in an integrated location and satisfies the definition of “competitive integrated employment.”

Changes: None.

Interaction During Performance of Job Duties

Comments: One commenter stated that to define “integrated location” as only “the interaction between employees with disabilities and those without disabilities that is specific to the performance of the employee's job duties, and not the casual, conversational, and social interaction that takes place in the workplace” is too narrow and may not reflect many workers' interaction patterns in typical work settings.

Discussion: Under the definition of “competitive integrated employment” and consistent with the general principles contained in the prior definition of “integrated setting,” the DSU is to consider the interaction between employees with disabilities and those without disabilities that is specific to the performance of the employee's job duties, and not the casual, conversational, and social interaction that takes place in the workplace. As a result, it would not be pertinent to its determination of an integrated setting for a DSU to consider interactions in the lunchrooms and other common areas of the work site in which employees with disabilities and those without disabilities are not engaged in performing work responsibilities.

The Secretary recognizes that the application of the integrated location criteria in the manner explained in the preceding paragraphs will restrict the types of employment options available to individuals with disabilities through the VR program. However, these restrictions have been in effect since the definition of “employment outcome” was last revised in 2001 and, therefore, do not reflect new Departmental policy. Specifically, through application of the criteria, individuals with disabilities hired by community rehabilitation programs to perform work under service contracts, either alone, in mobile work crews, or in other group settings (e.g., landscaping or janitorial crews), whose interaction with persons without disabilities (other than their supervisors and service providers), while performing job responsibilities, is with persons working in or visiting the work locations (and not with employees of the community rehabilitation programs without disabilities in similar positions) would not be performing work in an integrated setting. The Secretary believes that, even if such group employment in a community rehabilitation program provides for competitively paid wages, this fact does not change the non-integrated nature of the employment and may result in a less desirable level of integration (e.g., interaction with non-disabled co-workers) than individual employment, which supports the autonomy and self-sufficiency of individuals with disabilities.

In summary, the DSU must determine, on a case-by-case basis, that a work location is in an integrated setting, meaning it is typically found in the community, and it is one in which the employee with the disability interacts with employees and other persons, as appropriate to the position, who do not Start Printed Page 55645have disabilities to the same extent that employees without disabilities interact with these persons. Finally, the DSU is to consider the interaction between the employee with the disabilities and these other persons that takes place for the purpose of performing his or her job duties, not mere casual and social interaction. We firmly believe that the integrated location criteria within final § 361.5(c)(9)(ii), when properly applied, ensure that participants in the VR program, including individuals with the most significant disabilities, are afforded a full opportunity to integrate in their communities and to achieve employment available to the general public.

Changes: None.

Opportunities for Advancement

Comments: One commenter asked whether employment in which individuals with disabilities truly do not have the opportunity to advance in their jobs satisfies the definition of “competitive integrated employment,” if the criteria regarding competitive earnings and integrated locations are met. This commenter gave the example of a small business.

Discussion: To ensure that the employment of persons with disabilities is equivalent in all respects to that of persons without disabilities, section 7(5)(C) of the Act, as amended by WIOA, and final § 361.5(c)(9)(iii) require that the employee with the disability have the same opportunities for advancement as employees without disabilities in similar positions, regardless of the size of the business. This new criterion is consistent with the prior definitions of “competitive employment” and “integrated settings.” If employees in positions similar to that of the employee with the disability have the opportunity to advance in their employment, the individual with the disability must be afforded the same opportunity for this criterion of the definition to be satisfied.

Changes: None.

Construction of a Facility for a Public or Nonprofit Community Rehabilitation Program (§ 361.5(c)(10))

Comment: One commenter requested that “construction” and “ongoing maintenance” be clearly defined in the regulations.

Discussion: The term “construction of a facility for a public or nonprofit community rehabilitation program” remains unchanged in section 7(6) of the Act, as amended by WIOA, and final § 361.5(c)(10).

We disagree with the recommendation that we define “ongoing maintenance” in part 361. Final § 361.5(c)(2)(viii) specifies such costs, when incurred for operating and maintaining DSU facilities, may be allowable administrative costs under the VR program. However, ongoing costs of any kind, including ongoing maintenance costs, are not allowable expenditures when establishing, developing, or improving a community rehabilitation program (see final § 361.5(c)(16)(iii)).

Changes: None.

Customized Employment (§ 361.5(c)(11))

Comments: Most commenters supported the new definition of “customized employment” in proposed § 361.5(c)(11). A few commenters requested that the definition include the “discovery phase” of the customized employment model. A few commenters suggested that the definition address when it is appropriate for the DSU to consider customized employment for individuals with disabilities. Further, these commenters stated that DSUs should use customized employment as the last option in assisting an individual with a disability to achieve competitive integrated employment. Another commenter questioned whether customized employment means “job carving.” Furthermore, one commenter requested that we clarify how individuals with disabilities, who are working in customized employment, could advance in their careers. One commenter questioned whether an employer would want to support an individual with a significant disability in customized employment. Another commenter stated that customized employment should not be an unfunded mandate. Finally, one commenter asked that we clarify the impact customized employment might have on the performance accountability measure for the core programs, including the VR program, in the workforce development system under section 116 of WIOA that measures the median wage of participants during the second quarter after they exit from these programs. This commenter suggested that earnings from customized employment would deflate this measure.

Discussion: We appreciate the comments supporting the new definition of “customized employment” in final § 361.5(c)(11). However, we disagree with commenters who recommended that the definition be modified to include additional requirements, such as the inclusion of the discovery phase of the model or when a DSU must consider customized employment for an individual. Section 7(7) of the Act, as amended by WIOA, which defines the term “customized employment,” does not include this information. Therefore, we believe final § 361.5(c)(11) is consistent with the statute and further regulatory change is not necessary.

We disagree with the commenter that DSUs should use customized employment as a last resort when assisting an individual with a disability to achieve an employment outcome. We believe that customized employment may be an option for some individuals with significant disabilities, while, for other individuals, it may not be a viable path to competitive integrated employment. We strongly encourage DSUs to tailor customized employment services, like all of the services in final § 361.48(b) provided to eligible individuals under an individualized plan for employment, to meet the unique strengths, needs, interests, and informed choice of the individual, so that he or she can achieve an employment outcome in competitive integrated employment. We understand that some may have referred to customized employment in the past as “job carving;” however, the Act, as amended by WIOA, does not use that term. Therefore, we have not incorporated the term “job carving” into these final regulations.

We believe it is possible for individuals with disabilities in customized employment to advance in their careers. Individuals who achieve competitive integrated employment through customized employment could advance in their career with their original employers or by seeking advancement with other employers. The definition of “customized employment” in section 7(7) of the Act, as amended by WIOA, and final § 361.5(c)(11) do not include any criteria requiring an individual with a significant disability to remain in customized employment; rather, these individuals may seek additional vocational rehabilitation services for the purpose of advancing in their careers through other forms of competitive integrated employment. Customized employment is an alternative that enables individuals with disabilities and employers the opportunity to negotiate job tasks and/or reassign basic job duties to improve overall production in the workplace. For employers, customized employment allows an employer to examine its specific workforce needs and fulfill those needs with a well-matched employee. We encourage DSUs to work with employers, particularly those employers that have not been open to employing individuals with significant Start Printed Page 55646disabilities, to enable them to hire these individuals through customized employment when appropriate.

We disagree with the commenter that customized employment is an unfunded mandate. Customized employment services are included in the list of allowable vocational rehabilitation services in final § 361.48(b). DSUs may expend their resources, including program funds, on supporting individuals in customized employment when appropriate.

Customized employment, as we have discussed, must lead to competitive integrated employment. Section 116(b)(2)(A)(i)(III) of title I of WIOA establishes a primary performance accountability indicator for all core programs of the workforce development system, including the VR program, that measures the median earnings of all participants who have exited the program in the second quarter after exit. As such, earnings from customized employment will affect the VR program's performance, in the same manner that other earnings will do so. We cannot assume, as the commenter suggests, that individuals in customized employment will earn low wages.

Changes: None.

Employment Outcome (§ 361.5(c)(15))

Some commenters supported the definition of “employment outcome” in proposed § 361.5(c)(15) because it is consistent with the overall purpose of the Act, as amended by WIOA, to promote the achievement of competitive integrated employment and self-sufficiency by individuals with disabilities. As proposed, an “employment outcome” would mean full- or part-time employment in competitive integrated employment, or supported employment. As such, uncompensated employment outcomes (e.g., homemakers and unpaid family workers) would be removed from the scope of the definition for purposes of the VR program. However, most commenters strongly opposed removing “uncompensated employment outcomes,” and recommended revisions or clarifications to the proposed definition.

Statutory Basis

Comments: Most of the commenters on the proposed definition of “employment outcome” in § 361.5(c)(15) stated that the proposed change is contrary to congressional intent and not mandated by the Act, as amended by WIOA. Many of these commenters requested that the Secretary use the discretion permitted under section 7(11)(C) of the Act to not limit the definition to compensated employment, thereby permitting uncompensated outcomes of homemaker and unpaid family worker to continue to count as an employment outcome under the VR program.

In addition, recognizing that WIOA amends section 102(b)(4) of the Act to require that the individualized plan for employment contain a specific employment goal consistent with competitive integrated employment, a few commenters presented two arguments to support the retention of uncompensated outcomes as an employment outcome. First, the commenters argued that the phrase “consistent with the Act,” as used in the statutory definition, does not require that all components of the term “competitive integrated employment” be satisfied. In the alternative, these commenters suggested that homemaker and unpaid family worker outcomes satisfy the criteria for competitive integrated employment because they are typically found in the community and the earnings of individuals with disabilities who obtain these outcomes are commensurate with those of non-disabled persons in similar positions.

Discussion: We appreciate the commenters' concerns and recognize that the definition of “employment outcome” in proposed and final § 361.5(c)(15) will end a long-standing Department policy. We gave considerable thought to all aspects of the issue and seriously considered the definition in light of the comments received.

We agree with commenters that the change eliminating uncompensated outcomes was not explicitly required on the basis of an amendment to the statutory definition in section 7(11) of the Act, which remained unchanged, in pertinent part, by WIOA. Nonetheless, we believe that the Act as amended by WIOA, when read in its entirety, provides a strong justification for the change.

We agree with the commenters that section 7(11)(C) of the Act permits the Secretary to use his discretion to include other vocational outcomes within the scope of the definition of “employment outcome.” This provision is purely discretionary, and there is no requirement that the Secretary exercise this discretion, either to incorporate new outcomes or to retain previously permitted outcomes. However, if the Secretary chooses to exercise this discretion, the Secretary must do so in a manner that is consistent with the Act.

As noted throughout the preambles to the NPRM and these final regulations, WIOA amended the Act by emphasizing the achievement of competitive integrated employment by individuals with disabilities, including individuals with the most significant disabilities. The Act, as amended by WIOA, refers extensively to competitive integrated employment, including in the statement of the purpose for the VR program, requirements for developing individualized plans for employment and providing services to students and youth with disabilities, and the limitations on the payment of subminimum wages in new section 511. In particular, section 102(b)(4) of the Act, as amended by WIOA, and final § 361.46(a) require that the specific employment goal identified in the individualized plan for employment be consistent with the general goal of competitive integrated employment.

The changes made by WIOA provide a marked contrast to the Act, as amended by the Workforce Investment Act of 1998 (WIA). Under WIA, the emphasis in the Act was on achieving integrated employment. Consequently, in 2001, the Secretary amended the definition of “employment outcome” and required that all employment outcomes in the VR program be in integrated settings, under prior § 361.5(b)(16). In so doing, the Secretary eliminated sheltered employment as an employment outcome. At that time, because we considered homemaker and unpaid family worker outcomes to occur in integrated settings, these outcomes continued to constitute an “employment outcome,” for purposes of the VR program.

By contrast, given the pervasive emphasis on achieving competitive integrated employment—not just integrated employment—throughout the Act, as amended by WIOA, the Secretary has determined that uncompensated employment outcomes, including homemaker and unpaid family worker outcomes, are no longer consistent with the Act. For this reason, the Secretary believes it is no longer an appropriate exercise of the Secretary's discretion under section 7(11)(C) of the Act to include uncompensated outcomes within employment outcomes in final § 361.5(c)(15).

We disagree with the commenters' argument that an “employment outcome” need not satisfy all criteria of the definition of “competitive integrated employment,” with one narrow exception. Section 7(11)(B) of the Act and final § 361.5(c)(15) include supported employment within the employment outcomes available to individuals with disabilities through the VR program. Under section 7(38) of the Act, as amended by WIOA, and final Start Printed Page 55647§ 361.5(c)(53), supported employment requires that the individual be employed in competitive integrated employment or in an integrated setting in which the individual is working on a short-term basis toward competitive integrated employment. Thus, in limited circumstances, individuals in supported employment may not have achieved employment that satisfies all the criteria of “competitive integrated employment” initially since they will be earning non-competitive wages on a short-term basis. This very narrow exception is the only instance in which the statute permits that all criteria of “competitive integrated employment” need not be satisfied for an individual to achieve an employment outcome. However, even under this narrow exception, the expectation is that, after a short period of time, the individual will achieve competitive integrated employment in supported employment. It is understood, and the commenters do not argue otherwise, that uncompensated employment, such as homemaker and unpaid family worker outcomes, does not satisfy the definition of “supported employment.” There is no expectation that the individuals will ever be compensated in such employment.

We disagree with the first of the commenters' arguments that all criteria of “competitive integrated employment” need not be satisfied for employment to be considered competitive integrated employment. To interpret the Act's definition of “employment outcome” this way would ignore one of the three major components of the definition of “competitive integrated employment”—competitive wages.

While we agree with the assertion that individuals with disabilities who achieve homemaker or unpaid family worker outcomes perform their work in settings typically found in the community and receive no wages, as would a non-disabled homemaker or unpaid family worker, these similarities are not sufficient to satisfy the definition of “competitive integrated employment.” “Competitive integrated employment” requires the payment of wages at or above the applicable Federal, State, or local minimum wage. Neither homemakers nor unpaid family workers earn a wage. Therefore, individuals achieving uncompensated outcomes, such as homemakers and unpaid family workers cannot have achieved an employment outcome in competitive integrated employment.

Changes: None.

Informed Choice

Comments: Many commenters asserted that the definition of “employment outcome” in proposed § 361.5(c)(15) is contrary to the principle of informed choice and that individuals with disabilities should have the right to choose homemaker and other uncompensated outcomes just as do persons without disabilities.

Discussion: While we agree that section 102(d) and many other provisions of the Act place a premium on the ability of individuals with disabilities to exercise informed choice throughout the vocational rehabilitation process, including the choice of an employment outcome, we do not agree that the definition of “employment outcome” in final § 361.5(c)(15) is inconsistent with the individual's ability to exercise informed choice. We have historically interpreted the statute as allowing individuals who are participating in the VR program to exercise informed choice among those outcomes that satisfy the definition of “employment outcome.” Under these final regulations, such outcomes must be in competitive integrated employment or supported employment.

If an individual makes an informed choice to pursue uncompensated employment (e.g., homemaker or unpaid family worker outcomes) or any other outcome that does not meet the definition of “employment outcome” under final § 361.5(c)(15), he or she may still do so, but not with the assistance of the VR program. In final § 361.37, the DSU is required to refer that individual to other Federal, State, or local programs and providers that can meet the individual's needs for related services (e.g., the State Independent Living Services (SILS) program, Independent Living Services for Older Individuals Who Are Blind program (OIB), Centers for Independent Living program (CIL), and programs for the aging). In addition, final § 361.37 requires that individuals receive sufficient information concerning the scope of the VR program and competitive integrated employment opportunities. This information enables individuals to make a fully informed choice regarding whether to pursue an employment outcome through the VR program or homemaker and other uncompensated outcomes through other sources.

We believe the definition of “employment outcome” in final § 361.5(c)(15) ensures that the VR program promotes maximum opportunities for individuals with disabilities, particularly those with significant disabilities, to pursue competitive integrated employment or supported employment options. Individuals with disabilities can achieve competitive integrated employment or supported employment if given appropriate services and supports and, therefore, should be informed that they are not limited to pursuing uncompensated outcomes no matter how significant their disabilities. Nevertheless, we recognize that some individuals will choose to pursue such outcomes. These final regulations require each DSU to preserve individual choice by referring any individual who decides to pursue uncompensated outcomes, or any other outcome that does not meet the definition of an “employment outcome” in final § 361.5(c)(15), to other appropriate resources for assistance.

Changes: None.

Legitimacy of Homemaker Outcomes

Comments: Some commenters stated that the definition of “employment outcome” in proposed § 361.5(c)(15) does not recognize the legitimacy of homemaker occupations and devalues the work performed by homemakers. Some commenters stated that homemaker outcomes provide economic value for the individual or family, though the individual does not receive direct wages. Others suggested that homemaker outcomes allow the individual to care for other family members who are disabled and who would otherwise be institutionalized.

Discussion: We agree with the commenters that homemakers perform work that has an economic value for themselves and others in the home. For example, by caring for themselves and the home, homemakers can enable other members of the household to work outside the home and earn an income. In addition, homemakers may care for persons with disabilities in the household, thus helping them to remain in their homes, rather than to reside in institutional settings. Therefore, we emphasize that nothing in these final regulations is intended to alter the fact that homemaker outcomes serve as a legitimate and valued option for people with disabilities. The Secretary does not devalue the dignity or the worth of the individuals who perform this work through this regulatory action. Rather, the definition of “employment outcome” in final § 361.5(c)(15), focuses the VR program on its statutory purpose, as set forth in section 100(a)(2)(B)—giving persons with disabilities, including those with significant or the most significant disabilities, the opportunity to work in competitive integrated employment and to achieve economic self-sufficiency.

Changes: None.Start Printed Page 55648

Availability of Services

Comments: Several commenters who opposed the definition of “employment outcome” in proposed § 361.5(c)(15) stated that the services provided to individuals pursuing homemaker outcomes through the VR program provide a bridge, gateway, or stepping stone to competitive integrated employment. Many of those commenters stated that services such as Braille training, assistive technology, mobility training, and other home management services are essential to the ability of individuals who are blind and visually impaired to prepare for employment. Many commenters expressed the concern that without homemaker services, many individuals, especially those who are blind and visually impaired, will be unable to function, and either be shut in their homes or forced to live in a care facility. Finally, some commenters stated that the loss of homemaker services could result in low self-esteem, the loss of independence, physical disease, and depression among individuals who are blind and visually impaired.

Discussion: We strongly agree that Braille training, assistive technology, and mobility training are critical to the independence of individuals who are blind and visually impaired, and help to build the foundation on which they can successfully pursue gainful employment. In addition, we recognize that these services can enable individuals who are blind and visually impaired to increase their confidence, as well as their physical and psychological well-being. Most importantly, these services always have been, and continue to be, available to individuals with disabilities under an individualized plan for employment pursuant to section 103(a) of the Act and final § 361.48(b), so long as the individuals are pursuing an employment outcome under final § 361.5(c)(15), specifically competitive integrated employment or supported employment. To the extent such individuals do not wish to do so, these same services are, and always have been, available under the independent living programs authorized by title VII of the Act.

We understand, from anecdotal evidence, that it has been the practice of some DSUs to provide individuals who are newly blind or experiencing significant vision loss with services designed to help them attain homemaker outcomes, with the expectation that the individuals will return to the VR program when they are ready to pursue additional training and the achievement of an employment outcome. However, DSUs must provide the vocational counseling and guidance to help individuals pursue an employment outcome consistent with competitive integrated employment, as required by section 102(b)(4) of the Act, as amended by WIOA, and final § 361.46(a)(1) at the outset or refer individuals to the independent living programs under final § 361.37 depending on their individual goals. DSUs are encouraged to deliver services such as Braille and mobility training throughout the vocational rehabilitation process, in combination with the other education, training, and equipment needed to achieve the identified employment goal. In this way, DSUs can more effectively engage individuals in the VR program and better assist them to achieve the ultimate goal of competitive integrated employment or supported employment.

Changes: None.

Disproportionate Impact

Comments: Many commenters stated that the change in the definition of “employment outcome” in proposed § 361.5(c)(15) will have a disproportionate impact on individuals served through the VR program who are blind and visually impaired. A few commenters requested that we create an exception for agencies that serve individuals who are blind if we maintain the definition as proposed.

Discussion: As stated in the preamble to the NPRM, we believe the definition of “employment outcome” in final § 361.5(c)(15) will have minimal impact on most DSUs in their administration of the VR program because, nationally, a steadily decreasing and relatively small number of individuals exit the program as homemakers or unpaid family workers. The data reported by DSUs demonstrate that the majority of DSUs have been placing increased importance and emphasis in their policies and procedures on competitive integrated employment and supported employment outcomes, thereby deemphasizing uncompensated outcomes. This shift in practice has been the product of the DSUs' responding to the changes to the Act since the enactment of WIA in 1998 and reflecting that changing emphasis in their administration of the VR program.

Nonetheless, we recognize that some DSUs, particularly those serving individuals who are blind and visually impaired, report a greater percentage of homemaker outcomes than others. For example, VR agencies serving individuals who are blind and visually impaired reported that 618 individuals obtained homemaker outcomes in FY 2014, representing 9.8 percent of all employment outcomes for these agencies. In comparison, all other VR agencies reported that 2,436 individuals obtained homemaker outcomes in FY 2014, representing 1.4 percent of all employment outcomes for these agencies. Consequently, we proposed in the NPRM a transition period of six months following the effective date of these final regulations to allow DSUs to complete the VR process for individuals already pursuing homemaker outcomes under individualized plans for employment. See the discussion on “Transition Period” later in this section regarding the comments received on the proposed transition period.

Neither section 7(11) nor any other provision of the Act, as amended by WIOA, permits the Secretary to make an exception when implementing the definition of “employment outcome” to allow DSUs serving individuals who are blind and visually impaired to continue assisting individuals to achieve uncompensated outcomes, such as homemaker outcomes, when that employment is not consistent with the Act. Therefore, there is no statutory authority to make the exception recommended by commenters.

Changes: None.

Resources for Service Provision

Comments: Several commenters stated that services such as training in Braille, orientation and mobility training, and the provision of assistive technology and training in its use are not available to individuals who are blind and visually impaired through any other resources, such as medical insurance and one-stop delivery centers. In particular, many commenters stated that the OIB program lacks sufficient resources to serve the individuals who would no longer be eligible to receive vocational rehabilitation services as a result of the change in the definition of “employment outcome” in proposed § 361.5(c)(15), because, to be eligible for the VR program, an individual must intend to achieve an employment outcome. A few commenters asked that we request additional funds for this program. One commenter suggested that we lower the age of eligibility for services from the OIB program to allow younger individuals to receive these services. Additionally, many commenters stated that other independent living programs and providers lack the funds and qualified staff needed to provide individuals who are blind and visually impaired with the complex skills of Braille literacy and orientation and mobility. Several commenters stated that the change in Start Printed Page 55649the definition of “employment outcome” will result in loss of funding needed by community rehabilitation programs to provide these vital services.

One commenter asked if the Department would create a separate homemaker program not directly connected to the VR program. One commenter stated that many DSUs have entered into long-term contractual arrangements for providing services to individuals pursuing homemaker outcomes and requested that we exempt these arrangements from the application of the new rule. Another commenter requested that the Client Assistance Program (CAP) and other advocacy groups conduct outreach to the community of individuals who are blind and visually impaired who otherwise would have chosen homemaker outcomes.

Discussion: We recognize that medical insurance and other one-stop delivery system programs under WIOA typically do not support training in Braille and mobility or the provision of assistive technology for individuals who are blind and visually impaired.

Under final § 361.37(b), the circumstances when the DSU must provide referrals to other programs and service providers for individuals who choose not to pursue an employment outcome under the VR program has been expanded. Similarly, final § 361.43(d) expands the requirement for the referral of individuals found ineligible for vocational rehabilitation services, or determined ineligible subsequent to the receipt of such services, to include appropriate State, Federal, and local programs, and community service providers (e.g., the SILS program, OIB program, CILs, and programs for the aging) better suited to meet their needs.

Those programs designed to meet the needs of individuals who choose to pursue homemaker outcomes include the OIB program, the only program authorized under title VII of the Act, as amended by WIOA, which remains under the administration of the Department. There is no authority, in either title I or VII, to permit DSUs to use VR program funds to provide OIB program services in order to alleviate any deficiencies in OIB funding, which may result from an increase in the number of individuals seeking services from the OIB program following the change in the employment outcome definition for purposes of the VR program. However, the Administration has requested a $2.0 million increase over the 2016 level for the OIB program in the fiscal year 2017 President's Budget to assist States in meeting an anticipated increase in the demand for OIB services. The Department will consider increases in the demand for OIB program services resulting from this rule change in future budget requests.

We recognize that some CIL staff may not possess the skills necessary to provide individuals who are blind and visually impaired the specialized training and services that will enable them to remain in their homes and care for themselves, such as training in Braille and orientation and mobility. Therefore, we strongly encourage DSUs to strengthen their relationships with the CILs in their States by providing training and technical assistance necessary to build the capacity of the staff that will afford them the option to deliver these services in accordance with the State Plan for Independent Living developed in the State. The Department will support these efforts through technical assistance in collaboration with the Department of Health and Human Services, which is now responsible for the administration of the Centers for Independent Living program under title VII of the Act, as amended by WIOA.

We disagree that the change in the definition necessarily will result in a loss of funding for community rehabilitation programs to provide homemaker services. Although DSUs may no longer use VR program funds to purchase these services from community providers, they may use other program funds to do so, such as those for the OIB programs.

In response to the comment requesting an exemption for existing contractual relationships between the DSUs and other entities to assist individuals with disabilities to achieve outcomes in uncompensated employment, once final § 361.5(c)(15) takes effect a DSU cannot contract with another entity to assist an individual with a disability to achieve an uncompensated outcome, such as homemaker or unpaid family worker. There is no statutory authority that would permit an exemption to the prohibition. However, as discussed in more detail in the Transition Period section, DSUs are able to use VR program funds to continue to engage in contractual arrangements for providing services to individuals with disabilities who are already in the process of pursuing homemaker and other uncompensated employment outcomes under individualized plans for employment approved prior to the effective date of these final regulations.

While we understand the concern raised by the commenter who requested a lower eligibility age for the OIB program, title VII of the Act, as amended by WIOA, retains the eligible age of 55 for OIB program services in the statute; therefore, the Department is not authorized to change the age of eligibility. Nor does the Act, as amended by WIOA, authorize the creation of a homemaker program separate from the VR program.

While we appreciate the commenter's recommendation that the CAP should provide outreach services to individuals affected by the implementation of the revised definition of “employment outcome,” section 112 of the Act requires, as it always has, the CAP to provide information and advocacy services to individuals who are applicants or consumers of the VR program or any other program under the Act. The CAP may provide information and advocacy services for those individuals pursuing uncompensated outcomes who are served by the VR program during the transition period or served by the OIB or independent living programs after the transition period. However, no authority exists in section 112 of the Act to permit the CAP to conduct outreach to, or to serve, individuals pursuing uncompensated outcomes under programs not authorized by the Act. Although the Department is no longer responsible for the administration of the CIL and SILS programs, these programs continue to be authorized under title VII of the Act, and therefore the CAP can provide assistance to individuals receiving independent living services.

Changes: None.

Feasibility Studies

Comments: Some commenters recommended that we conduct a study of homemaker closures to address problems of overuse and that the definition of “employment outcome” include strict criteria to prevent overuse.

One commenter asked whether the Department had conducted a feasibility study to determine if the referral of individuals from VR to other service providers would reasonably result in the provision of services.

Discussion: We have not conducted, nor do we intend to conduct, a study of homemaker closures to address problems of overuse. A study to ensure DSUs do not overuse uncompensated outcomes is not necessary because such outcomes will no longer be permitted under the VR program once these final regulations take effect and the transition period ends. For the same reason, we do not believe it necessary to change § 361.5(c)(15) to prevent the overuse of Start Printed Page 55650homemaker and unpaid family worker outcomes.

However, we intend to monitor State implementation of the final regulations during our annual review and periodic on-site monitoring of State VR agencies to ensure that persons with significant disabilities, including those who are blind and visually impaired, receive vocational rehabilitation services in pursuit of competitive integrated employment or supported employment. Additionally, we will review the steps DSUs are taking to ensure that individuals are appropriately referred under final §§ 361.37(b) and 361.43(d), to other Federal, State, and local programs and providers (e.g., the SILS program, OIB program, CILs, and programs for the aging) that are better able to meet the needs of individuals with disabilities who desire to receive homemaker services. If needed, the Department will consider providing technical assistance to DSUs to enable them to build better relationships with these other entities to increase the potential for successful referrals.

Changes: None.

Transition Period

Comments: A few commenters supported the Department's proposed transition period of six months following the effective date of the final regulations, during which DSUs would finish providing vocational rehabilitation services to, and close the service records of, individuals pursuing uncompensated outcomes, such as homemakers and unpaid family workers, through individualized plans for employment that were approved prior to the effective date.

Some commenters stated that six months would not be long enough to finish providing services and close these service records or to develop relationships with providers of independent living services to which the DSUs could refer these individuals. Of these commenters, some recommended that the Department extend the proposed transition period to 12 months following the effective date of the final regulations, while some others recommended 18 or 24 months.

However, most commenters who commented on the proposed transition period recommended that we adopt a flexible period that DSUs would determine case by case, taking into account the needs of the individual. Finally, one commenter recommended that we permit DSUs to provide vocational rehabilitation services to individuals with the goal of homemaker on their individualized plans for employment without regard to the duration of the services, but that we not allow DSUs to implement new individualized plans for employment with the goal of homemaker following the effective date of the final regulations.

Discussion: To permit DSUs to develop individualized plans for employment that include uncompensated employment goals, such as those of homemakers and unpaid family workers, after the effective date of these final regulations would be inconsistent with the Act, as amended by WIOA. Section 102(b)(4) of the Act, as amended by WIOA, and final § 361.46(a), require all individualized plans for employment developed under the Act to include employment goals consistent with the general goal of competitive integrated employment.

However, we do agree with commenters that DSUs may need longer than six months following the effective date to finish providing services to some individuals who are already pursuing homemaker or other uncompensated outcomes on individualized plans for employment that were developed and executed prior to the effective date. Data obtained through the RSA-911 case service report show that, on average, individuals with disabilities take approximately 24 months to complete the vocational rehabilitation process from the time they apply for services until their service records are closed. These data also demonstrate that individuals who are 55 years and older and blind take approximately 21.5 months to complete the vocational rehabilitation process from the time that they apply for services.

Therefore, the Secretary has concluded that DSUs may continue to provide services to individuals with uncompensated employment goals on their individualized plans for employment that were approved prior to the effective date of the final regulations through June 30, 2017, unless a longer period of time is required based on the needs of the individual, as documented in the individual's service record.

The Secretary believes that DSUs can finish providing services to, and close the service records of, most individuals pursuing homemaker and other uncompensated outcomes during this transition period. However, a DSU can determine on a case-by-case basis, taking into consideration the unique needs of each individual, that the DSU cannot complete the provision of services within that time frame and, therefore, may continue the services until the individual no longer needs them. For example, services may be interrupted and, consequently, the DSU cannot complete the services prior to June 30, 2017. For this and other reasons, the DSU may extend the provision of services beyond June 30, 2017, until they are completed and the individual's service record is closed.

By extending the transition period, DSUs will have sufficient time to develop and strengthen their relationships with other governmental and nonprofit providers of independent living services so that DSUs may make appropriate referrals to these providers and individuals with disabilities can receive the services they need to maintain their homes and independence. The Department plans to provide guidance and technical assistance to: (1) Facilitate the transition to the new definition of employment outcome; and (2) minimize the potential disruption of services to VR program consumers currently receiving services and who do not have a competitive integrated employment or supported employment goal reflected in their individualized plan for employment.

Finally, all participants who exit the VR program after July 1, 2016, including those exiting in uncompensated employment, such as homemakers and unpaid family workers, must be included in the calculations of the performance accountability measures established in section 116(b)(2)(A)(i) of title I of WIOA and explained more fully in the joint performance information collection request. The performance accountability requirements of section 116 of WIOA take effect July 1, 2016.

Changes: We have included a note in final § 361.5(c)(15) allowing for a transition period to permit a DSU to continue services to individuals with uncompensated employment goals on their approved individualized plans for employment prior to the effective date of the final regulations until June 30, 2017, unless a longer period of time is required based on the needs of the individual with the disability.

Extended Services (§ 361.5(c)(19))

Comments: A few commenters were concerned that the provision of extended services to youth with the most significant disabilities will cause an undue hardship for some DSUs. A few other commenters understood the proposed changes to mean that the DSUs were responsible for funding all individuals in extended services even after the individual transitions from the DSU for support.

Discussion: Final § 361.5(c)(19)(iv) specifies that “extended services” are those services provided to individuals with the most significant disabilities, which may include youth with the most Start Printed Page 55651significant disabilities, by a State agency, a private nonprofit organization, employer, or any other appropriate resource once an individual has concluded support services from the DSU. The definition of “extended services” in final § 361.5(c)(19)(v) specifies that the DSU provides extended services only to “youth with the most significant disabilities” for a period not to exceed four years or until such time as a youth reaches the age of 25 and no longer meets the definition of a “youth with a disability” under final § 361.5(c)(58). For further information on the provision of extended services in accordance with final §§ 363.4 and 363.22, see the Analysis of Comments and Changes section for the Supported Employment Program in 34 CFR part 363.

Changes: None.

Indian; American Indian; Indian American; Indian Tribe (§ 361.5(c)(25))

Comments: Many commenters disagreed with expanding the definition of “Indian tribe” to make tribal organizations eligible for AIVRS grants. Most of these commenters requested that we establish policies that give tribal governments the authority to designate those tribal organizations or entities acting on their behalf as applicants or recipients of AIVRS funding.

Discussion: We provide a detailed analysis of these comments in a separate regulatory action implementing the amendments made by WIOA to miscellaneous programs under the Act, including the AIVRS program, published elsewhere in this issue of the Federal Register.

Changes: None.

Informed Choice

Comments: Some commenters requested that we define “informed choice.”

Discussion: We disagree with the recommendation to define “informed choice” in final § 361.5(c). Section 102(d) of the Act and final § 361.52 fully describe the critical aspects of informed choice in the context of the VR program and reflect the statutory emphasis that individuals participating in the VR program must be able to exercise informed choice throughout the entire rehabilitation process.

Changes: None.

Supported Employment Definitions

Comments: We received comments on the definitions of “supported employment” and “supported employment services” in proposed §§ 361.5(c)(53) and 361.5(c)(54), respectively, concerning the short-term basis period, transitional employment, and the duration of supported employment services.

Discussion: We discuss these comments later in the Analysis of Comments and Changes section for the Supported Employment Program in final 34 CFR part 363.

Transition-Related Definitions

Comments: We received comments on definitions pertaining to the transition of students and youth with disabilities from school to postsecondary education and employment, including “pre-employment transition services,” “student with a disability,” “transition services,” and “youth with a disability.”

Discussion: We discuss these comments in section B later in this Analysis of Comments and Changes section of the preamble.

Submission, Approval, and Disapproval of the State Plan (§ 361.10)

Content and Submission of the VR Services Portion of the Unified and Combined State Plan

Comments: Apart from public comments received on the joint regulations proposed by the U.S. Departments of Labor and Education implementing jointly administered requirements for the Unified or Combined State Plan, we received comments on proposed § 361.10 pertaining to the VR services portion of the Unified or Combined State Plan. Many commenters expressed support for the revised State Plan requirements and process as described in the proposed joint regulations, noting the regulations promote an opportunity for collaboration across the workforce development system. Additionally, these commenters requested technical assistance and guidance to clarify the State Plan process.

One commenter requested that we clarify the meaning of “The VR services portion of the State Plan” and asked whether this is in fact a separate program-specific component of the Unified or Combined State Plan. This commenter previously submitted a Unified State Plan in which the vocational rehabilitation components of the plan were interspersed throughout the overall plan. One commenter asked whether the proposed joint regulation in 34 CFR 676.130(f), which requires the RSA Commissioner to approve the VR services portion of the Unified or Combined State Plan before the Secretaries of Labor and Education approve the Unified or Combined State Plans, means that DSUs will have separate timelines for the submission of the VR program-specific components of the plan.

Discussion: We appreciate the commenters' support, as well as the requests for clarifications. Final § 361.10 implements section 101(a)(1) of the Act, as amended by WIOA, which requires a State to submit a Unified or Combined State Plan under section 102 or section 103, respectively, of title I of WIOA, in order to receive funding under the VR program. The Unified or Combined State Plan must contain a VR services portion. Section 101(a)(1) of the Act, as amended by WIOA, and final § 361.10(a) require the VR services portion of the Unified or Combined State Plan to contain all State Plan requirements under section 101(a) of the Act. Prior to the enactment of WIOA, DSUs submitted a stand-alone State Plan directly to the Department. Under WIOA, the VR services portion will be submitted as part of the Unified or Combined State Plans by the State to the Secretary of the U.S. Department of Labor, who will distribute the plans to the other Federal agencies responsible for their review and approval, including the Department of Education with respect to the review and approval of the VR services portion of the plans.

The “Required Elements for Submission of the Unified or Combined State Plan and Plan Modifications Under the Workforce Innovation and Opportunity Act,” recently approved by the Office of Management and Budget under control number 1205-0522, presents the VR services portion of the Unified or Combined State Plan as a distinct component of the plan. The timelines for submission of the Unified or Combined State Plan, and, hence, the VR services portion of that plan, are governed by sections 102 and 103 of title I of WIOA, and the joint final regulations published elsewhere in this issue of the Federal Register. Thus, there is no statutory authority to establish a separate timeline or date for the submission of the VR services portion of the plan, despite the fact that the Commissioner must approve the VR services portion before the Secretaries of Labor and Education approve the remainder of the plans.

Changes: None.

Alignment of Program and Fiscal Years

Comments: Many commenters were interested in how the new timelines for the submission and modification of the Unified and Combined State Plans will be aligned with the specific requirements of the VR services portion of the Unified or Combined State Plan, including reporting requirements, performance levels, and the difference Start Printed Page 55652between the start of the program year on July 1 for the purposes of requirements under title I of WIOA versus the start of the Federal fiscal year on October 1 when the VR program formula grants are issued in accordance with the Act. A few commenters supported the alignment of the program years under the Unified and Combined State Plans among all core programs in the workforce development system, including the VR program.

Discussion: While we understand the concern expressed by commenters regarding the potential confusion caused by differences between the VR program's fiscal year and the other core programs' program year, section 110(a)(2)(A) of the Act, which specifies the manner in which VR program allotments are to be made, was not amended by WIOA. Moreover, section 111(a)(1) of the Act, which also remained unchanged by WIOA, requires that payments are made to States on a Federal fiscal year basis. This provision is consistent with section 101(a)(1), which requires States to submit a VR services portion of a Unified or Combined State Plan to receive funding “for a fiscal year.” Finally, section 101(a)(10) of the Act, as amended by WIOA, requires the DSU to submit certain data to demonstrate the annual performance of the VR program, within the same fiscal year in which the VR program operates. For these reasons, there is no statutory authority to change the period for making allotments to the States from the fiscal year beginning on October 1 to the program year used under title I of WIOA, which is July 1 of each year for most core programs.

In order to align the VR program with the other core programs to the extent practicable, DSUs must submit the VR services portion of the Unified or Combined State Plan and report the data required under final § 361.40 in a manner consistent with the jointly administered requirements set forth in the joint regulations governing Unified or Combined State Plan requirements published elsewhere in this issue of the Federal Register. However, States will continue to receive VR program allotments and report fiscal data through the Financial Status Report (SF-425) in accordance with the Federal fiscal year.

Changes: None.

Other Comments

Comments: Several commenters were uncertain about the application of common performance measures and asked whether combined partners under a Combined State Plan would be held to the new performance standards as well. One commenter asked whether, when there is more than one DSU in the State, DSUs serving individuals who are blind will have separate performance levels from DSUs serving individuals with all other disabilities. Another commenter suggested that Unified or Combined State Plans be posted electronically to a Web site that the public could easily access.

We also received comments regarding the determination of eligibility for individuals with autism and on the significance of disability.

Discussion: The Departments of Education and Labor address these comments in the Analysis of Comments and Changes section of the joint final regulations implementing the jointly administered requirements for the submission of a Unified or Combined State Plan under sections 102, and 103 of title I of WIOA and the performance accountability system under section 116 of title I of WIOA, published elsewhere in this issue of the Federal Register, because they apply to all core programs in the workforce development system, not just the VR program.

We address the comments regarding the determination of eligibility for individuals with autism and the significance of disability in the Assessment for Determining Eligibility and Priority for Services (§ 361.42) section of this preamble.

Changes: None.

Requirements for a State Rehabilitation Council (§ 361.17)

Establishment of a State Rehabilitation Council

Comments: One commenter suggested the word “if” be removed from the introductory paragraph in § 361.17. This commenter suggested that all States are required to have a State Rehabilitation Council (SRC or Council).

Discussion: Section 101(a)(21) of the Act, which remained unchanged by WIOA, and final § 361.16 permit States to establish either an independent State commission or an SRC. Therefore, there is no statutory authority to mandate that States establish a Council, rather than an independent commission. For this reason, we have not revised the introductory paragraph in final § 361.17 as the commenter recommended, because it is consistent with the statute. However, the Act does not prohibit a State from establishing both an independent commission and a SRC if it chooses to do so.

Changes: None.

Additional Members

Comments: Some commenters requested that we require in § 361.17(b) that the SRC include additional members, such as a representative of the State's Council on Developmental Disabilities, entities carrying out programs under the Assistive Technology Act of 1998 in the State, and groups of, or representing, individuals with intellectual and developmental disabilities.

Discussion: Section 105(b)(1) of the Act, as amended by WIOA, made only one amendment to the composition requirements of the SRC related to the representation of the AIVRS projects in the State on the SRC. The Act, as amended by WIOA, did not alter the composition requirements in any other way. As a result, there is no statutory basis to require additional representatives from other State entities. However, the Act, as amended by WIOA, does not prohibit a State from electing to add more members to its SRC if it determines this is appropriate.

Changes: None.

Terms of Appointment

Comments: One commenter suggested that we amend the requirements related to terms of appointment in § 361.17(e) to allow SRC members who were appointed to fill a vacancy and serve the remainder of their predecessor's term to be appointed to two additional consecutive full terms.

Discussion: WIOA did not amend section 105(b)(6) of the Act or change the requirements governing terms of appointment; therefore, there is no statutory authority to amend these requirements in final § 361.17(e). The Department has interpreted these requirements to permit an SRC member who completed the term of a vacating member to be appointed for only one additional consecutive full term of three years.

This long-standing Department interpretation is consistent with section 105(b)(6) of the Act, which limits a term to no more than three years; however, there is no requirement that each member be appointed for a three-year term. Under section 105(b)(6)(A)(i) of the Act, an individual who is appointed to complete a predecessor's unfinished term is appointed for the remainder of that term. This appointment constitutes one full term for that individual. Section 105(b)(6)(B) of the Act prohibits an individual from serving more than two consecutive full terms. Therefore, if an individual is appointed to complete one year remaining of a predecessor's term and is then reappointed for a second full three-year term, this individual has served two full terms even though the total number of years served is four.

Changes: None.Start Printed Page 55653

Coordination With One-Stop Centers

Comments: None.

Discussion: Section 105(c)(8) of the Act and final § 361.17(h))(8) permit the SRC to perform functions in addition to those specifically authorized in the Act and final regulations so long as they are comparable to the specified functions. To support the alignment of the VR program with the workforce development system as emphasized throughout the Act and these final regulations, we clarify that SRCs may coordinate and establish working relationships with one-stop centers. This coordination is comparable to the coordination with SILCs and CILs required under section 105(c)(7) of the Act and final § 361.17(h)(7).

Changes: None.

Comprehensive System of Personnel Development (§ 361.18)

Data Report for Comprehensive System of Personnel Development (§ 361.18(a))

Comments: One commenter recommended revisions to proposed § 361.18(a) regarding the submission of data on the comprehensive system of personnel development (CSPD) in the vocational rehabilitation services portion of the Unified or Combined State Plan to reduce burden on DSUs. Specifically, the commenter recommended that DSUs be required to submit information about the vocational rehabilitation personnel via pre-print assurances, rather than descriptions, and be required to submit aggregated data, rather than disaggregated data.

Discussion: WIOA made only technical changes to section 101(a)(7)(A) of the Act, none of which increased the reporting that had been required of DSUs for nearly 20 years. While we are sensitive to the burden imposed by reporting requirements, there is no statutory basis for the Department to make the changes suggested by the commenter. Section 101(a)(7)(A) of the Act, as amended by WIOA, explicitly mandates that DSUs provide the requisite information in a descriptive format and the data in a disaggregated format.

Changes: None.

Applicability of Education, and Experiential Requirements to Rehabilitation Counselors (§ 361.18(c)(1))

Comments: We received many comments regarding proposed § 361.18(c)(1)(ii), which requires DSUs to establish, as part of a CSPD, personnel standards for rehabilitation professionals and paraprofessionals that include educational and experiential requirements. Most of these commenters opposed applying this provision to vocational rehabilitation counselors, and many of these commenters stressed the importance of maintaining the education and experience requirement under prior § 361.18(c)(1)(i) for vocational rehabilitation counselors. Specifically, these commenters stated that vocational rehabilitation counselors should be required to meet a national or State-approved or recognized certification, licensing, registration, or other comparable requirements for the area in which such personnel are providing vocational rehabilitation services. These commenters strongly urged the Department to require that vocational rehabilitation counselors meet that higher standard.

Similarly, many commenters urged that the training and education received in a master's degree program in rehabilitation counseling relate in a necessary, direct, and practical way to the work vocational rehabilitation counselors do each day. These commenters asserted that rehabilitation counseling is a professional career that requires extensive knowledge in a very broad arena. In addition, several commenters stressed that the educational requirements applied to vocational rehabilitation counselors must be sufficient to ensure that they have the following knowledge: medical and psychological aspects of disability, counseling and guidance strategies, vocational assessment, person-centered planning, cultural competency, career services, and building relationships with businesses who would like to hire or retain individuals with disabilities. These commenters maintained that all of these skills are available to individuals pursuing a master's degree in a program accredited by the Council on Rehabilitation Education.

Several commenters maintained that section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and proposed § 361.18(c)(1)(ii), which set education and experience requirements of a baccalaureate degree in an additional field of study such as business administration, human resources, and economics, do not apply to vocational rehabilitation counselors. These commenters strongly believe that since a national certification exists for certified rehabilitation counselors this provision is inapplicable for vocational rehabilitation counselors. Some commenters stated that because there was no legislative report accompanying WIOA, the Department cannot be certain that Congress intended that the lower education and experience requirements in section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, apply to vocational rehabilitation counselors. One commenter stated that including a business degree in the credentials required for vocational rehabilitation personnel, with respect to qualified vocational rehabilitation counselors, was intended to be supplemental to a Master's degree in rehabilitation counseling and does not supplant the highest standard in the State, which in many States is the master's degree in rehabilitation counseling. Another commenter stated that since individuals with less experience could be paid less, they potentially could make up a larger portion of the DSU staff. If done correctly, the commenter stated that this could be a great opportunity to add individuals with business and marketing backgrounds to the DSU staff. This could also potentially help reduce caseloads, since recipients who need assistance only with placement could go straight to the marketing/business staff. Some commenters observed that the new requirements appear to be based on an assumption that a counselor should be able to work with both consumers and employers, as opposed to a team approach where experts in counseling work with consumers and business experts work with employers.

One commenter supported the education and experience requirements in proposed § 361.18(c)(1)(ii) because of the heightened emphasis on employer engagement and competitive integrated employment outcomes. This commenter stated that the proposed changes will provide an opportunity for DSUs to adjust the level of expertise and commitment of its personnel. The commenter also stated that establishing these educational requirements and work experiences will ensure that program participants are receiving quality services.

Discussion: We appreciate the many comments we received regarding CSPD and the changes proposed in § 361.18(c)(1)(ii). We appreciate the fact that CSPD is an important issue for DSUs and their personnel and that it represents a cornerstone of the VR program, ensuring that individuals with disabilities receive services from staff who are qualified to meet their individual needs.

As stated in the NPRM, proposed § 361.18(c)(1)(ii) mirrors section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, with regard to minimum education and experience requirements for vocational rehabilitation personnel. In so doing, § 361.18(c)(1)(i), both proposed and final: (1) Retains language in prior § 361.18(c)(1)(i) regarding national and State-approved Start Printed Page 55654certification and licensure requirements since this requirement remained unchanged by WIOA; (2) incorporates new educational and experiential requirements in proposed § 361.18(c)(1)(ii) that range from a baccalaureate degree with at least one year of relevant experience to a master's or doctoral degree; and (3) deletes the requirement in prior § 361.18(c)(1)(ii) that DSUs must re-train staff who do not meet their established personnel standards.

We agree with commenters that the higher standard in section 101(a)(7)(B)(i) of the Act and final § 361.18(c)(1)(i), which had been the only personnel standard for vocational rehabilitation personnel prior to the enactment of WIOA, has served a critical role in ensuring that well-qualified staff are available to provide vocational rehabilitation services to individuals with disabilities. We understand other lower education or experience requirements may not prepare DSU staff in the same manner as a national or State-approved certification or licensure for vocational rehabilitation counseling could. As commenters indicated, programs leading to such national or State-approved certification or licensure in vocational rehabilitation provide vocational rehabilitation counselors with critical knowledge and understanding of medical and psychological aspects of disability, counseling and guidance strategies, vocational assessment, person-centered planning, cultural competency, career services, and building relationships with businesses who would like to hire or retain individuals with disabilities. However, section 101(a)(7)(B) of the Act, as amended by WIOA, requires that States establish and maintain personnel standards, which apply to all vocational rehabilitation professionals and paraprofessionals employed by the DSU, including both national or State-approved certification and licensure requirements in section 101(a)(7)(B)(i) and the education and experience requirements in section 101(a)(7)(B)(ii). This means that the personnel standards apply to vocational rehabilitation counselors and all other vocational rehabilitation professionals and paraprofessionals. There is nothing in the statute that limits the higher standard to vocational rehabilitation counselors. Nor is there any statutory basis to preclude a DSU from hiring a vocational rehabilitation counselor who meets the education and experience requirements of section 101(a)(7)(B)(ii) but not a national or State-approved certification or licensure requirement. Final § 361.18(c)(1) is consistent with the Act as amended by WIOA.

We also agree with the commenters who supported the proposal, and believe that the new education and experience requirements set forth in section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and final § 361.18(c)(1)(ii) are beneficial to the VR program and the individuals they serve.

Changes: None.

Applicability of Standards to Other Personnel

Comments: Some commenters stated that the lower educational standards might better be applied to other vocational rehabilitation personnel (e.g., business relations specialists, placement specialists, etc.). One commenter said other positions (such as financial officers, legal counsel, DSU program/division directors, and policy/regulatory compliance officers) should be subject to requirements regarding the development of skills and knowledge and should be required to complete and maintain a certain amount of training regarding the provision of rehabilitation services.

Discussion: Consistent with our interpretation of the CSPD requirements in a NPRM published pursuant to the 1998 Amendments to the Act, we interpret the Act to require the DSU establish and implement appropriate, certification-based standards for all categories of professionals and paraprofessionals needed to conduct the VR program. However, in light of the difficulty States may experience in developing numerous standards at the same time, we would expect DSUs to give priority to those professions that are generally considered most critical to the success of the VR program (65 FR 10619, 10622-10623 (Feb. 28, 2000)). This requirement under the Act, as amended by WIOA, applies to all personnel positions listed under the State's vocational rehabilitation classification as it had under WIA. The specific positions covered under such a classification will vary from State to State. With respect to financial officers and legal counsel, States have the discretion to determine whether they are classified as vocational rehabilitation professionals or paraprofessionals since their classification varies between States. In many States, these positions are not dedicated solely to the DSU and its VR program, but rather are more general State personnel positions. We would agree that program and division administrators and policy and regulatory compliance officers for the DSU's VR program must be covered by the requirement in final § 361.18(c)(1).

Similarly, we would agree that the VR program director or administrator would be covered by the CSPD requirements of section 101(a)(7)(B) because that position would be considered a vocational rehabilitation professional or paraprofessional. The Secretary believes that the individual who oversees vocational rehabilitation professionals and paraprofessionals should satisfy at least the minimum education and experience requirements applicable to all vocational rehabilitation professionals and paraprofessionals.

We appreciate the comment regarding the personnel standards and their applicability to vocational rehabilitation paraprofessionals. Neither the Act nor these final regulations distinguish between vocational rehabilitation professionals and paraprofessionals. By the same token, neither the Act nor these final regulations define what constitutes a vocational rehabilitation professional or paraprofessional as opposed to an administrative staff position providing clerical or other support to rehabilitation personnel.

The distinction among vocational rehabilitation professionals, paraprofessionals, and administrative (e.g., clerical and other support) staff are made at the State level in accordance with State hiring policies and procedures. Neither section 101(a)(7)(B) of the Act, as amended by WIOA, nor final § 361.18(c)(1) require the DSU to develop personnel standards for the hiring of staff who are not classified as vocational rehabilitation professionals or paraprofessionals. However, both the Act and these final regulations require a DSU to develop personnel standards for the hiring of vocational rehabilitation professionals and paraprofessionals that are consistent with the standards set forth in section 101(a)(7)(B) of the Act, as amended by WIOA, and final § 361.18(c)(1).

As such, if a national or State-approved standard—or, in the absence of such standards, other comparable requirements (e.g., State personnel standards)—exists for such paraprofessional this should be the standard for such personnel. However, if no such standard exists or the DSU is unable to hire staff that meet such standard, then the DSU must, under final § 361.18(c)(1)(ii), hire vocational rehabilitation paraprofessionals who meet standards consistent with the education and experience levels established in the Act and these final regulations.

Changes: None.Start Printed Page 55655

De-Professionalization and Diminution of Vocational Rehabilitation Personnel

Comments: Several commenters stated that the proposed education and experience requirements seemingly discount the role and impact of the professional rehabilitation counselor working with eligible consumers to obtain competitive integrated employment. Many stated that proposed § 361.18(c)(1)(ii)(A)(1), which permits a baccalaureate degree plus one year of relevant experience, serves as a guideline to promote the de-professionalization of the expertise level associated with rehabilitation counseling and the professional provision of qualified services for individuals with disabilities. The commenters asserted that an individual with a baccalaureate degree, some related work experience, or volunteer work, is not equivalent to a master's degree level graduate who is a qualified counselor licensed to practice counseling.

Further, at least one commenter expressed concern that the flexibility offered by the new education and experience requirements could lead to the unintended diminution of a vocational rehabilitation workforce able to meet the needs of a consumer population with significant disabilities, which is its major focus, especially as public resources diminish. The commenter encouraged the Department to work with DSUs and academic institutions to ensure this diminution does not occur. The commenter stated that some of the degrees listed under these personnel standards would be appropriate for specialized titles such as “business relations specialists” but may not be appropriate for vocational rehabilitation counselors.

Discussion: Prior § 361.18(c)(1)(ii) permitted DSUs to hire individuals who did not meet the national or State-approved standard so long as the agency provided training to enable the individual to reach that higher standard. While WIOA deleted the provision that allowed DSUs to hire individuals at a lower standard so long as additional training was provided so that the staff person could eventually satisfy the national or State-approved standard, DSUs under final § 361.18(c)(1)(ii) must ensure that individuals who do not meet the higher standard satisfy certain statutorily-required minimum standards. Looking at the new requirements in this way, the new educational and experiential requirements merely set minimum hiring standards, which previously had been left at the DSU's discretion. In this manner, we disagree with commenters that the new provisions of section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and final § 361.18(c)(1)(ii) promote the de-professionalization of the vocational rehabilitation counselor or the diminution of the knowledge and skills needed to meet the vocational rehabilitation needs of individuals with disabilities.

We believe the education and experience requirements set forth in section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and final § 361.18(c)(1)(ii) enable DSUs to hire personnel in such a manner that results in an expansion of qualifications of staff available to provide vocational rehabilitation services. For example, the new education and experience requirements could enable DSUs to expand the number of staff trained to provide certain services critical to meeting the employment needs of individuals with disabilities and employers, such as employment specialists or job placement specialists, thereby increasing opportunities for employer engagement and the achievement of competitive integrated employment outcomes by individuals with disabilities. This broader range of acceptable education and experience could lead to a more diverse workforce in VR agencies.

Looking at the new personnel standard requirements in this way, they could be viewed as a means of enabling DSUs to expand the range of qualified personnel available to provide certain services in-house rather than having to contract for those services. DSUs could employ sufficient qualified personnel to work in teams to meet the holistic needs of the individuals served by the VR program, ranging from specific disability-related services to employment-related services. We believe this interpretation is consistent with the plain meaning of the statutory requirements in section 101(a)(7)(B) of the Act, and the heightened emphasis throughout WIOA on employer engagement and the achievement of competitive integrated employment outcomes.

Changes: None.

State Job Classification Minimum Qualifications

Comments: One commenter noted the various degrees listed (e.g., psychology and business) in section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and proposed § 361.18(c)(1)(ii) are not typically seen for the same position when State governments are developing classification minimum qualifications because each of the degrees provide individuals with different skill sets. The commenter added that, while a DSU would need personnel with skill sets from many of the degrees listed, it would be unreasonable to expect that a single individual would have expertise in two or more specialized skill sets.

Some commenters stated that the standards in proposed § 361.18(c)(1) should be sufficient for recruitment of vocational rehabilitation counselors, but that the use of “and” between proposed §§ 361.18(c)(1)(i) and 361.18(c)(1)(ii) seems to imply that additional standards must be used. They expressed concern that requiring at least one year's paid or unpaid work in the field would make it challenging for DSUs to recruit qualified counselors directly from long-term training programs.

Discussion: We disagree with commenters that the degrees listed in section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and proposed § 361.18(c)(1)(ii) necessarily will pose problems for the development of minimum qualifications within State job classification. While we agree that it would be unreasonable for a single job position to list each of those degrees as a minimum qualification, it is reasonable to post various job positions within the classification for vocational rehabilitation counselors. As stated previously, we believe the amendments to WIOA provide DSUs with an opportunity to employ other personnel, such as business specialists or job placement specialists, who could complement the critical work performed by vocational rehabilitation counselors. In so doing, DSUs could minimize the need to contract for these services. While final § 361.18(c)(1)(ii) permits DSUs to hire individuals with a variety of degrees, there is no requirement or expectation that a vocational rehabilitation counselor or any other vocational rehabilitation professional or paraprofessional employed by the DSU be an expert in more than one area.

The education and experience requirements of section 101(a)(7)(B)(ii) of the Act apply only in those circumstances when the DSU is not able to hire vocational rehabilitation professionals and paraprofessionals who satisfy a national- or State-approved certification or licensure standard. Vocational rehabilitation counselors graduating from long-term training programs would meet a national or State-approved standard and could be hired in accordance with personnel standards established under section 101(a)(7)(B)(i) of the Act, which does not require that the individual satisfy minimum experience requirements.

Changes: None.Start Printed Page 55656

Additional or Substitute Qualifications

Comments: Two commenters recommended revising proposed § 361.18(c)(1)(ii)(B) by inserting a work experience requirement similar to that required for individuals with a baccalaureate degree as set forth in proposed § 361.18(c)(1)(ii)(A)(1).

Many commenters requested the proposed regulations be revised to include a new provision in § 361.18(c)(1)(ii) to allow a complement of work experience, in addition to specialized training or certification through either advanced higher education or through a legitimately recognized association that provides specialized training when working specifically with individuals who possess unique barriers to independence and require unique training, such as individuals who are blind.

Another commenter recommended that proposed § 361.18(c)(1)(ii) be revised to allow years of experience to substitute for the identified degree(s) for paraprofessionals, which could create reasonable flexibility. A requirement of years of experience, coupled with staff development required by the regulations, would assure that paraprofessionals are highly qualified to provide appropriate services to individuals with disabilities.

Discussion: We appreciate the suggestion made by two commenters adding minimum paid or unpaid work experience requirements for DSU personnel hired at the master's or doctoral level. We also appreciate the many comments recommending that, in addition to satisfying a national or State-approved standard, work experience be required for those personnel who work with individuals with significant barriers to employment, such as individuals who are blind or visually-impaired.

While we agree work experience can be valuable, section 101(a)(7)(B) sets forth explicit requirements for a DSU's personnel standards, including requirements related to minimum educational and experiential requirements. Given the explicit nature of these requirements, there is no statutory basis to require different or additional personnel standards in final § 361.18(c)(1).

Changes: None.

Interplay Between National or State-approved Certification or Licensure Standards and Minimal Educational and Experiential Requirements

Comments: Many commenters requested clarification regarding the interplay between the requirement that a State's CSPD be consistent with a national or State-approved certification or licensure standard in proposed § 361.18(c)(1)(i) and the minimal educational and experiential requirements in proposed § 361.18(c)(1)(ii). Most of these commenters did not support the proposed regulatory language, stating that it is confusing to have two sets of standards for vocational rehabilitation personnel. A few commenters questioned whether a DSU may choose between the two standards, i.e. choose to maintain the higher standard of § 361.18(c)(1)(i) or the lower standard of § 361.18(c)(1)(ii). Similarly, some commenters requested clarification about whether the DSUs can maintain their current personnel standards consistent with applicable national or State-approved or recognized certification, licensing, or registration requirements. These commenters were concerned that including lower standards in the regulations would force DSUs to lower their standards. Further, some commenters stated that most States have a minimum personnel standard that is greater than what is being proposed and asked whether the DSUs will have to hire vocational rehabilitation personnel at the lower educational standard.

Discussion: Contrary to the suggestions made by several commenters, the personnel standards in section 101(a)(7)(B)(i) and (ii) are separate and distinct requirements. Therefore, DSUs may not choose to implement one and not the other but, rather, must develop both standards. Under section 101(a)(7)(B)(i), States must continue to develop personnel standards that are consistent with applicable national or State-approved certification or licensure requirements, as well as develop personnel standards that satisfy minimum education and experience requirements. As has always been the case, CSPD standards do not dictate whom a State may or may not hire. Hiring is solely a State matter. Instead, the CSPD standards simply set parameters for the standards a State must use in establishing its hiring procedures. There is nothing in the Act or these final regulations to preclude a DSU from continuing to hire vocational rehabilitation professionals and paraprofessionals that satisfy the higher standard. However, in hiring individuals who do not meet a national or State-approved certification or licensure standard, DSUs must hire individuals who meet the educational and experiential requirements set forth in section 101(a)(7)(B)(ii). These individuals must have at least a baccalaureate degree in a specified field of study plus one year of relevant experience, or a master's or doctoral degree in one of the fields specified.

Further, if a vocational rehabilitation counselor is hired under the standard set forth in final § 361.18(c)(1)(i) (e.g., a standard consistent with a national or State-approved standard), that vocational rehabilitation counselor is not required to meet the education or experience requirements set forth in final § 361.18(c)(1)(ii) as well. There is no requirement that an individual meet both personnel standards set forth in final § 361.18(c)(1).

Changes: None.

Succession Planning

Comments: One commenter suggested that the CSPD requirements should address succession planning at the administrative level. The commenter recommended that the final regulations be revised to incorporate CSPD requirements to address the void in administrative skill and knowledge created in DSUs by retirements.

Discussion: We agree with the commenter's concern that DSUs face a significant loss of knowledge and skills as key personnel retire. We note that DSUs are required, under final § 361.18(d)(2)(iii), to include succession planning in their staff development plans when developing personnel standards and providing on-going training.

Changes: None.

Re-Training of Staff Not Meeting Personnel Standards

Comments: Several commenters expressed serious concerns about the elimination of the requirement to re-train staff who are not meeting the DSU's personnel standards for qualified staff, in prior § 361.18(c)(1)(ii).

Discussion: While we appreciate the concern expressed by commenters regarding the deletion of the regulatory requirement for the DSU to provide re-training to personnel who do not meet the DSU's personnel standards, the statutory requirement for re-training, which had been contained in section 101(a)(7)(B)(ii) of the Act, as amended by WIA, has been deleted by the amendments made by WIOA. Despite the deletion of the regulatory requirement, there is nothing in the Act or these final regulations that prohibits a DSU from making the decision to re-train staff as the agency deems appropriate. However, there is no statutory basis for the Department to require such re-training in these final Start Printed Page 55657regulations given the specific deletion of that statutory requirement.

Changes: None.

Standards of Personnel Development—Other Comparable Requirements (§ 361.18(c)(1))

Comments: Several commenters recommended that the Department define “other comparable requirements,” which is included in the personnel standard in section 101(a)(7)(B)(i) of the Act and proposed § 361.18(c)(1)(i) and applies if there are no applicable national, State-approved, or recognized certification, licensing, or registration requirements. The commenters recommended that “other comparable requirements” should include competence in counseling and guidance, knowledge and application of the medical and psychological aspects of disability, knowledge and implementation of vocational testing, working knowledge and integration of labor market data and disability employment policy, and providing the services required to develop and implement individualized career plans that assist persons with disabilities in successful employment in a competitive integrated work environment.

Discussion: Section 101(a)(7)(B)(i) of the Act and final § 361.18(c)(1)(i) require a DSU to develop personnel standards that are consistent with any national or State-approved or recognized certification, licensing, or registration requirements, or, in the absence of these requirements, other comparable requirements (including State personnel requirements) that apply to the profession or discipline in which that category of personnel is providing vocational rehabilitation services. While we agree with commenters that “other comparable requirements” could include any of the areas suggested, we disagree that the final regulations should define the phrase. This phrase provides DSUs with maximum flexibility when developing personnel standards by enabling DSUs to modify personnel standards as relevant credentials evolve.

Changes: None.

Meaning of “A 21st Century Understanding of the Evolving Labor Force and the Needs of Individuals With Disabilities”

Comments: Many commenters asked for clarification of what is meant by a 21st century understanding of the evolving labor force and the needs of individuals with disabilities, as used in section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and in proposed § 361.18(c)(2)(ii). Many commenters stated that the list of examples of relevant personnel skills in proposed § 361.18(c)(2)(ii) either did not help clarify the meaning or was incomplete. Some commenters stated that the list represented skills more oriented to the medical models of the past rather than the employer focus required today. One commenter asserted that the congressional intent behind the requirements for a 21st century understanding included a focus on employment; an understanding of economic and job market trends, business management, and operations; and meeting the needs of local and regional employers.

Many commenters who thought the list of examples was incomplete suggested additions. Some were suggested because the commenters stated that customary, but critical, skills for vocational rehabilitation counselors had been left out of the list. Some brought a more modern focus to the traditional topic, refining knowledge of medical and psychological aspects of disability to include more employment-focused use of such knowledge to determine functional limitations and the vocational implications of these functional limitations on employment planning and workplace accommodations.

Other commenters provided lists of skills that represented areas in which the focus is on greater knowledge of the world of work, including labor market trends and various sources of labor market information and its use in selecting vocational goals and developing individualized plans for employment. Some commenters suggested that using information about job requirements, labor market trends, and other labor market information would help build relationships with employers through greater knowledge of their businesses and their employment requirements and would also help in job development and job placement efforts.

One group of commenters suggested that a recent U.S. Government Accountability Office (GAO) study, which identified gaps in the knowledge of vocational counselors employed by the U.S. Department of Veterans Affairs, could serve as a starting point for developing a list of skills needed for the 21st century vocational rehabilitation counselor employed by the DSU. Some skills included familiarity with Bureau of Labor Statistics data, the Dictionary of Occupational Titles, and the Department of Labor's O*NET occupational system; vocational testing and assessment; job accommodations; training in the Americans with Disabilities Act (ADA) and other employment discrimination laws; vocational implications of various disabilities, including traumatic brain injury, post-traumatic stress syndrome, mental illnesses, and autism; employment plan development; Social Security work incentives, and the Ticket to Work and Self-Sufficiency program; and knowledge of disability programs in the State and local area, including independent living programs.

One commenter suggested that the six areas of knowledge and skills in proposed § 361.18(c)(2)(ii) could be used to ensure vocational rehabilitation personnel have a 21st century understanding. The commenter stated the examples focused on critical knowledge domains and closely mirror the knowledge domains required for accreditation by a vocational rehabilitation counseling program. However, the commenter expressed concern that the process of evaluating whether candidates have the necessary knowledge and skills would be insufficient without the assurance that the candidate graduates from an accredited vocational rehabilitation counseling program. The commenter recommended that the Department recognize graduates from accredited programs as having the knowledge, skill, and experience requirements that are necessary to provide high quality services to individuals with disabilities.

Discussion: We appreciate the many comments and suggestions we received about the skills and knowledge essential to ensuring a 21st century understanding of the evolving labor force and the needs of individuals with disabilities under section 101(a)(7)(B)(ii) of the Act, as amended by WIOA, and in proposed § 361.18(c)(2)(ii). Lacking a widely-accepted definition of the term, we proposed several examples in the regulations to help clarify its meaning. Most commenters, however, stated that the examples in proposed § 361.18(c)(2)(ii) were not sufficient because they did not include a clear focus on employment or emphasize the use of the most up-to-date techniques.

In considering what changes to make in the examples, we first recognized that the requirements for a 21st century understanding apply to knowledge and skills relevant to working with both employers and individuals with disabilities. We also believe that “21st century” refers to maintaining a cutting edge, state-of-the-art approach to whatever topic is included in the list, not merely maintaining activities at traditional, established levels. These underlying principles governed the review, selection, and wording of the examples.Start Printed Page 55658

We looked at traditional topic areas that are still necessary for working with individuals with disabilities and employers, with the intent to add language that suggests use of contemporary practices or that adds emphasis on an employment focus. For example, we replaced the previous language about knowledge of medical and psychological aspects of disability with language about knowledge of the functional limitations of various disabilities and the vocational implications of these functional limitations for employment.

We considered new approaches to learn about the world of work, large-scale employer needs (e.g., labor market trends and occupational shortages), small-scale employer needs (e.g., specific job requirements, soft skill requirements), and ways to use information differently to inform traditional vocational rehabilitation practices (such as using labor market information to assist in developing vocational goals and employment plans, while providing informed choice). We also took into consideration the GAO report titled “VA Vocational Rehabilitation and Employment: Further Performance and Workload Management Improvements Are Needed” (GAO-14-61) published January 14, 2014, as well as various lists of suggested examples provided by national organizations and endorsed by other commenters. After considering all of the comments and suggestions received, we have amended the examples in final § 361.18(c)(2)(ii). We clarify that the term “apprenticeships” as used in 361.18(c)(2)(ii)(D) does not include Registered Apprenticeships.

In response to commenters asking whether the “21st century understanding” requirement applies only to vocational rehabilitation counselors, section 101(a)(7)(B) of the Act, as amended by WIOA, and final § 361.18(c) require the DSU to develop personnel standards that apply to all vocational rehabilitation professionals and paraprofessionals, not just vocational rehabilitation counselors. The revised list of examples set forth in final § 361.18(c)(2)(ii) provides a comprehensive, but not exhaustive, list of skills necessary for achieving employment outcomes in the 21st century. Because we realize that States may choose to employ staff in a variety of positions, the skills listed may be applicable to various positions in differing ways.

Finally, as we described earlier in the Applicability of Education, and Experiential Requirements to Rehabilitation Counselors (§ 361.18(c)(1)) section, we agree with the comment that accredited programs provide vocational rehabilitation counselors with knowledge and skills critical to providing vocational rehabilitation services to individuals with disabilities. However, section 101(a)(7) of the Act does not specify that individuals pursuing employment as vocational rehabilitation counselors must obtain an undergraduate or a graduate-level degree in rehabilitation counseling from accredited programs and final § 361.18(c) mirrors the Act in this respect. In addition, we recognize that other DSU personnel, such as employment specialists and job placement specialists, serve a critical role in working with employers and individuals with disabilities. The Secretary believes all vocational rehabilitation professionals and paraprofessionals must have the knowledge and skills necessary to satisfy the “21st century understanding” requirement.

Changes: We have substantially revised the examples in final § 361.18(c)(2)(ii) to provide a more robust list of the skills and knowledge needed to meet the needs of employers and individuals with disabilities in the evolving 21st century labor market.

Staff Development (§ 361.18(d))

Comments: Several commenters requested clarification regarding proposed § 361.18(d)(1)(i), which requires, as part of the DSU's system of personnel development, training implemented in coordination with entities carrying out State programs under section 4 of the Assistive Technology Act of 1998 (29 U.S.C. 3003). Some of these commenters asked whether the purpose of this provision is to require those entities to provide the training to the DSUs. If so, the commenters requested that the Department revise proposed § 361.18(d)(1)(i) to make that intent clear. These commenters also sought clarification on how the training is to be coordinated with the State's assistive technology program. Other commenters thought a Federal “training fund” source should be made available for the training, regardless of who provides it. Still other commenters stated that proposed § 361.18(d)(1)(i) should be revised to require that the DSUs fund the entities carrying out the State's assistive technology program to provide this training.

Many commenters expressed concerns about insufficient training funds to meet the training needs of vocational rehabilitation personnel and requested that the Department require DSUs to allocate training funds for any required CSPD training. The commenters were further concerned that the potential hiring of staff at the baccalaureate or higher degree in a discipline other than vocational rehabilitation counseling would increase the need for training in order to ensure these personnel have solid knowledge of the VR program. Despite this expected increased need for training, DSUs will face reduced financial resources because of the elimination of the In-Service Training Grant program by WIOA. Therefore, these commenters were concerned that DSUs would allocate less funding for staff development training, certification fees, and other related expenses. One commenter requested that the Department provide training funds to each DSU to assist in providing staff development and personnel training in the areas mandated by WIOA. Still another commenter recommended that the Department offer regional training rather than onsite training through its monitoring or technical assistance process. The commenter said the regional trainings could benefit a larger group of personnel.

A few commenters recommended that proposed § 361.18(d) be revised to require specific training areas for staff development. For example, one commenter stated that many vocational rehabilitation counselors struggle to identify appropriate service providers for individuals with autism. The commenter requested further guidance from the Department on providing vocational rehabilitation services to this population in order to increase opportunities for competitive integrated employment.

Another commenter asked the Department to require DSUs to include in their agency planning and oversight the substantial involvement of mental health advocates, including individuals who have personally experienced mental illness, treatment, and recovery. Similarly, another commenter recommended that DSUs be required to hire and train peer service providers experienced in working with individuals with mental illness who are seeking vocational rehabilitation services, thereby increasing the DSU's effectiveness in serving this population. Still another commenter recommended that staff development include caseload management training, including implementation standards, measures, techniques, and strategies.

Another commenter stressed the importance of coordinating personnel development activities under the Act and the IDEA. The commenter Start Printed Page 55659recommended that State and local education agencies and DSUs establish memoranda of understanding on coordinating personnel development activities. Yet another commenter recommended that proposed § 361.18(d) require staff development to emphasize the need for evolving skills, including understanding the evolving labor market, nondiscrimination laws, the medical and psychosocial aspects of various disabilities, and how this understanding evolves over time.

Discussion: We appreciate the comments seeking clarification of the requirement that the DSU's CSPD must include assistive technology training for vocational rehabilitation professionals and paraprofessionals. Section 101(a)(7)(A)(v)(I) of the Act was amended slightly by WIOA, but not in a manner that imposed additional requirements for this particular training. Therefore, final § 361.18(d)(1)(i) contains only technical changes from the prior regulation, and there is no statutory basis for the Department to add new requirements regarding how the training should be financed. Section 101(a)(7)(A)(v)(I) of the Act, as amended by WIOA, and final § 361.18(d)(1)(i) simply require DSUs to ensure their vocational rehabilitation professionals and paraprofessionals are adequately trained. This must include a system for the continuing education of personnel in rehabilitation technology, and it must include training implemented in coordination with the entity carrying out the State's assistive technology program. It is within the DSU's discretion to determine how and by whom such training will be provided, so long as the training is adequate.

Further, it is beyond the scope of the Act and these regulations to mandate that an entity, authorized under a separate Federal law, such as the Assistive Technology Act of 1998, perform any action, including providing the training described here. There is also no separate Federal program from which money may be given to DSUs to pay for this training, as in-service training funds were eliminated from the Act by WIOA. However, the Act does not prohibit DSUs from using title I VR program funds to provide the training directly or through a contract with the entity providing assistive technology services in the State.

There are many possible sources of training on assistive technology and several ways in which the DSUs may coordinate with the State assistive technology program entity. For example, the DSU may select a trainer with input from the State's assistive technology program entity, or the DSU and the State assistive technology program entity may jointly train DSU staff. Final § 361.18(d)(1)(i) provides the DSU with maximum flexibility to coordinate with the assistive technology program entity in the manner it deems appropriate.

While we understand the limited financial resources available to DSUs, there is no authority under the Act to provide funding to DSUs for any of the trainings required by section 101(a)(7) of the Act and final § 361.18(d)(1)(i). As the commenters noted, WIOA eliminated the In-Service Training Grant program, which had been used by many DSUs to provide staff development training. Nonetheless, the Act has, and continues to, permit DSUs to use title I VR program funds to provide staff development and training. Given the availability of VR program funds for this purpose, we disagree that DSUs necessarily will allocate fewer resources for this effort.

Finally, the Department will explore options for providing staff development trainings on a broader scale, including regional training.

As section 101(a)(7) of the Act is specific about the training areas that may be included for staff development, there is no statutory basis for imposing additional training requirements. However, final § 361.18(d)(2) is consistent with the Act in that it gives DSUs maximum flexibility to use staff development trainings that are specific to each DSU's needs. Nevertheless, we understand the concerns raised by commenters requesting training on specific topics. We agree that serving individuals with autism may raise many complex issues, some of which are addressed in an Institute on Rehabilitation Issues Monograph on rehabilitation of individuals with autism spectrum disorders, which may be found at: http://www.iriforum.org/​/books.aspx.

While there is statutory authority under section 101(a)(21)(A)(i)(III) to require DSUs to involve mental health advocates in the agency's planning and oversight activities when the DSU has an independent commission or council, there is no specific statutory requirement under section 101(a)(7) that DSUs hire mental health peer service providers. Moreover, there is no statutory basis under section 101(a)(7)(A)(v) of the Act to require caseload management be included in staff development training. However, there is nothing to preclude a DSU from doing these things under § 361.18(d)(2) if a need is identified by the DSU.

Finally, we agree with the commenter regarding the need for coordinating staff development between DSUs and State and local education agencies. The Act, as amended by WIOA, places heightened emphasis on providing vocational rehabilitation services to students and youth with disabilities. Although section 101(a)(7) of the Act does not require DSUs to enter into memoranda of understanding with educational agencies, final § 361.18(f) continues to mandate this coordination as it has for many years in prior regulations. We also agree that staff development should emphasize the evolving skills needed to provide vocational rehabilitation services so that individuals with disabilities may achieve competitive integrated employment in the evolving 21st century labor market. Only with these evolving skills will vocational rehabilitation personnel be able to engage effectively with employers in the evolving labor market of the 21st century. We believe the staff development requirement set forth in final § 361.18(d)(1) and (2) covers these skills needed in the 21st century evolving labor market.

Changes: None.

Training Based on the Needs of the DSU

Comment: None.

Discussion: After further Departmental review, we have determined proposed § 361.18(d)(2) contained a drafting error by inadvertently using the word “should” rather than “must.” The regulation has used the term “must” since final regulations were published in 1997, with regard to the specific training areas for staff development. The specific training areas “must” be based on the needs of the DSU. Final § 361.18(d)(2) reflects the correct wording, and this change in these final regulations represents no change in the requirement for DSUs because the provision now reads as it has since 1997.

Changes: Final § 361.18(d)(2) has been changed to require training areas for staff development be based on the needs of the DSU, as is true in prior regulations.

Public Participation Requirements (§ 361.20)

Public Hearings for Changes in an Order of Selection

Comments: Several commenters supported the changes to the prior regulations in proposed § 361.20 that outline the requirements for public notice and participation prior to the adoption of any substantive policies or procedures governing the provision of vocational rehabilitation services under the State plan, including substantive Start Printed Page 55660amendments. Proposed § 361.20 clarifies through descriptive examples the distinction between substantive and administrative changes to VR program rules, policies, and procedures. While “substantive changes” trigger the requirement that the designated State agency provide notice and conduct a public meeting, “administrative changes” typically do not. These commenters stated that the proposed regulation clarifies and supports a more rigorous and open channel of communication between the designated State agency, the SRC, and community stakeholders.

Nonetheless, several commenters requested further clarification. One commenter asked if a DSU must conduct a public meeting every time it opens or closes a priority category under an order of selection.

Discussion: We appreciate the support for, as well as the requests for further clarification of, proposed § 361.20, which distinguishes between those substantive changes requiring public meetings and those administrative changes that do not.

Final § 361.20(a)(2)(v) states that adopting or amending policies implementing an order of selection constitutes a substantive change that requires public input. However, it is the Department's long-standing policy that a DSU need not conduct a public meeting each time it opens or closes a priority category if doing so is consistent with the information describing the implementation of the order of selection in that agency's currently approved State Plan (now the VR services portion of the Unified or Combined State Plan).

By contrast, we believe that closing one or more priority categories would be a substantive change in the administration of the VR program, and would consequently trigger the requirement to conduct a public meeting if such change represents a departure from the manner in which the DSU has implemented the order of selection under the approved State Plan. For example, if a DSU implements an order of selection and closes one or more priority categories after one or more years without closing priority categories, we believe this action would constitute a substantive change in the administration of the VR program and would require a public meeting.

Changes: None.

Public Meetings of the State Rehabilitation Council

Comments: One commenter asserted that meetings of the SRC should fulfill the requirements of proposed § 361.20, since these are public meetings, and the Council is charged with the responsibility to review vocational rehabilitation policies and other substantive changes to the VR program. The commenter stated that holding public meetings in addition to the Council's meetings takes time away from the central work of the DSU.

Discussion: Under section 101(a)(16)(A) of the Act and final § 361.20, it is the responsibility of the designated State agency, not the SRC, to conduct public meetings. Therefore, the Council's meetings cannot satisfy, on their own, the requirement of final § 361.20. Likewise, it is the responsibility of the Council, and not the designated State agency, to conduct its meetings as required by section 105 of the Act and final § 361.17. We recognize that the designated State agency works closely with the Council, as it is required to do, with regard to substantive changes made to policies and procedures affecting the VR program. Therefore, if the designated State agency and the Council determine it would be expedient and effective to do so, they may use the regular or special meetings of the Council as a forum for obtaining input from the Council and the public on substantive changes in VR program rules, policies, and procedures. If the designated State agency chooses to conduct joint meetings in this manner, they must ensure that all requirements concerning the conduct of public meetings in final § 361.20 are satisfied. We emphasize that neither the designated State agency nor the Council are required to conduct joint meetings for the purpose of gathering public input on substantive changes to the administration of the VR program under either final §§ 361.17 or 361.20, though both entities may find it efficient to do so.

Changes: None.

Substantive and Administrative Changes

Comments: A few commenters stated that the distinction between those changes in DSU rules, policies, and procedures that require public comment and those that do not was not clear in the proposed regulation, and requested further clarification.

Discussion: With respect to the comments seeking further clarification and examples of what constitutes a substantive versus administrative change, the commenters did not specify what additional clarification was needed, and so we can provide no further examples. However, the lists of examples in final § 361.20(a)(2) and (a)(3) are not exhaustive; rather, they illustrate some of the most common substantive and administrative changes contemplated by DSUs. We recognize that States may contemplate many more changes to their rules, policies, and procedures implementing the VR program than those identified in these final regulations.

In addition, the Act, as amended by WIOA, and these final regulations provide significant flexibility to the States in the manner in which they administer the VR program and deliver vocational rehabilitation services, and States may adopt rules, policies, and procedures governing the administration of the program that best suit their particular circumstances. As a result, States may adopt rules, policies, and procedures that vary widely from one another, and we do not believe that it is practicable to further clarify, or add to, the examples listed in final § 361.20(a)(2) and (a)(3). While we believe that final § 361.20 provides States with the guidance necessary to determine if a potential change in rules, policies, and procedures constitutes a substantive change requiring a public meeting, we encourage States to seek guidance from the Department about State specific changes.

Changes: None.

Public Comment Through Electronic Means

Comments: One commenter asked if publishing policy changes on a State agency's Web site and receiving public comment and input at the Web site constitutes a public meeting.

Discussion: The publication by the DSU of a proposed change in rules, policies, or procedures governing its administration of the VR program on a Web site does not constitute a public meeting under section 101(a)(16)(A) of the Act or final § 361.20. As used in final § 361.20(a), which requires public meetings to be held throughout the State, “public meeting” means a gathering of people in a physical or virtual (as in the case of videoconferences or teleconferences) location. Nonetheless, designated State agencies can use postings on a Web site and other innovative strategies to gather valuable input from individuals with disabilities, community rehabilitation programs, and other stakeholders affected by proposed changes in rules, policies, or procedures.

Changes: None.

Requirements Related to the Statewide Workforce Development System (§ 361.23)

Comments: Apart from comments on the joint regulations proposed by the Departments of Education and Labor Start Printed Page 55661implementing jointly administered requirements for the one-stop delivery system, one commenter requested that we retitle § 361.23 to improve the reference to the joint regulations governing the one-stop delivery system. A second commenter expressed concern that one-stop centers cannot meet the needs of individuals who are blind or visually impaired. The commenter did not provide an explanation or recommendation on how the regulations could be revised to address this concern.

Discussion: Final § 361.23 provides a cross-reference to the joint regulations governing the one-stop delivery system in subpart F of part 361. Therefore, we believe there is no need to retitle or amend the section further as suggested by the commenter.

We appreciate the concern regarding the availability of services at the one-stop centers for individuals who are blind or visually-impaired. While we understand that there have been some issues with respect to accessibility and availability of services for individuals with significant disabilities in the past, section 121(b)(1)(B)(iv) of WIOA identifies the VR program as a core partner of the workforce development system. As such, DSUs and other core partners of the workforce development system are required to ensure the programmatic and physical accessibility of the services provided through the one-stop centers. For further information, see the joint regulations governing the one-stop delivery system published elsewhere in this issue of the Federal Register. Furthermore, we strongly encourage DSUs that serve individuals who are blind or visually impaired to ensure the needs of these individuals are met through the one-stop delivery system, as appropriate, by strengthening their relationships with other core programs through the memoranda of understanding required under section 121 of WIOA and the joint regulations in subpart F. The Secretary believes the strengthened relationships between the VR program and other core programs, as well as the delivery of vocational rehabilitation services directly at the one-stop centers, will ensure the needs of individuals who are blind or visually impaired are met.

Changes: None.

Cooperation and Coordination With Other Entities (§ 361.24)

General

Comments: Some commenters expressed concerns about the difficulty in establishing new collaborative relationships, the lack of or limited fiscal resources necessary to develop and support collaboration, and mechanisms for accountability and transparency. One commenter indicated that collaborative relationships do not currently exist in their State and that establishing them will require additional money and will alter the methodology for developing the State Plan and the statewide needs assessment.

A few commenters expressed concern that proposed § 361.24 contained limited language regarding the contents of agreements and the delineation of issues that should be addressed. For example, a few commenters remarked that there was no requirement for an agreement between the DSU and Medicaid, and mental health agencies, for people with psychiatric disabilities needing long-term employment supports funded by Medicaid. The commenters suggested that cooperative agreements include identification of individuals needing extended supports, referral mechanisms, the use of Medicaid funds in providing extended supports, how funds will be braided between the DSU and agencies with primary responsibilities to serve individuals with specific disabilities, and sources and criteria for providers of extended supports. A similar comment about waivers for home and community based settings stressed that all parties must work cooperatively at both the policy and individual levels; however, the commenter noted that the proposed regulations merely require there to be an agreement, without specifying minimum contents of those agreements.

Discussion: We appreciate and understand the concerns about the difficulty in establishing new collaborative relationships required under the Act, the lack of or limited fiscal resources necessary to do so, and mechanisms for accountability and transparency. However, DSUs have extensive experience in meeting the requirements under prior § 361.24 for cooperating and coordinating with other entities, and we believe that this will enable DSUs to implement the collaboration requirements in the Act as amended by WIOA.

We also appreciate the concerns that proposed § 361.24 contained limited language regarding the contents of agreements and the delineation of issues that should be addressed. While section 101(a)(11) specifies the content requirements for only some of the cooperative agreements, nothing in the Act or final § 361.24 precludes DSUs from including specific content to clarify the responsibility of collaborating entities through these agreements, and we strongly encourage DSUs to do so. For example, DSUs may enter into cooperative agreements with Medicaid and mental health agencies for people with psychiatric disabilities needing long-term employment support funded by Medicaid. Cooperative agreements may include identification of individuals needing extended supports, referral mechanisms, the use of Medicaid funds in providing extended support, how funds will be braided between DSUs and agencies with primary responsibilities to serve individuals with specific disabilities, and sources and criteria for providers of extended services.

Changes: None.

Cooperation and Collaboration With Other Agencies and Entities

Comments: Many commenters supported proposed § 361.24, which expanded the entities with whom the DSU must collaborate and coordinate its activities under the VR program and several offered additional recommendations.

One commenter especially supported the coordination with employers. Other commenters supported the requirement for cooperative agreements with the State Medicaid agency and the State agency primarily serving people with intellectual and developmental disabilities; however, several commenters noted that the State agency responsible for providing mental health services was not included in this requirement and recommended its inclusion.

Many commenters strongly recommended that DSUs be required to enter into formal interagency agreements with AIVRS grant recipients and with Tribal Education Agencies (TEAs) located in the State.

One commenter recommended that the assurance in the VR portion of the Unified or Combined State Plan specify that the DSU coordinate activities with other State agencies functioning as an employer network under the Ticket to Work and Self-Sufficiency Program established under section 1148 of the Social Security Act (42 U.S.C. 1320b-19), and that the network be expanded to include other agencies acting as employer networks. A related comment inquired whether there should be a Federal Partnership Plus agreement instead of individual State agreements.

A few commenters suggested that in the development of the vocational rehabilitation services portion of the Unified or Combined State Plan, the Department require the DSU to collaborate with the lead entity Start Printed Page 55662implementing programs under the Assistive Technology Act of 1998.

Discussion: We appreciate the commenters' review, support, and recommendations. Although some commenters recommended adding the State agencies responsible for providing mental health services to the required cooperative agreement with the State Medicaid agency and the State agency serving individuals with intellectual and developmental disabilities, section 101(a)(11)(G) of the Act does not require such an agreement and, in fact, is very specific about the entities with which the DSU must develop interagency agreements. For this reason, there is no statutory basis for us to require the DSUs to enter into formal cooperative agreements with the State agencies responsible for providing mental health services.

However, we agree with commenters that it could be beneficial to individuals with disabilities to formalize coordination of services between the DSUs and the State agencies providing mental health services. While final § 361.24(f) does not require a formal cooperative agreement, as the commenters suggest, there is nothing in the Act or in this section that prohibits a DSU from entering into a formal cooperative agreement with the State agencies providing mental health services. Furthermore, section 101(a)(11)(K) of the Act, as amended by WIOA, and final § 361.24(g) stress the importance of the relationship between the DSU and the State agencies providing mental health services and requires collaboration between them.

Similarly, while we agree with commenters that coordination and collaboration between DSUs and entities holding section 14(c) certificates under the FLSA and Tribal Education Agencies could be beneficial for different reasons and we encourage such coordination and collaboration, there is no basis under section 101(a)(11) of the Act to require this. However, Section 101(a)(11)(H) of the Act and final § 361.24(d) do require the VR services portion of the Unified or Combined State Plan to include an assurance that the State has entered into a formal cooperative agreement with each AIVRS grant recipient in the State.

Additionally, the Department does not have the authority under section 101(a)(11)(J) of the Act to expand the requirement in final § 361.24(i) to include non-State agencies acting as employer networks. The Act only requires the DSU to coordinate with State agencies serving as employment networks under the Ticket to Work program. While final § 361.24(i) does not impose the requirement on the DSUs for non-State agencies serving this function, there is nothing in the Act or these final regulations that would prohibit a DSU from doing so. Similarly, the statute does not provide the authority to develop a Federal Partnership Plus agreement in lieu of individual State agreements.

Section 101(a)(11)(I) of the Act and final § 361.24(h) require an assurance in the VR portion of the Unified or Combined State Plan that the DSU and the lead agency and the entity, if any, implementing programs under section 4 of the Assistive Technology Act of 1998 have developed working relationships and will enter into agreements for the coordination of their activities, including the referral of individuals with disabilities to programs and activities described in that section. However, the Act does not require that the DSU collaborate with the Assistive Technology Act program in developing the VR portion of the Unified or Combined State Plan. Therefore, to add this requirement in final § 361.24(h), as recommended, is not supported by the Act. Also, nothing in the Act precludes a DSU from seeking input from the Assistive Technology Act program in the development of the VR portion of the Unified or Combined State Plan.

Changes: None.

Non-Educational Agencies

Comments: One commenter asked for clarification of non-educational agencies and requested examples.

Discussion: Section 101(a)(11)(C) of the Act, as amended by WIOA, and final § 361.24(a) require the DSU to describe in the VR services portion of the Unified or Combined State Plan its cooperation with, and use of, a variety of entities, including non-educational agencies serving out-of-school youth. In response to the commenter, the Act does not define non-educational agencies. Therefore, the Act and these final regulations maximize flexibility because the DSU is not limited to a list that may or may not be applicable in any given State. However, we believe that non-educational agencies could include public systems such as welfare services, foster care, and the juvenile or criminal justice systems serving out-of-school youth. Non-educational agencies also could include those State or local agencies that administer the youth formula grant program authorized under title I of WIOA.

Changes: None.

Federal Agreements

Comments: A few commenters asked whether we intend to establish working arrangements or agreements with agencies at the Federal level to assist States in their efforts to implement proposed § 361.24, and one suggestion was made to establish an interagency coordinating workgroup to review any working arrangements or agreements with these agencies.

Discussion: The Department already cooperates and works collaboratively with its Federal partners. The Act does not provide for formal arrangements at the Federal level for the coordination, collaboration, and cooperation required by section 101(a)(11) of the Act; however, we believe that guidance and technical assistance in the development of agreements and cooperative arrangements may be beneficial. Where appropriate, the Department will work collaboratively with Federal partners to assist States.

Changes: None.

Guidance on the Braiding of Funds

Comments: Two commenters suggested that Federal agencies coordinate guidance regarding the ways in which various funding streams may be braided to help States implement agreements to fully support individuals with disabilities. One commenter requested that the Department emphasize transparency of coordination efforts to track resources to ensure accountability and sustainability.

Discussion: Each Federal program has its own requirements for the expenditure of funds, and States must adhere to those requirements when collaborating. Moreover, while the Uniform Guidance, as set forth in 2 CFR part 200, provides for the braiding and blending of funds, it also requires that funds must be spent solely on allowable costs, namely those costs permitted under and allocable to that program. A cost is allocable to the extent that the program receives a benefit relative to the expenditure of those funds (in other words, a proportionate share of those expenditures). While the Department exercises oversight of the expenditure of funds by DSUs under the Act, we do not have the authority to provide guidance related to the expenditure of funds provided by other Federal agencies or programs. However, we support transparency of coordination efforts to track resources to ensure accountability and sustainability.

Changes: None.

Requirements for Training

Comments: One commenter suggested including joint training among the activities in which the DSU must coordinate with other entities.Start Printed Page 55663

Discussion: There is no authority under section 101(a)(11) of the Act to require the DSUs to add joint training to the activities that the DSU must coordinate with other entities, with one exception. Joint training is required in section 101(a)(11)(H) with grant recipients under the AIVRS program, but not with the other entities in section 101(a)(11) of the Act.

Changes: None.

Notification of the Client Assistance Program

Comments: One commenter suggested that proposed § 361.24 require that all cooperating agencies notify program participants about the CAP in each State.

Discussion: The suggestion is inconsistent with the Act. Section 20 of the Act requires only programs and projects providing services under the Act, not cooperating agencies, be mandated to notify program participants of the CAP. Moreover, section 112 of the Act authorizes the CAP to serve only individuals who are applicants or consumers of programs funded under the Act. To the extent that a cooperative entity is serving an individual who is also an applicant or consumer of a program funded under the Act, that individual would already receive information about the CAP under section 20 of the Act.

Changes: None.

Requirements for Third-Party Cooperative Arrangements (§ 361.28)

In-Kind Contributions

Comments: Two commenters agreed with the changes to the prior regulation in proposed § 361.28. Many commenters, primarily from one State, noted that excluding costs for administrative time and other indirect costs paid by third parties as an allowable source of match would negatively impact cooperative arrangements between VR agencies and their partners.

One commenter requested that the regulations maintain flexibility for States to use in-kind funding contributions from partners to augment a State's match and leverage State funding. Another commenter expressed concern that as a result of the proposed changes, services for students and clients in one program would cease, and that school district employees would lose their jobs.

Discussion: We appreciate the commenters' concerns, and agree that eliminating the ability of third-party cooperative agencies from using certified personnel time would indeed pose a hardship, but such prohibition is not contained in § 361.28, either proposed or final. Section 361.28(c), both proposed and final, explicitly permits public third-party cooperative agencies to provide match via certified personnel time for staff directly providing the vocational rehabilitation services under the third-party cooperative arrangement, as they have been permitted to do for many years. For example, for a school that is the cooperating agency, the cooperating agency may use the certified time for the teacher responsible for teaching the students under the third-party cooperative arrangement program as a permissible source of match since the teacher is directly providing the service under the third-party cooperative arrangement. Final § 361.28(c) does not change the long-standing arrangements that many DSUs have with third-party cooperative agencies, such as the schools, with regard to certified personnel time. However, not all certified personnel time is permissible as a source of match under a third-party cooperative arrangement. As stated above, the teacher's time is permissible for match purposes under the VR program because he or she is directly providing the service, but certified time for other school staff such as principals, vice principals, secretaries, and supervisors, is not permissible for match purposes under the VR program because these individuals do not directly provide vocational rehabilitation services. The certified time for these individuals is a third-party in-kind contribution as defined in 2 CFR 200.96 and, as such, is not permissible source of match for the VR program. While final § 361.28(c) is a new provision, the content merely clarifies the matching requirements that existed in accordance with § 361.60(b), which remains virtually unchanged by these final regulations. The changes made to this section further clarify the allowable sources of match under third-party cooperative arrangements. Consequently, we believe that final § 361.28(c) should have little or no effect on the services for students and other individuals with disabilities served through third-party cooperative arrangements or the cooperative agencies and their employees.

Contrary to what some commenters appear to believe, third-party in-kind contributions have never been an allowable source of match under the VR program, including for purposes of third-party cooperative arrangements. Final § 361.60(b)(2), which remains unchanged, prohibits the use of third-party in-kind contributions as a source of match for the VR program and this prohibition would apply to third-party cooperative arrangements under the VR program as well. However, during monitoring of the VR program, the Department has found that many DSUs seem to be unaware of this prohibition, especially in the context of third-party cooperative arrangements. For this reason, the Department proposed revisions to § 361.28(c), which are maintained in these final regulations, to remind DSUs of the allowable sources of match for third-party cooperative arrangements. Specifically, these sources include cash transfers from the cooperating agency to the DSU and certified personnel expenditures of cooperating agency staff who directly provide vocational rehabilitation services under the third-party cooperative arrangement, both of which were proposed in the NPRM. In final § 361.28, we have added a new paragraph (c)(3) to specify that other direct expenditures incurred under the contract with the cooperating agency only for the direct provision of services under the third-party cooperative arrangement may be an allowable source of match. These expenditures are distinguished from in-kind contributions because the expenditures were incurred specifically for the purpose of the third-party cooperative arrangement and in accordance with the terms and conditions of the contract and within the contract period, all of which can be verified by supporting documentation from the cooperating agency. For example, if it was necessary for a cooperating agency to purchase instructional materials to provide new or expanded services authorized under the third-party cooperative arrangement contract, and if those materials were not already available to the cooperating agency, the expenditures for those materials may be an allowable source of match. On the other hand, expenditures for costs incurred by the third-party cooperating agency not directly for the provision of vocational rehabilitation services, such as, indirect costs, depreciation, existing utilities, space and supplies are not an allowable source of match because they are third-party in-kind contributions as defined in 2 CFR 200.96.

Changes: We have revised final § 361.28 by adding new paragraph (c)(3) to permit other direct expenditures incurred by the cooperating agency to be used as a source of match so long as those expenditures were incurred specifically for the purpose of the third-party cooperative arrangement.Start Printed Page 55664

Students Who Are Eligible or Potentially Eligible for Services

Comments: One commenter requested that proposed § 361.28(a)(2) include services provided by the cooperating agency for students with disabilities who are eligible or potentially eligible for services from the DSU.

Discussion: Under final § 361.28(a)(2), which remains unchanged from prior regulations, vocational rehabilitation services provided under a third-party cooperative arrangement are only available to applicants for, or recipients of, services from the VR program. Given amendments to the Act made by WIOA, particularly new provisions in section 103(b)(7) regarding transition services to groups of students and youth with disabilities and section 113 regarding the provision of pre-employment transition services to students with disabilities, it is possible that some of these services will be provided to youth or students with disabilities who have not yet applied or been determined eligible for vocational rehabilitation services. This means that these students and youth with disabilities would be considered a “recipient” of vocational rehabilitation services for purposes of final § 361.28. As such, DSUs could enter into third-party cooperative arrangements for the provision of these group transition services or pre-employment transition services so long as all requirements of final § 361.28 are satisfied.

Changes: None.

Statewide Assessment; Annual Estimates; Annual State Goals and Priorities; Strategies; and Reports of Progress (§ 361.29)

Comprehensive Statewide Needs Assessment

Comments: We received many comments on proposed § 361.29 pertaining to statewide assessment, annual estimates, goals and priorities, strategies, and reports of progress. One commenter requested clarification of the role of SRCs in the conduct of a comprehensive statewide needs assessment under WIOA.

Several commenters suggested that we revise § 361.29(a) to require that the comprehensive statewide needs assessment be conducted independently, thereby helping to ensure that the needs assessment is more objective and comprehensive.

Another commenter requested that we add a requirement to proposed §§ 361.29(a)(1)(i) and 361.29(b) that the statewide assessment include individuals who are working in subminimum wage and sheltered employment for employers using section 14(c) certificates issued by the Department of Labor under the FLSA. The commenter recommended that because States are required to conduct annual reviews of individuals in subminimum wage and sheltered employment, the needs of these individuals should be added to the assessment requirements under § 361.29(a).

Additionally, the commenter stated that States should be required to review the quality of supported employment services provided to individuals with the most significant disabilities and ensure that any employer holding subminimum wage certificates under section 14(c) of the FLSA should be able to provide supported employment services. Lastly, the same commenter asserted that States should include data on individuals working in segregated employment in any reports to RSA.

Discussion: In response to the comment requesting clarification of the role of the SRC, there is no authority under section 101(a)(15) or 105 of the Act or under title I of WIOA for the SRC to participate in the conduct of any needs assessments required by title I of WIOA. The activities of the Council are limited to those listed in section 105(c) of the Act and final § 361.17(h), both of which remain unchanged by WIOA or these final regulations. In general, the SRC's responsibilities encompass only functions associated with the conduct of the VR program under title I of the Act, not those functions of the VR program as a core partner in the workforce development system under title I of WIOA.

Specifically, section 105(c)(3) and final § 361.17(h)(3) authorize the Council to advise the DSU on activities carried out under title I of the Act and part 361 and to assist with the preparation of the VR services portion of the Unified or Combined State Plan, applications, reports, needs assessments, and evaluations required to be carried out under title I and part 361.

We disagree with the recommendation to require that the comprehensive statewide needs assessment be conducted independently. Final § 361.29(a) mirrors section 101(a)(15)(A) of the Act, which does not require that the assessment be carried out independently. On the contrary, that provision requires that the DSU and Council jointly conduct the assessment every three years. Therefore, there is no authority to revise § 361.29(a) as the commenters recommend.

The contents of the comprehensive statewide needs assessment are outlined in section 101(a)(15)(A) of the Act and final § 361.29(a) is consistent with the statute. However, nothing in the Act and these final regulations prohibits a DSU and Council from conducting a needs assessment that includes additional elements, such as the needs of individuals in subminimum wage and sheltered employment.

Changes: None.

Annual Estimates and Reports of Progress

Comments: One commenter supported the change in proposed § 361.29 that requires DSUs that have implemented orders of selection to estimate and report how many individuals with disabilities are not receiving services, asserting this will provide indirect data regarding the appropriateness of not implementing an order of selection. One commenter requested clarification as to what the Department means by the submission of annual estimates “at such time and in such manner to be determined by the Commissioner” and expressed concern that this was not consistent with the continued requirements to submit various annual reports and updates. The same commenter suggested that the phrase “standards and indicators authorized by Section 106 of the Act” be removed as no longer relevant and that only performance measures authorized under WIOA be included.

Another commenter stated that the requirement under WIOA for the increased collection of data would offer evidence of successes and challenges across the Nation but would also impose some additional costs on the DSUs, which are already struggling under budget constraints.

Additionally, one commenter expressed concerns about the apparent lack of annual reporting of progress toward achieving goals and priorities, and that once the WIOA system is fully implemented, annual reporting should not be such a burden. The commenter requested guidance on how best to use data collected under the newly aligned systems to maximize fiscal and staff resources.

One commenter expressed concern that the lack of annual reporting to the Department regarding flaws in the delivery system for persons with significant disabilities, including those receiving supported employment services, could preclude making timely adjustments to maximize the opportunity for successful, integrated employment in accordance with Section 109 of the Act, as amended by WIOA, Start Printed Page 55665which allows for “expanded types of trainings, technical assistance and other services DSUs may provide under the VR program, to employers who have hired or are interested in hiring individuals with disabilities.”

Discussion: We appreciate the support for the requirement to report the numbers of individuals with disabilities who may not be served in the event that an order of selection is implemented, as well as the other comments expressing concerns and suggestions. In response to the comment requesting clarification pertaining to submission of annual estimates, “at such time and in such manner to be determined by the Commissioner” allows the Department to solve a practical problem caused by a statutory inconsistency. Section 101(a)(10) requires that DSUs collect key data to more effectively manage the VR program and ensure that the needs of the program's consumers, including those with the most significant disabilities, are met. Many of these data must be collected annually, and historically have been submitted as part of annual State plan updates. However, under sections 102 and 103 of title I of WIOA, the Unified or Combined State Plan is submitted every four years, with modifications made at least every two years, as appropriate. Therefore, the Secretary may determine it appropriate to require the data, which are collected annually by DSUs, to be reported only when the State submits a Unified or Combined State Plan or a modification to that Plan.

Although collected data are to be submitted at a time and in a manner to be determined by the Secretary, DSUs still must gather and analyze required data annually as required by the Act and these final regulations. This will allow the agency to respond in a timely manner to the needs of all consumers, including those with the most significant disabilities who may need supported employment services in order to achieve their vocational goals.

Section 106 of the Act requires that the standards and indicators for the VR program must be consistent with the performance accountability measures required by section 116 of title I of WIOA for all core programs, including the VR program. Therefore, all references to standards and indicators throughout the Act and these final regulations refer to the performance accountability measures under WIOA and the phrase cannot be removed from final § 361.29.

We address comments associated with any burden resulting from the data reporting requirements under section 101(a)(10) of the Act, as amended by WIOA, in the Regulatory Impact Analysis section of these final regulations. The Departments of Education and Labor will jointly issue guidance regarding the alignment of data reporting requirements pursuant to the joint regulations governing the performance accountability system established under WIOA and published in subpart E of part 361.

Changes: None.

Provision of Training and Services for Employers (§ 361.32)

Comments: While commenters generally appreciated the increased emphasis on engagement with employers, some suggested that the regulations clarify the types of services and activities in which the DSU may engage, and differentiate the roles and responsibilities of the DSU and the employer, especially with regard to providing accommodations.

Some commenters acknowledged the importance and need for training employers about their obligations under the ADA and about vocational rehabilitation services provided through the VR program, such as work-based learning experiences, pre-employment transition services, disability awareness and the needs of individuals with disabilities in the workplace.

A few commenters suggested that the Department recommend some actions to engage employers, such as encouraging States to establish employer advisory councils at the State, regional, or local level.

One commenter suggested that proposed § 361.32 was not strong enough to prioritize the activities under this section because it authorizes, but does not require, an allocation of funding for services. The commenter recommended that the Department more heavily emphasize the importance of activities under this section.

Finally, one commenter recommended aligning allowable activities under this section with WIOA performance measures regarding effectiveness in serving employers and requested guidance on tracking data related to services provided to employers and the effectiveness of such services.

Discussion: We appreciate the supportive comments and the additional recommendations for implementing the requirements for activities DSUs may engage in with employers. Section 109 of the Act, as amended by WIOA, describes the activities for which States may pay to educate and provide services to employers who have hired, or are interested in hiring, individuals with disabilities under programs carried out under title I of the Act. However, section 109 of the Act does not address prohibited activities or the differentiation of the roles and responsibilities of the DSU and the employer, particularly in providing accommodations. Section 109(1) only allows the DSU to provide training and technical assistance to employers regarding the employment of individuals with disabilities, including disability awareness, and the requirements of the ADA and other employment-related laws. The recommended inclusion of language to describe accommodations that are incumbent upon employers to provide does not fall under the purview of the Department or within the scope and authority of these regulations. Instead, the responsibility of employers for work place accommodations is within the jurisdiction of the Equal Employment Opportunity Commission, which is charged with the enforcement of title I of the ADA.

Section 109 of the Act, as amended by WIOA, and final § 361.32 clearly recognize the important role that DSUs can play in increasing opportunities for competitive integrated employment for individuals with disabilities through the provision of technical assistance and training to employers and specify a wide variety of these activities. For example, the statute and regulation describe the areas in which DSUs may work with employers to provide opportunities for work-based learning experiences and pre-employment transition services to recruit qualified applicants who are individuals with disabilities, to train employees who are individuals with disabilities, and to promote awareness of disability-related obstacles to continued employment. Furthermore, the Act and final regulation provide that the DSU may assist employers through consultation, technical assistance, and support related to workplace accommodations, assistive technology, facilities and workplace access, and using available financial support for hiring or accommodating individuals with disabilities. Given these and other examples, we do not believe that it is necessary to include additional language in final § 361.32 to further emphasize the importance of this technical assistance and training. However, we clarify here that the use of the term “apprenticeships” in final § 361.32 does not include Registered Apprenticeships.

Although we recognize the value of the DSUs engaging employers through activities such as establishing Statewide or regional/local level employer advisory councils, section 109 of the Act Start Printed Page 55666does not require this activity and therefore, we have no statutory authority to require this activity in these regulations. However, final § 361.24(c) requires States to describe in the VR services portion of the Unified or Combined State Plan how the DSU will work with employers to identify opportunities for competitive integrated employment and career exploration, and to facilitate the provision of vocational rehabilitation services.

We agree that the provision of training and services for employers by DSUs is important in accomplishing the purposes of the Act, as amended by WIOA; however, final § 361.32 mirrors section 109 of the Act, as amended by WIOA, which authorizes, but does not require, the expenditure of funds for activities under this section. Therefore, we have no authority to require DSUs to incur expenditures under this section.

The Departments of Education and Labor appreciate the comment regarding the potential interplay between the activities authorized under section 109 of the Act and final § 361.32, and the performance indicator for the effectiveness of serving employers required by 116(b)(2)(A)(i)(VI) of title I of WIOA. Because the measures apply to all core programs in the workforce development system, not just the VR program, we have addressed this comment in the joint final regulations implementing the performance accountability measures under section 116 of WIOA, and published elsewhere in this issue of the Federal Register.

Changes: None.

Innovation and Expansion Activities (§ 361.35)

Resource Plans for Statewide Independent Living Councils

Comments: Many of the commenters opposed the changes in proposed § 361.35(a)(3) which requires the State to assure that it will reserve and use a portion of its VR program funds to support the funding of the Statewide Independent Living Council (SILC), consistent with the plan prepared jointly by the Council and the State under section 705(e)(1). The commenters contend that WIOA did not amend section 101(a)(18)(A)(ii)(I) of the Act and therefore, the Department should not change its regulation and allow the State and the SILC to determine not to use I&E funds. The commenters further stated that any change to § 361.35 would harm CILs by diverting funds from the SILS program under Part B of title VII if I&E funds are not used. Some other commenters opposed proposed § 361.35 allowing innovation and expansion funds to be used at all to support SILC resource plans to the extent needed, arguing that other funding sources are available.

A few commenters requested clarification as to when the DSU uses I&E funds to support the SILC. Of these, one commenter indicated that the DSU, in the commenter's State, has supported the SILC with innovation and expansion funds and would likely continue to do so unless there is a change in the designated State entity (DSE), the State agency responsible for the administration of the independent living programs authorized under title VII of the Act, as amended by WIOA.

Discussion: We appreciate the concerns expressed by commenters. In proposed § 361.35, we attempted to set forth our long-standing interpretation of the statutory language in section 101(a)(18)(A)(ii)(II) that a State's contribution of innovation and expansion funds to the SILC resource plan is governed by the resource plan's description of support for the SILC. We consistently have interpreted the statutory requirement in section 101(a)(18)(A)(ii)(II) that the funding of the SILC be consistent with the SILC resource plan to mean that the State and the SILC may decide to use innovation and expansion funds to support the SILC resource plan, or not to do so as they determine how they will use the sources of funding available under section 705(e) to support the SILC.

Our data shows that States and SILCs have been using innovation and expansion funds to support SILC resource plans in this way for many years. Based upon an analysis of the data from all of the State Plans for Independent Living for the period FY 2014 through FY 2016, we found that innovation and expansion funds account for 38 percent of the roughly $8.7 million contributed by States to SILC resource plans. We found that only 32 States contributed innovation and expansion funds to the SILC resource plan. Of these 32 States, 13 States used only innovation and expansion funds to support the SILC.

However, because the innovation and expansion section of the Act remained unchanged by WIOA and our proposed regulation sparked confusion among many commenters, we have decided to return to the current regulation which mirrors the statutory language requiring that the reservation and use of the innovation and expansion funds to support the funding of the SILC be consistent with the SILC resource plan. We continue to interpret the current regulation, as we always have, that the State and the SILC determine in the SILC resource plan which sources and amounts of available funding, including innovation and expansion funding, will be used in the SILC resource plan, and then the State reserves and uses the innovation and expansion funding to support funding of the SILC, consistent with the SILC resource plan.

Changes: We have revised final § 361.35(a)(3) to substitute the language of the current regulation, with conforming edits, for the language in the proposed regulation.

Innovative Approaches With Components of the Workforce Development System

Comments: None.

Discussion: Section 101(a)(18)(A)(i) of the Act and final 361.35(a)(1) require the designated State unit to develop and implement innovative approaches to improve vocational rehabilitation services to individuals with disabilities that are consistent with the comprehensive statewide needs assessment and the State's goals and priorities. To support the alignment of the VR program with the workforce development system as emphasized throughout the Act and these final regulations, we clarify that these innovative approaches may include activities and partnerships with components of the workforce development system.

Changes: None.

Ability To Serve All Eligible Individuals; Order of Selection for Services (§ 361.36)

Individuals Who Require Specific Services and Equipment To Maintain Employment

Comments: Most commenters supported proposed § 361.36(a)(3)(v), which permits the DSU to elect to serve eligible individuals who require specific services or equipment to maintain that employment, whether or not those individuals are receiving vocational rehabilitation services under the order of selection. The commenters stated that this proposed change from the prior regulations will better serve the needs of individuals with disabilities who are at risk of losing their jobs by allowing the DSU an opportunity to serve them outside an order of selection, as appropriate.

A few commenters expressed concern that proposed § 361.36(a)(3)(v) would allow individuals with less significant disabilities to be served before individuals with significant or the most significant disabilities. A few commenters also questioned whether this new provision applies only to Start Printed Page 55667individuals with the most significant disabilities. In addition, a few commenters stated that providing specific services or equipment to eligible individuals who do not meet the order of selection should be mandatory to ensure that they are able to maintain their employment.

Conversely, a few commenters suggested that the DSU should not be required to use this authority at all. One commenter suggested that a DSU should not be required to state its intent to use the authority in the vocational rehabilitation services portion of the Unified or Combined State Plan. One commenter requested clarification of the term “immediate need,” which the Department used in explaining the proposed provision in the preamble of the NPRM.

Discussion: We appreciate the comments supporting the flexibility afforded to DSUs in § 361.36(a)(3)(v). We also recognize the need, as expressed by some commenters, for clarification of this exemption from the order of selection.

Final § 361.36(a)(3)(v), which implements section 101(a)(5)(D) of the Act, applies to those specific services or equipment that an individual needs to maintain current employment. The regulation does not apply to other services an individual may need for other purposes. In other words, if an individual is receiving services and equipment from a DSU under this exemption, the individual is within the order of selection for the purpose of receiving any other vocational rehabilitation services not covered by the exemption. This means that if the individual needs services that are not directly tied to maintaining current employment, the individual's ability to receive those services from the VR program depends on the individual's placement in the State's order of selection.

As to whether and how the DSU may exercise its authority under final § 361.36(a)(3)(v), that section applies to all eligible individuals, not just those with the most significant disabilities. It is possible that individuals with less significant disabilities would receive vocational rehabilitation services before individuals with significant or the most significant disabilities. The Act, as amended by WIOA, gives the DSU the option to provide services and equipment to individuals at immediate risk of losing employment outside the established order, and the DSU should consider doing so if financial and staff resources are sufficient. If the DSU elects to do so—again, the exercise of the authority is not mandatory—section 101(a)(5)(D) of the Act requires that it indicate this in the VR services portion of the Unified or Combined State Plan.

The term “immediate need” in the Summary of Proposed Changes section of the NPRM has its common meaning, and it remains the same. The phrase means that the eligible individual would almost certainly lose his or her current job if not provided specific services or equipment in the very near future that would enable him or her to retain that employment.

Changes: None.

Information and Referral

Comments: One commenter sought clarification about referring individuals to other programs under proposed § 361.37 for specific services or equipment necessary to help them retain employment, as well as other services that cannot be provided under proposed § 361.36(a)(3)(v). This commenter further suggested that if an individual is referred elsewhere for specific services or equipment necessary to maintain employment, the DSU should follow up to ensure the necessary services were delivered.

Discussion: If the individual is placed into a closed category of that order, under sections 101(a)(5)(E) and 101(a)(20) of the Act, and final §§ 361.36(a)(3)(iv)(B) and 361.37(a)(2), the DSU must refer the individual to other programs and providers for those services not covered by the exemption. These provisions require a DSU to assure in the VR services portion of the Unified or Combined State Plan that individuals who do not meet the order of selection criteria will have access to an information and referral system through which the DSU will refer them to other appropriate Federal and State programs, including other components of the statewide workforce development system.

However, neither section 101(a)(5)(E) nor 101(a)(20) requires the DSU to follow up with the programs to which the individuals are referred, and we have no authority to do so either. While we agree this is a best practice, we also recognize the administrative burden the requirement would impose on the DSU.

Changes: None.

Monitoring by the State Rehabilitation Council

Comments: A few commenters proposed that § 361.36(f)(4) allow the SRC to monitor the use of this authority by the DSU and ensure that individuals with the most significant disabilities are still prioritized for vocational rehabilitation services. A few other commenters also suggested that the SRC be involved in monitoring the use of the new provision but did not propose any additional regulatory language.

Discussion: Section 105(c) of the Act, which sets forth the functions of the SRC, does not authorize it to monitor the DSU's exercise of the order of selection exemption. Rather, section 107(a)(1) of the Act requires the Department to monitor the DSUs.

However, under section 105(c)(1)(A) of the Act and final § 361.17(h)(1)(i), the SRC is tasked with reviewing, analyzing, and advising the DSU about the order of selection and the discretion to exercise the authority set forth in section 101(a)(5)(D) of the Act and final § 361.36(a)(3)(v). In addition, the SRC has the opportunity to review and comment on the DSU's intent to use the authority under § 361.36(a)(3)(v) when the SRC reviews the DSU's order of selection policies under final § 361.36(f) and when the SRC advises and assists the DSU in the preparation of the VR services portion of the Unified or Combined State Plan under final § 361.17(h)(3).

Changes: None.

Order of Selection Criteria

Comments: A few commenters suggested that the DSU develop a “meaningful” order of selection to ensure that individuals with the most significant disabilities receive vocational rehabilitation services. One commenter suggested that the order of selection be based on something other than the refinement of the three criteria in the definition of “individual with a significant disability” in § 361.5(c)(30).

Discussion: Section 101(a)(5) of the Act remained unchanged by WIOA, except for the addition of section 101(a)(5)(D) permitting the DSU to exercise its discretion to provide specific services and equipment to individuals, who are at risk of immediate job loss, outside the order of selection. Therefore, there is no authority to further amend final § 361.36 to require the DSU to establish a “meaningful” order of selection or to permit the order of selection to be based on criteria other than those included in the definition of an “individual with a significant disability” in final § 361.5(c)(30).

Changes: None.

Prohibited Factors

Comments: Some commenters questioned whether the proposed § 361.36 is consistent with the requirement in § 361.42(c)(2)(ii)(D), which prohibits the DSU from considering an applicant's particular service needs, the anticipated cost of Start Printed Page 55668services required by an applicant, or the income level of an applicant and applicant's family. Other commenters indicated that the proposed § 361.36 aligns with § 361.42(a)(1)(iii), which permits the DSU to provide vocational rehabilitation services to eligible individuals who require services in order to retain their employment.

Discussion: For States operating under an order of selection, the DSU must determine eligibility under final § 361.42 prior to assigning eligible individuals to any priority category. WIOA did not change this requirement. Therefore, under final § 361.42(c)(2)(ii)(D) an applicant's particular service needs (including those services necessary to maintain current employment) are not considered in determining eligibility. The order of selection exemption in final § 361.36(a)(3)(v) applies only after an individual has been determined eligible. Consequently, the eligible individual would be exempt from the order of selection for the purpose of receiving services necessary to maintain employment.

Changes: We have made a technical amendment to § 361.36(d)(2)(vi) to reflect the exemption set forth in § 361.36(a)(3)(v).

Pre-Employment Transition Services

Comments: Some commenters raised various concerns, posed questions, or sought clarification about pre-employment transition services, including serving students with disabilities who may not have applied or been determined eligible for vocational rehabilitation services.

Discussion: We address these comments in the Pre-Employment Transition Services (§ 361.48(a)) section elsewhere in this Analysis of Comments and Changes.

Changes: None.

Information and Referral Programs (§ 361.37)

Benefits Planning

Comments: Most of the comments received on this regulation were in support of the changes to the prior regulation in proposed § 361.37, while some suggested further revisions. A few of these commenters suggested that § 361.37 specify to whom referrals are made for benefits planning for individuals with disabilities receiving Social Security benefits under title II or title XVI of the Social Security Act.

Discussion: We appreciate the comments supporting the changes to § 361.37 and the comments suggesting further revisions. Section 361.37(b)(5), both proposed and final, which requires the DSU to refer individuals who do not choose to seek an employment outcome under the VR program to the SSA for information about receiving benefits while employed, has remained unchanged from the VR program regulations that were published in 2001. While section 102(b)(2) of the Act, as amended by WIOA, requires the DSU to provide information about benefits planning to individuals with disabilities receiving Social Security benefits, it does not mandate the DSUs to make related referrals to any one agency or organization for this service. Some DSUs have the capacity to provide this information in-house, whereas others may need to refer individuals to other programs or entities. As such, and because the needs of the individuals requiring these services also vary, we believe it best serves DSUs and individuals with disabilities not to require a specific referral program in final § 361.37. For the same reason, we have not specified other entities to which DSUs may refer individuals with disabilities for any other type of service.

Changes: None.

Referral Options

Comments: One commenter suggested that a list of all options for referrals be included in proposed § 361.37. Another commenter suggested that referral options may not be available in certain geographical areas of the State. The commenter also noted the dilemma facing DSU personnel if it is known, before a referral is made, that individuals with disabilities are unlikely to receive services from other programs in the State.

Discussion: We do not believe it is possible or practicable to include a list of all referral options in final § 361.37 because the Federal, State, and local agencies, as well as non-profit organizations that serve individuals with disabilities vary widely from State to State. In addition, DSUs are most familiar with the referral option in their State and we would not want them to believe these options were limited by the inclusion of a list in final § 361.37. However, we clarify that these referral options include one-stop centers as components of the workforce development system.

If referral options are not available in a geographic location or if a referral will not result in the individual with a disability receiving services, we encourage DSUs to continue to build partnerships with a broader set of appropriate Federal and State programs, including other components of the statewide workforce development system, to ensure effective referral options are available in the State. DSUs should not make referrals to other programs unless there is an expectation that the individual with a disability will benefit from the referral.

Changes: None.

Follow-Up

Comments: One commenter suggested that DSUs be required to follow-up on referrals made to other programs to verify that individuals with disabilities are receiving the services for which they were referred.

Discussion: The Act, as amended by WIOA, does not require a DSU to follow-up on the referrals it makes to other programs. Therefore, we have not made the suggested revision. While we agree with commenters that this is a best practice, we also recognize the administrative burden the requirement would impose. However, the criteria for appropriate referrals in final § 361.37(c) is designed to ensure effective referrals for individuals with disabilities.

Changes: None.

Independent Living Services

Comments: A few commenters suggested that there may be difficulty in referring individuals with disabilities for independent living services if the DSU is not the same entity administering the independent living programs authorized under title VII of the Act, as amended by WIOA. One commenter stated that the Department would need to partner with the Department of Health and Human Services when referrals are made for independent living services.

Discussion: We acknowledge that some States may establish a designated State entity (DSE) responsible for administering the independent living programs, which is separate from the DSU for the VR program. However, this should not inhibit referrals between the VR and independent living programs as required in final § 361.37(b). In these circumstances, we encourage the DSU to partner with the DSE to develop effective referral policies and procedures to enable individuals with disabilities to access both programs. The Department intends to support these partnerships in the State through technical assistance developed and delivered jointly with the Department of Health and Human Services, which now administers the SILS program and the CIL program.

Changes: None.

Protection, Use, and Release of Personal Information (§ 361.38)

Comments: None.Start Printed Page 55669

Discussion: We anticipate that other Federal and State agencies, and researchers will have an increased interest in using the data required to be collected by core programs in the workforce development system, including the VR program, under section 116(b) of title I of WIOA. Section 116(b) of WIOA requires DSUs to collect significantly more personal information than was required previously under section 101(a)(10) of the Act and prior § 361.40. Therefore, after further Departmental review, we have strengthened the protection of the confidentiality of this information by requiring in final § 361.38 that DSUs enter into written agreements with any entity seeking access to personal information collected under the VR program for the purpose of audits, evaluations, research, or for other program purposes. We understand that DSUs already enter into such written agreements and the revisions to final § 361.38 will not represent a change in practices under the VR program.

Changes: We have revised final § 361.38(a), (d), and (e) by requiring that DSUs enter into written agreements with other organizations and entities receiving personal VR program information during the conduct of audits, evaluations, research, and for other program purposes.

Reports; Evaluation Standards and Performance Indicators (§ 361.40)

We received numerous comments on proposed reporting requirements under § 361.40, including the collection and reporting of data on students with disabilities receiving pre-employment transition services, evaluation standards and performance indicators under section 106 of the Act, common performance accountability measures under section 116 of WIOA, and the timeframe for implementation of reporting requirements. We also received comments on burden estimates that were included in the Regulatory Impact Analysis of the NPRM. While one commenter supported the collection of new data elements required under section 101(a)(10) of the Act and implemented in § 361.40(a) of these final regulations, in general, commenters expressed concerns or requested additional clarification concerning the collection and reporting of data. We address these comments under the subheadings below.

Pre-Employment Transition Services

Comments: We received several comments on the reporting of data on students with disabilities receiving pre-employment transition services under proposed § 361.40(a)(1)(ii). One commenter noted that States may opt to track funding and services for students receiving pre-employment transition services in different ways, depending on factors such as staffing patterns, order of selection wait list considerations, and counselor caseload sizes. One commenter expressed the opinion that there are more effective ways to track the expenditures from the 15 percent of the VR program allotment reserved for the provision of pre-employment transition services than collecting individual case information for each student receiving these services.

A few commenters requested guidance about the specific data elements that will be required for students who are receiving pre-employment transition services and are applicants, or potentially eligible, for vocational rehabilitation services. Another commenter asked what additional data will be needed for purposes of performance accountability reporting pursuant to section 116 of WIOA once the student becomes a participant under the VR program.

Finally, one commenter requested clarification and guidance about the interplay between the data required to be reported under § 361.40(a), collected through the Case Service Report (RSA-911), and the content of the VR services portion of the Unified or Combined State Plan regarding the number of students who are receiving pre-employment transition services.

Discussion: We appreciate the concerns expressed regarding the new data reporting requirements in final § 361.40(a) related to the provision of pre-employment transition services to students with disabilities. We agree with commenters that it is reasonable to anticipate an increase in the number of individuals that will need to be reported through the RSA-911. Prior to the enactment of WIOA, DSUs could only serve, and thus report, individuals who were applicants or eligible individuals under the VR program. However, section 113 of the Act, as added by WIOA, requires DSUs to provide pre-employment transition services to all students potentially eligible for vocational rehabilitation services who need such services, regardless of whether they have applied and been determined eligible for vocational rehabilitation services. This change is likely to result in a significant increase in the number of individuals reported under the RSA-911.

Students with disabilities who are not yet served under an individualized plan for employment and who receive pre-employment transition services are not considered “participants” as that term is defined under the joint final regulations for performance accountability purposes published elsewhere in this issue of the Federal Register. However, students with disabilities receiving pre-employment transition services are considered “reportable individuals” for RSA-911 reporting and WIOA performance purposes, regardless of whether they have applied for vocational rehabilitation services or are receiving these services under an individualized plan for employment. This does not, however, preclude a DSU from serving an eligible student with a disability under an individualized plan for employment. Once the student has begun receiving services under a signed individualized plan for employment, he or she will be counted as a participant and included in the applicable performance indicator calculations. At the point the student with a disability becomes a participant, all the applicable RSA-911 data elements will be collected and reported in the individual's RSA-911 case record.

We have identified and defined the specific data elements needed for all students with disabilities receiving pre-employment transition services in the RSA-911 instructions. We believe this will reduce collection and reporting burden to the maximum extent possible, and prevent a requirement for collecting specific information that would otherwise result in an application for services for students with disabilities who have not intended to apply for these services.

In addition to the tracking necessary to demonstrate compliance with the requirement to reserve at least 15 percent of the State's VR allotment for providing pre-employment transition services, under section 110(d) of the Act, as amended by WIOA, and final § 361.65(a)(3), section 101(a)(10) of the Act requires DSUs to have a mechanism to report the number of students with disabilities receiving these services. We recognize the burden this will place on DSUs and we have included a specific, but limited, set of data elements in the RSA-911 to enable DSUs to report the number of students with disabilities receiving these services, including both those who have been determined eligible for vocational rehabilitation services and those who have not applied for vocational rehabilitation services. For further information regarding the specific data elements DSUs are required to report regarding students receiving pre-employment transition services, see the RSA-911 data collection instrument published elsewhere in this issue of the Federal Start Printed Page 55670Register. We believe DSUs should use these data, along with other information (such as that obtained through the comprehensive statewide needs assessment required under section 101(a)(15)(A) of the Act, as amended by WIOA, and final § 361.29(a)), when developing the VR services portion of the Unified or Combined State Plan, including the goals and strategies related to the provision of pre-employment transition services under sections 101(a)(15)(C) and (D) of the Act, as amended by WIOA, and final § 361.29(c) and (d).

Changes: None.

Standards and Indicators

Comments: With respect to proposed § 361.40(b), a few commenters requested that we add indicators to the evaluation standards and performance indicators. Of these, a few requested that separate indicators be added for transition services to students and youth with disabilities and for services to youth with disabilities. One commenter expressed the concern that students with disabilities will not be counted as participants or included in the performance indicators, thereby eliminating a large number of vocational rehabilitation consumers from the performance measures. This commenter recommended that we establish new performance indicators for students with disabilities receiving pre-employment transition services. Another commenter requested we add performance indicators aligned with evidence-based practices that promote individuals with disabilities entering the labor force. One commenter requested that we include additional performance indicators in these final regulations rather than add them later through an information collection request. Another commenter asked if the Department would continue using the evaluation standards and performance indicators in prior §§ 361.80 through 361.89 as Federal reporting requirements under the VR program. Finally, one commenter requested that we limit the data selected to only that required to determine the performance accountability measures under section 116 of WIOA.

Discussion: Section 106 of the Act, as amended by WIOA, makes the VR program subject to the common performance accountability measures, established in section 116 of title I of WIOA, which are applicable to all core programs of the workforce development system. Therefore, we have removed prior § 361.80 through § 361.89, which established the evaluation standards and indicators in use by the VR program prior to the enactment of WIOA. Final § 361.40(b) includes a cross reference to the joint performance accountability regulations developed by the Departments of Labor and Education in subpart E of final part 361.

Section 106 of the Act, as amended by WIOA, does not provide additional VR program-specific performance accountability measures. However, consistent with section 116(b)(1)(A)(ii) of title I of WIOA, section 106(a)(2) permits States, but not the Department, to establish and provide information on additional performance accountability indicators. States must identify any additional performance indicators in the Unified or Combined State Plan. Under this section, States could opt to include additional performance indicators, including any or all of the additional performance measures recommended by commenters or the evaluation standards and performance indicators set forth in prior §§ 361.80 through 361.89.

In addition, section 101(a)(10)(A) of the Act requires that, in the VR services portion of the Unified or Combined State Plan, the State assures that it will submit certain reports in the form and level of detail and at the time required by the Secretary. Regarding applicants for, and eligible individuals receiving, services, these reports must provide the wide variety of data specified in section 101(a)(10)(C), as well as data related to the evaluation standards and indicators in section 106 of the Act, which are the performance accountability indicators in section 116(b) of title I of WIOA. Therefore, there is no statutory authority to limit the data reported by DSUs through the RSA-911 to those data needed for the performance accountability indicators applicable to the core programs under WIOA, as recommended.

Changes: None.

Program Year

Comments: One commenter requested that the Department use the program year under title I of WIOA, instead of the fiscal year, for the operation of the VR program in order to better align the program with the performance data required under section 116 of WIOA.

Discussion: We understand the concern expressed by commenters and the potential confusion that may result because the annual award and financial reporting cycle for the VR program is no longer aligned with the State planning and performance reporting cycle required under title I of WIOA. The VR program is a current-funded program for which Congress appropriates annual funds to be obligated consistent with the Federal fiscal year and section 110(a)(2)(A) of the Act, which specifies the manner in which allotments are to be made. As noted in the Submission, Approval, and Disapproval of the State Plan (§ 361.10) section earlier in this preamble, section 110(a)(2)(A) of the Act, which was not amended by WIOA, requires that allotments be made for each fiscal year beginning on or after October 1, 1978. We interpret section 110(a)(2)(A) of the Act to require that VR program allotments coincide with the Federal fiscal year. Thus, we cannot change the year under which the VR program operates in order to align it with the July 1 through June 30 program year for submission of the VR services portion of the Unified or Combined State Plan and the reporting of performance data required under final § 361.40. States will continue to receive VR program allotments and report fiscal data through the Financial Status Report (SF-425) and the VR program Cost Report (RSA-2) in accordance with the Federal fiscal year.

Changes: None.

Performance Accountability Regulations

Comments: One commenter recommended that we include the joint performance regulations in proposed § 361.40.

Discussion: We disagree with the recommendation. The extent and detail of the joint regulations governing the performance accountability system under section 116 of title I of WIOA makes it necessary to include them in a separate subpart of these final regulations. For the convenience of the reader, we grouped this subpart E with subparts D and F, which set forth the joint final regulations implementing requirements for unified and combined planning and the one-stop delivery system, respectively, of WIOA. We believe it is sufficient to include a cross reference to subpart E in final § 361.40(b).

Changes: None.

Cumulative Caseload Report (RSA-113)

Comments: We received two comments regarding the VR program's Cumulative Caseload Report (RSA-113). One commenter asked whether we intend to make changes to this data collection instrument and requested that we provide guidance on these changes. Another commenter suggested that the Department discontinue use of the RSA-113 because it is redundant with data reported through the revised RSA-911.

Discussion: We do not intend to make changes to the currently approved RSA-113 or the instructions for its submission. At this time, we use the Start Printed Page 55671data reported through the RSA-113, the only source of quarterly VR program data, for program management purposes and to support budget requests for the VR program. However, we intend to reduce the reporting burden on the States by discontinuing use of the RSA-113 when DSUs are able to report similar data through the RSA-911 on a quarterly basis. When appropriate, the Department will provide guidance to DSUs regarding reporting changes.

Changes: None.

States With Two VR Agencies

Comments: One commenter asked whether, in States with two VR agencies, those agencies that serve individuals who are blind and visually impaired would establish levels of performance for purposes of the performance accountability indicators under section 116 of title I of WIOA separate from those established by agencies serving individuals with all other disabilities. Another commenter expressed concern that VR agencies serving individuals who are blind and visually impaired would be required to establish separate levels of performance due to the relatively low number of individuals served by these agencies and the high variance in outcomes.

Discussion: Section 116(b)(3)(A)(iii) of title I of WIOA requires States to identify, in their Unified or Combined State Plans, expected levels of performance for the performance indicators for the first two years covered by their plans. Because this section, as well as all other provisions of section 116 of WIOA pertinent to the establishment of levels of performance for the performance accountability indicators, refers to the “State,” States must establish the expected levels of performance using State-level, not VR agency-level, data. Therefore, in States with more than one VR agency, the agencies must work together to identify expected levels of performance that take into account their individual performance. We will monitor each agency's performance on the performance accountability indicators and their contributions toward achieving the adjusted levels of performance through a review of the data reported on the RSA-911 and during periodic reviews in accordance with section 107 of the Act. See the Analysis of Comments and Changes section of the joint performance regulations published elsewhere in this issue of the Federal Register for a more detailed discussion about setting expected levels of performance and adjusted levels of performance.

Changes: None.

Reporting Burden

Comments: We received numerous comments on the Department's burden estimates, all of which stated that we underestimated the costs associated with the reporting of data under proposed § 361.40 described in the Regulatory Impact Analysis section of the NPRM. In particular, commenters raised concerns about estimates of the amount of time needed for the collection of new data and the quarterly reporting of individual data on all open service records, as well as the cost of changes to State management information systems. Some of these commenters stated that the proposed new reporting requirements will create a burden on the financial and personnel resources of the agency. One commenter noted that documenting and tracking the number of potentially eligible students with disabilities would be burdensome and costly considering the number of potentially eligible students is staggering when compared to the number of transition-age consumers previously served by the DSUs.

Discussion: We recognize that proposed new data collection and reporting requirements, including data on students with disabilities receiving pre-employment transition services, will have an impact on the financial and personnel resources of the agency. However, the collection and reporting of such data are required by the amendments made by WIOA to section 101(a)(10) of the Act. In addition, the collection and reporting of data regarding the number of students with disabilities receiving pre-employment transition services and the costs of these services will enable the Department and the States to better track the use of VR program funds that must be reserved for the provision of these services.

In response to the comments regarding the burden associated with the reporting of data under final § 361.40 and as a result of further Departmental review, we have adjusted the burden estimates as described in the Regulatory Impact Analysis section of the preamble of these final regulations. Comments pertaining to specific estimates of reporting burden included in the Regulatory Impact Analysis of the NPRM are addressed in the Regulatory Impact Analysis of these final regulations. No changes are needed to the regulatory text of final § 361.40.

Changes: None.

RSA-911 Case Service Report

Comments: We received comments related to the definitions of data elements, the reporting of Social Security numbers, the reliability of data, the data elements used to report services to employers, the reporting of barriers to employment as required by section 116 of title I of WIOA, and the timelines by which States must report data required for the performance accountability indicators.

Discussion: We discuss comments related to the manner in which the data are required to be reported under final § 361.40(a) and (b) through the RSA-911 in the supporting statement for this data collection instrument published elsewhere in this issue of the Federal Register, and under the joint performance accountability system final regulations, also published elsewhere in this issue of the Federal Register, as appropriate.

Assessment for Determining Eligibility and Priority for Services (§ 361.42)

Advancing in Employment and Other Eligibility Criteria

Comments: Many commenters expressed strong support for proposed § 361.42(a)(1)(iii) permitting an applicant to be eligible if he or she requires vocational rehabilitation services to advance in employment and meets all other eligibility criteria. However, some of these commenters requested clarification regarding the effect of the regulation when an individual is unable to advance in employment due to his or her disability. These commenters also asked whether advancing in employment refers only to the individual's current employment, or if it extends to preparations, including graduate education services, for advancing in future employment. A few commenters requested clarification about whether a DSU would be required to support the pursuit of a graduate degree by an individual already employed successfully in a competitive integrated environment and about how financial need shall be assessed.

Some commenters expressed concern that the term “advance in employment” was too vague and that it would be difficult to know when an individual has achieved his or her goal since one can always advance in employment to some degree. These commenters also expressed concerns that serving more individuals who want to advance in employment could force a DSU to implement an order of selection. Some commenters suggested that the regulations should clarify that advancement in employment should be explicitly linked to the individual's impairment, rather than broader developmental needs.Start Printed Page 55672

A few commenters inquired whether the proposed changes in § 361.1, which establishes the purpose of the VR program, affect the determination of eligibility under § 361.42. These commenters expressed concern that the deletion of the term “gainful employment” in proposed § 361.1 could be misconstrued as disallowing entry level employment as a vocational goal. A few commenters asked whether the new emphasis on self-sufficiency and competitive integrated employment means that those who apply for vocational rehabilitation services intending only to work part-time will be a lower priority for the purpose of determining eligibility.

Discussion: We appreciate the strong support for the changes in final § 361.42. We also understand the need for clarification.

Section 102(a)(1)(B) of the Act, as amended by WIOA, allows for an individual with a disability, whose physical or mental impairment constitutes a substantial impediment to employment, to be determined eligible for vocational rehabilitation services if he or she requires services to prepare for, secure, retain, advance in, or regain employment. By adding the phrase “advance in,” section 102(a)(1)(B) of the Act, as amended by WIOA, reinforces the Department's long-standing commitment that the VR program must provide comprehensive services to assist individuals with disabilities to achieve their maximum vocational potential. The VR program is not intended solely to place individuals with disabilities in entry-level jobs but rather to assist them to obtain appropriate employment, given their unique strengths, resources, priorities, concerns, abilities, capabilities, and informed choice. The VR program's purpose is the same regardless of whether an individual wants to advance in employment or obtain employment. We disagree with the commenter that the provision of vocational rehabilitation services to assist an individual to advance in employment should be limited to disability needs rather than other needs or desires. The extent to which DSUs should assist eligible individuals to advance in their careers by providing vocational rehabilitation services depends upon whether the individual has achieved employment that is consistent with this standard. The DSU's assistance could include, as appropriate for the individual, graduate-level postsecondary education, if necessary to achieve the advancement in employment specified in the vocational goal on the individual's approved individualized plan for employment. All other eligibility criteria still apply to applicants seeking to advance in employment.

Consistent with long-standing Department policy, we interpret the phrase “advance in employment,” as used in section 102(a)(1)(B) of the Act and final § 361.42(a)(1)(iii), broadly to include advancement within an individual's current employment or advancement into new employment. In this way, the VR program ensures that individuals with disabilities obtain the services necessary so they can pursue and engage in high-demand jobs available in today's economy.

The addition of the phrase “advance in” in § 361.42(a)(1)(iii), both proposed and final, underscores long-standing policy. Because DSUs have been assisting individuals to advance in employment prior to this statutory and regulatory revision, we do not anticipate that the change will result in a DSU implementing an order of selection due to an increased number of individuals seeking to advance in employment. As stated, although the phrase “advance in” employment is new in both the statute and these final regulations, its inclusion merely mirrors long-standing Departmental policy as set forth in RSA-PD-97-04, dated August 19, 1997.

As discussed in more detail in the Purpose (§ 361.1) section earlier in this preamble, inclusion of the term “economic self-sufficiency,” rather than “gainful employment” as contained in prior § 361.1, does not alter the eligibility criteria set forth in final § 361.42(a)(1) or establish a priority of services for individuals seeking any particular form of employment. Therefore, the changes contained in final §§ 361.1 and 361.42(a)(1)(iii) do not require DSUs to treat individuals seeking part-time or self-employment differently (e.g., given lower priority) than individuals seeking full-time employment. Neither the Act, as amended by WIOA, nor these final regulations, supports such an interpretation. Section 361.42(c)(2), for example, prohibits the DSU from considering the nature of an applicant's vocational goal when determining eligibility and priority for services. Therefore, a DSU may not prioritize the determination of eligibility for individuals who choose to pursue full-time employment over those who elect to seek part-time employment or self-employment. In addition, economic self-sufficiency is intended to serve as a goal to maximize employment, which may be achieved through a variety of employment options, including entry-level employment for individuals for whom it is consistent with their skills, interests, and informed choice. However, the achievement of economic self-sufficiency is not among the criteria used to determine eligibility for the VR program under section 102(a) of the Act.

Changes: None.

Substantial Impediment to Employment

Comments: One State VR agency asked whether a substantial impediment to employment for the purpose of determining eligibility meant an impediment to any employment, or just to the employment the individual wished to pursue.

Discussion: Although this particular eligibility criterion was not changed in the Act, as amended by WIOA, or § 361.42, either proposed or final, we clarify in this Discussion that the term “substantial impediment to employment” should be interpreted in its broadest context, not just considered with respect to the applicant's specific vocational goal when determining eligibility. Final § 361.42(c)(2)(ii)(B), as it did in prior regulations, prohibits the DSU from considering the individual's desired employment objective, even if known, during this stage of the vocational rehabilitation process.

Changes: None.

Prohibited Factors

Comments: A number of commenters expressed concerns about the inability to consider an applicant's employment history when determining eligibility, particularly for those who are currently employed and apply for vocational rehabilitation services to advance in employment. One commenter stated that not being able to evaluate disability barriers from previous or current employment experiences, or not being able to assess abilities and capabilities by examining past and current educational credentials, could prevent the qualified rehabilitation counselor from determining whether an individual has a substantial impediment to employment and whether the individual requires services to achieve an employment outcome.

Other commenters expressed concern that proposed § 361.42(c)(2), which precludes the consideration of an applicant's employment history, current employment status, level of education, or educational credentials when determining eligibility for services, contradicts the definition of “assessment” in § 361.5(c)(5)(ii)(E), which states that the vocational rehabilitation counselor must rely on information obtained from the eligible individual's experience in integrated Start Printed Page 55673employment settings in the community and other integrated settings.

Some of these commenters requested that we remove the requirement that a DSU must not consider an applicant's employment history, current employment status, level of education, or educational credentials when determining eligibility for services. A commenter requested that criminal records be added to the list of prohibited factors when determining eligibility for vocational rehabilitation services, except when the criminal background is related to the employment outcome.

Discussion: The additional factors, set forth in both proposed and final § 361.42(c)(2)(ii)(E) and (F), that a DSU must not consider when determining an applicant's eligibility for vocational rehabilitation services are consistent with long-standing policy. A DSU must examine a variety of factors when developing an individualized plan for employment, including the individual's past and current employment and education credentials, to ensure that the appropriate vocational rehabilitation services are identified to assist the individual to achieve his or her chosen vocational goal specified in the approved individualized plan for employment. However, a DSU may not use an applicant's employment or education to determine his or her eligibility for vocational rehabilitation services. The change from the prior regulation in proposed and final § 361.42(c)(2)(ii)(E) and (F) clarifies existing eligibility criteria and the list of prohibited factors in order to ensure consistency with the phrase “advance in employment” in the Act, as amended by WIOA, and these final regulations. Because an individual may be eligible for the VR program if he or she requires vocational rehabilitation services to advance in employment, the Act seems to take into account that the individual could have more than minimal educational or employment history. Regardless of his or her education or employment history, the applicant still must demonstrate that he or she has a disability and that the disability constitutes a substantial impediment to employment as required in § 361.42(a)(1)(ii) and requires vocational rehabilitation services to prepare for, secure, retain, advance in, or regain employment in accordance with final § 361.42(a)(1)(iii). In making these determinations, the qualified vocational rehabilitation counselor would review all known information about the applicant in order to assess the individual's impediments and service needs, but the eligibility determination itself must not be based on the fact that the individual has an extensive employment or educational history.

Although final § 361.42(c)(2) does not specifically prohibit a DSU from considering an applicant's criminal background when determining an individual's eligibility for vocational rehabilitation services, the Act and these final regulations require that a DSU base the determination of eligibility only on those factors identified in section 102(a)(1) of the Act and final § 361.42(a)(1). However, the DSU may develop policy and issue guidance to its vocational rehabilitation counselors about managing an individual's criminal background when developing the individualized plan for employment to ensure that the vocational goal is appropriate and that any necessary vocational rehabilitation services to address this background are provided in a manner that is consistent with limitations that might be imposed by Federal, State, and local law and regulations due to that criminal history. For further information regarding Federal law and guidance in this area, see: http://wdr.doleta.gov/​directives/​ and http://www.eeoc.gov/​laws/​guidance/​.

Changes: None.

Residency

Comments: A number of commenters requested clarification about the definition of “residency” for the purpose of determining eligibility and providing vocational rehabilitation services. Several commenters noted that individuals may apply for services when living just across the border in a neighboring State, while other individuals receive services from one State but intend to work in another State and continue working with the VR agency with which they began their rehabilitation program.

Discussion: We proposed only one change from the prior regulation in § 361.42(c)(1) to clarify that a DSU is prohibited from establishing de facto duration of residency requirements by requiring the applicant to produce documentation that would, under State or local law, result in a duration of residence requirement. Although the clarification regarding documentation did not exist in prior § 361.42(c)(1), the provision as contained in final § 361.42(c)(1) is consistent with long-standing Department policy. The explicit prohibition against a duration of residency requirement existed in prior § 361.42(c)(1) and remains unchanged in all other respects in these final regulations and is consistent with section 101(a)(12) of the Act.

Nonetheless in response to the requests for clarification, as stated in Technical Assistance Circular 12-04, titled “Provision of Vocational Rehabilitation Services to An Individual by More Than One Agency” and dated June 11, 2012, we clarify here in this Discussion that an individual may receive vocational rehabilitation services from more than one DSU simultaneously, including those in different States, when appropriate, and in accordance with the implementation of an order of selection, as applicable, in each State. In this way, the individual can receive the services that best support his or her vocational needs and the achievement of an employment outcome.

Changes: None.

Compliance Threshold

Comments: A few commenters recommended that we establish a compliance threshold of 90 percent with the requirement to determine eligibility within 60 days of the receipt of the application. These commenters stated this would provide a national benchmark by which DSUs would be held accountable by community stakeholders as well as State and Federal auditors.

Discussion: Section 102(a)(6) of the Act and final § 361.41(b)(1) require DSUs to determine the eligibility of an applicant within 60 days from the receipt of an application for vocational rehabilitation services, unless exceptional circumstances preclude the determination and the individual agrees to a specific extension of time. This requirement remains unchanged in the Act, as amended by WIOA and these final regulations; therefore, it is not a new requirement imposed on DSUs.

We appreciate the recommendations made by commenters for a mechanism to ensure compliance. Section 106(a)(1) of the Act requires States to comply with the common performance accountability system requirements imposed on all core programs of the workforce development system, including the VR program, established by section 116 of title I of WIOA. Section 116(b)(1)(A) requires a State to comply with the six primary performance indicators set forth in section 116(b)(2)(A)(i), as well as any other additional performance indicators developed by the State. While there is no statutory authority for the Department to impose a performance accountability measure, such as that recommended by commenters, there is nothing to preclude a State from developing such a measure for itself. We will continue to assess the compliance Start Printed Page 55674of DSUs with the 60-day eligibility determination requirement in accordance with section 107 of the Act using all available data and information.

Changes: None.

Entities Holding Special Wage Certificates

Comments: Many commenters requested clarification about whether a DSU may contract with a community rehabilitation program to provide assessments used in the determination of eligibility, if the community rehabilitation program holds a subminimum wage certificate under section 14(c) of the FLSA.

Discussion: Neither the Act, as amended by WIOA, nor these final regulations prohibit a DSU from contracting with a community rehabilitation program for assessment services regardless of whether that provider also holds a subminimum wage certificate under section 14(c) of the FLSA. Nevertheless, we strongly encourage DSUs to contract with providers that can conduct assessments in competitive integrated settings. It is through these assessments that DSUs may best determine the individual's eligibility for the VR program and the vocational rehabilitation services needed to achieve competitive integrated employment.

Changes: None.

Extended Evaluation and Trial Work Experiences

Comments: Many commenters supported eliminating extended evaluation as a tool for determining eligibility for some individuals with the most significant disabilities. However, many other commenters also requested clarification of the circumstances under which it might be appropriate to use extended evaluation for the determination of eligibility for vocational rehabilitation services. Some commenters expressed concern that individuals for whom a trial work opportunity may not be available may inappropriately be determined ineligible for services and requested an evidentiary standard in the absence of the term “clear and convincing evidence” in § 361.42. Some commenters explicitly requested that extended evaluation be reinserted into the regulations.

Some commenters asked whether the term “clear and convincing evidence” was removed from proposed § 361.42(e)(2)(iii) by mistake and recommended retaining this standard. The proposed language required that “sufficient evidence” be obtained through trial work experiences to determine if an individual cannot benefit from vocational rehabilitation services to achieve a vocational goal. These commenters believed sufficient evidence is not a strong enough standard and that individuals with significant disabilities may be inappropriately determined ineligible as a result.

One commenter recommended that we revise § 361.42(e)(2)(i) to require that all trial work experiences take place in integrated settings by deleting the phrase “to the maximum extent possible.” One commenter requested that we add examples of supports for individuals with serious mental illness to § 361.42(e)(2)(iv), such as individual placement and supported employment services.

Discussion: We appreciate the support by many commenters for the elimination of the use of extended evaluations for the purpose of determining that an individual is unable to benefit from vocational rehabilitation services due to the severity of the individual's disability and, thus, is ineligible for vocational rehabilitation services under section 102(a)(2)(B) of the Act, as amended by WIOA, and § 361.42. The Act's amendment and these final regulations help to ensure that before a DSU makes an ineligibility determination, it must conduct a full assessment of the capacity of the applicant to perform in realistic work settings, without the use of lengthy extended evaluations.

We appreciate the comment recommending that all trial work experiences be conducted in competitive integrated employment settings. While we agree that these experiences should be provided in competitive integrated employment settings, to the maximum extent possible, as stated in both proposed and final § 361.42(e)(2)(i), there is no statutory authority to do as the commenter recommends. Section 102(a)(2)(B) of the Act, as amended by WIOA, requires a DSU to explore an individual with a disability's ability to work through trial work experiences prior to determining that the individual is not eligible for the VR program due to the severity of his or her disability. The trial work experiences must be of “sufficient variety” and must provide the individual with the opportunity to “try different employment experiences” and “become employed in competitive integrated employment.” There is no mandate in section 102(a)(2) that all trial work experiences be in competitive integrated employment. In fact, the use of the phrases “sufficient variety” and “different employment opportunities” suggest the congressional understanding that some trial work experiences may need to be provided in a setting other than competitive integrated employment. However, given the Act's heightened emphasis on the achievement of employment outcomes in competitive integrated employment, as well as the fact that section 102(a)(2)(B) of the Act, as amended by WIOA, specifically mandates that trial work experiences provide individuals with the opportunity to become employed in competitive integrated employment, we believe that final § 361.42(e)(2)(i) is consistent with the statute. Proposed and final § 361.42(e)(2)(i), are both consistent with prior § 361.42(e)(2)(i), with only minor wording changes to conform to terms used in the Act, as amended by WIOA. The Department also believes that trial work experiences in integrated settings, rather than simulated or mock experiences in sheltered environments, provide the DSU with the best and most comprehensive evidence of an individual's capacity to achieve competitive integrated employment. Therefore, consistent with the intent of the Act to provide individuals with disabilities the opportunity to achieve competitive integrated employment, we strongly recommend that DSUs exhaust all opportunities to provide trial work experiences through actual work experiences in integrated community environments to obtain the evidence necessary for making the determination of an individual's eligibility for vocational rehabilitation services.

We do not expect that individuals with significant disabilities will be determined ineligible in greater numbers as a result of this change. Rather, we expect that more individuals, including those with the most significant disabilities, and those who may require supported employment services, will achieve competitive integrated employment outcomes.

We appreciate the comments regarding the inadvertent deletion of prior regulatory provisions regarding clear and convincing evidence from proposed § 361.42(e)(2)(iii) and appreciate the strong support that this provision be retained in these final regulations. We agree with commenters that “sufficient evidence” is insufficient for a determination of ineligibility and that some individuals with significant disabilities may be inappropriately determined ineligible as a result. The deletion of the provision related to clear and convincing evidence was indeed an error and we have revised final § 361.42(e)(2)(iii) to read exactly as it had in prior regulations, thus resulting Start Printed Page 55675in no regulatory change from prior regulations to these final regulations.

We believe retaining prior regulatory text in these final regulations is consistent with the statutory requirements of section 102 of the Act, as amended by WIOA. Specifically, section 102(a) of the Act, read in its entirety, establishes the information that is sufficient to make a determination of eligibility for an individual with a disability for purposes of the VR program. There is no, and never has been, a statutory requirement that clear and convincing evidence be used to make an eligibility determination. This long-standing statutory interpretation is consistent with use of the phrase “sufficient evidence” in § 361.42(e)(2)(iii)(A), both prior and final, with respect to eligibility determinations. However, when making a determination of ineligibility due to the severity of an individual's disability, section 102(a)(5)(C)(i) of the Act, which remained unchanged by WIOA, requires the DSU to inform the individual in writing of the reason for the ineligibility determination, including the clear and convincing evidence that formed the basis for that determination. This long-standing statutory requirement is consistent with use of the phrase “clear and convincing evidence” in § 361.42(e)(2)(iii)(B), both prior and final, with respect to determinations of ineligibility. Therefore, given the error noted by commenters, the Department has retained prior § 361.42(e)(2)(iii) in these final regulations.

In addition, prior to WIOA, section 102(a)(2)(B) of the Act required that trial work experiences be of sufficient variety and provided over a sufficient period of time to enable the DSU to determine the eligibility of the individual, or to obtain clear and convincing evidence of the individual's inability to achieve an employment outcome due to the severity of his or her disability.

Section 102(a)(2)(A) and section 102(a)(2)(B) now state only that the trial work experiences must be of sufficient variety and over a sufficient period of time to determine the eligibility of the individual. Section 102 of the Act, as amended by WIOA, no longer makes reference to the need for clear and convincing evidence for the purpose of determining an individual's ineligibility for vocational rehabilitation services. Consistent with these amendments, we proposed to revise §§ 361.42(e)(1) and 361.42(e)(2)(iii) to require that trial work experiences be of sufficient variety and over a sufficient period of time for the DSU to obtain sufficient evidence that the individual cannot benefit from participation in the VR program.

In proposing this change, we believe that the Act, as amended by WIOA, did not intend, to weaken the evidentiary standard required for this determination. It remains our long-standing policy that individuals with disabilities, including those with the most significant disabilities, must be afforded every opportunity to obtain the vocational rehabilitation services needed to achieve high quality employment and that a DSU should only deny an individual this opportunity in limited circumstances, and based on the highest level of proof.

Therefore, we have revised final § 361.42(e)(2)(iii) to clarify that the trial work experiences must yield clear and convincing evidence before a DSU may determine an individual is incapable of benefiting from the provision of vocational rehabilitation services, and, thus, is ineligible for the program.

We agree with the commenter that individuals with serious mental illness should be afforded the necessary supports, such as—but not limited to—individual placement or supported employment services, to ensure trial work experiences are beneficial. The same is true for any individual with significant disabilities participating in trial work experiences. Proposed § 361.42(e)(2)(iv) remained unchanged from prior regulations. While we disagree with the commenter that specific examples pertinent to mental illness should be included in final § 361.42(e)(2)(iv) because to do so could cause more confusion as to why other examples were not added. However, assistive technology services and personal assistance services are not the only support that should be provided during a trial work experience. Although we believe the provision was clear that the two examples given were just two examples of many given the use of the word “including,” we have nonetheless made a small change to § 361.42(e)(2)(iv) to add further clarity.

Changes: We have revised final § 361.42(e)(2)(iii) to retain prior § 361.42(e)(2)(iii), thereby specifying that a DSU must base eligibility determinations on sufficient evidence, but that determinations of ineligibility due to the severity of an individual's disability must be based on clear and convincing evidence. We have also revised final § 361.42(e)(2)(iv) to add the phrase “including, but not limited to” when providing examples of the types of support services that may be provided to an individual participating in a trial work experience. This change clarifies that DSUs should ensure an individual with a disability receives the supports he or she needs so that the trial work experience is beneficial.

Development of the Individualized Plan for Employment (§ 361.45)

Time Frame for Developing the Individualized Plan for Employment

Comments: Many commenters supported the change from the prior regulations in proposed § 361.45(e) which required that the DSU develop the individualized plan for employment for each eligible individual as soon as possible, but no later than 90 days following determination of eligibility, unless the DSU and the individual agree to a specific extension of that time frame. Some commenters supported the 90-day standard but were concerned that the quality of plans be maintained and that plans continue to be individualized based on interests, abilities and informed choice and not be made uniform out of expediency. These commenters stated that DSUs may not take the time needed to develop a comprehensive individualized plan for employment within the 90-day time limit, and may settle for a more generalized plan rather than seeking an extension of time. Some commenters, though they supported a specific time limit, stated that the limit should be shorter than 90 days and recommended that we strengthen the regulation to promote the more timely development of the individualized plan for employment. One commenter recommended the adoption of a 90 percent compliance standard for this regulation to strengthen the adherence to the time limit. Another commenter asked how long the extended period should be to ensure that there are no additional delays in the development of the individualized plan for employment. Finally, one commenter requested guidance concerning how to proceed in situations where the individual does not agree to an extension.

Discussion: We appreciate the comments supporting the proposed regulatory changes, as well as the concerns expressed by commenters about those same changes. As explained in the NPRM, the change to § 361.45(e), which mirrors section 102(b)(3)(F) of the Act, as amended by WIOA, is intended to efficiently and effectively serve eligible individuals, move them through the VR process with minimal delay, and achieve employment outcomes in competitive integrated employment. We believe that DSUs can implement the regulation in a manner that does not negatively affect the quality and individualized nature of the plan for Start Printed Page 55676employment for each eligible individual and that this requirement will have a minimal impact on the majority of DSUs that have already adopted the 90-day time frame. Despite the 90-day time frame, these plans must be of sufficient quality to incorporate mandatory components in section 102(b)(4) of the Act, and meet requirements under § 361.46(a)(1), which requires the individualized plan for employment to be consistent with the individual's unique strengths, resources, priorities, concerns, abilities, capabilities, career interest, and informed choice consistent with the general goal of competitive integrated employment (except that in the case of an eligible individual who is a student or a youth with a disability, the description may be a description of the individual's projected post-school employment outcome).

In addition, the change to § 361.45(e) is necessary to implement the statutory requirement in section 102(b)(3)(F) of the Act, as amended by WIOA, that specifically mandates DSUs to develop the individualized plan for employment for each individual within 90 days following the determination of eligibility, unless the DSU and the individual agree to an extension of that time frame. Therefore, we do not have the statutory authority to shorten the time frame because to do so would be inconsistent with the statute.

DSUs must comply with the requirements of section 102(b)(3)(F) of the Act and final § 361.45(e) when developing the individualized plans for employment for each eligible individual. We will assess the DSUs' compliance with the requirement during the monitoring and review we conduct under section 107 of the Act. We do not believe that it is necessary, therefore, to include a 90 percent compliance standard in this regulation to strengthen the adherence to the time frame.

Section 102(b)(3)(F) of the Act and final § 361.45(e) permit the DSU and individual to agree to a specific extension of the 90-day time limit without imposing a limitation on the length of that extension. DSUs should ensure that the extension is warranted based on the particular circumstances and needs of the individual and that the extensions are not so long as to cause unnecessary delays in providing services.

The individualized plan for employment is an evolving document and may be amended to effect changes of goal, services, providers, and time frames. If the individual disagrees with the vocational rehabilitation counselor's request to extend the time for developing the plan, the counselor should determine whether the plan, as written at that time, addresses the mandatory components of section 102(b) of the Act and final § 361.46, and whether the information in the plan is sufficient to allow the DSU and individual to proceed with the delivery of services, with the understanding that the plan may be amended. If the counselor determines that the plan does not contain sufficient information on which to base the provision of services and the individual still disagrees with the request to extend the development of the plan beyond 90 days after further vocational guidance and counseling, the counselor should refer the individual to the CAP for help in resolving the disagreement, and must, in accordance with section 102(c)(2)(B)(ii), inform the individual of the due process rights set forth in section 102(c) of the Act and final § 361.57.

Changes: None.

Options for Developing the Individualized Plan for Employment

Comments: All comments received on proposed § 361.45(c)(1) supported the requirement that a DSU provide eligible individuals information about the option of requesting assistance from a disability advocacy organization when developing the individualized plan for employment. Many of the commenters recommended that we include in the regulation examples of disability advocacy organizations, such as agencies funded under the Act, entities providing services under the Ticket to Work and Work Incentive Act of 1998, and agencies assisting individuals with disabilities under the Developmental Disabilities Assistance and Bill of Rights Act of 2000 and the IDEA.

All commenters supported our inclusion of benefits planning in proposed § 361.45(c)(3). A few commenters requested that we define that term. One commenter asked whether we would support the development of additional benefit planning resources and what documentation would be required to verify the individual's completion of benefits planning.

Discussion: We appreciate the comments supporting the proposed regulations. Section 102(b)(1)(A) of the Act, as amended by WIOA, and final § 361.45(c)(1)(ii)(C) are intended to empower eligible individuals by clarifying that they can choose to seek assistance from disability advocacy organizations when developing their individualized plans for employment. Section 102(b)(1)(A) of the Act does not specify examples of these disability advocacy organizations, and we do not believe it necessary to include examples in final § 361.45(c)(1)(ii)(C) because to do so could have an unintended limiting effect. However, we encourage DSUs to provide eligible individuals with a list of the advocacy organizations in the State so that they may identify those organizations with expertise in disability-related needs, responsibilities, and services that are required to achieve the individuals' employment goals.

Consistent with section 102(b)(2) of the Act, as amended by WIOA, final § 361.45(c) requires DSUs to provide certain information in writing to eligible individuals when developing the individualized plan for employment. Specifically, final § 361.45(c)(2) and (3) require DSUs to provide general information on additional supports and assistance for individuals with disabilities desiring to enter the workforce, including assistance with benefits planning, to individuals receiving Supplemental Security Income or Social Security Disability Insurance benefits. We recommend that DSUs retain a copy of this written information and guidance in the individual's service record, as they would be documents pertinent to the development of the individualized plan for employment.

In addition, we understand that benefits planning may take many different forms over a course of time. Furthermore, benefits planning and the individuals certified to provide these types of support services are determined by the SSA's work incentive program. We believe it is important that States retain sufficient flexibility to work with providers appropriately certified or defined by SSA. Therefore, we disagree with the recommendation to define “benefits planning” in these final VR program regulations.

Furthermore, although DSUs must provide information about benefits planning and available resources, they are not required to document the completion of these services. However, if benefits planning is included and the services in the individualized plan for employment, it should be documented upon completion.

Changes: None.

Data for Preparing the Individualized Plan for Employment

Comments: One commenter stated that the determination of eligibility only requires that an individual have impediments to employment but not necessarily impediments to the specific employment outcome the individual desires, and questioned why only this data would be used.Start Printed Page 55677

Discussion: While we appreciate the concerns expressed by the commenter, this section of the Act was not changed by WIOA and, therefore, no changes were proposed in the NPRM. We address other comments we received on this section regarding the use of sheltered employment settings for the conduct of assessments in the Assessment for Determining Eligibility and Vocational Rehabilitation Needs section under the Applicable Definitions section previously in this preamble.

Changes: None.

Content of the Individualized Plan for Employment (§ 361.46)

Comments: The majority of commenters supported proposed § 361.46(a)(1), requiring that the individualized plan for employment specify an employment goal consistent with the general goal of competitive integrated employment under section 102(b)(4) of the Act, as amended by WIOA. However, a few commenters expressed concern that the proposed regulation does not satisfactorily address the needs of all individuals with disabilities because it limits options for employment goals to competitive integrated employment, and stated that the regulation is in conflict with congressional intent regarding the full range of employment options.

A few commenters recommended adding to or clarifying the requirement in proposed § 361.46(a)(7)(iii) that the individualized plan for employment contain a description of how the responsibilities for service delivery will be divided between the employment network and the DSU under section 102(b)(4)(H) of the Act.

Discussion: We appreciate the support for the proposed regulation. WIOA did not amend section 102(b)(4)(H) of the Act, which requires that the individualized plan for employment for an individual receiving assistance from an employment network through the Ticket to Work and Self-Sufficiency program established under the Social Security Act include a description of how the responsibility for providing services will be divided between the employment network and the DSU. Therefore, we do not believe that further clarification of this long-standing requirement is necessary.

We received comments about eliminating uncompensated employment outcomes through the individualized plan for employment, and we address them in the discussion on the definition of “employment outcome” in final § 361.5(c)(15) under the Applicable Definitions section elsewhere in this Analysis of Comments and Changes section.

Changes: None.

Scope of Vocational Rehabilitation Services for Individuals With Disabilities

Services for Individuals Who Have Applied or Been Determined Eligible for Vocational Rehabilitation Services (§ 361.48(b))

Advanced Training

Comments: A few commenters supported including advanced training in STEM fields (science, technology, engineering, or mathematics, including computer science), medicine, law, or business as a vocational or other training service in proposed § 361.48(b)(6) so that individuals with disabilities can be prepared for the high-demand careers available in today's economy. One commenter recommended that advanced training be provided, as appropriate, not only for those specific careers mentioned in proposed § 361.48(b)(6), but for all careers. Another commenter suggested that § 361.48(b)(6) explicitly state that advanced training must be provided under an individualized plan for employment. Still another commenter requested that proposed § 361.5(c) include a definition of “advanced training.”

By contrast, a few commenters expressed concern about the potential cost burden upon VR agencies that would result from individuals pursuing advanced training under proposed § 361.48(b)(6). These commenters suggested that comparable benefits are typically limited for graduate students; as a result, DSUs would need to cover all or a substantial portion of the cost of advanced degrees.

Additionally, one commenter requested that we clarify in § 361.48(b) that vocational rehabilitation services are not intended to assist individuals to obtain employment in only entry-level careers.

Discussion: We appreciate the support for including advanced training among the individualized services available. The Department has a long history of encouraging DSUs to provide advanced training, when appropriate, to assist eligible individuals in achieving their employment goals. Section 103(a)(18) of the Act, as amended by WIOA, specifically permits DSUs to provide vocational rehabilitation services that encourage qualified eligible individuals to pursue advanced training in the STEM fields, medicine, law, or business. Section 103(a)(5) of the Act and our prior regulation in § 361.48(f) (now final § 361.48(b)(6)) have historically permitted DSUs to provide training at institutions of higher education, including in advanced degree programs, to qualified eligible individuals.

While section 103(a)(18) of the Act specifically mentions advanced education in certain fields, that does not exclude advanced training in other fields under section 103(a)(5) of the Act. In reviewing proposed § 361.48(b)(6), the Department recognizes that it could be interpreted as allowing advanced training in only certain fields. This was not our intent, and that restriction would not be consistent with section 103(a) of the Act or long-standing Department policy. Therefore, we have revised final § 361.48(b)(6) to clarify that DSUs may provide advanced training in any field, not just the specific fields listed in section 103(a)(18) of the Act.

We do not believe that a definition of “advanced training” is necessary. Neither section 7, nor section 103(a), of the Act, as amended by WIOA, defines “advanced training.” We understand that “advanced training” may have multiple meanings, such as degrees conferred by institutions of higher education and advanced certifications in certain fields, all of which may be permissible under the VR program. Therefore, we will not define this term in final § 361.48(b)(6) or elsewhere in final part 361 to avoid limiting the meaning of “advanced training.”

As stated earlier, final § 361.48(b)(6) continues the long-standing availability of financial support for advanced training through the VR program. Therefore, though comparable benefits for graduate-level education may be limited, we anticipate that DSUs will experience little, if any, increase in the costs of providing this existing service.

The Secretary agrees that providing vocational rehabilitation services is not limited only to helping an individual with a disability obtain entry-level employment. Under section 102(a)(1) of the Act, as amended by WIOA, and final § 361.48(b), DSUs are to provide vocational rehabilitation services to help eligible individuals advance in employment, consistent with each individual's approved individualized plan for employment and his or her unique strengths, resources, priorities, concerns, abilities, capabilities, interests, and informed choice.

Changes: We have revised § 361.48(b)(6) to clarify that DSUs may provide advanced training in any field.

Other Services

Comments: Some commenters recommended that proposed § 361.48(b) Start Printed Page 55678include other services not already specifically mentioned. Of these commenters, a few suggested that § 361.48(b)(6) allow DSUs to provide tuition and other services for students with intellectual or developmental disabilities in a Comprehensive Transition and Postsecondary Program for Students with Intellectual Disabilities, as defined by the Higher Education Act of 2008. One commenter asked that assistive technology be included among the individualized services listed in this section. Another commenter suggested that § 361.48(b) require that DSUs recruit, train, and hire peer service providers and mental health advocates to offer individualized support services to individuals experiencing mental illness.

Finally, one commenter requested that we clarify the difference between job retention services and follow-along services in § 361.48(b)(12).

Discussion: We disagree with the commenters' recommendations to identify in final § 361.48(b) other services not specifically listed. The list of services in section 103(a) of the Act and final § 361.48(b) is not exhaustive. Therefore, DSUs may provide other services, not specifically listed, if necessary for the individual to achieve an employment outcome. Similarly, we clarify here that the vocational and other training services specified in final § 361.48(b)(6) encompass tuition and other services for students with intellectual or developmental disabilities in a Comprehensive Transition and Postsecondary Program for Students with Intellectual Disabilities, as defined by the Higher Education Act of 2008. In addition, assistive technology is encompassed in the definition of “rehabilitation technology” in final § 361.5(c)(45), which is included among the individualized services in final § 361.48(b)(17). Also, section 103(a) of the Act, as amended by WIOA, does not specifically require a DSU to provide mental health advocacy services or peer-counseling services for individuals with mental health diagnoses. However, a DSU may provide peer-counseling services, on an individualized basis, under final § 361.48(b)(3), (12), and (21).

Finally, job-retention services and follow-along services are both types of job-related services. Job-retention services may include any vocational rehabilitation service (i.e., vocational rehabilitation counseling and guidance, maintenance, or tools) necessary to help an individual maintain employment. Follow-along services typically mean direct contact with an employed individual to provide support with issues arising from employment, such as on-the-job performance, or with addressing employment barriers, such as absenteeism or tardiness, that could jeopardize employment.

Changes: None.

Scope of Vocational Rehabilitation Services for Groups of Individuals With Disabilities (§ 361.49(a))

Establishment, Development, or Improvement of Community Rehabilitation Programs

Comments: One commenter suggested that vocational rehabilitation services provided under § 361.49(a)(1) for establishing, developing, or improving a public or other nonprofit community rehabilitation program should be allowable only if these services result in competitive integrated employment for the individuals receiving services from the program.

Discussion: We agree with the comment that services for groups provided under § 361.49(a)(1) must be provided for the purpose of achieving competitive integrated employment. Section 103(b)(2) of the Act remained unchanged by the amendments in WIOA, except for a technical amendment. As such, services provided under this authority have always been for the purpose of promoting integration in the community through employment, and final § 361.49(a)(1), like the Act, as amended by WIOA, emphasizes employment outcomes in competitive integrated employment, including supported employment and customized employment.

Changes: None.

Technical Assistance to Businesses

Comments: Another commenter sought clarification about the difference between technical assistance to businesses seeking to employ individuals with disabilities in proposed § 361.49(a)(4) and training and services for employers in proposed § 361.32. This commenter inquired whether both authorities may be used to fund these similar services.

Discussion: In answer to the request for clarification, DSUs are permitted to partner with employers and businesses under both final §§ 361.49(a)(4) and 361.32, as authorized by sections 103(b) and 109, respectively, of the Act, as amended by WIOA. Under final § 361.49(a)(4), DSUs may use VR program funds to provide technical assistance to businesses seeking to hire individuals with disabilities, and this authority must be exercised in a manner consistent with the ultimate purpose of the program—achieving competitive integrated employment. Final § 361.32 is similar, and it identifies specific activities DSUs may engage in when providing training and technical assistance to businesses. These activities may include, but are not limited to, general training and technical assistance for employers about employing individuals with disabilities, disability awareness, and employment law; recruitment, training, retention of, and workplace accommodations for, employees with disabilities; and improving opportunities for work-based learning experiences for individuals with disabilities. The specific activities in final § 361.32 are encompassed within the more general authority of final § 361.49(a)(4). Thus, there is little distinction between the two authorities, and DSUs may rely on both when providing training and technical assistance to businesses seeking to employ individuals with disabilities in competitive integrated employment.

Changes: None.

Establishment, Development, or Improvement of Assistive Technology Programs

Comments: A few commenters opposed proposed § 361.49(a)(8), because it requires that individuals with disabilities be applicants of or be determined eligible for vocational rehabilitation services to access assistive technology services through the establishment, development, or improvement of assistive technology demonstration, loan, reutilization, or financing programs established under the Assistive Technology Act of 1998.

Discussion: We agree with commenters that section 103(b)(8) of the Act, as amended by WIOA, is not explicitly limited to individuals with disabilities who have applied or been determined eligible for the VR program. We also agree that individuals with disabilities who are not applicants or eligible individuals of the VR program may benefit from the coordination of programming with activities authorized under the Assistive Technology Act of 1998.

After further review, we recognize that limiting these generalized assistive technology services to applicants and eligible individuals of the VR program, as we did in proposed § 361.49(a)(8), may have created an unintended barrier for these individuals in accessing generalized assistive technology services. Our intention of limiting this service to applicants and eligible individuals of the VR program in proposed § 361.49(a)(8) was to be consistent with the establishment authority in section 103(b)(2) of the Act Start Printed Page 55679and proposed § 361.49(a)(1), which remained substantially unchanged by WIOA.

However, we acknowledge that the nature of the services provided under the new establishment authority of section 103(b)(8) of the Act and proposed § 361.49(a)(8) is quite different. We also acknowledge that neither section 103(b) of the Act, as amended by WIOA, nor proposed § 361.49 mandates the DSU to provide any one of these services, including the assistive technology related services in section 103(b)(8) of the Act and proposed § 361.49(a)(8). Furthermore, consistent with section 103(b) of the Act, under final § 361.49(a), some of the services to groups are available to individuals who may not have applied or been determined eligible for vocational rehabilitation services.

We acknowledge that some individuals with disabilities may require generalized assistive technology services before they are able to apply for vocational rehabilitation services, or that, through the receipt of generalized assistive technology services, individuals with disabilities may realize their potential to achieve competitive integrated employment and subsequently apply for vocational rehabilitation services. Therefore, the final regulations do not limit assistive technology services to applicants and eligible individuals of the VR program.

Finally, the assistive technology services provided under this authority are more generalized in nature and for the benefit of a group of individuals; they are not tied to the individualized plan for employment of any one individual. Individualized assistive technology services and devices may only be provided, under section 103(a)(14) of the Act and final § 361.48(b)(17) and in accordance with an agreed upon individualized plan for employment.

Changes: We have revised final § 361.49(a)(8) so that DSUs are permitted to provide any individual with a disability generalized assistive technology services provided under programs established, developed, or improved by the DSU in coordination with activities authorized under the Assistive Technology Act of 1998.

Advanced Training

Comments: One commenter sought clarification of the authority of the DSU to provide support to eligible individuals (including, as appropriate, tuition) for advanced training in specific fields under proposed § 361.49(a)(9).

Discussion: As stated in the NPRM, because § 361.49(a)(9) addresses services to groups, we believe there are only limited circumstances in which it would be appropriate for the DSU to provide support for advanced training under that section. Examples include supporting an advanced degree program for multiple eligible individuals at the same institution of higher education or developing and implementing specific programming to benefit a group of eligible individuals working toward advanced degrees at institutions of higher education.

Final § 361.49(a)(9), which mirrors section 103(b)(9) of the Act, as amended by WIOA, is not intended, and must not be used, to replace the authority of the DSU to provide advanced training to eligible individuals on their individualized plans for employment under section 103(a)(5) and (18) of the Act and final § 361.48(b).

Changes: None.

Comparable Services and Benefits (§ 361.53)

Accommodations and Auxiliary Aids and Services

Comments: Although a few commenters supported the proposed regulation, many commenters recommended that accommodations and auxiliary aids and services be exempt from a search for comparable services and benefits when they are needed to help an individual participate in services that are exempt from such a search. Two commenters recommended removing the requirement to search for comparable benefits for auxiliary aids and devices altogether. Some commenters indicated that, prior to WIOA, providing accommodations or auxiliary aids and services was typically done in support of another service and rarely a stand-alone service.

A few commenters noted a technical error in proposed § 361.53(b), which cross-referenced the vocational rehabilitation services exempt from a determination of the availability of comparable services and benefits in proposed § 361.48(a) instead of proposed § 361.48(b), the correct citation. These commenters also recommended revising the regulation to specify that a comparable service review is not required prior to providing an accommodation or auxiliary aid or service if it is necessary for an individual to receive one of the exempt services listed in proposed § 361.48(b).

Discussion: We appreciate the comments and recommendations about comparable services and benefits. Although many commenters suggested that we exempt accommodations and auxiliary aids and services from a search for comparable services and benefits, especially when they are needed to enable an individual to participate in services that are exempt from such a search, doing so would be contrary to the statute. Whereas some commenters noted that prior to WIOA, providing accommodations for auxiliary aids and services was typically done in support of another service and rarely as a stand-alone service, section 101(a)(8)(A)(i) of the Act, as amended by WIOA, specifically added accommodations or auxiliary aids and services to those services that require a determination of available comparable services and benefits before the DSU may provide them. Moreover, section 101(a)(8)(A)(i) specifically exempts certain services from this search, but accommodations or auxiliary aids and services are not among those that are exempt.

We agree that there was an error in the cross-reference to proposed § 361.48(a), as noted by several commenters. We have made the correction.

Changes: We have revised final § 361.53(b), which cross-references § 361.48, to correct a typographical error that appeared in the NPRM. The correct cross-reference is § 361.48(b).

Pre-Employment Transition Services and Personally Prescribed Devices

Comments: A few commenters suggested that pre-employment transition services be added to the list of services exempt from a search for comparable services and benefits because the vocational rehabilitation agency must ensure that these services are provided or provide them directly.

One commenter suggested that personally-prescribed devices, such as eyeglasses, hearing aids, and wheelchairs, be added as an exempt service under proposed § 361.53(b). The commenter based this recommendation on a statement in the preamble of the NPRM about identifying agency financial responsibilities in interagency agreements under proposed § 361.53(d) that personally prescribed devices are not included in accommodations or auxiliary aids and services for the purposes of these regulations.

Discussion: While we agree with commenters that DSUs must provide, or arrange for the provision of, pre-employment transition services, section 101(a)(8)(A)(i) of the Act, as amended by WIOA, does not exempt these services from the search for comparable services and benefits as it does for other specific services. A DSU may satisfy its mandate under section 113 of the Act by arranging for pre-employment transition services provided by another public Start Printed Page 55680entity after conducting a search for comparable services and benefits. Similarly, section 101(a)(8)(A)(i) of the Act does not exempt personally-prescribed devices, such as eyeglasses, hearing aids, and wheelchairs. Given that the Act specifically exempts some services, there is no statutory basis to exempt other services or devices from the search for comparable services and benefits; therefore, personally prescribed devices may not be added as an exempt service under final § 361.53(b) as referenced in final § 361.53(d).

Changes: None.

Interagency Agreements

Comments: Several commenters addressed interagency agreements between DSUs and public institutions of higher education for providing accommodations and auxiliary aids and services. A few commenters shared their concern that students may not receive services they need because the DSU and an institution of higher education cannot agree on financial responsibilities. One commenter suggested that DSUs be required to provide the services and then pursue reimbursement from the universities if no interagency agreement exists. Other commenters supported interagency agreements so long as they did not result in denial or delays in providing needed aids or accommodations. Some commenters stated that interagency agreements should not require negotiation of the financial responsibilities for providing accommodations or auxiliary aids and services, which should be the responsibility of the agency that is providing the service, aid, or accommodation. Other commenters stated that these financial responsibilities should be defined at a national level. One commenter suggested that interagency agreements should be explicit in specifying who is responsible for accommodations, services, and auxiliary aids, and that the regulations should include a required time frame of six months from the publication of the final regulations for completing interagency agreements.

A few commenters objected to one example in the NPRM describing agency financial responsibilities in interagency agreements with public institutions of higher education. Specifically, the commenters thought the example of a DSU providing interpreters or readers both in and out of a classroom in a State where tuition is free for deaf or blind students could be misinterpreted as guidance or direction from the Department about how to assign financial responsibilities rather than as an example of negotiating financial responsibilities.

Discussion: We appreciate the concerns expressed by commenters regarding negotiation of financial responsibilities in interagency agreements and the potential delay in students receiving services. Pursuant to section 101(a)(8)(A)(i) of the Act and final § 361.53(c)(2), DSUs must provide a service if that service is not available as a comparable service at the time it is needed. This provision should not be interpreted as precluding the required negotiation of financial responsibilities under an interagency agreement required by section 101(a)(8)(B) of the Act and final § 361.53(d).

Although some commenters suggested that accommodations and auxiliary aids and services should be the responsibility of the agency providing the service requiring the accommodations, section 101(a)(8)(B) of the Act, as amended by WIOA, mandates that State-level interagency agreements identify who is financially responsible for providing vocational rehabilitation services, including accommodations or auxiliary aids and services.

There is no statutory authority for the Department to define these financial responsibilities at the national level. While the statute and these final regulations establish some parameters, both permit States to develop interagency agreements appropriate to their unique needs, thereby ensuring maximum flexibility. For example, States may choose to explicitly identify the financial responsibilities of each party to the interagency agreement as suggested by the commenter.

Additionally, there is no statutory authority for the Department to impose a deadline of six months from the publication of the final regulations to complete interagency agreements. Moreover, we do not believe such a deadline is necessary because the requirement to enter into interagency agreements, set forth in section 101(a)(8)(B) of the Act and final § 361.53, existed prior to the enactment of WIOA. The requirement to enter into an interagency agreement is long-standing, with the only change being the explicit inclusion of accommodations or auxiliary aids and services. However, as noted in the preamble to the NPRM, we believe that these services were always included in the search for comparable services and benefits, as is any vocational rehabilitation service that is not explicitly exempt. For this reason, the changes made to the interagency agreements pursuant to the amendments made by WIOA are technical—not substantive—in nature, and additional time to implement the requirement is not necessary.

Finally, in response to comments expressing concern about one of the examples provided in the preamble to the NPRM, that example is one of several in a non-exhaustive list. Determination of agency financial responsibilities in interagency agreements is a State matter and should be developed appropriately to meet each State's unique circumstances. We provided the examples only to demonstrate how some States have resolved financial responsibilities in interagency agreements. However, these examples do not necessarily represent best practices or the complete universe of how such issues may be resolved.

Changes: None.

Semi-Annual and Annual Review of Individuals in Extended Employment and Other Employment Under Special Certificate Provisions of the Fair Labor Standards Act (§ 361.55)

Effective Date

Comments: Many commenters strongly supported or endorsed proposed § 361.55, which was viewed as helpful in increasing the potential of as many people with disabilities as possible moving into competitive integrated employment. A few commenters requested clarification about the effective date.

Discussion: We appreciate the many comments supporting this regulation, which is consistent with section 101(a)(14) of the Act, as amended by WIOA. The additional review requirement in § 361.55 is one of many new requirements by which WIOA places heightened emphasis on ensuring that individuals with disabilities, including those with the most significant disabilities, can achieve competitive integrated employment if given the necessary services and supports.

In response to the comments seeking clarification of the effective date of the requirements in final § 361.55, most provisions of the Act, as amended by WIOA (with only a few exceptions not applicable here), took effect on July 22, 2014, the date WIOA was signed into law. This includes section 101(a)(14), which requires the semi-annual review and reevaluation for the first two years following the beginning of employment, and annually thereafter, for individuals with a disability who have received services under the VR program and who are employed in an extended employment setting in a community Start Printed Page 55681rehabilitation program or any other employment under section 14(c) of the FLSA. The purpose of these reviews is to determine each individual's interest, priorities, and needs with respect to competitive integrated employment or training for such employment.

Changes: None.

Who is subject to the requirements?

Comments: A few commenters requested that we clarify who is subject to these requirements (e.g., all individuals, only youth, or individuals in day habilitation programs).

Discussion: Final § 361.55 applies to all individuals with disabilities, regardless of age, who have been served by the VR program and are employed in extended employment or in any employment setting at subminimum wage. This includes any individual who has received services under an individualized plan for employment but has been determined by the DSU to be no longer eligible for services under final § 361.43.

Changes: None.

Documentation

Comments: A few commenters asked that we clarify the documentation required for the semi-annual and annual reviews.

Discussion: The documentation required in final § 361.55(b)(2) for the semi-annual or annual reviews must be consistent with final § 361.47(a)(10). We believe that the DSU could satisfy the requirement by: (1) Documenting the results of the semi-annual or annual review; (2) obtaining a signed acknowledgment that the individual with a disability, or if appropriate, the individual's representative, has provided input to the review; and (3) obtaining a signed acknowledgment by the individual, or the individual's representative as appropriate, that the review was done.

Final § 361.47(b) requires the DSU, in consultation with the SRC, if the State has a Council, to determine the type of documentation that the DSU will maintain in order to meet service record requirements, including those in final § 361.55(b)(2). We encourage the DSU to document the interests, priorities, and needs discussed in final § 361.55(b)(1) and the maximum efforts made under final § 361.55(b)(3) to assist the individual in achieving competitive, integrated employment.

Changes: None.

Costs of Conducting the Reviews

Comments: One commenter noted the unknown costs to the DSU associated with conducting semi-annual and annual reviews.

Discussion: We agree with the commenter that the costs associated with conducting semi-annual and annual reviews may not be readily known; however, prior to the amendments made by WIOA, DSUs were required to conduct annual reviews for up to two years and annually thereafter at the request of the individual with a disability or his or her representative. Therefore, the DSU should have a historical cost basis for estimating the current costs of conducting these reviews.

Changes: None.

Informed Choice

Comments: Other commenters suggested allowing an individual, directly or indirectly through his or her representative, to exercise informed choice to opt out of future reviews after any review has taken place.

Discussion: While we appreciate the commenter's suggestion to allow an individual to opt out of future reviews after any given review has taken place, section 101(a)(14) of the Act, as amended by WIOA, does not permit this. WIOA removed the previous statutory provision that required the reviews to be conducted annually only for the first two years of employment. Under the prior requirement, the reviews would continue past the mandatory two years only if requested by the individual or, if appropriate, the individual's representative. By removing this language, WIOA requires the reviews and provides no ability for an individual to opt out.

Changes: None.

Retroactive Reviews

Comments: One commenter was concerned that the semi-annual and annual reviews would not be conducted by the DSU in that State. The commenter observed that the DSU had not been tracking individuals or conducting reviews, despite beginning tracking efforts in 2014. The commenter suggested that we require DSUs to conduct, within a specified time, retroactive semi-annual and annual reviews for all individuals with disabilities in subminimum wage or extended employment that have been found ineligible to benefit from vocational rehabilitation services.

Discussion: We appreciate both the concern about the DSU not tracking and conducting reviews, as well as the recommendation to require DSUs to conduct retroactive semi-annual and annual reviews within a specified time. Since the enactment of WIOA, DSUs have been required to conduct semi-annual reviews on individuals with disabilities in extended employment, or any other employment under section 14(c) of the FLSA, for two years following the beginning of such employment and annually thereafter. To require a set period of time for retroactive reviews is inconsistent with the Act; however, the conduct of reviews, albeit with differing time frames, has been a requirement prior to the passage of WIOA and a responsibility of the DSU. Therefore, a DSU that historically has not, and is not conducting reviews currently, would be out of compliance with the requirement under the Act.

Changes: None.

Cross-Reference With 34 CFR 397.40

Comments: A few commenters suggested that the language in proposed § 361.55 and proposed 34 CFR 397.40, regarding semi-annual and annual reviews, be cross-referenced and reconciled to ensure consistency and avoid confusion about which requirements apply and the respective responsibilities of the DSU under each provision. One commenter suggested we add a new § 361.55(c) to indicate that: (1) The requirements in part 361 supersede any requirements that may apply in 34 CFR 397.40 regarding the responsibilities of a DSU for individuals with disabilities, regardless of age, who are employed at a subminimum wage; and (2) reviews conducted under § 361.55 are subject to the requirements under 34 CFR 397.40, regarding informing the individual of self-advocacy, self-determination, and peer mentoring training opportunities available in the community.

Discussion: Although a few commenters suggested that the language in proposed § 361.55 and proposed § 397.40 regarding semi-annual and annual reviews be cross-referenced and reconciled to ensure consistency and avoid confusion about applicable requirements and responsibilities of the DSU, the sections are under separate titles in the Act and have differing effective implementation dates. Section 101(a)(14) took effect upon enactment (July 22, 2014); section 511 of the Act, as amended by WIOA, will take effect on July 22, 2016. Moreover, final part 361 and 34 CFR part 397 apply to different, although sometimes intersecting, groups of individuals with disabilities. Final § 361.55 applies only to individuals who have received or are receiving vocational rehabilitation services, whereas final 34 CFR 397.40 covers a much broader population of individuals with disabilities because Start Printed Page 55682many of those individuals may not have ever received vocational rehabilitation services. Neither section supersedes the other; therefore, the specific responsibilities of the DSU and the requirements for reviews must be met under both. While it is conceivable that the required reviews under final § 361.55 and final 34 CFR 397.40 may be fulfilled concurrently for some individuals with disabilities to whom both apply, it cannot be assumed that a review required under final § 361.55 sufficiently replaces the review required under final 34 CFR 397.40 or vice versa.

Changes: None.

Individuals With a Record of Service

Comments: None.

Discussion: Upon further Departmental review of proposed § 361.55 in light of the practical implementation of these requirements with regard to students with disabilities receiving pre-employment transition services under section 113 of the Act, as amended by WIOA and final § 361.48(a), we have determined that clarifying technical amendments are necessary. Thus, we clarify in final § 361.55(a)(1) and (a)(2) that the requirements of final § 361.55 apply to those individuals who have a record of service—in other words, individuals who have applied for or been determined eligible for, vocational rehabilitation services—and achieved employment either at subminimum wage or in extended employment. This clarifying change retains the long-standing applicability of these requirements to such individuals. Without this clarifying change, it may be construed that the requirements may also apply to students with disabilities receiving pre-employment transition services. As noted in a separate discussion related to “Transition Services,” there is no requirement that these students apply for or be determined eligible for vocational rehabilitation services in order to receive pre-employment transition services. As such, it is possible that a DSU will have no information about the student to form the basis for these semi-annual or annual reviews.

Changes: Final §§ 361.55(a)(2)(i) and (ii) now explicitly applies these requirements to individuals who have a record of service.

B. Transition of Students and Youth With Disabilities From School to Postsecondary Education and Employment

This section presents the analysis of comments we received on proposed regulations regarding the provision of transition and other vocational rehabilitation services to students and youth with disabilities to ensure that they have meaningful opportunities to move from school to post-school activities, including competitive integrated employment. The analysis is presented by topical headings relevant to sections of the regulations in the order they appear in part 361 as listed. We discussed some of these regulatory sections, such as §§ 361.24, 361.46, 361.48(b), and 361.49, under section A as they also pertain to the general administration of the VR program and the provision of vocational rehabilitation services to individuals with disabilities of any age.

Topical Headings

Transition-Related Definitions (§ 361.5(c))

Pre-Employment Transition Services (§ 361.5(c)(42))

The Term “Pre-Employment Transition Services”

Scope of Definition

Definitions for Required Activities

Acronym for Pre-Employment Transition Services

Student With a Disability (§ 361.5(c)(51))

Scope of Definition

Educational Programming

Students Who Have Applied or Been Determined Eligible for Vocational Rehabilitation Services

Transition Services (§ 361.5(c)(55))

Scope of “Pre-Employment Transition Services” and “Transition Services”

Outreach and Engagement of Parents or Representatives

Youth With a Disability (§ 361.5(c)(58))

Distinction Between “Student With a Disability” and “Youth With a Disability”

Scope of Definition

Coordination With Education Officials (§ 361.22)

Coordination of Pre-Employment Transition Services

Financial and Programmatic Responsibilities

Contracting With Subminimum Wage Programs

Coordination and Outreach to Parents and Representatives

Dispute Resolution

Cooperation and Coordination With Other Entities (§ 361.24)

Content of the Individualized Plan for Employment (§ 361.46)

Scope of Vocational Rehabilitation Services for Individuals With Disabilities (§ 361.48)

Pre-Employment Transition Services (§ 361.48(a))

Scope of Pre-Employment Transition Services and Use of Reserve

Potentially Eligible

Discretion to Provide Pre-Employment Transition Services to All Students With Disabilities

Provision of Required Activities Based on Need

Continuation of Pre-Employment Transition Services

Required Activities

Continuum of Services

Other Vocational Rehabilitation Services as Pre-Employment Transition Services

Pre-Employment Transition Coordination Activities

Documentation and Reporting

Performance Measures

Services for Individuals Who Have Applied for or Been Determined Eligible for Vocational Rehabilitation Services (§ 361.48(b))

Scope of Vocational Rehabilitation Services for Groups of Individuals With Disabilities (§ 361.49)

Transition-Related Definitions (§ 361.5(c))

Pre-Employment Transition Services (§ 361.5(c)(42))

The Term “Pre-Employment Transition Services”

Comments: Some commenters suggested revising the term “pre-employment transition services” to “student career services.”

Discussion: We appreciate the suggestions raised by the commenters. However, we will not change the term “pre-employment transition services” in final § 361.5(c)(42) to “student career services” because this term is not used in the Act. Rather, section 7(30) of the Act, as amended by WIOA, defines “pre-employment transition services,” and it is the term used throughout title I of the Act, including in sections 101(a)(25), 103(a)(15), 110(d), 112(a), and 113.

Changes: None.

Scope of Definition

Comments: A few commenters recommended alternate definitions for the term “pre-employment transition services” that would include: (1) The pre-employment transition coordination responsibilities in proposed § 361.48(a)(4); (2) each of the five required activities in proposed § 361.48(a)(2); and (3) use of the term “potentially eligible” and its definition.

Discussion: While we appreciate the suggestions, we disagree that the definition of “pre-employment transition services” should be expanded to include more specific information regarding the types of services that constitute “pre-employment transition services” and the population to be served. The definition of “pre-employment transition services” in final § 361.5(c)(42) is consistent with the statutory definition in section 7(30) of the Act because it refers to the required and authorized activities specified in detail in final § 361.48(a), which are the only services permitted.

We also disagree with the recommendation to include pre-Start Printed Page 55683employment coordination services in the definition of “pre-employment transition services.” We agree that coordination activities are necessary for arranging and providing pre-employment transition services. However, coordination activities are more akin to the related activities performed by vocational rehabilitation counselors and other vocational rehabilitation personnel during the course of providing pre-employment transition services rather than the services themselves. As such, we included pre-employment transition coordination activities under the implementation of pre-employment transition services in final § 361.48(a), but have not included them as part of the definition of “pre-employment transition services.”

We also do not believe it is necessary to define the term “potentially eligible,” either within the definition of “pre-employment transition services” or separately in final § 361.5(c). Because this term is unique to implementing pre-employment transition services and is not applicable to any other vocational rehabilitation service, we interpret the phrase “potentially eligible” in § 361.48(a)(1) as meaning all students with disabilities, regardless of whether they have applied or been determined eligible for vocational rehabilitation services. In so doing, the term is applicable only when implementing the requirements governing pre-employment transition services in final § 361.48(a).

Changes: None.

Definitions for Required Activities

Comments: A few commenters recommended that we define the required activities listed in proposed § 361.48(a)(2), including work-based learning experiences, and career (or job exploration) counseling. In this same vein, many suggested that we define work-based learning experiences in a manner consistent with section 103(a) of the School to Work Opportunities Act of 1994, and include job training, work experiences, workplace mentoring, and instruction in general workplace competencies. One commenter requested that we define career counseling, expressing concern that many States may provide this service in ways that are less effective than one-on-one counseling, such as presentations to groups of students. One commenter requested that we broadly define the five required pre-employment transition services to facilitate maximum use of the VR funds reserved for those services. However, a few commenters requested that the required activities not be defined so as to maintain the flexibility permitted in the Act, as amended by WIOA, to allow States to be innovative in the types of activities provided to students with disabilities and to maximize use of the VR funds reserved for providing pre-employment transition services.

Discussion: We considered the requests to define the required activities listed in § 361.48(a)(2). We reviewed section 103 of the School-to-Work Opportunities Act of 1994, which expired on October 1, 2001, and found that it included mandatory activities under the work-based learning component that are similar to the five required activities identified in section 113(b) of the Act, as amended by WIOA. Given the similarities, we do not believe further clarifications are needed.

We agree with the comment that, by not defining the required activities, we maintain flexibility for States and enable the use of creative and innovative strategies that are State specific and tailored to meet the needs of students with disabilities. We also considered the comment about defining career counseling. DSUs must provide career counseling, or job exploration counseling as the term is used in section 113 of the Act, in a manner that most effectively meets the needs of the student with a disability in an individual or group setting, as they would any other vocational rehabilitation service. By providing job exploration counseling in group settings, DSUs can prepare students with disabilities for one-on-one counseling.

Changes: None.

Acronym for Pre-Employment Transition Services

Comments: A few commenters expressed concerns about the use of an acronym for “pre-employment transition services.”

Discussion: We agree with the commenters that an acronym should not be used as shorthand for “pre-employment transition services.” We did not use the most obvious acronym for “pre-employment transition services” in the NPRM or in these final regulations, and we do not intend to use it in administering the VR program because of its negative connotations.

Changes: None.

Student With a Disability (§ 361.5(c)(51))

Scope of Definition

Comments: A few commenters supported the proposed definition. However, most commenters did not agree, for differing reasons, with the Department's proposed definition or its interpretation set forth in the preamble of the NPRM. Most of those disagreeing stated the Department narrowed the scope of the definition of a “student with a disability.”

Some commenters disagreed with the regulatory definition because it did not mirror the statutory definition. Specifically, they believed the addition of the phrase “a student who is” to the phrase “an individual with a disability for the purposes of section 504” in proposed § 361.5(c)(51)(i)(C)(2) narrows the scope of the statutory definition. In fact, one commenter believed that the interpretation effectively eliminated individuals qualifying on the basis of section 504 of the Act.

A few commenters recommended that the Department adjust the age range of a “student with a disability,” while other commenters recommended that the definition require a consistent age range across the Nation.

Discussion: We appreciate the comments supporting the definition, as well as those expressing concern or disagreement. We anticipated many of the same concerns when developing the proposed regulations. However, we firmly believe that § 361.5(c)(51), both as proposed and final, is consistent with both the plain meaning and intent of the definition in section 7(37) of the Act, as amended by WIOA. We agree with commenters that § 361.5(c)(51)(i)(C)(2), both as proposed and final, limits the definition to students. We adopted almost verbatim section 7(37) of the Act, as amended by WIOA, and, in so doing, we attempted to eliminate confusion that the term “student with a disability” could be construed to apply to someone not in an educational program. We recognize that the applicability of section 504 of the Act, in any other context, is much broader. Therefore, in an effort to reduce confusion and potential non-compliance, we clarified in § 361.5(c)(51)(i)(C)(2), both proposed and final, that this particular criterion, as all others, applies only to students with disabilities. We believe this clarification is consistent with the statute because the term itself—“student with a disability”—describes a population that encompasses only individuals with disabilities who are participating in educational programs. For this reason, we also disagree with the recommendations to remove any explicit requirement in the definition of a “student with a disability” that the individual be a participant in an educational program because to do so would contradict the plain meaning of Start Printed Page 55684the term itself and section 7(37) of the Act.

The definitions of “student with a disability” in section 7(37) of the Act and final § 361.5(c)(51) allow for a certain degree of flexibility in the age range of students with disabilities. States may elect to use a lower minimum age for receipt of pre-employment transition services than the earliest age for the provision of transition services under section 614(d)(1)(A)(i)(VIII) of the IDEA. The section applies beginning with the first individualized education program (IEP) to be in effect when a child with a disability turns 16, or younger if determined appropriate by the IEP Team, and updated annually thereafter. Pursuant to 34 CFR 300.320(b) of the the IDEA regulations, transition services may be provided for students with disabilities younger than age 16, if determined appropriate by the IEP Team. Furthermore, a “student with a disability” may not be older than 21, unless a State law provides for a higher maximum age for the receipt of special education and related services under the IDEA. Therefore, there is no statutory authority to revise the definition of a “student with a disability,” for purposes of the VR program, by adjusting the specified age range or creating a standard age range to be applied across the Nation because to do so would be inconsistent with the age criteria contained in the statutory definition.

Changes: None.

Educational Programming

Comments: Some commenters stated that the Department's interpretation that the definition applies only to students in secondary school directly contradicts congressional intent, as expressed in section 2(b)(5) of the Act, as amended by WIOA, because the narrower interpretation does not ensure, to the greatest extent possible, that students and youth with disabilities have opportunities for postsecondary success. Most of these commenters stated that students in postsecondary education should be included within the definition, as should students in GED, ESL, home school, vocational/technical programs, and juvenile justice or mental health treatment facilities, so long as they meet the age requirements in the definition. These commenters stated that students in these educational programs and settings also need pre-employment transition services, which are available only to individuals who meet the definition of a “student with a disability.” One commenter requested that the Department share documentation of congressional intent in support of the interpretation that the definition does not include individuals in postsecondary education. A few commenters were concerned that the emphasis on serving only secondary students might decrease emphasis by DSUs on services for individuals enrolled in postsecondary education.

Some commenters expressed concern about the impact of the Department's interpretation of the definition of “student with a disability” on the use of funds reserved for the provision of pre-employment transition services. These commenters believed the definition of a “student with a disability” should be broader in order for States to maximize use of the funds reserved for pre-employment transition services.

Discussion: We appreciate the concerns expressed by the commenters and have reconsidered our interpretation, as described in the preamble to the NPRM, that the definition of a “student with a disability” should be limited to students in a secondary education program. Our intention in the NPRM was to be consistent with congressional intent for the definition, given the requirements governing the availability of a free appropriate public education under the IDEA, which is limited to services included in the individualized education programs of children with disabilities who are enrolled in secondary education under State law (20 U.S.C. 1412(a)(1) and 1401(9)). Services provided under the IDEA are not affected by our interpretation here, which applies only to the VR program.

Nonetheless, we agree that section 7(37) of the Act, as amended by WIOA, is silent on the educational setting for a student with a disability. After much consideration of the potential effects for such change in interpretation, the Secretary agrees that the definition of a “student with a disability” in final § 361.5(c)(51), for purposes of the VR program, should be interpreted as applying to students also enrolled in educational programs outside secondary school, including postsecondary education programs, so long as the students satisfy the age requirements set forth in final § 361.5(c)(51). We believe this change will eliminate the concern expressed by commenters regarding the potential negative effect a different interpretation would have on a DSU providing and maximizing postsecondary education opportunities to eligible individuals with disabilities needing such services under an approved individualized plan for employment. Furthermore, as was set forth in the NPRM, the Secretary believes that the definition applies to secondary students who are homeschooled, as well as students in other non-traditional secondary educational programs. This interpretation is not affected by this discussion, and these individuals remain covered by the definition of a “student with a disability” in final § 361.5(c)(51).

We also agree with commenters that postsecondary education students may benefit from certain pre-employment transition services set forth in section 113 of the Act, as amended, and final § 361.48(a), all of which are limited to “students with disabilities.” We believe this broader interpretation of the definition will increase the potential for DSUs to maximize the use of funds reserved for the provision of pre-employment transition services by increasing the number of students who can receive these services. Therefore, we have revised the definition of “student with a disability” in final § 361.5(c)(51) to include students in secondary, postsecondary, and other recognized education programs.

However, this broader interpretation does not expand the list of required or authorized activities in section 113 of the Act, as amended by WIOA, and final § 361.48(a). A DSU can use the reserved funds to provide pre-employment transition services, as set forth in final § 361.48(a), to students with disabilities in postsecondary education or other educational programs who meet the age requirements of the definition. For example, a DSU may provide work-based learning activities such as internships to an individual with a disability in a postsecondary education program who otherwise satisfies the definition of a “student with a disability,” but may not use the reserved funds (dedicated to the provision of pre-employment transition services under final § 361.48(a)) to provide services and activities not specifically included in section 113 of the Act and final § 361.48(a). In other words, a DSU may not use the funds reserved for pre-employment transition services to pay for tuition and other costs of attending postsecondary education, since this is not among those activities that are required or authorized under section 113 of the Act and final § 361.48(a). These and other necessary services, however, may be provided with VR funds not reserved for the provision of pre-employment transition services so long as they are provided pursuant to an approved individualized plan for employment under section 103(a) of the Act and final § 361.48(b) of these final regulations.Start Printed Page 55685

Section 113 of the Act, as amended by WIOA, requires DSUs to coordinate pre-employment transition services with local educational agencies. This applies to students with disabilities in educational programs administered by local educational agencies. DSUs should coordinate the pre-employment transition services provided to students who are not participating in programs administered by local educational agencies with the public entities administering those educational programs, as described in section 101(a)(11)(C) of the Act, as amended by WIOA, and final § 361.24.

Changes: We have revised the definition of “student with a disability” in final § 361.5(c)(51) to includes students in secondary, postsecondary, and other recognized education programs.

Students Who Have Applied or Been Determined Eligible for Vocational Rehabilitation Services

Comments: A few commenters recommended that the definition apply only to individuals with disabilities who have applied for and been determined eligible for vocational rehabilitation services.

Discussion: We disagree with the comments recommending that a “student with a disability” should be limited to individuals who have applied or been determined eligible for vocational rehabilitation services. The definition in final § 361.5(c)(51) is consistent with section 7(37) of the Act, which does not limit the definition to applicants and eligible individuals of the VR program. Furthermore, to impose such a limitation would be contrary to the Department's interpretation of “potentially eligible,” students with disabilities, as used in section 113 of the Act, as amended by WIOA, and final § 361.48(a). We have repeatedly stated in both the NPRM and these final regulations that all “students with disabilities,” regardless of whether they have submitted an application or been determined eligible for vocational rehabilitation services, may receive pre-employment transition services under final § 361.48(a). See a more detailed discussion of “Potentially Eligible” later in this section in connection with comments received under final § 361.48(a).

Upon further Departmental review of this issue, the Secretary has determined that other conforming changes are needed throughout final part 361 to ensure these students, who may not have applied or been determined eligible for the VR program, would still be protected by fundamental rights under the VR program, namely the protection of their personal information under final § 361.38 and the right to exercise informed choice under final § 361.52. We have revised these provisions to refer to “recipients of services” rather than “eligible individuals.”

Changes: We have revised final § 361.38 and final § 361.52 to refer to “recipients of services” rather than “eligible individuals,” thereby ensuring that students and youth with disabilities who may receive pre-employment transition services or transition services to groups, as applicable, are still protected by requirements governing confidentiality and informed choice even if they have not applied or been determined eligible for the VR program.

Transition Services (§ 361.5(c)(55))

Scope of “Pre-Employment Transition Services” and “Transition Services”

Comments: A few commenters supported the definition of “transition services” in proposed § 361.5(c)(55), while a few commenters requested clarification regarding the difference between “transition services” and “pre-employment transition services,” and the responsibility of DSUs to provide job placement assistance within the context of these services.

Discussion: We appreciate the support from commenters to maintain the proposed definition of “transition services” in final § 361.5(c)(55). As to the difference between “pre-employment transition services” and “transition services,” we believe the distinction between the two is critical. As stated in the preamble to the NPRM, vocational rehabilitation services are provided on a continuum, with pre-employment transition services being the earliest set of services available to students with disabilities.

Pre-employment transition services, authorized by section 113 of the Act, as amended by WIOA, and implemented by final § 361.48(a), are designed to help students with disabilities to begin to identify career interests that will be further explored through additional vocational rehabilitation services, such as transition services. Furthermore, pre-employment transition services are only those services and activities listed in section 113 of the Act, as amended by WIOA, and final § 361.48(a). Job placement assistance is not included among the listed pre-employment transition services, but it could constitute a transition service under section 103(a)(15) of the Act and final § 361.48(b). Finally, pre-employment transition services are available only to students with disabilities, whereas transition services may be provided to a broader population—both students and youth with disabilities.

Following the continuum, transition services represent the next set of vocational rehabilitation services available to students and youth with disabilities. They are outcome-oriented and promote movement from school to post-school activities, including postsecondary education, vocational training, and competitive integrated employment. As such, transition services may include job-related services, such as job search and placement assistance, job retention services, follow-up services, and follow-along services, based on the needs of the individual.

Individualized transition services under section 103(a)(15) of the Act and final § 361.48(b) must be provided to students who have been determined eligible for the VR program and in accordance with an approved individualized plan for employment. Transition services also may be provided in group settings to students and youth with disabilities under section 103(b)(7) of the Act, as amended by WIOA, and final § 361.49(a)(7). Although these group services are not individualized, they can still be beneficial for job exploration, including presentations from employers in the community and group mentoring activities.

Changes: None.

Outreach and Engagement of Parents or Representatives

Comments: A few commenters requested that we revise the definition to incorporate parental outreach and engagement.

Discussion: We agree that engaging and coordinating with parents or representatives of students and youth with disabilities is consistent with the network of services and activities included in the definition, and we have revised the definition accordingly.

Changes: We have revised final § 361.5(c)(55) by adding paragraph (v) to include outreach to and engagement of parents or, as appropriate, the representatives of students or youth with disabilities in the definition of “transition services.”

Youth With a Disability (§ 361.5(c)(58))

Distinction Between “Student With a Disability” and “Youth With a Disability”

Comments: While a few commenters praised the clarity of the proposed definition, most stated that making a Start Printed Page 55686distinction between a student with a disability and a youth with a disability creates unnecessary complexity and burden. These commenters recommended that services available to students with disabilities, such as pre-employment transition services, also be available to youth with disabilities. One commenter recommended that “youth with a disability” be defined more broadly than “student with a disability” so that individuals who are homeschooled and others could be covered by the definition.

Discussion: We appreciate all of the comments and concerns about the definition of “youth with a disability” in § 361.5(c)(58). While we understand the commenters' concerns, the Act, as amended by WIOA, defines the terms “student with a disability” and “youth with a disability” differently. Moreover, the Act and these final regulations use the terms differently, depending on the context. For example, only students with disabilities can receive pre-employment transition services under section 113 of the Act and final § 361.48(a), but both students with disabilities and youth with disabilities can receive transition services under section 103 of the Act and final §§ 361.48(b) and 361.49(a). The definitions set forth in these final regulations are consistent with the statute, and we have no statutory authority to consolidate the two definitions or to delete one of them because to do so would be inconsistent with the statute.

The age range in the definition of “youth with a disability” in final § 361.5(c)(58) is broader than that for “student with a disability” in final § 361.5(c)(51). Therefore, a student with a disability always meets the definition of a “youth with a disability” because a student with a disability has an age range that fits within the age range prescribed by the definition of a “youth with a disability.”

However, a youth with a disability may not necessarily meet the definition of a “student with a disability.” A youth with a disability could also be a student with a disability if the individual meets the age range in the definition of “student with a disability” and participates in an educational program (see the earlier discussion of educational programming under Student with a Disability section § 361.5(c)(51)). On the other hand, a youth with a disability who is outside the age range for a student with a disability or is not participating in an educational program does not meet the definition of a “student with a disability.”

Changes: None.

Scope of Definition

Comments: One commenter questioned whether the definition of “youth with a disability” includes criteria related to the IDEA or section 504, as is the case with the definition of a “student with a disability.”

Discussion: As previously discussed, the definition of “youth with a disability” in final § 361.5(c)(58) not only is broader in age range but also is not tied to participation in an educational program under the IDEA or section 504 of the Act, as is the definition of “student with a disability.”

Changes: None.

Coordination With Education Officials (§ 361.22)

Coordination of Pre-Employment Transition Services

Comments: A few commenters expressed support for proposed § 361.22, suggesting minimal to no changes. A few, however, stated that DSUs are required to provide pre-employment transition services in collaboration with educational agencies, and recommended that we include in proposed § 361.22(b) reference to these services wherever the interagency coordination of transition services is mentioned. One commenter stated that a major challenge in transition is determining which entity is responsible for job placement assistance and support, and recommended proposed § 361.22(b) be revised to incorporate specific mention of these services in the coordination of pre-employment transition services.

A few commenters recommended that we consider including in proposed § 361.22 a reference to technical assistance circular 14-03 (RSA-TAC-14-03), which discusses transition-related principles.

Discussion: We appreciate the comments supporting proposed § 361.22, as well as those seeking further clarification or expressing concerns. We agree that pre-employment transition services should be added to final § 361.22(b) as it is referenced in final § 361.22(a)(1). However, there is no statutory basis to require job placement services in connection with pre-employment transition services, as job placement services are not among the required or authorized activities under section 113 of the Act, as amended by WIOA. Yet, while we cannot require it, nothing in the Act prohibits States from including job placement activities as a transition service in the formal interagency agreement.

We disagree with the request to add a reference in final § 361.22(b) to technical assistance circular 14-03 because the content of technical assistance circular 14-03 has been significantly affected by the amendments to the Act made by WIOA. As a result, we will be revising this particular technical assistance circular accordingly.

Changes: We have revised § 361.22(b)(1) to state that the formal interagency agreement must include collaboration between the DSU and the State educational agency for providing pre-employment transition services to students with disabilities. We have also revised §§ 361.22(b)(3) and (b)(4) to similarly cover pre-employment transition services when identifying personnel responsible for providing services and when developing procedures for outreach to and identification of students with disabilities.

Financial and Programmatic Responsibilities

Comments: One commenter suggested that we revise proposed § 361.22 by requiring that the formal interagency agreement between the DSU and the State educational agency contain more robust minimum content provisions, since the agreement is critical to providing services to students with disabilities and a successful transition from school to post-school activities.

Many commenters stated that additional guidance is needed to determine which entity, the school or the DSU, is financially responsible for providing transition services to students with disabilities. Many requested that we revise proposed § 361.22 to explicitly identify the financial roles and responsibilities of each entity, stating that the interagency agreement cannot be effective if it is broad, general or abstract. Other commenters recommended that the formal interagency agreement provide clear direction about agencies' responsibilities for services under particular circumstances, stating that specificity is essential to coordinating shared responsibilities and funding.

A few commenters expressed concern that major problems and delays in implementing transition planning services occur because neither WIOA nor the IDEA state explicitly which entity is responsible for providing transition services. These commenters stated that the financial responsibilities must be made clear so that neither the local educational agency nor the DSU may shift the burden for providing a Start Printed Page 55687service, for which it otherwise would be responsible, to the other entity.

A few commenters also noted that while many of these decisions can be resolved at the State and local level, there are still instances where it is difficult to determine the responsible entity, such as in the determination of which entity is responsible for job placement assistance and related work supports. Conversely, one commenter, representing school officials, stated that decisions about providing and assuming financial responsibility for transition services must be made at the State and local level through interagency collaboration and coordination, cannot be wholly dictated by regulation, and must be made based on the circumstances of the situation and the eligibility of the student.

One commenter expressed the concern that the budget for the VR program is not as significant as the budget for special education, and vocational rehabilitation funds may be quickly exhausted if the VR program were to provide pre-employment transition services to every student with a disability. Another commenter noted that the schools and DSUs need to collaborate with other entities that have shared responsibilities and funding. Similarly, one commenter stated that the IDEA, WIOA, and the Americans with Disabilities Act seem to be in a competitive relationship, since the entities covered by these statutes are responsible for providing and funding some of the same services.

Discussion: As discussed in the preamble of the NPRM, over the years many individuals have sought clarification and posed questions about the financial responsibilities of schools and DSUs when services fall under the purview of both entities. For example, pre-employment transition services and transition services can be both vocational rehabilitation services under the VR program and special education or related services under the IDEA. While neither the Act, as amended by WIOA, nor the IDEA is explicit as to which entity—the DSU or the State educational agency and, as appropriate, the local educational agency—is financially responsible for providing pre-employment transition services and transition services, both final § 361.22(c) and 34 CFR 300.324(c)(2) provide that neither the DSU nor the local educational agency may shift the burden for providing services, for which it otherwise should be responsible, to the other entity. It is essential that section 101(c) of the Act, as amended by WIOA, and section 612(a)(12) of the IDEA, along with their implementing regulations in § 361.22(c) and 34 CFR 300.154, are read in concert to avoid any inconsistency or conflict between the two requirements.

Section 113(a) of the Act, as amended by WIOA, requires the DSU to provide, or arrange for the provision of, pre-employment transition services in collaboration with local educational agencies. Therefore, decisions as to which entity will be responsible for providing services that are both special education services and vocational rehabilitation services must be made at the State and, as appropriate, local level as part of the collaboration between the DSU, State educational agencies, and, as appropriate, the local educational agencies.

We agree that the formal interagency agreement should facilitate the transition of students with disabilities receiving special education services to receiving vocational rehabilitation services without delay or disruption. Since the decisions about financial responsibility for providing pre-employment transition services and transition services must be made at the State and local level during collaboration and coordination of services, a formal interagency agreement or other mechanism for interagency coordination can explicitly address all aspects of these issues. As suggested in the NPRM, the agreement criteria could address criteria such as:

1. The purpose of the service. Is it related more to an employment outcome or education? That is, is the service usually considered a special education or related service, such as transition planning necessary for the provision of a free appropriate public education?

2. Customary Services. Is the service one that the school customarily provides under part B of the IDEA? For example, if the school ordinarily provides job exploration counseling or work experiences to its eligible students with disabilities, the mere fact that those services are now authorized under the Act as pre-employment transition services does not mean the school should cease providing them and refer those students to the VR program. However, if summer work experiences are not customarily provided by a local educational agency, the DSU and local educational agency may collaborate to coordinate and provide summer work-based learning experiences.

3. Eligibility. Is the student with a disability eligible for transition services under the IDEA? The definition of a “student with a disability” under the Act and these final regulations is broader than under the IDEA because the definition in the Act includes those students who are individuals with disabilities under section 504 of the Act. It is possible that students receiving services under section 504 do not have individualized education programs under the IDEA because they are not eligible to receive special education and related services under the IDEA. As a result, DSUs are authorized to provide transition services under the VR program to a broader population under WIOA than local educational agencies are authorized to provide under the IDEA.

The Secretary believes that these criteria may assist DSUs, State educational agencies, and local educational agencies as they collaborate and coordinate the provision of transition services, including pre-employment transition services, to students with disabilities. We strongly encourage that formal interagency agreements have clearly defined parameters for collaborating and coordinating the delivery of pre-employment transition services and transition services and clearly defined responsibilities for each entity. However, there is no statutory basis for the Department to establish service delivery or financial responsibilities. Those decisions must be made at the State level while developing an interagency agreement and considering the population, available resources, and needs of the students and youth. Consequently, States have maximum flexibility to develop these interagency agreements in a manner that best meets the unique needs and capacities of both the DSUs and educational agencies.

Changes: None.

Contracting With Subminimum Wage Programs

Comments: Some commenters recommended that proposed § 361.22(b)(6) be revised to prohibit contracts or arrangements with, or referrals to, programs in which youth with disabilities are employed at subminimum wage. They stated that the agreements should go beyond documentation requirements and make proactive efforts to identify individuals being considered for employment at subminimum wage. One commenter expressed support for using the existing formal interagency agreement as the mechanism to develop and document the process required in section 511 of the Act as proposed in § 361.22.

Discussion: We agree with commenters that the Act emphasizes the need to ensure that individuals with disabilities, especially students and youth with disabilities, are given the opportunity to receive training for and Start Printed Page 55688obtain work in competitive integrated employment. The commenters misunderstood our proposal because § 361.22(b)(6), both proposed and final, requires the interagency agreement between the DSU and the State educational agency to include an assurance that, in accordance with 34 CFR 397.31, neither the State educational agency nor the local educational agency will enter into a contract or other arrangement with an entity, as defined in 34 CFR 397.5(d), for the purpose of operating a program for a youth with a disability under which work is compensated at a subminimum wage. Moreover, new requirements in section 511 of the Act, as amended by WIOA, and in final 34 CFR part 397 place additional limitations on the use of subminimum wages for individuals with disabilities, especially youth with disabilities. For example, final 34 CFR 397.10 requires the DSU, in coordination with the State educational agency, to develop a process that ensures youth with disabilities receive documentation demonstrating their completion of the various required activities.

Changes: None.

Coordination and Outreach to Parents and Representatives

Comments: A few commenters urged the Department to ensure that coordination efforts include outreach to parents of students who are in need of transition services. One such commenter recommended proposed § 361.22(b)(4) be revised to include systematic outreach to, and engagement of, parents, including through the IEP process for the IDEA eligible students. The commenter stated that without this outreach and engagement, parents will not have a meaningful understanding of the benefits of vocational rehabilitation services for their children.

Discussion: While there is no statutory basis in section 101(a)(11)(D) of the Act to require outreach to parents, we agree that family members, caregivers, and representatives play a critical role in the transition process. We believe that for pre-employment transition services and transition services to be meaningful and to lead to successful outcomes for students and youth with disabilities, their family members, caregivers, and representatives must be aware of the services and benefits offered by DSUs and be involved in the transition process. Although DSUs may conduct outreach to parents and representatives, this activity may be affected by State laws governing the age of majority.

Under section 615(m) of the IDEA and 34 CFR 300.520, a State may transfer all rights accorded to parents under Part B of the IDEA to the student when he or she reaches the age of majority under State law that applies to all children. If rights under the IDEA transfer to the student, a student may have the right to make his or her own education, employment, and independent living decisions under the IDEA. DSUs may conduct outreach directly to these students. Parental consent to participate in pre-employment transition services and transition services should be obtained pursuant to State law, as well as policies of the educational programs and the DSU. We further emphasize here that the Department funds programs and projects that advise and assist parents and representatives of students and youth with disabilities as their children prepare for adult life. The Department awarded grants to more than 65 Parent Training and Information Centers funded by the Office of Special Education Programs and seven Parent Information and Training Programs funded by RSA during FY 2015. Individuals will find additional resources regarding age of majority at www.parentcenterhub.org/​repository/​age-of-majority-parentguide/​.

Changes: None.

Dispute Resolution

Comments: Some commenters expressed the concern that proposed § 361.22(c) is limited and provides no safeguards for students if an agreement is not reached about financial responsibility for a particular service, which can lead to delays in services or no services at all. Some commenters stated that the formal interagency agreement should include a mechanism to resolve disputes between the State educational agency and the DSU about providing pre-employment transition services and transition services. One commenter also suggested that we require language in the formal interagency agreement to inform individuals of the availability of the CAP.

Discussion: We disagree with the recommendations to require that the formal interagency agreement include: (1) A mechanism for resolving disputes between the DSU and the State educational agency or local educational agency; (2) a method for resolving disputes between an individual with a disability and these entities; and (3) information about the CAP. Section 101(a)(11)(D) of the Act, as amended by WIOA, which provides the statutory authority for final § 361.22(b), does not require that States create a grievance procedure for disputes under the agreements, in general, or, more specifically, about the provision of pre-employment transition services or transition services. Likewise, section 101(a)(11)(D) of the Act does not require the interagency agreement to identify a process for resolving disputes between an individual with a disability and the DSU, State educational agency, or local educational agency about pre-employment transition services and transition services, or to include information about the CAP. We believe final § 361.22 is consistent with the Act, and it provides States maximum flexibility to develop the interagency agreements in a manner that best meets their unique needs and circumstances. However, there is nothing in the Act or these final regulations that prohibits States from including in the formal interagency agreement a grievance procedure (e.g., similar to the one in section 101(a)(8) of the Act) to resolve disputes between the DSU and the State educational agency, or the local educational agency, as appropriate, as well as procedures to resolve disputes between an individual with a disability and the DSU, State educational agency or local educational agency, and information about the CAP. We encourage States to include these procedures and information in their interagency agreements.

Section 20 of the Act requires all programs providing services under the Act, including the VR program, to inform applicants and recipients of services of the availability and purpose of the CAP. Therefore, regardless of whether the formal interagency agreement between the DSU and the State educational agency addresses the CAP, all students and youth with disabilities receiving vocational rehabilitation services, including pre-employment transition services and transition services, will be informed about it. In addition, an applicant for, or eligible individual under, the VR program who is dissatisfied with a decision made by vocational rehabilitation personnel, including those about pre-employment transition services and transition services, may request a review of that decision under section 102(c) of the Act. Upon further Departmental review, the Secretary has realized that the statute has created an unintended inconsistency among sections 20, 102(c), 103(b)(7), 12(a), and 113. Specifically, section 20 requires programs funded under the Act to inform applicants for and recipients of those services about the CAP. There is no requirement that the recipients be Start Printed Page 55689determined eligible for those services in order to receive information about the CAP. Section 103(b)(7) of the Act permits the DSU to provide transition services to youth and students with disabilities in a group setting, regardless of whether those students or youth have applied for or been determined eligible for vocational rehabilitation services. Section 112(a) specifically authorizes the CAP to assist students with disabilities receiving pre-employment transition services. Section 113 makes clear that students with disabilities are eligible to receive pre-employment transition services regardless of whether they have applied or been determined eligible for the VR program. All of these provisions, read in concert, make clear that due process rights under the Act would be available to students and youth with disabilities receiving pre-employment transition services and transition services even if they have not yet applied for or been determined eligible for the VR program. However, section 102(c) refers only to “applicants and eligible individuals,” thus creating an internal inconsistency within the Act. Because it is clear that students and youth with disabilities are able to receive certain services without having applied or been determined eligible for vocational rehabilitation services and they are eligible for advocacy assistance from the CAP, the Secretary has determined it is necessary to amend final § 361.57 throughout to make clear that “recipients” of vocational rehabilitation services may exercise due process rights when disagreements arise during the receipt of pre-employment transition services and transition services. We have also made conforming changes throughout final part 361, such as with the definition of “impartial hearing officer” in § 361.5(c)(24) and “qualified and impartial mediator” in 361.5(c)(43).

The student or youth with a disability, or the individual's parent, as appropriate, will be informed of the CAP. Disputes or disagreements between parents and educational personnel are beyond the scope of the Act and these final regulations.

Changes: We have revised final § 361.57 throughout to replace “eligible individuals” with “recipients.” We also made conforming changes to the definitions of “impartial hearing officer” and “qualified and impartial mediator” in final § 361.5(c).

Cooperation and Coordination With Other Entities (§ 361.24)

Comments: A few commenters disagreed with proposed § 361.24(d), stating that the regulations do not ensure that American Indian students and youth with disabilities enrolled in, but disconnected from, the education system are adequately served. These same commenters specifically requested that reference to the American Indian Vocational Rehabilitation Services (AIVRS) program funded under § 121 of the Act be made throughout the final regulations whenever “new transition services” are mentioned. A few other commenters addressed transition services for American Indian students with disabilities without referring to proposed § 361.24.

Some commenters recommended that we require DSUs to include in their formal interagency agreements with AIVRS projects and to address in their agreements with Tribal Education Agencies in the State how the State VR agency plans to provide equitable pre-employment transition services to American Indian students with disabilities, particularly those that attend schools on Indian reservations. The commenters also recommended that we require State VR agencies to address how services to American Indian students with disabilities will be incorporated into the budgeting and spending plans for the funds reserved for providing pre-employment transition services for students with disabilities.

One commenter encouraged the Department to consider using Impact Aid funds for youth in transition.

Discussion: While the Department understands the commenters' concerns regarding the need to ensure that coordination among the DSU, AIVRS program, and educational agencies is taking place and that transition services, including pre-employment transition services, are provided to American Indian students with disabilities, the Department does not believe a revision to the final regulations is necessary to do this.

Final § 361.24, as it did when proposed, addresses the need for coordination among these entities and for providing transition services to American Indians living on or near a reservation. Section 361.24(d)(1) requires the VR services portion of the Unified or Combined State Plan to assure that DSUs have entered into formal cooperative agreements with AIVRS programs in their States. Section 361.24(d)(2) sets out requirements for cooperative agreements with AIVRS programs, and those include strategies for providing transition planning under § 361.24(d)(2)(iii). Furthermore, the Federal funds reserved in accordance with § 361.65, and any funds made available from State, local, or private funding sources, are to be used to provide pre-employment transition services to all students with disabilities, including American Indian students with disabilities, in need of such services, regardless of whether an application for services has been submitted. Finally, § 361.30 requires that the DSU assure in the VR services portion of the Unified or Combined State Plan that it will provide services to American Indians with disabilities to the same extent that it provides services to other populations with disabilities in the State.

Final § 361.22 provides for a formal interagency agreement with the State Educational Agency that would include educational services, including transition services and pre-employment transition services, provided by local educational agencies for Indian students with disabilities living on reservations. DSUs coordinate with schools on reservations that provide services through the Bureau of Indian Education or TEAs under the requirement in § 361.24(a) that the DSU cooperate with Federal and local agencies and programs. Because the final regulations provide appropriate mechanisms for coordination with the Federal, State and Tribal agencies that provide educational services to Indian students with disabilities on reservations, we do not believe a change in the regulations is necessary.

As for using funds for transition services provided under the Impact Aid law (formerly Title VIII of the Elementary and Secondary Education Act of 1965 (ESEA) and now in Title VII as a result of the Every Student Succeeds Act reauthorization), the comment is beyond the scope of these regulations. That said, however, the Impact Aid provides assistance to local school districts with concentrations of children residing on Indian lands, military bases, low-rent housing properties, or other Federal properties and, to a lesser extent, concentrations of children who have parents in the uniformed services or employed on eligible Federal properties who do not live on Federal property. The majority of Impact Aid funds is general aid to the school district recipients and may be used in whatever manner the districts choose, as long as it is consistent with State and local requirements. The Department does not have the statutory authority to direct Impact Aid general aid money, including for the use suggested by the commenter.

Changes: None.Start Printed Page 55690

Content of the Individualized Plan for Employment (§ 361.46)

Comments: A few commenters requested additional guidance regarding the use of a “projected post-school employment outcome” in an individualized plan for employment for a student or youth with a disability and asked whether the use of the broad category “Standard Occupational Codes” would meet this description.

Discussion: In response to the request for additional guidance, the individualized plan for employment with a projected post-school employment outcome should outline the services and activities that will guide the individual's career exploration. The projected post-school employment outcome facilitates the individual's exploration and identification of a vocational goal based upon his or her informed choice. It may be a specific goal, such as a Web designer, or a broader goal, such as medical practitioner. The projected goal may be amended during the career development process, and eventually it must be revised to a specific vocational goal once this process is completed.

Changes: None.

Scope of Vocational Rehabilitation Services for Individuals With Disabilities (§ 361.48)

Pre-Employment Transition Services (§ 361.48(a))

Scope of Pre-Employment Transition Services and Use of Reserve

Comments: Some commenters expressed support for the proposed regulation. However, most commenters recommended revisions or sought clarification about the scope and provision of pre-employment transition services. One commenter suggested that we revise proposed § 361.48(a) to include only direct services to individuals, while another commenter requested clarification as to whether pre-employment transition coordination activities in proposed § 361.48(a)(4) could be paid for with funds reserved for providing pre-employment transition services.

Discussion: Section 113(a) of the Act, as amended by WIOA, states that the funds reserved under section 110(d) and any funds made available from State, local, or private (other) sources shall be used to provide, or arrange for the provision of, pre-employment transition services. The coordination activities required by section 113(d) of the Act, as amended by WIOA, and final § 361.48(a)(4) are essential for arranging and providing the “required” and “authorized” activities set forth in section 113(b) and (c) of the Act and final § 361.48(a)(2) and (3). Therefore, there is no statutory authority to limit the scope of final 361.48(a) to only the direct services required by section 113(b) of the Act. See a more detailed discussion of the definition of “Pre-Employment Transition Services,” and the services included in that definition, earlier in this section.

We agree with the commenter that proposed § 361.48(a) should be revised to clarify that pre-employment transition coordination services provided under § 361.48(a)(4) may be paid with funds reserved for providing pre-employment transition services, because coordination activities are essential for arranging and providing those services, as required by section 113(a) of the Act and § 361.48(a).

Changes: We have revised final § 361.48(a) to clarify that the funds reserved for the provision of pre-employment transition services may be used to pay for pre-employment transition coordination activities.

Potentially Eligible

Comments: Through the NPRM, we sought public comments and alternate suggestions related to our interpretation of “potentially eligible” to mean all students with disabilities, regardless of whether they have applied for and been determined eligible for the VR program. Of the comments received, most agreed with this interpretation. However, some commenters provided alternate interpretations.

Of those commenters, a few suggested that the term should be interpreted as meaning students with disabilities who have at least applied for vocational rehabilitation services, with one commenter suggesting this would both allow for providing individualized services and ensure parental consent for students with disabilities to work with a vocational rehabilitation counselor. Other commenters stated that serving applicants for vocational rehabilitation services would allow the counselor not only to gather sufficient information to meet the specific needs of the student with a disability but also to track and report the provision of services and expenditure of funds. One commenter recommended revising proposed § 361.48(a)(1) to limit the “potentially eligible” population to those individuals who have both applied for and been determined eligible for vocational rehabilitation services.

Furthermore, some commenters provided alternate interpretations for limiting or expanding the population to students or youth based upon age-range, or enrollment in secondary, postsecondary, or dual enrollment educational programs. One commenter recommended that “potentially eligible” be defined to ensure consistent implementation across States. A few commenters expressed concerns that the regulations significantly limit the resources for students who have applied for and been determined eligible for the full scope of vocational rehabilitation services, as well as individuals with most significant disabilities. A few commenters expressed concerns that spending funds required to be reserved for providing pre-employment transition services on students who are potentially eligible for vocational rehabilitation services may force DSUs to implement an order of selection or close priority categories under an existing order of selection. One commenter raised concerns that DSUs may have limited fiscal and human resources required to address the needs of potentially eligible students. One commenter requested clarification as to how students would be identified.

Another commenter suggested that proposed § 361.48(a) does not conform to section 112 of the Act, as amended by WIOA, because the CAP is unable to provide assistance or advocacy services to individuals who are not vocational rehabilitation clients or client-applicants. A few commenters also expressed concerns about students being able to make informed choices, as well as obtaining parental consent for potentially eligible students who are minors and participating in pre-employment transition services, prior to submitting an application for vocational rehabilitation services.

Discussion: We appreciate the comments supporting the proposed regulation, as well as comments expressing concerns and suggestions for changes. After much consideration of all available options, we have decided to maintain our interpretation of “potentially eligible” for purposes of pre-employment transition services. In so doing, all students with disabilities, regardless of whether they have applied for or been determined eligible for the VR program, may receive pre-employment transition services. The Secretary believes this is the broadest legally supportable interpretation and the one that is most consistent with the apparent congressional intent.

Most notably, section 113 of the Act is the only statutory section that references “potentially eligible” students with disabilities. All other sections of title I of the Act refer to “applicants” or individuals determined eligible for services. Given the stark Start Printed Page 55691contrast in the use of “potentially eligible” in section 113 of the Act, the Secretary believes it imperative that meaning is given to that phrase by not limiting it to individuals who have applied for or been determined eligible for the VR program.

The broader interpretation means all students with disabilities will be able to obtain much-needed pre-employment transition services and begin the early phase of job exploration without the potential delays, and the administrative burden on DSU personnel and resources, caused by application processing, eligibility determinations, assignment to an order of selection category, and development of an individualized plan for employment. However, there is nothing that precludes a DSU from taking an application as soon as a student expresses an interest in pre-employment transition services or other vocational rehabilitation services and making a timely determination of eligibility.

We want to emphasize that the phrase “potentially eligible” applies only in the context of pre-employment transition services. This means that students with disabilities who need individualized services beyond the scope of pre-employment transition services (e.g., transition and other vocational rehabilitation services) must first apply for, and be determined eligible for, the VR program, be assigned to the appropriate category if the State is on an order of selection, and develop an approved individualized plan for employment. We recommend that DSUs request students with disabilities who are “potentially eligible” for vocational rehabilitation services and receiving pre-employment transition services submit an application for services as soon as possible in the event further vocational rehabilitation services are needed.

This recommendation is especially pertinent for those States that have implemented an order of selection. A student's position on the wait list for services other than pre-employment transition services, in the event the student is placed in a closed category, is based on the date of application, not the date of referral or the receipt of pre-employment transition services. To provide students with disabilities an opportunity to apply for services as early as possible in the transition process and ensure a smooth transition into the VR program, it is imperative that DSUs collaborate with educational programs to identify students who may be eligible or potentially eligible for vocational rehabilitation services and engage parents and representatives. The earlier a student is placed on a wait list, the sooner his or her turn will open in the State's order in the event a State is on an order of selection.

We want to make clear that neither the Act nor these final regulations exempt these students with disabilities from the State's order of selection, if one has been implemented, or VR program requirements once they apply and are determined eligible for services. While under the order of selection regulations at § 361.36, the student could continue to receive pre-employment transition services if such services have begun, a student could not begin to receive pre-employment transition services if such services had not begun prior to applying and being determined eligible. To permit such would create an exemption from the order of selection requirements and the statute does not provide such authority. However, we recognize the benefit early services can have for students. Therefore, we want to make clear that these students could receive transition services offered to groups of students and youth with disabilities under § 361.49. While not identical to pre-employment transition services, many similar services could be provided under the services to groups authority.

A detailed discussion regarding comments related to the continuation of pre-employment transition services under an order of selection is provided in the Continuation of Pre-Employment Transition Services section later in this Analysis of Comments and Changes.

In response to the concern related to the availability of services from the CAP, section 112(a) of the Act, as amended by WIOA, specifically authorizes CAP grantees to assist individuals receiving services under sections 113 and 511 of the Act. Therefore, these individuals are clients and client-applicants for purposes of the CAP.

Finally, as discussed previously under “Coordination with Education Officials,” parental consent to participate in pre-employment transition services is governed by State law, as well as policies of the educational programs and the DSU. Furthermore, informed choice, as outlined in final § 361.52, applies throughout the vocational rehabilitation process; therefore, students with disabilities receiving pre-employment transition services under final § 361.48(a) must be given the opportunity to exercise their informed choice.

Changes: None.

Discretion To Provide Pre-Employment Transition Services to All Students With Disabilities

Comments: One commenter requested that we clarify whether States have the option, under proposed § 361.48(a), to provide pre-employment transition services to all students with disabilities, including those who have not applied for vocational rehabilitation services. Another commenter requested that we revise the “may” in proposed § 361.48(a)(1) to “shall” in order to ensure that pre-employment transition services are provided to all students with disabilities, regardless of whether they have applied for services.

Discussion: We agree that clarification is necessary. Section 110(d)(1) of the Act, as amended by WIOA, requires States to reserve at least 15 percent of their Federal vocational rehabilitation allotment for providing pre-employment transition services. Moreover, section 113 of the Act, as amended by WIOA, requires States to use the reserved funds to provide, or arrange for the provision of, pre-employment transition services to all students with disabilities in need of such services who are eligible or potentially eligible for services. Therefore, the requirement to reserve and use funds for providing pre-employment transition services is mandatory, not discretionary. A State must provide pre-employment transition services to all students with disabilities needing those services and may not limit or expand those services. We used the term “may” in proposed § 361.48(a)(1) to recognize that, for the first time, the Act permitted the delivery of pre-employment transition services to students with disabilities who have not applied for or been determined eligible for the VR program. However, we acknowledge the confusion caused by the use of the term. We therefore clarify that States must provide pre-employment transition services not only to students with disabilities who have applied for vocational rehabilitation services but also to those students with disabilities who have not applied for services.

Changes: We have revised final § 361.48(a)(1) to clarify that DSUs must make pre-employment transition services available statewide to all students with disabilities, not just those who have applied for or been determined eligible for vocational rehabilitation services.

Provision of Required Activities Based on Need

Comments: Some commenters requested that we clarify whether a Start Printed Page 55692student must be provided all five required services or only those required services based upon a student's need. Of these comments, many recommended the latter, as students with disabilities may not need all five activities set forth in section 113(b) of the Act, as amended by WIOA.

A few commenters requested clarification about, or criteria for, making a determination of need. One commenter also recommended that the regulations promote client choice about participating in pre-employment transition services to ensure that students are not coerced into participating in these services. Finally, one commenter expressed concern that DSUs may require students with disabilities to participate in pre-employment transition services as readiness or preparatory activities before applying for vocational rehabilitation services, thereby delaying the transition from school to post-school activities.

Discussion: Section 113(a) and (b) of the Act, as amended by WIOA, when read in concert with each other, as well as final § 361.48(a)(2), require the DSU to make certain “required” pre-employment transition services available to all students with disabilities who need them. However, none of these provisions mandate that all five “required” activities be provided to each student with a disability if all the activities are not necessary. Pre-employment transition services, as is true for any vocational rehabilitation service, must be provided solely on the basis of the individual's need for that service.

Under final § 361.50, DSUs are responsible for developing policies, in consultation with the SRC, for determining the need for pre-employment transition services. These policies must include clear and consistent criteria based on the needs of students identified in the comprehensive statewide needs assessment. The policies will guide the DSU, in consultation with school personnel, family members, and students with a disability, in determining which pre-employment transition services each student needs, consistent with his or her interests and informed choice.

Finally, pre-employment transition services are designed to be an early start at job exploration for students with disabilities and should enrich, not delay, transition planning, application to the VR program, and the continuum of vocational rehabilitation services necessary for movement from school to post-school activities. Neither section 113 of the Act, as amended by WIOA, nor final § 361.48(a) requires students with disabilities receiving pre-employment transition services to apply for, or be determined eligible for, the VR program or to receive other vocational rehabilitation services. The Act and these final regulations maximize opportunities for achieving competitive integrated employment by imposing no requirement that would delay or hinder the student's ability to access these crucial early services or that would permit a DSU to coerce an individual to participate in any of them. However, should the student with a disability need additional vocational rehabilitation services, he or she must apply for and be determined eligible for those services. See the more detailed discussion of comments related to “Potentially Eligible” earlier in this section.

Changes: None.

Continuation of Pre-Employment Transition Services

Comments: Some commenters expressed concerns about the continuation of pre-employment transition services and availability of reserved funds for those services once a student with a disability applies for and is determined eligible for the VR program. Of those commenters, many expressed the need for a continuation of services for those students who received pre-employment transition services prior to applying for the VR program and aging out of or exiting an educational program. Some commenters requested that States be permitted to use funds reserved under section 110(d) of the Act to continue to provide services for any student with a disability who has received pre-employment transition services and who cannot receive vocational rehabilitation services due to a State's implementation of an order of selection. One commenter suggested that those students found eligible for the VR program while, or after, receiving pre-employment transition services should be given an automatic service priority under a State's order of selection, while another commenter requested clarification as to why students with disabilities have not received a service priority under proposed § 361.36. Some commenters expressed concerns that serving students who have not applied for services, regardless of the severity of their disability, will result in a delay of services to other students who have applied and been determined eligible for vocational rehabilitation services, including individuals with the most significant disabilities. A few commenters expressed the concern that the emphasis on serving students would limit the funds available to serve adult consumers.

Discussion: We understand the commenters' concerns about the continuation of services for students with disabilities after receiving pre-employment transition services, as some students may apply but not be determined eligible for the VR program. Others may no longer satisfy the definition of a “student with a disability” because they are no longer within the required age range or are no longer participating in an education program. These issues arise only when a student with a disability who is receiving, or has received, pre-employment transition services also needs other vocational rehabilitation services. All students with disabilities who apply for vocational rehabilitation services, even if they are still receiving pre-employment transition services, will be subject to all relevant requirements for eligibility, order of selection, and development of the individualized plan for employment (including its development prior to leaving school under final § 361.22(a)(2)). Neither the Act nor these final regulations exempt students with disabilities from any of these requirements, which apply to all VR program applicants.

Section 101(a)(5) of the Act, as amended by WIOA, does not exempt students with disabilities receiving pre-employment transition services prior to the determination of eligibility from a State's order of selection; therefore, we do not have the statutory authority to include such an exemption in final § 361.36. Nonetheless, consistent with the policy underlying prior § 361.36(e)(3), which requires a DSU to continue providing vocational rehabilitation services to individuals who had begun receiving these services under an individualized plan for employment prior to the implementation of an order of selection, it is imperative that students with disabilities not experience a disruption in the pre-employment transition services that they are receiving and that are so critical to their transition to postsecondary education and employment. Thus, we have revised final § 361.36(e)(3) by requiring DSUs implementing an order of selection to continue the provision of pre-employment transition services to students with disabilities who were receiving these services prior to the determination of eligibility and assignment to a priority category. DSUs may use the funds reserved under section 110(d) and final § 361.65(a)(3) Start Printed Page 55693for the continuation of these services. This change does not permit the DSU to provide any other transition or vocational rehabilitation services for students with disabilities assigned to closed priority categories.

As for ceasing to satisfy the definition of “student with a disability,” pre-employment transition services under section 113 of the Act and final § 361.48(a) are available only to students with disabilities. Therefore, if an individual no longer meets the definition of a “student with a disability,” despite the fact that he or she has received or is receiving pre-employment transition services, he or she is no longer able to receive these services under section 113 of the Act and final § 361.48(a). However, if the individual has been determined eligible for vocational rehabilitation services and has been assigned to an open category in the State's order of selection, if the State has implemented one, he or she may continue to receive the same types of pre-employment transition services under section 103(a) of the Act and final § 361.48(b), in accordance with an approved individualized plan for employment. The DSU would pay for these services with VR funds, other than those reserved for the provision of pre-employment transition services under section 113 of the Act because the reserved funds must be used solely for the provision of pre-employment transition services to individuals who satisfy the definition of a “student with a disability.”

Changes: We have revised final § 361.36(e)(3) by requiring a designated State unit implementing an order of selection to continue to provide pre-employment transition services to students with disabilities who have begun receiving these services prior to the determination of eligibility and assignment to a closed priority category.

Required Activities

Comments: Several commenters provided alternate suggestions for the required activities specified in proposed § 361.48(a)(2). One commenter recommended that States be permitted to develop their own menu of pre-employment transition services, while many other commenters recommended a variety of revisions to proposed § 361.48(a)(2). Specifically, one commenter requested that job exploration counseling include actual work experience in competitive integrated employment settings. A few commenters requested that work-based learning experiences include paid or unpaid work experiences in school or community settings, as well as experiential learning opportunities. Some commenters who recommended paid work experiences suggested that placement be aligned with the definition of competitive integrated employment. Many commenters on work-based learning experiences requested that the Department delete “to the maximum extent possible” from the regulation, prohibit sheltered work in segregated settings, and require that the experiences only be provided in integrated settings. However, a few commenters requested clarification as to whether entities with certificates issued by the Department of Labor under section 14(c) of the FLSA could provide pre-employment transition services.

A few commenters suggested that we revise proposed 361.48(a)(2) to conform to similar language in the Higher Education Opportunity Act of 2008 by replacing “or” with “and” in the language that governs counseling on opportunities for enrollment in comprehensive transition or postsecondary educational programs at institutions of higher education. In addition, these commenters recommended language specific to counseling on opportunities for enrollment of students with intellectual disabilities in postsecondary educational programs at institutions of higher education. A few other commenters proposed revising the focus of workplace readiness training to replace the development of social skills and independent living with a focus on soft skills, financial literacy, mobility skills, and other skills necessary for employment. Another few commenters recommended that the regulations require instruction in self-advocacy to be provided by a recognized self-advocacy group of the individual's choosing and that peer mentoring occur during work experiences. A few commenters recommended that the required activities include outreach to and engagement of parents of students with disabilities in conjunction with parent centers and parent training information centers.

Discussion: We appreciate the commenters' suggestions, concerns, and requests for clarification. However, section 113(b) of the Act, as amended by WIOA, specifically itemizes the pre-employment transition services that must be provided—the “required” activities. Furthermore, section 113(c) of the Act itemizes the pre-employment transition services that may be provided—the “authorized” activities—in the event funds remain after providing the required activities. Given the Act's specificity about the pre-employment transition services that must be provided, as well as those that may be provided, there is no statutory basis to require additional activities or impose additional requirements, such as requiring that instruction in self-advocacy be provided by a recognized self-advocacy group of the individual's choosing or that peer mentoring occur during work experiences.

We disagree with the commenters' request to revise § 361.48(a)(2)(iii) to conform to similar language in the Higher Education Opportunity Act of 2008 and specifically includes programs and services for students with intellectual disabilities. Final § 361.48(a)(2)(iii) mirrors section 113(b)(3) of the Act, as amended by WIOA, and we do not believe the replacement of “or” with “and” helps to better describe the manner in which DSUs are to provide this service. In addition, Section 113(b)(3)of the Act and final § 361.48(a)(2)(iii) encompass counseling on the broad range of comprehensive transition or postsecondary education programs available to all students with disabilities, including students with intellectual disabilities. Therefore, we do not believe it is necessary to revise final § 361.48(a)(2)(iii).

Moreover, there is no statutory basis for States to develop their own menu of pre-employment transition services. Rather, under section 113(b) of the Act and final § 361.48(a)(2), each State must make all “required” pre-employment transition services available to students with disabilities who need such services.

Similarly, contrary to recommendations made by commenters, we do not have the authority to remove, by regulation, statutory requirements. Accordingly, § 361.48(a)(2)(ii) must be consistent with section 113(b)(2) of the Act, as amended by WIOA, which requires that work-based learning experiences occur in integrated settings to the maximum extent possible. While we agree with commenters that work-based learning experiences in integrated settings are optimal, the Act's use of the phrase “to the maximum extent possible” leaves open the possibility for work-based learning experiences in non-integrated settings. Consequently, we cannot require that all work-based learning experiences occur in integrated settings. However, DSUs should exhaust all opportunities for work-based learning experiences in competitive integrated employment settings before considering provision of these services in non-integrated work settings, as appropriate for the needs, and consistent with the informed choice, of the individual student with a disability, Start Printed Page 55694and his or her family or guardian, as applicable.

Having said this, the Department agrees that actual work experiences in integrated settings, rather than simulated or mock experiences in sheltered environments, provide students with disabilities with the most beneficial opportunities for job exploration, work-based learning, work readiness, and peer mentoring. The Secretary believes that DSUs, to the maximum extent possible, should provide work-based learning experiences, which may be paid or unpaid, through actual work experiences in integrated community environments to prepare students with disabilities for community-based competitive integrated employment, instead of using classrooms and educational facilities as settings for work-based learning experiences that segregate, replicate the tasks performed in adult sheltered employment, and often result in referrals to segregated employment settings following exit from school.

If these are paid work-based learning experiences, students with disabilities must be paid competitive wages to the extent competitive wages are paid to students without disabilities. Training stipends are also permissible for students with disabilities to the same extent that they are provided to students without disabilities participating in these experiences. Similarly, nothing in the Act prohibits States from coordinating the provision of pre-employment transition services with entities that hold certificates issued by the Department of Labor under section 14(c) of the FLSA. However, the Department strongly encourages training in competitive integrated settings to prepare students for competitive integrated employment. In addition, there is no statutory basis here to require that self-advocacy instruction be provided by a specific entity.

We agree that engaging students' parents or representatives is essential to their participation in pre-employment transition services and vital to their success. Since DSUs will be delivering pre-employment transition services to students with disabilities at a much younger age, parents must be involved, as required by State law and the policies of educational agencies and the DSU. We encourage DSUs to provide information regarding the application process and availability of services to all students with disabilities, and their parents or representatives, early in the transition process. As such, parent centers funded through the Rehabilitation Act and the IDEA may serve as mechanisms for outreach to, and engagement of, parents.

Changes: None.

Continuum of Services

Comments: A few commenters requested clarification about “required activities” under pre-employment transition services in § 361.48(a)(2). One commenter stated that pre-employment transition services appear to be a continuum of services and requested clarification as to whether a student might initially receive a general level of pre-employment transition services and then later receive a customized level of pre-employment transition services. Another commenter requested clarification as to how individualized pre-employment transition services would be funded for a student or youth with a disability who is not a vocational rehabilitation client. One commenter suggested that general pre-employment transition services be reserved for students who are potentially eligible for the VR program, while reserving individualized level pre-employment transition services for those students with disabilities determined eligible for vocational rehabilitation services. The same commenter suggested that pre-employment transition services be directed toward determining whether further vocational rehabilitation services are required for the individual to be successful in securing and maintaining employment. A few commenters requested clarification of the difference between employment assistance under pre-employment transition services and transition services, including the role of the vocational rehabilitation counselor.

Discussion: In response to requests for clarification, DSUs may provide, or arrange for the provision of, “required” pre-employment transition services to students with disabilities in classroom, employment, or community (group) settings. These services may be general in nature for students with disabilities who have not applied and been determined eligible for vocational rehabilitation services. As a student progresses through the vocational rehabilitation process by applying and being determined eligible for services, the DSU will have the information necessary to conduct assessments and provide more individualized and customized services to address the student's particular needs. But in some instances DSUs may nonetheless have sufficient information to provide individualized pre-employment transition services to students with disabilities who have not applied and been determined eligible for vocational rehabilitation services. Thus, we decline to require in final § 361.48(a)(2) that providing more individualized pre-employment transition services be limited to students with disabilities who have applied and been determined eligible for vocational rehabilitation services.

Finally, section 113 requires that DSUs use the funds reserved under section 110(d) of the Act, as amended by WIOA, to provide pre-employment transition services not only to students with disabilities who are eligible for vocational rehabilitation services but also to students with disabilities who are potentially eligible for vocational rehabilitation services, which includes all students with disabilities regardless of whether they have submitted an application for these services.

Examples of the five “required” activities and how they may be provided in either a group or individualized setting include, but are not limited to, the following:

One, general job exploration counseling may be provided in a classroom or community setting and include information regarding in-demand industry sectors and occupations, as well as non-traditional employment, labor market composition, administration of vocational interest inventories, and identification of career pathways of interest to the students. Job exploration counseling provided on an individual basis might be provided in school or the community and include discussion of the student's vocational interest inventory results, in-demand occupations, career pathways, and local labor market information that applies to those particular interests.

Two, work-based learning experiences in a group setting may include coordinating a school-based program of job training and informational interviews to research employers, work-site tours to learn about necessary job skills, job shadowing, or mentoring opportunities in the community. Work-based learning experiences on an individual basis could include work experiences to explore the student's area of interest through paid and unpaid internships, apprenticeships (not including pre-apprenticeships and Registered Apprenticeships), short-term employment, fellowships, or on-the-job trainings located in the community. These services are those that would be most beneficial to an individual in the early stages of employment exploration during the transition process from school to post-school activities, including employment. Should a student need more individualized services (e.g., job coaching, orientation and mobility training, travel expenses, Start Printed Page 55695uniforms or assistive technology), he or she would need to apply and be determined eligible for vocational rehabilitation services and develop and have an approved individualized plan for employment.

Three, counseling on opportunities for enrollment in comprehensive transition or postsecondary educational programs at institutions of higher education in a group setting may include information on course offerings, career options, the types of academic and occupational training needed to succeed in the workplace, and postsecondary opportunities associated with career fields or pathways. This information may also be provided on an individual basis and may include advising students and parents or representatives on academic curricula, college application and admissions processes, completing the Free Application for Federal Student Aid (FAFSA), and resources that may be used to support individual student success in education and training, which could include disability support services.

Four, workplace readiness training may include programming to develop social skills and independent living, such as communication and interpersonal skills, financial literacy, orientation and mobility skills, job-seeking skills, understanding employer expectations for punctuality and performance, as well as other “soft” skills necessary for employment. These services may include instruction, as well as opportunities to acquire and apply knowledge. These services may be provided in a generalized manner in a classroom setting or be tailored to an individual's needs in a training program provided in an educational or community setting.

Five, instruction in self-advocacy in a group setting may include generalized classroom lessons in which students learn about their rights, responsibilities, and how to request accommodations or services and supports needed during the transition from secondary to postsecondary education and employment. During these lessons, students may share their thoughts, concerns, and needs, in order to prepare them for peer mentoring opportunities with individuals working in their area(s) of interest. Further individual opportunities may be arranged for students to conduct informational interviews or mentor with educational staff such as principals, nurses, teachers, or office staff; or they may mentor with individuals employed by or volunteering for employers, boards, associations, or organizations in integrated community settings. Students may also participate in youth leadership activities offered in educational or community settings.

The wide variety of pre-employment transition services described in these examples is designed to be an early start at job exploration for students with disabilities. DSUs are not to use these activities as assessment services for the purpose of determining whether additional vocational rehabilitation services are needed, or if the individual will be successful in employment. In response to commenters' requests for clarification of the difference between employment assistance under pre-employment transition services and transition services, see more detailed descriptions of the distinctions between the two types of services in the Transition Services (section 361.5(c)(55)) and Scope of Pre-Employment Transition Services and Use of the Reserve sections earlier in this section B.

Changes: None.

Other Vocational Rehabilitation Services as Pre-Employment Transition Services

Comments: A few commenters recommended that we interpret the scope of required activities under section 113 of the Act, as amended by WIOA, to include both support services and individualized vocational rehabilitation services necessary to participate in pre-employment transition services. The commenters requested that the funds reserved for providing pre-employment transition services also be permitted to pay for services provided under section 103(a) of the Act, as amended by WIOA, and proposed § 361.48(b), including, but not limited to job coaching services, maintenance, transportation to and from work-based learning experiences, travel, uniforms, tools, sign language interpreters, reasonable accommodations, assistive technology, independent living, and orientation and mobility services for students who are blind. One commenter requested that pre-employment transition services be expanded to include all transition services for students determined eligible for vocational rehabilitation services. Another commenter requested that we include all services listed on an individualized plan for employment within the scope of pre-employment transition services, including postsecondary education and training costs.

Discussion: Section 113 of the Act, as amended by WIOA, and final § 361.48(a) set out a list of pre-employment transition services that must be made available to all students with disabilities who are eligible or potentially eligible for vocational rehabilitation services (“required” activities), as well as those that may be provided (“authorized” activities). Under section 113(a) of the Act, the funds required to be reserved for pre-employment transition services must be used solely for providing pre-employment transition services. Therefore, the Department has no statutory authority to expand or limit the pre-employment transition services listed in section 113 of the Act, as amended by WIOA. Furthermore, if a student with a disability needs any additional individualized vocational rehabilitation services, including those necessary for participating in pre-employment transition services, such as those provided under final § 361.48(b), the student must apply and be determined eligible for vocational rehabilitation services and develop an individualized plan for employment that includes the additional necessary services. These additional services must be charged as a vocational rehabilitation expenditure separate from the funds reserved for providing pre-employment transition services.

Changes: None.

Pre-Employment Transition Coordination Activities

Comments: A few commenters expressed concerns that proposed § 361.48(a)(4) did not permit alternate means of participation in the meetings required by section 113 of the Act, as amended by WIOA, and permitted in section 103(b)(6) of the Act. Many commenters recommended we include language to allow for alternate means of participation in meetings as vocational rehabilitation counselors may not be available to participate in all individualized education program or person-centered planning meetings across a State.

A few commenters stated that pre-employment transition coordination activities must occur between DSUs and parent training and information centers funded by the Office of Special Education Programs and RSA to ensure that parental outreach concerning the benefits of pre-employment transition services is coordinated among these federally funded centers.

Discussion: We agree that alternate means for participating in pre-employment transition coordination activities (e.g., video conferences and teleconferences) could minimize travel time and costs and maximize both the number of individualized education program and person-centered planning Start Printed Page 55696meetings in which a vocational rehabilitation counselor could participate, as well as the number of direct services a vocational rehabilitation counselor could provide to students with disabilities. Although § 361.48(a)(4), both as proposed and final, does not explicitly permit DSUs to use alternate means to participate in individualized education program or person-centered planning meetings, it does not prohibit them. DSUs may therefore use these alternate means.

Decisions on how to conduct meetings is a matter of agency administration. Conducting these meetings via alternate means would be consistent with the explicit authority to conduct alternate format meetings under section 101(a)(11)(D)(i) of the Act and final § 361.22(b)(1). Additionally, section 614(f) of the IDEA and its implementing regulations in 34 CFR 300.328 allow the parent of a child with a disability and a public agency to agree to use alternative means of meeting participation requirements, such as video conferences and conference calls, when conducting individualized education program team meetings and placement meetings under the IDEA, as well as carrying out administrative matters under section 615 of the IDEA (such as scheduling, exchange of witness lists, and status conferences). Since the Act and the IDEA provide for alternate means for conducting meetings very similar to those required by section 113 of the Act and final § 361.48(a), DSUs may use alternate means to conduct these meetings as well. We do not believe a regulatory change is necessary to accomplish this.

We agree that coordinating with federally funded parent centers is a mechanism that would help parents of students with disabilities understand the benefits of pre-employment transition services. Section 113(d) of the Act, as amended by WIOA, however, does not require this. The statute is clear that the funds reserved for providing pre-employment transition services must only be spent on the activities specified in section 113 of the Act, as amended by WIOA, and final § 361.48(a). Given the Act's specificity of the activities that constitute pre-employment transition services, there is no statutory authority for final § 361.48(a)(4) to include any additional required coordination responsibilities.

Changes: None.

Documentation and Reporting

Comments: Some commenters requested clarification as to how States should document the provision and costs of pre-employment transition services for students with disabilities who have not yet applied and been determined eligible for vocational rehabilitation services and for whom limited personal information is available. Additionally, one commenter requested additional guidance about the tracking of funds expended on groups of students who have not applied or been determined eligible for the VR program.

A few commenters requested flexibility in the reporting of pre-employment transition services because it is burdensome for DSUs to develop and implement tracking systems for a large potentially eligible population. These commenters also stated this tracking could be difficult because DSUs may not have access to the personal identifying information, including Social Security numbers, typically used to document and report vocational rehabilitation services provided. A few commenters suggested that the Department establish reporting requirements for pre-employment transition services that are similar to the child count reporting requirements under the IDEA. One commenter requested clarification regarding reporting requirements for the funds reserved for providing pre-employment transition services and whether expenditures are only to be reported during the time period for which an individual meets the definition of a student with a disability or during the entire fiscal year in which the individual was served.

Discussion: Because sections 110(d) and 113 of the Act require a State to reserve and use at least 15 percent of its total vocational rehabilitation allotment for providing, or arranging for the provision of, pre-employment transition services to students with disabilities, it will be critical that the DSU implement administrative methods and procedures that ensure proper data collection and financial accountability of these reserved funds, as required by final § 361.12 and 2 CFR 200.302 of the Uniform Guidance. In addition, section 101(a)(10)(C) of the Act, as amended by WIOA, expands the VR program-specific data that DSUs must report, including data elements related to students with disabilities who are receiving pre-employment transition services. These reporting requirements are included in final § 361.40(a) to ensure that the Secretary has the information needed to assess the performance of the VR program, especially with regard to providing pre-employment transition services to students with disabilities.

Although the Department recognizes the burden placed on DSUs to develop procedures for tracking pre-employment transition services and related expenditures for students who have not yet applied or been determined eligible for vocational rehabilitation services, DSUs are required by section 101(a)(10)(C) of the Act to do so in order to properly account for, and report, the provision of pre-employment transition services and the reserved funds spent on those services. Moreover, the State's accounting procedures must be such that the DSU will be able to complete accurately all required forms, including financial reports, that show the reservation and use of these funds for this purpose, as required by final § 361.12 and 2 CFR 200.302.

The Department does not have the authority to grant exceptions from, or waivers of, these reporting requirements. Regardless of whether students with disabilities are receiving pre-employment transition services without having applied or been determined eligible for vocational rehabilitation services, i.e. by virtue of the fact they are “potentially eligible” for the program, if Federal funds are being spent, expenditures must be tracked and monitored in accordance with final § 361.12 and the Uniform Guidance in 2 CFR 200.302 (Financial Management) and 200.328 (Monitoring), as well as the Federal cost principles in 2 CFR 200.403 (Allowability), 200.404 (Reasonable) and 200.405 (Allocable). Furthermore, the Department issued Policy Directive (PD) 15-05 on February 5, 2015, which provided technical assistance on reporting the total Federal expenditures for providing pre-employment transition services. We appreciate the commenters' proposed alternate suggestions for reporting. However, the Department uses the SF-425 to collect financial data from DSUs so that it can monitor the financial status of the VR program and assess grantee compliance with Federal fiscal requirements under the VR program, including requirements for the reservation and use of funds for providing pre-employment transition services.

As they have been required to do for many years, DSUs must submit completed SF-425 reports semi-annually. The end dates for each reporting period in a fiscal year are March 31 and September 30. Semi-annual reports must be submitted no later than 45 days after the end of the reporting period. Final reports must be submitted no later than 90 days after the period of performance. “Period of performance” means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award. Start Printed Page 55697These final regulations do not affect any of these reporting requirements. To ensure the proper accounting and reporting of services provided and funds expended, especially with regard to pre-employment transition services, DSUs must track and report data on students with disabilities until they no longer meet the definition of a student with a disability. At that point, DSUs must track and report services provided to, and funds expended on, these individuals as they would any other individual receiving vocational rehabilitation services.

Changes: None.

Performance Measures

Comments: A few commenters expressed concern that pre-employment transition services and expenditure of funds are not included in the proposed common performance accountability measures. These commenters recommended that we revise the common performance accountability measures to include and evaluate these services. One commenter requested clarification regarding how group service expenditures would inform statistical adjustment model calculations, as it was unclear how the ratio of reportable individuals to participants may reflect on the performance of a DSU.

Discussion: The VR program is no longer subject to its own set of performance standards and indicators established by the Department, as it had been prior to the enactment of WIOA. Because the common performance accountability indicators are mandated by section 116(b) of title I of WIOA and apply to all six core programs of the workforce development system, including the VR program, the Departments of Education and Labor do not have the authority to establish additional performance accountability indicators beyond those identified in the statute. However, section 106(a)(2) of the Act and section 116(b)(1)(A)(ii) of title I of WIOA permit States to develop additional accountability measures to evaluate the performance of the core partners in the workforce development system. We intend to monitor State implementation of pre-employment transition services and expenditure of funds during our annual review and periodic on-site monitoring of State VR agencies to identify areas of concern and the need for technical assistance. The Departments of Education and Labor address the remaining comments in the joint final regulations implementing the performance accountability system under title I of WIOA, and published elsewhere in this issue of the Federal Register.

Changes: None.

Services for Individuals Who Have Applied for or Been Determined Eligible for Vocational Rehabilitation Services (§ 361.48(b))

Comments: A few commenters supported proposed § 361.48(b)(18) and agreed that youth may be provided transition services that are similar to pre-employment transition services under an individualized plan for employment. Another commenter requested that proposed § 361.48(b)(18) require DSUs to provide students and youth with disabilities an application for vocational rehabilitation services at the beginning of the transition process. A few commenters expressed concerns regarding the expansion of services for students and youth with disabilities at the expense of other individuals with disabilities served by DSUs. One commenter expressed such concerns in terms of potential harm to the Randolph-Sheppard program.

Some commenters requested that we identify the services, including transition services, that would be allowable if provided by community rehabilitation programs that hold section 14(c) certificates under the FLSA. A few commenters recommended that the regulations prohibit DSUs from contracting with section 14(c) certificate holders to provide transition services. One commenter requested that we clarify if entities holding section 14(c) certificates may provide transition services and proposed alternatives for providing these services if they may not.

One commenter requested that incentives be added for providing transition services or supported employment services.

Discussion: We appreciate the support for, and consideration given by commenters to, proposed § 361.48(b)(18). We agree that students and youth with disabilities should receive adequate information and applications for vocational rehabilitation services at the beginning of the transition from secondary programs to post-secondary activities. A DSU may provide the information and application under final §§ 361.41 and 361.52, which require the DSU to establish and implement standards for promptly processing referrals, informing individuals of application requirements, and facilitating individuals' informed choice as they transition. Therefore, we do not believe it is necessary to add further requirements to final § 361.48(b)(18).

We acknowledge that the heightened emphasis on providing services to students and youth with disabilities may cause some DSUs concern about their ability to serve all individuals. We believe that the process for implementing an order of selection established within section 101(a)(5) of the Act, as amended by WIOA, is adequate to address these concerns in the event that vocational rehabilitation services cannot be provided to all eligible individuals.

We acknowledge the commenters' support and concerns about section 14(c) certificate holders providing transition and other vocational rehabilitation services. While the Act does not prohibit community rehabilitation programs that are section 14(c) certificate holders from providing transition or other vocational rehabilitation services or training in sheltered settings, section 511 of the Act prohibits local and State educational agencies from entering into a contract or other arrangement with section 14(c) entities for the purpose of operating a program for youth with disabilities under which work is compensated at a subminimum wage. The Department strongly encourages training in competitive integrated settings to prepare students for competitive integrated employment, as stated in the discussion of “required” activities in final § 361.48(a) and discussed in more detail in Required Activities earlier in this section B. There is no statutory basis for requiring or permitting incentive payments for providing vocational rehabilitation services, including transition and supported employment services.

Changes: None.

Scope of Vocational Rehabilitation Services for Groups of Individuals With Disabilities (§ 361.49)

Comments: A few commenters sought clarification of, or suggested revisions to, proposed § 361.49(a)(7) governing the provision of transition services for groups of youth and students with disabilities. Of these, one commenter questioned whether transition services may be provided under this authority to students and youth with disabilities who have not applied or been determined eligible for vocational rehabilitation services. Similarly, another commenter suggested that DSUs be required to provide an application to all students and youth with disabilities receiving transition services under proposed § 361.49(a)(7). One commenter communicated concerns that allowing transition services under this authority will lead to students and youth with Start Printed Page 55698disabilities receiving services in segregated environments. Another commenter suggested that pre-employment transition services under proposed § 361.49 be limited to group orientations. Yet another commenter supported providing transition services for groups of students and youth with disabilities and then providing transition services to this population under final § 361.48(b) if more individualized services are necessary.

One other commenter suggested that we add the term “competitive integrated employment” to proposed § 361.49(a)(7) to emphasize that transition services for groups of students and youth with disabilities are to support the achievement of competitive integrated employment. The same commenter recommended that we add outreach to and engagement of parents to § 361.49(a)(7) as an allowable service to groups. Finally, one commenter requested clarification of how informed choice of both the individual and the individual's representative would be provided and documented if transition services are provided to groups of youth and students with disabilities.

Discussion: We appreciate all of these comments. A student with a disability or a youth with a disability is not required to have applied or been determined eligible for vocational rehabilitation services to receive general transition services provided to groups under section 103(b)(7) of the Act, as amended by WIOA, and final § 361.49(a)(7). Therefore, a DSU may, but is not required to, provide or collect applications from students and youth with disabilities receiving transition services under final § 361.49(a)(7). Students with disabilities may receive these services in a variety of settings, including classroom, employment, and community-based settings. However, the Department strongly encourages DSUs to provide these services in integrated settings to the maximum extent possible to best prepare students and youth with disabilities for competitive integrated employment. Furthermore, students and youth with disabilities may continue to receive generalized transition services under this authority while also receiving individualized vocational rehabilitation services under an individualized plan for employment pursuant to section 103(a) of the Act and final § 361.48(b).

Pre-employment transition services may be provided in a group setting to students with disabilities who have not applied or been determined eligible for vocational rehabilitation services, as discussed in the examples in final § 361.48(a). Contrary to the assumption in some comments, pre-employment transition services cannot be provided to students with disabilities as a service for groups under section 103(b)(7) of the Act, as amended by WIOA, or final § 361.49(a)(7). Pre-employment transition services must only be provided under section 113 of the Act and final § 361.48(a).

The intent of these generalized transition services when provided under final § 361.49(a)(7) is to benefit groups of students and youth with disabilities. We understand the concern that these services are limited to only students and youth with disabilities. Transition services provided under final § 361.48(b) under an individualized plan for employment are more individualized in nature, and the settings in which they are delivered are typically more diverse.

We agree that the purpose of transition services to groups should ultimately be achieving competitive integrated employment for students and youth with disabilities consistent with the purpose of the VR program set forth in final § 361.1. Nonetheless, the transition services provided under final § 361.49(a)(7) are not limited to those individuals who have been determined eligible for the VR program and who are pursuing an employment outcome in competitive integrated employment or supported employment. Therefore, we cannot require that the transition services authorized in final section 361.49(a)(7) be provided only for the purpose of assisting students and youth with disabilities to obtain competitive integrated employment.

We also agree that the families of students and youth with disabilities should be involved in all transition services, even though section 103(b) of the Act, as amended by WIOA, does not specifically include outreach to and engagement of parents within its requirements. Neither the Act nor these final regulations prohibit a DSU from providing outreach to, and engaging parents in, the provision of transition services under final § 361.49(a)(7).

Finally, informed choice, as outlined in final § 361.52, applies throughout the vocational rehabilitation process; therefore, students and youth with disabilities receiving transition services under final § 361.49(a)(7) must be given the opportunity to exercise their informed choice.

Changes: None.

C. Fiscal Administration of the VR Program

Section C includes the Analysis of Comment and Changes to the regulations in subpart C of part 361 that pertain to the fiscal administration of the VR program and covers requirements for matching funds, maintenance of effort, program income, and the allotment and payment of funds. The analysis is presented by topical headings relevant to sections of the regulations in the order they appear in part 361 as listed.

Topical Headings

Matching Requirements (§ 361.60)

Third-Party In-Kind Contributions

Additional Sources of Match

Differences Between Prior and Proposed Regulations

Maintenance of Effort Requirements (§ 361.62)

Program Income (§ 361.63)

Waiver

Legal Basis

Pre-Employment Transition Services

Amount of Program Income Earned

Addition Alternative

Allotment and Payment of Federal Funds for Vocational Rehabilitation Services (§ 361.65)

Exemption from the Reservation of Funds Requirement for Pre-Employment Transition Services

Use of Reserved Funds for Other Vocational Rehabilitation Services

Amount of Funds to Be Reserved

Application of the Reservation of Funds to the State and to the State Allotment

Effect of Reallotment and Carryover on the Reservation of Funds

Administrative Costs

Tracking of the Reserved Funds

Use of Reserved Funds for Authorized Activities

Matching Requirements (§ 361.60)

Third-Party In-Kind Contributions

Comments: Several commenters requested that the Department either include third-party in-kind contributions as an allowable source of match under the VR program or clarify whether these contributions are an allowable source of match. One commenter questioned whether the Department has the authority to exclude third-party in-kind contributions as a source of match under the VR program, given that these contributions are a permissible source of match in the Uniform Guidance contained in 2 CFR part 200.

Discussion: We have addressed the comments regarding the allowability and use of third-party in-kind contributions as match under the VR program in the discussion of third-party cooperative arrangements in final § 361.28 earlier in section A of this Analysis of Comments and Changes section. We received similar comments about that regulation, and issues of third-party in-kind contributions most Start Printed Page 55699often arise in the third-party cooperative arrangement context.

For more than two decades, the Department has excluded third-party in-kind contributions from the allowable sources of match for the VR program. Neither the NPRM nor these final regulations reflect any substantive changes to this prohibition.

In addition, we do not agree that § 361.60 is inconsistent with 2 CFR part 200 with regard to third-party in-kind contributions. Specifically, 2 CFR 200.306 states that for all Federal awards, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity's cost sharing or matching when specific criteria are met. However, 2 CFR 200.102(c) states that “the Federal awarding agency may apply more restrictive requirements to a class of Federal awards or non-Federal entities when approved by OMB, or when required by Federal statutes or regulations. . . .”

Section 361.60(b)(2) has prohibited, and continues to prohibit, DSUs from considering third-party in-kind contributions as a permissible source of match under the VR program. The Department is within its authority to continue to exclude third-party in-kind contributions as an allowable source of match under the VR program, as it has done for more than two decades, and thus the VR program regulations are consistent with 2 CFR part 200. Nevertheless, given the comments questioning the relationship between the prohibition against using third-party in-kind contributions for match purposes under the VR program in § 361.60(b)(2) and the permissibility of these contributions under 2 CFR 200.306(b), we have revised final § 361.4(d) to reduce confusion. These revisions are purely technical and do not affect the long-standing prohibition against using third-party in-kind contributions as a source of match under the VR program.

Changes: We have revised final § 361.4(d) to exempt 2 CFR 200.306(b), as it relates to third-party in-kind contributions, from the VR program, thereby ensuring consistency with final § 361.60(b)(2) and the long-standing prohibition against third-party in-kind contributions as a source of match under the VR program.

Additional Sources of Match

Comments: Another commenter requested that the Department include additional sources of non-Federal share as examples of potential matching sources.

Discussion: We appreciate the commenter's request for additional examples of permissible sources of match under the VR program. The 1988 regulations (53 FR 16978 (May 12, 1988)), which remained in effect until 1997, contained a short list of examples of permissible match sources, none of which included third-party in-kind contributions.

Similarly, the 1997 final regulations (62 FR 6307 (Feb. 11, 1997)) simplified the requirements by removing the list of permissible sources of expenditures to meet the non-Federal share. Instead, it referred to former 34 CFR 80.24 for a list of allowable match sources, to the extent that provision was not inconsistent with § 361.60(b), which prohibited third-party in-kind contributions from being used for match purposes under the VR program. We emphasized in the preamble to the 1995 NPRM (60 FR 64475 (Dec. 15, 1995)) that the proposed regulation would not prohibit the use of any funding sources that had been allowable for match purposes under the VR program, but third-party in-kind contributions were not among them. Although we do not believe the list of permissible match sources should be re-inserted into final § 361.60, we provide here the still-effective permissible match sources that had been contained in prior § 361.76, which existed until the 1997 regulations took effect and subsequently was replaced by prior § 361.60.

The old regulations in 34 CFR 361.76, which formed the basis for both prior and final § 361.60, indicated that the allowable sources of match were:

1. Direct State appropriation to the VR agency,

2. Transfers or allotments from other public agencies,

3. Expenditures incurred by other public agencies pursuant to a cooperative agreement in accordance with 34 CFR 361.13 (which formed the basis for both prior and final § 361.28),

4. Funds set aside from Business Enterprise Programs, established under the Randolph-Sheppard Act, for which the DSU provides supervision and management services, and

5. Private contributions deposited into the VR agency's account.

Section 361.60 has remained substantively unchanged from 1997 through these final regulations.

Changes: None.

Differences Between Prior and Proposed Regulation

Comments: One commenter requested we clarify the differences between the prior and proposed § 361.60(b)(3).

Discussion: We made only technical changes to proposed § 361.60(b)(3)(iii) in the NPRM. Specifically, we replaced the phrase “grant, subgrant, or contract” with the word “subaward” in order to be consistent with the use of this term in the Uniform Guidance, as set forth in 2 CFR part 200. We made no further changes to final § 361.60(b)(3)(iii).

Changes: None.

Maintenance of Effort Requirements (§ 361.62)

Comments: A few commenters supported proposed § 361.62. One commenter stated that section 241(b) of WIOA did not support the proposed VR regulations and recommended allowing flexibility for States to choose the fiscal year in which maintenance of effort penalties would be paid.

Discussion: We appreciate the comments supporting proposed § 361.62. Section 241(b) of WIOA, referenced by the commenter, does not apply to the VR program but rather to programs authorized under the Adult Education and Family Literacy Act in title II of WIOA. Instead, section 420 of WIOA amended section 111(a)(2)(B) of the Act, which governs the maintenance of effort requirements for the VR program. Final § 361.62(a) is consistent with section 111(a)(2)(B) of the Act, as amended by WIOA.

Changes: None.

Program Income (§ 361.63)

Waiver

Comments: Several commenters requested that we waive the requirement for States to expend program income prior to drawing down Federal grant funds. One commenter stated that the role of the Department in placing restrictions on the use of program income should be limited since VR program grantees are not required to generate program income.

Discussion: We appreciate the comments submitted regarding proposed § 361.63. The Act gives the Secretary the authority to grant waivers of only two VR program requirements, specifically those related to statewideness (section 101(a)(4)) and maintenance of effort (section 111(a)(2)(C)). The Act, as amended by WIOA, does not provide a general waiver authority or a specific authority to waive program income requirements. Therefore, we may not include in final § 361.63 a waiver of the requirement to expend program funds prior to drawing down Federal VR program funds.

Changes: None.Start Printed Page 55700

Legal Basis

Comments: Another commenter noted that following the 1992 amendments to the Rehabilitation Act, the Department interpreted the Act as allowing program income, including transferred program income, to be obligated and/or expended on or before September 30th of the carryover year of the grant period. According to the commenter, WIOA did not amend the Act to require the expenditure of program income under the VR program as soon as it was received. The commenter also recommended that we review both the 1992 amendments to the Rehabilitation Act and WIOA to determine whether there is a sufficient legal basis to exempt DSUs from the requirement to expend program income before requesting additional Federal grant funds and that we include this exemption in the VR program final regulations. One commenter noted that the NPRM incorrectly cited 2 CFR 200.305(b)(5) as the legal authority requiring that program income be disbursed prior to drawing down Federal funds.

Discussion: While we agree that DSUs are not required to earn program income under the VR program, we disagree that the Secretary's authority over program income is, therefore, limited. As a recipient of Federal VR program funds, DSUs must comply with all applicable Federal requirements, including those in the Act, the VR program regulations in final part 361, Education Department General Administrative Regulations (EDGAR), and government-wide regulations in 2 CFR part 200 (see final § 361.4). Requirements governing program income affecting the VR program are found in final § 361.63 and 2 CFR 200.305, both of which are under the Secretary's purview. Moreover, final § 361.4(b) and (d) make final part 361 and 2 CFR part 200, respectively, applicable to the VR program. For this reason, DSUs must comply with all Federal requirements governing program income to the extent that they earn such income under the VR program.

We agree that section 19(a)(2) of the Act allows program income to remain available for obligation and expenditure in the year following the year in which the program income was earned. However, we also believe that final § 361.63(c)(3) is consistent with both section 19(a)(2) of the Act and 2 CFR 200.305. In the event that a DSU receives program income at the end of a fiscal year and is unable to disburse it prior to the end of that year, the DSU may carry over that program income for use in the following Federal fiscal year; however, that DSU must spend that program income prior to drawing down Federal funds.

The Department reminded DSUs of this requirement—program income must be disbursed prior to drawing down Federal funds—in PD-11-03 (dated October 26, 2010), as well as in PD-12-06 and PD-15-05 (dated February 13, 2012 and February 5, 2015, respectively). The Department also reminded DSUs of this requirement in a PowerPoint presentation at the FY 2011 Fiscal Conference, held in Washington, DC, in August 2011.

Prior to developing proposed § 361.63, the Department reviewed the legislative and regulatory history about program income. Our review found that, while the Act has not addressed this issue specifically, EDGAR has long done so. The Federal government has had a long-standing requirement under the common rule implementing former OMB Circular A-102, codified by the Department of Education in former 34 CFR 80.21(f)(2), that States must expend program income prior to drawing down Federal grant funds. The Uniform Guidance, codified in 2 CFR part 200, was adopted by the Department in 2 CFR 3474 on December 19, 2014, in 79 FR 76091. The Uniform Guidance in 2 CFR 200.305(a) specifies the payment procedures that States must use to draw down Federal funds; however, these procedures appear, on the surface, to apply only to funds included in a Treasury-State Agreement (TSA), and not all Federal program funds made available to States are subject to TSAs.

For this reason, the Uniform Guidance in 2 CFR 200.305(a) has created an ambiguity about how States should draw Federal funds under non-TSA programs. Moreover, TSAs do not cover program income earned by State grantees. Thus, in addition to the ambiguity regarding non-TSA programs, 2 CFR 200.305(a) does not address whether States must expend available program income funds before requesting additional Federal cash, as had been the long-standing government-wide requirement in OMB Circular A-102 and codified for Department grantees in former 34 CFR 80.21(f)(2). This silence creates concern because, for all other non-Federal entities, § 200.305(b)(5) clearly requires those entities to expend available program income funds before requesting payments of Federal funds.

While the § 200.305(a) silence creates an ambiguity, we do not believe that this ambiguity should be construed to no longer require States to expend program income funds before requesting additional Federal cash because no such policy change was discussed in the preambles to either the final guidance in 2 CFR part 200, which was published on December 26, 2013 (78 FR 78589), or in the Interim Final Guidance published on December 19, 2014 (79 FR 75867). This issue is critical to the Department because DSUs earn more than $100 million in program income annually under the VR program—an amount that far exceeds amounts earned under any other program administered by the Department. For this reason, the Secretary believes it is essential that we resolve this ambiguity in these regulations. Therefore, we proposed in the NPRM to incorporate the requirement to expend program income before requesting payment of funds by referencing 2 CFR 200.305(a).

Upon further review of that proposed change, and in consideration of one comment, we have determined that the proposed amendment, as presented in the NPRM, would not achieve the needed objective because it referenced the wrong citation from 2 CFR part 200. We resolved the ambiguity by revising final § 361.63(c)(3) to explicitly require States to expend available program income funds before requesting additional cash payments, maintaining the long-standing requirement that applied to VR program grantees under 34 CFR 80.21(f)(2). The Secretary believes this change is essential to protect the Federal interest by using program income to increase the funds devoted to the VR program and keep to a minimum the interest costs to the Federal government of making grant funds available to the States. There is no legal basis to exempt DSUs from this long-standing government-wide requirement.

Changes: We have revised final § 361.63(c)(3) to explicitly require States to disburse available program income funds before requesting additional cash payments.

Pre-Employment Transition Services

Comments: Some commenters expressed concerns that the requirement to spend program income first creates an undue barrier to the ability of DSUs to reserve 15 percent of their VR program allotments for providing pre-employment transition services. According to these commenters, grantees cannot predict the arrival of program income to the same extent that they can anticipate the arrival of allotted funds. As a result, DSUs may have to expend program income for pre-employment transition services instead of their State allotments, thereby failing to expend the 15 percent reserve required for the provision of pre-employment transition services.Start Printed Page 55701

Discussion: We recognize the challenge for States to meet both the requirements to disburse program income prior to drawing down Federal funds as well as to reserve VR program funds for providing pre-employment transition services. While final § 361.63(c)(1)(ii) requires States to expend available program income funds before requesting additional cash payments, it does not preclude States from executing allowable accounting adjustments between program income disbursed on pre-employment transition services and other Federal funds expended on non-pre-employment transition services for the same time period. These accounting adjustments must be in accordance with Generally Accepted Accounting Principles (GAAP) and the State's accounting procedures and must be reflected in the State accounting system that is required by final § 361.12 and 2 CFR 200.302.

Changes: None.

Amount of Program Income Earned

Comments: One commenter noted that it is unable to determine the actual amount of program income earned until after the end of the Federal award because the program income must be “netted out.”

Discussion: Program income, as defined in 2 CFR 200.80 and used in final § 361.63, means the “gross” program income earned by the grantee. Furthermore, as stated earlier, program income is considered earned when received. In other words, if a DSU receives $100,000 in program income in November, it should report this amount as received—or earned—on the SF-425 covering the first quarter of the Federal fiscal year. Therefore, DSUs should not wait until the end of a fiscal year to determine the amount of program income received, and all reports should reflect gross—not net—amounts.

Changes: None.

Addition Alternative

Comments: None.

Discussion: Upon further Department review, we determined it necessary to clarify in § 361.63(c)(3) that the deduction method is no longer available to DSUs for expending program income. In examining the grant formula set forth in the statute more closely, we have concluded that the use of the deduction method would, in effect, result in a reduction of a VR grant allotment. Absent specific statutory authority, these reductions would be inconsistent with the statute and general appropriations law principles. In reviewing the grantees' financial reports, we have found that very few, if any, DSUs elect to use the deduction method. Instead, most, if not all, grantees elect to use the addition method, which is still permissible and, in fact, will be the only permissible use of program income under the VR program final regulations. We do not believe this change will negatively impact many, if any, grantees. Therefore, we have revised final § 361.63(c)(3) to require VR program grantees to use program income only to supplement the VR grant through the addition alternative.

Changes: We have revised final § 361.63(c)(3) to require DSUs to use the addition alternative when expending program income.

Allotment and Payment of Federal Funds for Vocational Rehabilitation Services (§ 361.65)

Exemption From the Reservation of Funds Requirement for Pre-Employment Transition Services

Comments: Some commenters agreed with the changes to proposed § 361.65. Many commenters recommended that we exempt DSUs from the requirement to reserve at least 15 percent of their State allotments for providing pre-employment transition services in cases where the DSUs lack resources to do so.

Discussion: We appreciate the commenters who supported proposed § 361.65 and those who expressed concern or sought clarification. Section 110(d)(1) of the Act, as amended by WIOA, requires States—not the Department—to reserve at least 15 percent of their VR program allotment for providing pre-employment transition services. Given this explicit requirement, the Secretary lacks statutory authority to exempt States from the reservation requirement or to modify this requirement because to do so would be inconsistent with the statute. While we understand the concerns expressed by commenters regarding an inability to expend the full amount of reserved funds on pre-employment transition services, we encourage DSUs to work closely with the school systems and other entities to identify students with disabilities who might benefit from pre-employment transition services. Through these outreach activities, DSUs may be able to identify students with disabilities who could benefit from pre-employment transition services and who were not previously known to the agencies.

Changes: None.

Use of Reserved Funds for Other Vocational Rehabilitation Services

Comments: A few commenters requested that agencies who may not meet the reservation requirement, due to a lack of individuals who qualify to receive pre-employment transition services, be allowed to use the remaining reserved funds to provide vocational rehabilitation services listed under proposed § 361.48(b) to other eligible individuals.

Discussion: Funds reserved, pursuant to section 110(d)(1) of the Act, for providing pre-employment transition services must be used solely for the activities set forth in section 113 of the Act, as amended by WIOA, and final § 361.48(a). If a student with a disability requires other vocational rehabilitation services, the DSU must pay for those services with the remainder of the VR program allotment.

Changes: None.

Amount of Funds To Be Reserved

Comments: A few commenters recommended creating a benchmark for pre-employment transition services provided, rather than tying those services to actual Federal funds spent. Two commenters recommended basing the reservation of funds on the number of individuals in the State who would be eligible to receive pre-employment transition services. These commenters added that the remaining funds would be used for the provision of all other allowable vocational rehabilitation services.

Two commenters stated that the requirement to reserve at least 15 percent is too high. One commenter recommended that we consider DSUs to have satisfied the requirement if they demonstrate progress toward the minimum 15 percent requirement in the first 2 years of implementation, based upon the amount of funds spent in the previous fiscal year for pre-employment transition services. One commenter recommended that we allow States to negotiate the reservation requirement based upon populations of students with disabilities in the States. One commenter expressed concern that requiring at least 15 percent of the VR award to be used for pre-employment transition services will reduce the Federal VR funds available to support the Randolph-Sheppard program.

Discussion: Section 110(d)(1) of the Act, as amended by WIOA, requires States to reserve “at least” 15 percent of their VR program allotment for providing pre-employment transition services. Final § 361.65(c)(3) mirrors the statutory requirement. Although several Start Printed Page 55702commenters referred to the 15 percent reservation requirement as a “limit,” the Act as amended by WIOA, and final § 361.65(c)(3) do not restrict States from spending more than 15 percent of their allotments for the provision of these services.

We appreciate the many recommendations for alternative ways for DSUs to meet the pre-employment transition services reservation requirement under proposed § 361.65(a)(3)(i). We also appreciate the concerns that the reservation of funds for the sole purpose of providing pre-employment transition services will reduce the amount of funds available for other VR program purposes, including services for individuals who are blind or visually impaired who wish to start a vending facility under the Randolph-Sheppard program. Nevertheless, the Act requires States to reserve at least 15 percent of their VR program allotment for providing pre-employment transition services. The Act provides no exceptions to this requirement and, therefore, we do not have the authority to make the changes suggested by the commenters because to do so would be inconsistent with the statute.

Changes: None.

Application of the Reservation of Funds to the State and to the State Allotment

Comments: Many commenters requested that RSA apply the pre-employment transition reservation requirement to the State as a whole and not to the DSU in States with separate agencies serving individuals who are blind and individuals with all other disabilities. One commenter requested clarification regarding how pre-employment transition services are to be funded. A few commenters requested that we clarify whether the reservation requirement applies to the State funds, or just the Federal funds.

Discussion: Section 113(a) of the Act requires pre-employment transition services to be paid for with funds reserved from the VR program allotment pursuant to section 110(d)(1) of the Act, as amended by WIOA. We agree with commenters that the reservation of funds for providing pre-employment transition services is a State requirement, not a DSU-specific requirement. Section 110(d) of the Act, as amended by WIOA, and final § 361.65(a)(3)(i) require the State—not the DSU—to reserve the funds, thereby making this a matter that must be resolved at the State level when there are two agencies in the State. For this reason, the Department encourages DSUs to coordinate to ensure State compliance. While the Department recommends that each DSU, when a State has two DSUs, reserve at least 15 percent of its allotment to facilitate the tracking of State compliance with the reservation requirement, the Act does not require that this be done. If one DSU (when a State has two DSUs) uses more of its funds than the other, the State would be in compliance so long as the State's total of funds reserved for providing pre-employment transition services is at least 15 percent of the State's total allotment, including any additional funds received during reallotment by one or both DSUs.

The State allotment, from which funds must be reserved, refers to the Federal funds awarded pursuant to section 110(a) of the Act, not State funds appropriated to the DSUs by State legislatures.

Changes: None.

Effect of Reallotment and Carryover on the Reservation of Funds

Comments: One commenter requested clarification regarding whether funds received during reallotment would count toward the State's allotment for purposes of the pre-employment transition services reservation requirement. One commenter requested clarification regarding whether the reservation requirement applies to the carryover period.

Discussion: Under section 110(b)(3) of the Act, funds received during reallotment are an increase to the State's allotment. Similarly, funds relinquished during reallotment are a reduction to the State's allotment. Therefore, funds received or relinquished by a State during reallotment affect the amount of funds that must be reserved for providing pre-employment transition services.

Section 19 of the Act, which governs the carryover of grant funds, applies to all VR program funds, including funds reserved for providing pre-employment transition services. Section 19(b) of the Act permits grantees to carry over Federal funds for obligation and expenditure in the subsequent Federal fiscal year only to the extent that the DSU has provided sufficient non-Federal expenditures to match those funds. This means that grantees may carry over Federal funds reserved for providing pre-employment transition services into the subsequent Federal fiscal year only to the extent that they have provided the requisite 21.3 percent non-Federal share by the end of the Federal fiscal year in which the funds were awarded. In addition, because they have been matched in the fiscal year for which they were appropriated, the funds reserved for providing pre-employment transition services that are eligible for carryover into the succeeding Federal fiscal year may only be obligated in that succeeding Federal fiscal year and expended for providing pre-employment transition services.

Changes: None.

Administrative Costs

Comments: Some commenters requested clarification regarding fiscal reporting requirements, including staff time, counted toward the reservation requirement given that DSUs may not expend funds reserved for providing pre-employment transition services on administrative costs. One commenter requested clarification regarding the apparent contradiction of some of the authorized activities listed in proposed § 361.48(a)(3), which might appear to be administrative in nature, and the prohibition in proposed § 361.65(a)(3)(ii) against using reserved funds for administrative costs.

Discussion: We appreciate the comments requesting clarification regarding whether DSUs may pay for staff-related costs from funds reserved for the provision of pre-employment transition services. Section 110(d)(2) of the Act, as amended by WIOA, prohibits DSUs from using the reserved funds for administrative costs. Section 7(1) of the Act and final § 361.5(c)(2) define “administrative costs” as including, among other things, “administrative salaries, including clerical and other support staff salaries, in support of these administrative functions.” It has been the long-standing Department policy that staff-related costs, including salaries, fringe benefits, and travel, incurred while providing vocational rehabilitation services, constitute service costs, not administrative costs. As such, costs associated with staff time spent providing pre-employment transition services may be paid with the funds reserved for providing those services.

By contrast, supervisory costs, rent, utilities, indirect costs, and other similar associated costs are administrative costs—not service costs—and, as such, cannot be paid with the reserved funds. In considering the various pre-employment transition services specified in section 113 of the Act and final § 361.48(a) in this way, we do not believe there are actual conflicts between final § 361.48(a) and § 361.65.

However, we have revised final § 361.65(a)(3)(ii)(B) to add a cross-reference to the definition of “administrative costs” in final § 361.5(c)(2), to clarify that these costs are still allowable under the VR program and may be paid for with VR program Start Printed Page 55703funds not reserved for the provision of pre-employment transition services under final § 361.65(a)(3).

Changes: We have revised final § 361.65(a)(3)(ii)(B) to clarify that the administrative costs referred to in this provision are those that meet the definition of “administrative costs” in final § 361.5(c)(2). This change is technical, not substantive.

Tracking of the Reserved Funds

Comments: Some commenters requested that we provide flexibility regarding the tracking of pre-employment transition service expenditures to minimize time-consuming administrative requirements. One commenter requested that the Department issue guidance to States regarding tracking expenditures, for example, creating a separate accounting code to track the reservation requirement. One commenter requested that the Department allow agencies with counselors who work with schools or support the provision of pre-employment transition services to count all of the counselor's time toward the reservation requirement, thereby easing the burden on DSUs associated with tracking these costs.

Discussion: When tracking expenditures incurred for the provision of pre-employment transition services, DSUs may need to develop a cost objective (i.e., a separate accounting code) that is different from the one used for other VR program cost allocation purposes, thereby enabling DSUs to track pre-employment transition services expenditures properly with the reserved funds. Similarly, DSUs should account for personnel time to ensure the proper allocation of staff time between the provision of pre-employment transition services and other vocational rehabilitation services, just as the DSU does when its personnel work on multiple programs. DSUs must track pre-employment transition services in a manner that ensures the reserved funds are used only for the provision of services set forth in section 113 of the Act and final § 361.48(a). Although this could increase administrative burden slightly, it is only in this manner that a DSU can be certain it is expending reserved funds appropriately. The Department will issue guidance separately about tracking expenditures from the reserved funds and other fiscal matters relevant to the reservation of funds for providing pre-employment transition services.

Changes: None.

Use of Reserved Funds for Authorized Activities

Comments: Some commenters requested that we clarify when the authorized activities (as opposed to the required activities) in proposed § 361.48(a)(3) are allowable pre-employment transition expenditures in meeting the reservation requirement. Specifically, the commenters wanted to know the threshold for determining when funds are remaining after providing the required activities under § 361.48(a)(3).

Discussion: As stated in final § 361.48(a)(3), a DSU may provide “authorized” pre-employment transition services only to the extent that reserved funds remain after providing the “required” activities. As part of the Comprehensive Statewide Needs Assessment, States should determine the number of potential individuals eligible for pre-employment transition services. This data will enable the States to target the amount of the reserved funds necessary for ensuring the “required” pre-employment transition services are provided to students with disabilities. To the extent the States demonstrate that they have made the required pre-employment transition services available to the population identified in the Comprehensive Statewide Needs Assessment, the States have met the requirement to provide the “required” pre-employment transition services prior to the “authorized” activities. Any reserved funds remaining beyond the targeted amount necessary for the “required” activities may then be used for “authorized” activities in final § 361.48(a)(3).

Changes: We have revised proposed § 361.65(a)(3)(ii)(A) to clarify that funds reserved for providing pre-employment transition services may be used to pay for the costs of providing all of the services “specified” in final § 361.48(a). Proposed § 361.65(a)(3)(ii)(A) referred to services “authorized” in final § 361.48(a). We believe this technical change is necessary to avoid any confusion about the general use of the term “authorized” and the distinction between “required” and “authorized” services in the context of pre-employment transition services.

Part 363—The State Supported Employment Services Program

The discussion of comments on part 363 is presented by topic in the order that the relevant sections appear in this part.

Competitive Integrated Employment and Short-Term Basis (§ 363.1)

Comments: Overall, commenters strongly supported the focus and emphasis in part 363 on individuals with the most significant disabilities, including youth with the most significant disabilities, achieving competitive integrated employment. One commenter suggested, however, that supported employment should not be assumed automatically as the first option for people with significant, or the most significant, disabilities. Another commenter urged that “States” (presumably designated State agencies) track all individuals working in segregated settings and at subminimum wage to help identify the need for supported employment.

Other commenters pointed out discrepancies in the definition of “supported employment” between proposed 34 CFR 361.5(c)(53) and proposed §§ 363.1(b) and (c) and urged that these be made consistent.

One commenter suggested adding other approaches or evidence-based models such as Individual Placement and Support (IPS) to supported employment and customized employment. This commenter also asked whether funds could be used to train new or existing providers in various models of supported employment.

Many commenters responded to the short-term basis provisions in proposed § 363.1(c) and proposed 34 CFR 361.5(c)(53) under which individuals with the most significant disabilities working in an integrated setting are working toward competitive integrated employment and can reasonably anticipate achieving competitive integrated employment within six months of entering supported employment. A few commenters endorsed the six-month period, indicating that the six-month period would not allow individuals to linger for long periods in subminimum wage employment.

A few commenters considered six months to be too long and even recommended eliminating the short-term basis period altogether, indicating that under no circumstance should any individual with a disability be employed at a subminimum wage. However, most commenters considered six months to be arbitrary, too restrictive, or not sufficient, especially for individuals with the most significant disabilities, such as individuals who are blind who, as indicated by multiple commenters, might require additional training or specialized services in order Start Printed Page 55704to achieve competitive integrated employment. Others recommended extensions of up to 12, 18, or 24 months, or even an unspecified time based upon an individual's needs, in order to achieve competitive integrated employment consistent with the individual's unique strengths, priorities, concerns, abilities, capabilities, interests, and informed choice.

Some commenters suggested adding unpaid internships, apprenticeships, and transitional employment as examples of “working on a short term basis.” These commenters also recommended emphasizing that employment in sheltered workshops and enclaves and group employment settings does not constitute supported employment. A few commenters stated that individuals working on a short-term basis should be only in integrated settings as they work toward competitive integrated employment. Other commenters, however, referenced competitive, but non-integrated, settings when commenting on the short-term basis provision. One commenter asked for clarification to ensure that AbilityOne contracts with non-profit agencies that employ individuals with disabilities remain a viable option for individuals with the most significant disabilities to achieve employment outcomes in supported employment.

Discussion: We appreciate the many supportive comments regarding the goal of competitive integrated employment for all individuals with significant disabilities, including youth with significant disabilities, and particularly for those with the most significant disabilities.

We also agree with the commenter who suggested that supported employment should not be considered automatically as the first choice for individuals with significant disabilities or the most significant disabilities. The State Supported Employment Services program (Supported Employment program) and supported employment services exist to support individuals with the most significant disabilities who need intensive services and supports to achieve an employment outcome. Supported employment should be considered when determining an individual's employment goal, consistent with his or her unique strengths, priorities, concerns, abilities, capabilities, interests, and informed choice.

The Act, as amended by WIOA, specifically mentions customized employment and supported employment. We do not believe that including examples of additional approaches or models of supported employment, such as Individual Placement and Supports, is necessary. However, we support developing and implementing evidence-based models of supported employment, so long as they are consistent with the Act, as amended by WIOA, and the implementing regulations. Furthermore, administrative funds under this part, subject to the 2.5 percent administrative cost limitation, and funds under 34 CFR part 361, as appropriate, may be used to support training of providers and others on various models of supported employment.

Although the tracking of all individuals working in segregated settings and at subminimum wage would be useful to designated State units (DSUs) in identifying and assessing the need for supported employment, we do not have the authority under the Act to require this unless the individuals have been served through the VR program (see 34 CFR 361.55, which requires the DSU to conduct semi-annual or annual reviews, as applicable, of individuals in extended employment and other employment under special wage certificate provisions of the Fair Labor Standards Act), or the individuals have become known to the DSU through the activities required in section 511 of the Act.

We agree with commenters who noted discrepancies in the definition of “supported employment” in proposed 34 CFR 361.5(c)(53) and proposed § 363.1(b) and (c), and we have made the definitions consistent in these final regulations.

We also appreciate the many comments about “short-term basis.” As proposed, § 363.1(c) is consistent with the requirement in the Act, as amended by WIOA, that supported employment be in competitive integrated employment or in an integrated work setting in which the individual is working on a short-term basis toward competitive integrated employment. Therefore, despite the payment of competitive wages, employment in a non-integrated work setting does not meet the requirement under the Act, as amended by WIOA, for an employment outcome in supported employment.

The Secretary acknowledges the diverse views, concerns, and recommendations of the commenters about the variables that should be considered in determining the short-term basis period but believes six months is consistent with the intent of the Act. The Secretary agrees with the commenters, however, that, in limited circumstances, an extended period of time may be appropriate based upon the needs of the individual and upon demonstrated progress toward competitive earnings documented in his or her service record. Therefore, an individual with a most significant disability, including a youth with a most significant disability, may, in limited circumstances, have up to 12 months from achieving a supported employment outcome, as appropriate, to address fully his or her individualized needs to secure competitive earnings in supported employment.

In response to the concerns about the availability of sufficient time to help individuals achieve an employment outcome, particularly in relation to the short-term basis, we want to clarify when the six-month short-term basis period, and the additional six months that may be available in limited circumstances, begins. This period begins only after an individual with a most significant disability, including a youth with a most significant disability, has completed up to 24 months of supported employment services (unless a longer period of time is necessary based upon the individual's needs) and the individual is stable in the supported employment placement for a minimum period of 90 days following the transition to extended services. At this point, the individual has achieved a supported employment outcome in accordance with the criteria set forth in final § 363.54. We believe that this provides sufficient time, considering both the time allowed for providing supported employment services and the short-term basis period, if needed, to address fully the needs of an individual in supported employment and to enable that individual to achieve competitive integrated employment. Our data support this belief and show that most supported employment outcomes are achieved in less than 24 months.

In response to multiple commenters' concerns about individuals with the most significant disabilities, such as individuals who are blind who may require additional training or specialized services to achieve competitive integrated employment, we want to clarify that vocational rehabilitation services, as well as supported employment services, are available to them. The vocational rehabilitation services generally occur prior to placement in supported employment as part of the individual's approved individualized plan for employment.

Again, because the definition of “employment outcome,” which includes supported employment, requires achieving competitive integrated employment as defined in Start Printed Page 55705final § 361.5(c)(9), all supported employment outcomes must be in integrated settings with the expectation that individuals with the most significant disabilities can and will achieve competitive wages.

We appreciate the recommendations regarding activities that commenters stated should constitute employment during the short-term basis period, including unpaid internships, apprenticeships, and transitional employment; however, we want to emphasize that the short-term basis period begins following the achievement of the supported employment outcome. Unpaid internships, pre-apprenticeships, apprenticeships (including Registered Apprenticeships), and transitional employment are vocational rehabilitation services that lead to employment outcomes, but they do not constitute supported employment outcomes within the meaning of the definition of “supported employment” in final 34 CFR 361.5(c)(53) and § 363.1(b) and (c). Therefore, they would not be appropriate placements for employment on a short-term basis.

Finally, we agree with commenters that employment in sheltered workshops and enclaves and group employment settings does not constitute supported employment under this part because an individual achieves a supported employment outcome only if, at a minimum, the supported employment is in an integrated setting. There is a full discussion about why non-integrated employment does not meet the definition of “competitive integrated employment” in the responses to comments on the definition of competitive integrated employment in 34 CFR 361.5(c)(9). That discussion also addresses whether entities that are set up specifically for providing employment to individuals with disabilities, such as AbilityOne non-profit agencies, will be able to place individuals with the most significant disabilities in competitive integrated employment and achieve employment outcomes in supported employment.

Changes: We have revised the definition of “supported employment” to be consistent in both final § 363.1(b) and (c) and final 34 CFR 361.5(c)(53). In the NPRM, the definition in proposed 34 CFR 361.5(c)(53) did not include the phrase “and customized” when referring to competitive integrated employment, and proposed § 363.1(b) did not include the phrase “including a youth with a most significant disability” when referring to individuals with the most significant disabilities. Additionally, proposed 34 CFR 361.5(c)(53) included “transitional employment,” which has been removed in final 34 CFR 361.5(c)(53). We have corrected other, minor inconsistencies in singular and plural references to individuals with the most significant disabilities.

We have also revised final § 363.1(c) by adding a limited circumstance in which an individual can extend the short term basis up to a 12-month period from the achievement of the supported employment outcome to demonstrate progress toward competitive earnings based on information contained in the service record.

Definitions (§ 363.6(a))

Comments: We received several comments regarding changes in proposed 34 CFR 361.5(c) to definitions relevant to the Supported Employment program. A few commenters requested the removal of the definition of “transitional employment” in proposed 34 CFR 361.5(c)(56). These commenters also suggested removing the reference to transitional employment from the definitions of “supported employment” in proposed 34 CFR 361.5(c)(53) and “ongoing support services” in proposed 34 CFR 361.5(c)(37). They noted that WIOA eliminated “transitional employment” and that the definition of “supported employment” in WIOA supersedes the definition in the Workforce Investment Act of 1998, which included “transitional employment” for individuals with mental illness. The commenters suggested that Congress deliberately removed “transitional employment” to ensure people with the most significant disabilities have access to competitive integrated employment.

Some commenters sought clarification about the definition of “extended services” in proposed 34 CFR 361.5(c)(19)(v) related to youth with the most significant disabilities.

Discussion: We agree with the commenters' assessment of the congressional intent behind removing the definition of “transitional employment” and the reference to transitional employment in both the definition of supported employment and the definition of ongoing support services. The term is no longer supported by the Act.

We discuss the commenters' request for clarification about the definition of “extended services” in proposed 34 CFR 361.5(c)(19)(v) for youth with the most significant disabilities in this Analysis of Comments and Changes under “Services to Youth with the Most Significant Disabilities” in § 363.4(a)(2).

Changes: We have removed the definition of “transitional employment” in final 34 CFR 361.5(c), as well as the references to it in the definition of “supported employment” in 34 CFR 361.5(c)(53) and “ongoing support services” in 34 CFR 361.5(c)(37).

The definition of “extended services” in 34 CFR 361.5(c)(19)(v) has been revised as discussed in § 363.4(a)(2) of this Analysis of Comments and Changes section under “Services to Youth with the Most Significant Disabilities.”

Extension of Time for the Provision of Supported Employment Services (34 CFR 361.5(c)(54)(iii))

Comment: A few commenters recommended either basing the time frame for providing supported employment services on an individual's need rather than a prescribed period of time or revising the regulatory language to make it easier to extend the 24-month time frame, as needed. A few other commenters disagreed with extending the time frame beyond 18 months.

Discussion: We appreciate the concerns regarding the time frame for providing supported employment services. WIOA extended the availability of supported employment services from 18 months to 24 months, and this mandate cannot be changed by the Department. The extension provides additional time for individuals with the most significant disabilities to receive the services and supports necessary to achieve an employment outcome in supported employment, either in competitive integrated employment or working on a short-term basis to achieve competitive integrated employment. In accordance with section 7(39)(C) of the Act, under special circumstances, the eligible individual and the rehabilitation counselor or coordinator can jointly agree to extend the time to achieve the employment outcome identified in the individualized plan for employment.

Changes: None.

Services to Youth With the Most Significant Disabilities (§§ 363.4(a)(2) and 363.22)

Extended Services (§ 363.4(a)(2))

Comments: Many commenters suggested changing the statutorily defined time frame of up to four years during which the DSU may expend supported employment program funds for extended services for youth with the most significant disabilities, either by establishing a longer or shorter period for providing extended services or by basing this period upon individual circumstances.Start Printed Page 55706

Additionally, commenters requested clarification regarding the point at which the DSU would be required to terminate its provision of extended services for a youth who turns 25 years of age and no longer meets the definition of a “youth with a disability” in 34 CFR 361.5(c)(58).

With respect to the use of funds allotted under the Supported Employment program for extended services, a few commenters recommended changing the word “may” in proposed § 363.4(a) to “shall” or “will” to establish that it is mandatory for DSUs to provide extended services to youth with the most significant disabilities.

A few commenters asked for clarification whether providing extended services is mandatory or optional, citing discrepancy between the language in proposed § 363.22, which appears to indicate that the reserve must be used for extended services, and proposed § 363.4(a)(2), which uses the word “may” when referring to the use of funds allotted under this part.

Other commenters also proposed making the DSU either the initial payer or the payer of last resort for extended services for youth with the most significant disabilities. Still other commenters raised questions about providing extended services to youth with the most significant disabilities who have not been served by the DSU as an applicant or eligible individual.

Discussion: We appreciate the suggested revisions to proposed § 363.4(a)(2). While many commenters sought to limit the DSU's responsibility for extended services, given limited available resources, we cannot do so. Section 604(b)(2) of the Act mandates that the DSU make available extended services for youth with the most significant disabilities for up to four years. Nothing in the Act authorizes the Department to grant a waiver of this requirement or to change the time period from four years to any other time period for youth with the most significant disabilities.

While the DSU cannot “opt out” of any of the activities authorized under § 363.4 by refusing to fund them, DSUs determine the need for and fund services on a case-by-case basis dependent upon each individual's need for services. Therefore, it is not appropriate to change the “may” in 34 CFR 363.4(a) to “shall” or “will,” and doing so would not be consistent with the authorizing language in section 604 of the Act. In light of the responsibility to make available funds for extended services for youth with the most significant disabilities, DSUs should continue to explore the availability of funding from other sources, as is done for other individuals with the most significant disabilities transitioning from supported employment services to extended services.

Regarding the point at which the DSU may no longer provide extended services to a youth with the most significant disabilities, in no case may a DSU provide more than four years of extended services. Also, once a youth with the most significant disabilities reaches 25 years of age, he or she no longer meets the definition of “youth with a disability” in 34 CFR 361.5(c)(58), and the DSU must discontinue funding extended services. We appreciate the commenters bringing this last scenario to our attention. Final § 363.4(a)(2) now states that at the age of 25, a youth with a most significant disability is no longer eligible to receive extended services, even if he or she has not yet received services for four years. Nevertheless, under final § 363.53(b)(2)(ii), the DSU must identify another source of extended services to ensure that there will be no interruption of services.

As indicated by a few commenters, section 606(b)(7)(D) of the Act provides that the State shall use supported employment funds only to supplement, and not to supplant, title I VR program funds in providing supported employment services. A few commenters suggested that this provision means that the Supported Employment program or VR program funds should be the payer of last resort (others suggested the payer of first resort) for extended services to youth with the most significant disabilities. The “supplement, not supplant clause,” as it is known, addresses only the relationship between the Supported Employment program and the VR program when providing supported employment services, which now includes extended services. It does not affect at all the relationship of the Supported Employment program or VR program to sources of funds that have historically been the providers of extended services to individuals after they have transitioned from supported employment services provided by the DSU. We expect those State and other sources of funding to coordinate with the Supported Employment and VR programs to provide the extended services needed by youth with the most significant disabilities. One of the purposes of the Supported Employment program is to assist States in developing collaborative programs with appropriate public and private nonprofit organizations to provide supported employment services for individuals with the most significant disabilities.

As to whether the DSU can provide extended services to youth with the most significant disabilities who have not been served by the DSU as an applicant or eligible individual, we emphasize that in order to be eligible for supported employment services, including extended services, provided by the DSU, youth with the most significant disabilities must meet the requirements of § 363.3, which include being determined eligible for vocational rehabilitation services. The DSU therefore may not provide extended services to a youth with the most significant disabilities who has not received services from the DSU through an individualized plan for employment simply because he or she meets the definition of a youth with a disability and is in need of extended services.

Changes: We have revised § 363.4(a)(2) to clarify that extended services to youth with the most significant disabilities provided by the DSU may be for a period not to exceed four years, or until such time as the youth reaches age 25 and no longer meets the definition of “youth with a disability” under final 34 CFR 361.5(c)(58), whichever occurs first.

Reserve of Supported Employment Funds for Services for Youth With the Most Significant Disabilities (§ 363.22)

Comments: One commenter agreed with the reserve requirement, indicating that the reserve funds should also be targeted to “school-to-work” transition services to place youth in competitive integrated employment.

Of the commenters that expressed concern regarding the requirement for reserving 50 percent of supported employment funds for supported employment services to youth with the most significant disabilities, most requested an exemption to ensure that adults with the most significant disabilities, particularly those with adult onset visual impairment or blindness, are able to be served.

Discussion: We appreciate these concerns. However, WIOA mandates the 50 percent reservation of funds for supported employment services, including extended services, for youth with the most significant disabilities. The reserved funds may not be used for “school-to-work” transition services because the funds must be used for supported employment services for youth with the most significant disabilities, including extended services, which occur after placing such youth in competitive integrated employment. WIOA does not provide Start Printed Page 55707any exceptions or authorize the Department to grant an exemption or waiver.

Changes: None.

Match Requirements for Funds Reserved for Serving Youth With the Most Significant Disabilities (§ 363.23)

Comments: Some commenters preferred that the 50 percent reserve not have a match requirement, and others indicated the match tracking and monitoring requirements are burdensome. A few commenters sought clarification regarding whether the match required new funding by the State or whether the State could realign current funding. The commenters indicated that it was difficult to comprehend the intent of the match without a defined plan for allocating the funds.

Other commenters requested that in-kind match, such as those used and tracked in the Independent Living Services for Older Individuals Who Are Blind program, be allowed to meet the match requirements under this section. A few commenters requested examples of match and asked whether certified personnel expenditures are permitted as a third-party contribution.

Discussion: We appreciate the concerns expressed by the commenters regarding the required match for funds reserved for providing supported employment services, including extended services, to youth with the most significant disabilities. This is a new requirement that will require all States to provide a non-Federal share; however, States that have historically expended non-Federal funds to supplement the Federal supported employment award now may count those expenditures for the provision of services to youth with the most significant disabilities as match for the reserve requirement.

WIOA mandates the match requirement for supported employment and does not provide any exceptions to it or authorize the Secretary to grant a waiver. The activities and internal processes necessary for States to track and expend the non-Federal share for the reserve should not be burdensome because they may be modeled after those used for the part 361 match requirements.

In addressing what may be used as match, allowable sources of match for the supported employment program follow the same guidelines for those sources allowable under the VR program. Under final 34 CFR 361.28(b)(2), which addresses third-party cooperative arrangements for providing vocational rehabilitation services, which in turn include supported employment services under final 34 CFR 361.48(b)(13), certified personnel expenditures for time cooperating agency staff spent providing direct vocational rehabilitation services pursuant to a third-party cooperative arrangement are allowable. Certified personnel expenditures include staff salary and fringe benefits allocable to the third-party cooperative arrangement. To ensure consistency with part 361, third-party in-kind contributions are not permitted as match.

In reviewing proposed § 363.23 further, we determined that it did not effectively describe the calculation of the 10 percent match, which must be based upon the total expenditures, made up of the Federal funds reserved and the non-Federal share, incurred for providing supported employment services to youth with the most significant disabilities.

Changes: We have revised final § 363.23(a)(2)(i) to demonstrate that the match calculation is based upon the total expenditures, including the Federal funds reserved and the non-Federal share, associated with the 50 percent reserve of Federal funds for providing supported employment services to youth with the most significant disabilities.

Program Income (§ 363.24)

Comments: A commenter disagreed with limiting the use of program income and supported eliminating the requirement to disburse program income prior to requesting additional cash draws from its Federal award.

Discussion: There has been a long-standing government-wide requirement under the common rule implementing former OMB Circular A-102, as codified by the Department in former 34 CFR 80.21(f)(2), that States must expend program income prior to drawing down Federal grant funds. The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), codified in 2 CFR part 200, were adopted by the Department in 2 CFR 3474 on December 19, 2014 (79 FR 76091). The new 2 CFR 200.305(a) specifies the payment procedures that States must use to draw down Federal funds; however, these procedures appear, on the surface, to apply only to funds included in a Treasury-State Agreement (TSA), but not all Federal program funds made available to States are subject to TSAs. For this reason, there is an ambiguity in 2 CFR 200.305(a) about how States should draw Federal funds under non-TSA programs. Moreover, TSAs do not cover program income earned by State grantees, and 2 CFR 200.305(a) does not address whether States should expend available program income funds before requesting additional Federal cash, as had been the long-standing government-wide requirement in OMB Circular A-102 and codified for Department grantees in 34 CFR 80.21(f)(2).

This silence creates concern because, for all other non-Federal entities, 2 CFR 200.305(b)(5) requires those entities to expend available program income funds before requesting payments of Federal funds. We do not believe, however, that this ambiguity should be construed to lift the requirement that States expend program income funds before requesting additional Federal cash because no such policy change was discussed in the preambles to either the final guidance in 2 CFR part 200, which was published on December 26, 2013 (78 FR 78589), or in the Interim Final Guidance published on December 19, 2014 (79 FR 75867).

Here, 34 CFR 361.63(c)(2) permits the transfer of VR Social Security reimbursement program income to carryout programs under title VI of the Rehabilitation Act (Supported Employment). Historically, some State VR agencies have transferred a portion of VR Social Security reimbursement program income to the Supported Employment programs for use by those programs. For this reason, we believe it is essential that we resolve this ambiguity via these regulations.

Thus, we proposed in the NPRM to incorporate the requirement to expend program income before requesting payment of funds by referencing 2 CFR 200.305(a), but that provision is ambiguous. These final regulations now resolve the ambiguity by revising § 363.24(b)(1) to require States to expend available program income funds before requesting additional cash payments from their Federal Supported Employment grant. We believe this change is essential to protect the Federal interest by using program income to increase the funds devoted to this program to which VR Social Security reimbursement program income may be transferred, keeping to a minimum potential interest costs to the Federal government of making grant funds available to the States. These final regulations should not negatively impact States because this change merely maintains the status quo that existed under former 34 CFR 80.21(f)(2).

In addition, upon further review of the proposed program income regulation, we determined that it was necessary to address the relationship between program income and match. Just as with program income in the VR Start Printed Page 55708program, program income earned in the Supported Employment program may not be used to meet the required non-Federal share under § 363.23.

Changes: We have revised § 363.24 by removing the inapplicable reference to the Uniform Guidance in § 363.24(b)(1), leaving only the requirement that program income earned in the Supported Employment program must be disbursed prior to requesting additional cash draws from its Federal award. We have also added a new § 363.24(b)(3), which provides that program income cannot be used to meet the non-Federal share requirement under § 363.23.

Period of Availability of Funds (§ 363.25)

Comment: None.

Discussion: In reviewing proposed § 363.25(b), we determined that it would be beneficial to clarify the use of Federal funds reserved for the provision of supported employment services to youth with the most significant disabilities that have been matched in the fiscal year for which the funds were appropriated and thus are available for obligation in the succeeding fiscal year. The Federal supported employment reserve funds eligible for carryover into the succeeding Federal fiscal year, because they have been matched in the fiscal year for which the funds were appropriated, may only be obligated and expended in that succeeding Federal fiscal year for supported employment services to youth with the most significant disabilities.

Changes: Final § 363.25(b) states that any reserved funds carried over may only be obligated and expended in that succeeding Federal fiscal year for providing supported employment services to youth with the most significant disabilities.

Limitations on Administrative Costs (§ 363.51)

Comment: One commenter stated that the reduction of the administrative cost limit from 5 percent to 2.5 percent would severely limit the agency's ability to hire and retain staff.

Discussion: Despite this mandated reduction in section 603(c) of the Act, funds from the VR program remain available for costs related to the Supported Employment program, including administrative costs under § 363.4(c)(1) and section 608(a) of the Act. The limitation of administrative costs under the Supported Employment program expands the availability of funds for supported employment services to individuals with the most significant disabilities, and the availability of VR program funds for administrative costs related to the Supported Employment program helps to mitigate the impact of the reduction in administrative costs upon the DSU's ability to hire and retain staff.

Changes: None.

Requirements for Transition To Extended Services, the Achievement of an Employment Outcome, and Closure of a Service Record (§ 363.53, § 363.54, and § 363.55)

Comments: Many commenters requested clarification of requirements related to the transition to extended services, especially for youth with the most significant disabilities; the interplay of the short-term basis with the achievement of an employment outcome; and the requirements related to case closure, particularly when youth with the most significant disabilities are receiving extended services from the DSU.

Discussion: We acknowledge the questions and confusion that many commenters expressed about the transition to extended services, employment outcome, and closure of the service record as they pertain to individuals receiving supported employment services. The transition to extended services continues to take place after an individual has completed supported employment services. WIOA makes two changes to the transition to extended services.

First, an individual receiving supported employment services can now receive those services for up to 24 months, instead of the previous 18, and, under special circumstances, may receive an extension based upon the individual's need as described in 34 CFR 361.5(c)(54)(iii). The transition to extended services begins after all supported employment services are complete. Second, the DSU may now provide extended services to youth with the most significant disabilities in accordance with § 363.4(a) and 34 CFR 361.5(c)(19)(v). The DSU's responsibilities necessitated by both of those changes have been outlined more comprehensively in a revised section 363.53.

By including the requirement to achieve competitive integrated employment into the definition of “supported employment” in Section 7(38) of WIOA, Congress stated its expectation that all individuals with disabilities, even those with the most significant disabilities, could achieve competitive integrated employment. Recognizing, however, that those individuals with the most significant disabilities may need more time and supports to reach that goal, Congress permitted those individuals to be employed in an integrated setting with non-competitive wages on a short-term basis, as long as they were working toward competitive integrated employment. The definition of “employment outcome” in 34 CFR 361.5(c)(15) addresses the achievement of competitive integrated employment in supported employment. Therefore, final § 363.54 explains when an individual with a most significant disability is considered to have achieved an employment outcome in supported employment, either in competitive integrated employment or when he or she is working on a short-term basis toward competitive employment in an integrated work setting.

When the DSU closes the service record of an individual with a most significant disability now depends on whether the DSU is providing services during the short-term basis period or providing extended services for youth. A new final § 361.55 describes how the new statutory requirements for employment on a short-term basis working toward competitive integrated employment, extended services for youth, and achieving an employment outcome relate to closing the service record.

Changes: We have reformatted and revised § 363.53 to better identify the steps that the DSU must take prior to transitioning an individual with a most significant disability, including a youth with a most significant disability, to extended services. Those steps include both a joint decision made by the counselor and the individual that the individual needs no further supported employment services, as defined in § 361.5(c)(54), and identifying providers of extended services, including the DSU in the case of a youth with a most significant disability, under 34 CFR part 361.5(c)(19).

We have reformatted and revised final § 363.54 to better identify the considerations that the DSU must take into account when determining when an individual with a most significant disability, including a youth with a most significant disability, who is employed in competitive integrated employment or in an integrated setting and is working on a short-term basis toward competitive integrated employment, will be considered to have achieved an employment outcome in supported employment.

We have removed the cross-reference from proposed § 363.54(b) to the closure of the service record requirement in 34 Start Printed Page 55709CFR 361.56 as a criterion for achieving an employment outcome.

Final § 363.54 sets forth four requirements that must be satisfied for an employment outcome. First, the individual must have completed supported employment services under this part and 34 CFR part 361, meaning the individual has received services for up to 24 months, or longer if the counselor and the individual have determined that such services are needed to support and maintain the individual in supported employment. Any other vocational rehabilitation services listed on the individualized plan for employment provided to individuals who are working on a short-term basis toward the achievement of competitive integrated employment in supported employment need not be completed prior to satisfying the achievement of an employment outcome.

Second, the individual has transitioned to extended services provided either by the DSU for youth with the most significant disabilities, or another provider, consistent with the provisions of §§ 363.4(a)(2) and 363.22.

Third, the individual has maintained employment and achieved stability in the work setting for a minimum of 90 days after transitioning to extended services, and, finally, the employment must be individualized and customized consistent with the strengths, abilities, interests, and informed choice of the individual.

New final § 363.55 addresses when the service record of an individual who has achieved an employment outcome in supported employment may be closed. Separate requirements are specified for different scenarios, depending on whether individuals with a most significant disability, including youth with a most significant disability, achieve competitive integrated employment or work toward competitive integrated employment on a short-term basis and whether they are receiving extended services and any other vocational rehabilitation services from the DSU or from other service providers.

Limitation on Use of Subminimum Wage (34 CFR Part 397)

The Analysis of Comments and Changes of part 397 is presented in the order in which relevant subjects and sections appear in this part.

General Comments (Part 397)

Comments: More than 550 commenters responded to proposed part 397. Some commenters expressed strong support for all or various sections. A few commenters suggested that section 511 of the Act, as added by WIOA, does not go far enough, and stated that the payment of subminimum wages to individuals with disabilities perpetuates the perception that these individuals are less valued. The commenters recommended that the payment of subminimum wages to individuals with disabilities should be entirely eliminated. Others supported Congress' steps to reinforce the belief that, with the proper supports and services, individuals with all types of disabilities can attain competitive integrated employment. A few commended the Department for its efforts in issuing important regulations designed to curb subminimum wage employment, especially for youth with disabilities, who too often transition from school directly into sheltered employment at subminimum wages without ever having the opportunity to try competitive integrated work or explore their interests and abilities.

Some commenters remarked that section 511 of the Act and the implementing regulations in part 397 will help to eliminate practices that have not worked to benefit individuals with disabilities, such as the overuse of employment at subminimum wages, years of extended evaluation, and cycles of performance evaluations that result in low wages based upon an individual's productivity without necessary supports and services. In addition, a few commenters suggested that supporting subminimum wage employment appeared to be inconsistent with the purpose of the VR program and that resources should not be used to provide services or activities that result in individuals being employed in segregated settings at subminimum wages.

Generally, however, supporters of proposed part 397 regarded the regulations as helping individuals who are considering subminimum wage employment, or those already employed at subminimum wage, access opportunities for competitive integrated employment.

Multiple commenters voiced opposition to, or concerns about, proposed part 397. These commenters expressed concern that proposed part 397 would eliminate or phase out section 14(c) certificates and subminimum wages, close sheltered workshops, and cause individuals employed at subminimum wages to lose their jobs. Some of these commenters stated that individuals employed in sheltered employment were mostly incapable of working in competitive integrated employment, enjoyed a supportive and safe environment and social network in sheltered employment, and would lose income-based financial and medical benefits if they were paid minimum wages. Additionally, many of these commenters expressed concern that employers in the community would not hire individuals with low productivity who are unable to perform at expected levels and that it was unrealistic to believe that there are enough jobs for them in competitive employment. As a result, these individuals with disabilities would remain at home or need increased support from day programs.

Many commenters suggested that there should be a continuum of employment opportunities for individuals with disabilities, including sheltered workshops, and that the proposed regulations do not consider the choices that individuals and families make among these options.

Discussion: We appreciate the many thoughtful recommendations to change, clarify, and improve the regulations. Section 511 of the Act, as added by WIOA, and final part 397 set forth the requirements that must be satisfied: (1) Before an entity holding a special wage certificate issued by the Department of Labor under section 14(c) of the Fair Labor Standards Act (FLSA) may hire a youth with a disability or continue to employ an individual with a disability of any age at subminimum wages; and (2) by DSUs and local educational agencies with regard to services and documentation that must be provided to these individuals. Neither section 511 of the Act nor final part 397 eliminates the payment of subminimum wages or section 14(c) certificates. Both of these actions are outside the scope of the Department's authority and these final regulations. We also understand the concerns about the potential loss of needed disability-related and income-based benefits and the availability of sufficient jobs in the community; however, WIOA embodies the belief that with appropriate skills and supports, all individuals with disabilities can participate in the competitive workforce and achieve self-sufficiency. The Act, as amended by WIOA, and WIOA itself, could result in more job opportunities becoming available to individuals with disabilities, including those with the most significant disabilities. Two of the core purposes of WIOA are to ensure that: (1) Individuals who face barriers to employment, such as individuals with disabilities, receive the services and supports they need to acquire the skills necessary to obtain competitive integrated employment; and (2) Start Printed Page 55710employers receive the training, technical assistance, and other services they need to understand and tap into the full potential of individuals with disabilities in the workforce, for example through supported employment or customized employment. In addition, the Act, as amended by WIOA, and final part 361 require DSUs to work with other public agencies to ensure that individuals with disabilities receive the benefits planning they need to better understand the interplay of income-based benefits and work and to make informed decisions about the type of employment to pursue. Through all of these efforts, the Secretary hopes that individuals with disabilities, including those with the most significant disabilities, have more employment opportunities.

In addition, neither section 511 of the Act nor final part 397 restricts or eliminates sheltered employment. Individuals with disabilities continue to have a continuum of choices and options for employment ranging from competitive integrated employment to employment in sheltered workshops. Therefore, individuals with disabilities choosing to pursue or continue in sheltered employment may do so; however, certain requirements must be satisfied before the employer hires or continues to employ them at subminimum wages. While we recognize that many subminimum wage jobs for individuals with disabilities are in sheltered settings, section 511 of the Act and final part 397 focus exclusively on the requirements that must be satisfied before an entity holding a section 14(c) certificate may hire or continue to employ an individual with a disability at subminimum wages, not on the setting in which those wages are paid.

Changes: None.

Purpose (§ 397.1)

Comments: One commenter recommended that § 397.1(b)(1) require the DSU to ensure that youth with disabilities actually have completed certain services, not just provide documentation about the completion of those services to the youth. The commenter further suggested we revise this section to maximally limit the use of subminimum wage employment by requiring the DSU to: (1) Track youth with disabilities receiving pre-employment transition services and transition services from the DSU who are considering subminimum wage employment; (2) identify all individuals currently receiving services from the DSU considering subminimum wage employment; (3) identify all individuals over the past three years who applied for and were found ineligible for the VR program and may be currently working in, or considering, subminimum wage employment; (4) track referral agreements with, and conduct outreach to, State and local educational agencies to identify youth with disabilities considering subminimum wage employment; and (5) track referral agreements with, and conduct outreach to, the State agency with primary responsibility for providing services and supports for individuals with intellectual and developmental disabilities, and any other State agency providing services to a significant number of individuals in subminimum wage employment. The commenter also recommended that we revise § 397.1 by clarifying that nothing in this part supersedes the requirements of 34 CFR 361.55 regarding semi-annual and annual review of individuals in extended employment or other employment under special certificates issued under section 14(c) of the FLSA.

Discussion: We appreciate the commenter's time and consideration in reviewing this section and making substantive suggestions that would assist DSUs in carrying out the intent of section 511. In particular, the Secretary believes the proactive steps recommended by the commenter offer potential ways in which DSUs could increase the number of youth and other individuals with disabilities considering subminimum wage employment who become known to the DSUs, thereby significantly impacting the DSU's ability to assist in limiting the use of subminimum wages. That said, the Act does not require DSUs to seek out or solicit youth and others with disabilities considering, or already employed at, subminimum wages. Similarly, the Act does not require DSUs to track youth with disabilities or others with disabilities, except for those individuals who have become known to the DSU through the vocational rehabilitation process or through activities required in §§ 397.20, 397.30, 397.40 and 397.50. However, there is nothing in the Act or these final regulations that would prohibit a DSU from working with local educational agencies or other public agencies that may be able to identify individuals seeking or working in subminimum wage employment, for example, when implementing the requirements in section 101(a)(11) of the Act, as amended by WIOA, and the final regulations in 34 CFR 361.22 related to coordination with education officials, 34 CFR 361.24 regarding cooperation and coordination with other entities, and the documentation process requirements in final part 397. This could increase the number of individuals known to the DSU and allow the DSU to provide services, especially employment-related counselling and guidance, earlier than it otherwise would.

While we encourage the DSUs and State and local educational agencies to work together to identify these students and youth with disabilities as early as possible, any referrals by educational agencies that are subject to the confidentiality requirements of the Family Education Rights and Privacy Act (FERPA) (20 U.S.C. 1232g(b) and 34 CFR 99.30 and 99.31) and/or the IDEA (20 U.S.C. 1417(c) and 34 CFR 300.622) would need to comply with the applicable confidentiality standards. Although we are not revising the final regulations as recommended, the Department will consider ways to incorporate some of the suggestions into technical assistance to the DSUs.

The Secretary understands the recommendation to require the DSU to ensure that youth with disabilities actually complete certain services, in addition to providing documentation. However, the Secretary disagrees that this is necessary. Under section 511(c)(1)(A) of the Act and final § 397.40(a), DSUs must provide certain information and career counselling services to all individuals with disabilities, known by the DSUs, who want to continue employment at subminimum wage. Upon the completion of those services, the DSU must provide the individual with documentation that the services were provided. As such, the documentation “ensures,” as the commenter desired, that the services were actually completed. Similarly, a youth with a disability must complete certain services, such as transition and, as appropriate, pre-employment transition services, prior to beginning work in subminimum wage employment. Again, the DSUs and local educational agencies must provide documentation that the youth has completed these services, thus ensuring that the services were completed.

Finally, the Secretary agrees that nothing in this part supersedes the requirements of final 34 CFR 361.55 regarding semi-annual and annual review of individuals in extended employment or other employment under special wage certificate provisions in section 14(c) of the FLSA. We received similar suggestions to cross-reference and reconcile the requirements under final 34 CFR 361.55 and final § 397.40 to ensure consistency Start Printed Page 55711and avoid confusion about which requirements apply and the respective responsibilities of the DSU under each provision. While the Secretary understands the concerns, such revisions are not necessary or appropriate. The DSUs must satisfy their responsibilities under both final 34 CFR 361.55 and final § 397.40. These sections implement requirements under separate titles in the Act and apply to different—although sometimes intersecting—populations. We discuss these requirements of final 34 CFR 361.55 more fully in the Analysis of Comments and Changes section earlier in this preamble and those in final § 397.40 in a following section.

Changes: None.

Jurisdiction (§ 397.2)

Jurisdiction of the Departments of Education and Labor

Comments: One commenter agreed that proposed § 397.2 is consistent with the statutory authority granted to the Department. The commenter noted that the Department has the authority to regulate the actions of State educational agencies and collect data, citing Executive Order 11761 (To Facilitate Coordination of Federal Education Programs), and, therefore, has the authority to impose documentation requirements; to impose requirements for educational agencies, as detailed in proposed §§ 397.2(a)(1) and (2); and to regulate the actions of State and local educational agencies with regard to subminimum wage placements as detailed in proposed § 397.2(a)(3).

The same commenter agreed with proposed § 397.2(b), which states that nothing in this part will be construed to grant the Department or its grantees jurisdiction over requirements set forth in the FLSA. The commenter added that, although the Department of Labor has the authority to grant entities section 14(c) certificates allowing subminimum wage employment to individuals with disabilities, the Department has the authority to regulate, and thus restrict, the placement of individuals with disabilities in subminimum wage employment as it relates to public schools.

Another commenter stated that the Department has express legal authority to administer funding for the VR program under the Act and to oversee services by local school districts under the Individuals with Disabilities Education Act (IDEA). The commenter urged the Department to assume a central enforcement role over programs that facilitate employment outcomes for youth with disabilities, something which, according to the commenter, was lacking in the proposed regulations.

Other commenters stated that the Department should take a more proactive and vigorous role in enforcement, working collaboratively with the Department of Labor's Wage and Hour Division to enforce fully and meaningfully the requirements of section 511 of the Act, including provisions under which both Departments have overlapping jurisdiction. Similarly, several commenters viewed the enforcement of section 511 of the Act as a shared responsibility between the Departments of Education and Labor.

Several commenters expressed concerns about the enforcement of section 511, including the concern that entities holding section 14(c) certificates would continue their current practices and not comply with requirements under the Act. Some commenters suggested the Department require entities holding special wage certificates to refer youth and other individuals with disabilities to the DSU or educational agency. Many commenters recognized that these entities are subject to enforcement action from the Department of Labor and may have their certificates revoked under 29 CFR 525.17.

Similarly, since section 511 of the Act is entitled “limitations on the use of subminimum wage,” one commenter suggested that there is a legal basis under WIOA for the Department of Labor to revoke section 14(c) certificates for violations of section 511 of the Act, which these final regulations should require. The same commenter stated that after the effective date of section 511 on July 22, 2016, when an entity holding a section 14(c) certificate hires a person with a disability who is age 24 or younger without completing the required steps in section 511(a)(2)(B) of the Act, the entity should face enforcement action from the Departments of Labor and Education under both the FLSA and the Act, as amended by WIOA. Without vigorous enforcement by both Departments, particularly the Department of Education, the commenter suggested that entities holding section 14(c) certificates would view the responsibility for meeting the requirements under section 511 of the Act as resting with the DSUs.

Discussion: The Secretary appreciates the many comments and recommendations about jurisdiction and enforcement. In response to the many comments received, the Department consulted further on the matter with the Department of Labor's Wage and Hour Division. Although the Secretary understands the various concerns expressed, both the Departments of Education and Labor agree that under FLSA and WIOA, the authority to administer and enforce Federal requirements governing the payment of subminimum wages by entities holding special wage certificates under section 14(c) of the FLSA resides with the Secretary of Labor. The Secretary of Labor administers and enforces the minimum wage and overtime requirements of the FLSA, issues and revokes subminimum wage certificates, and remedies unauthorized payment of subminimum wages. See 29 U.S.C. 206, 207, and 214(c); 29 CFR part 525. Section 511 states that its provisions “shall be construed in a manner consistent with the provisions of the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.), as amended before or after the effective date of this Act.” Accordingly, if an employer fails to comply with the section 511 criteria for payment of a subminimum wage, the Secretary of Labor would take enforcement action pursuant to the FLSA in the same manner as he would against any other employer who failed to satisfy the requirements of the FLSA. The Secretary of Labor has delegated his authority to administer the FLSA to the Department of Labor's Wage and Hour Division.

The Secretary agrees with commenters who called for greater collaboration between the Department and the Department of Labor's Wage and Hour Division to ensure that the requirements of section 511 of the Act are enforced fully and meaningfully. Additionally, the Secretary agrees that the provisions of section 511 are dependent on the DSUs and educational agencies knowing the identities of individuals seeking employment or who are already employed at subminimum wage. However, despite the recommendations made by commenters, there is no statutory authority for the Department to require entities holding special wage certificates to refer youth and other individuals with disabilities to the DSU or educational agency. Section 511 of the Act does not grant the Department the authority to impose this or any other requirement on entities holding special wage certificates under the FLSA. Recognizing the importance of these requirements, the Secretary proposed part 397, taking the initiative to regulate on those provisions for which the Department is solely responsible. Under section 511 of the Act, the Department has the authority to Start Printed Page 55712regulate the activities and services that must be provided to an individual before the individual is eligible for, or may continue work compensated at a subminimum wage. Additionally, the Department has the authority to regulate how documentation of these actions is provided by the DSU to the individual with a disability, including the documentation process developed by the DSU in consultation with the State educational agency. We have revised final § 397.2(a)(1) to specify the Department's jurisdiction over the documentation process. Lastly, while States, not the Department, have oversight of services by local school districts under the IDEA, the Department has the authority under section 511 of the Act to prohibit State and local educational agencies from entering into a contract or other arrangement with certain entities for the purpose of operating a program under which a youth with a disability is engaged in work compensated at a subminimum wage. The Department has enforcement authority over State and local educational agencies that violate this prohibition.

Contrary to the opinion of some commenters, the Department of Labor rather than the Department has enforcement authority and jurisdiction over entities holding special wage certificates, including the suspension or revocation of these certificates. Despite recommendations that we require the Department of Labor to revoke violators' section 14(c) certificates if entities are found to be in violation of section 511, the statute does not authorize the Department of Education to do so; any suspension or revocation and any related regulations must be undertaken and promulgated by the Department of Labor.

Changes: We have revised final § 397.2(a)(1) to state that the Department has jurisdiction over the documentation process developed by the DSU in consultation with the State educational agency.

Interplay of the Other WIOA Rulemakings

Comments: One commenter noted that the Department of Labor's NPRM covering programs authorized under titles I and III of WIOA, as well as the joint NPRM issued by the Departments of Education and Labor for the workforce development system, did not address section 511 or the Department of Labor's enforcement of the documentation requirements for hiring or retaining individuals with disabilities in subminimum wage employment.

Discussion: In response to the comment regarding the lack of mention of section 511's requirements or the Department of Labor's enforcement responsibilities either in its program-specific NPRM (80 FR 20690 (April 16, 2015)) or in the joint NPRM issued by the Departments of Education and Labor (80 FR 20574 (April 16, 2015)), the Secretary believes it would not have been appropriate to do so for two reasons. First, the joint NPRM focuses solely on jointly administered requirements imposed by title I of WIOA on the Department of Education and the Department of Labor's Employment and Training Administration. The explicit requirements set forth in title I make both the Department and the Department of Labor's Employment and Training Administration equally responsible for administering and monitoring all jointly administered requirements governing the workforce development system.

Section 511, on the other hand, imposes requirements on State and local educational agencies and DSUs administered by the Department, that are separate and distinct from the restrictions imposed on entities holding section 14(c) certificates that fall under the exclusive purview of the Department of Labor's Wage and Hour Division. There is nothing in section 511 of the Act that shifts the responsibility for enforcement under the FLSA either to the Department exclusively or to the Department jointly with the Department of Labor. In fact, section 511(b)(3) of the Act requires that section 511 be construed in a manner that is consistent with the FLSA. Therefore, the Department of Labor retains the authority to enforce all minimum wage and subminimum wage requirements for entities holding special wage certificates.

Second, the Department of Labor's program-specific NPRM focuses solely on program-specific requirements imposed by titles I and III of WIOA. Section 511, on the other hand, is contained in title V of the Act, which is contained in title IV of WIOA. As such, the provisions of section 511 would not have been appropriate for the Department of Labor's program-specific NPRM. Moreover, the enforcement authority in section 511 that belongs to the Department of Labor resides with a different division, specifically the Wage and Hour Division, than that covered by the Department of Labor's program-specific NPRM. Rules required under the FLSA related to the provisions of section 511 are the responsibility of the Department of Labor.

Changes: None.

Reviewing Documentation

Comments: Many commenters suggested that the final regulations specify timelines for reviewing documentation. One commenter stated that proposed § 397.2 does not address enforcement, either by DSUs or the Department of Labor, for the failure of section 14(c) certificate holders to maintain required documentation. The commenter also stated that it is unclear whether the Department of Labor has the ability to revoke a license for a workshop that fails to keep the required documentation under final §§ 397.20, 397.30, and 397.40.

Several commenters emphasized the importance of enforcing the document review process. They suggested that the DSU or its contractor authorized to review individual documentation maintained by entities holding section 14(c) certificates have an enforcement mechanism to address deficiencies and violations. These commenters urged the Department to take a stronger stand to ensure that corrective actions can be taken by the DSU or its contractor. Another commenter requested that the final regulations define the consequences for non-compliance. One commenter suggested that the DSU should be required to report deficiencies to the Department of Labor or the Client Assistance Program (CAP).

Some commenters stated that DSUs are not enforcement or compliance agencies and requested clarification regarding enforcement authority in the documentation review process. One commenter agreed that while it was clear in the proposed regulations that the Department of Labor oversees entities holding section 14(c) certificates and the payment of subminimum wages to individuals with disabilities, further clarification of the DSU's role and scope was required. Without it, the DSU might become the “de facto” organization responsible for policing subminimum wage certificates rather than providing guidance and technical assistance.

One commenter urged that the final regulations task the Department of Labor with enforcing provisions related to the review of documentation since it already monitors entities holding special wage certificates and reviews employee documentation, unlike DSUs. If the final regulations also include the remedy of revoking an entity's 14(c) certificate for failure to maintain the required documentation for individuals employed at subminimum wage, the Department of Labor has the capacity to implement that remedy. In the view of the commenter, imposing an Start Printed Page 55713enforcement obligation on the DSUs would be burdensome and likely result in no enforcement at all.

Discussion: Many commenters suggested final part 397 include timelines for the review of documentation. Section 511(e)(2)(B) of the Act imposes no specific requirements on when, how often, or how reviews must be done. Rather, the statute states that the reviews will be conducted at a time and in a manner as necessary, consistent with regulations established by the DSU or the Secretary of Labor. Therefore, under section 511(e)(2)(B) of the Act, requirements governing the reviews, including whether or when they must be done, are beyond the scope of these final regulations.

Although some commenters requested that we provide the DSU or its contractor an enforcement mechanism for addressing documentation deficiencies and violations by entities holding section 14(c) certificates, the Secretary lacks the statutory authority to do as the commenters suggest. Likewise, the Secretary lacks the statutory authority to define the consequences for non-compliance by entities holding special wage certificates under the FLSA, which rests with the Department of Labor, or to require the DSU to report non-compliance by these entities to the Department of Labor or to the CAP. Having said this, nothing in section 511 prohibits a DSU from informing the Department of Labor's Wage and Hour Division of non-compliance it finds during any documentation review and doing so may assist in supporting the Department of Labor's efforts in monitoring compliance. A more detailed discussion of this issue is presented in the Review of Documentation (§ 397.50) section later in this preamble. As discussed under the CAP and PAIR (Protection and Advocacy of Individual Rights) section, the reporting of non-compliance to the CAP is not authorized.

We acknowledge that reviewing individual documentation held by the entities holding special wage certificates, as authorized by section 511(e)(2)(B) of the Act, may be regarded as burdensome to DSUs. Section 511 does not require that DSUs conduct these reviews. Rather section 511(e)(2)(B) merely subjects entities holding section 14(c) certificates to these reviews in an effort to ensure that the intent of section 511 is being fulfilled. These reviews may be conducted in a manner and at such time as is deemed necessary, consistent with a DSU's or the Department of Labor's regulations. While the Secretary agrees with the comment that the Department of Labor is experienced with conducting these reviews, the Secretary does not have the statutory authority to require that the Department of Labor be solely responsible for the documentation reviews. Section 511(e)(2)(B) of the Act clearly grants authority to the DSUs to conduct these reviews as well.

Changes: None.

CAP and PAIR

Comments: Many commenters suggested that CAPs and PAIR programs have jurisdiction for reviewing compliance with section 511. To ensure that required activities are completed and are meaningful (i.e., not just checklist actions), some commenters recommended that the CAP or the PAIR agency be empowered to represent students and others with disabilities employed at subminimum wages under section 511. Commenters emphasized that, given the role of CAPs in the new requirements in sections 113 and 511 of the Act, the regulations should define this role and provide the CAPs the authority and ability to monitor and effectively advocate for individuals with disabilities. The commenters noted that the CAPs have access to workers in sheltered workshops and their records, regardless of whether they are VR program consumers. The commenters endorsed the need for independent advocates to ensure that DSUs and entities adhere to the requirements of section 511 to make the most of the opportunity presented in the Act to improve the employment of individuals with disabilities.

One commenter requested that we require that the protection and advocacy systems have access to any entity covered under sections 113 and 511 of the Act to monitor for rights and safety compliance, which includes the ability to speak with individuals with disabilities privately and to access records with the consent of an individual service recipient, parent, or guardian. Additionally, the commenter suggested that we require CAP staff with similar access to advise individuals employed by an entity holding a section 14(c) certificate of their rights and, with consent, to access their records.

Discussion: With respect to the comments regarding the CAPs, section 112(a) of the Act, as amended by WIOA, specifically requires CAPs to inform and advise clients and client-applicants of all available benefits under the Act, including under section 511. Clients or client-applicants, as defined in final 34 CFR 370.6(b) for purposes of the CAP, are individuals seeking or receiving services under the Act, including individuals seeking or receiving services under section 511. Upon the request of clients or client-applicants, CAPs may assist and advocate for them, including by pursuing legal, administrative, or other appropriate remedies to protect their rights and ensure access to the services under the Act.

Although several commenters expressed concerns that the proposed regulations did not provide CAP and PAIR programs with the authority to access records and conduct monitoring, the Secretary does not agree that CAP or PAIR programs have the authority to access records in the manner the commenter suggests. The advocacy provided by CAPs, whether individual or systemic, must be at the request of clients or client-applicants and must be solely for the purpose of protecting their rights or to facilitate their access to services under the Act. In representing the client or client-applicant upon that individual's request, CAPs could access relevant records of individuals with disabilities under section 511 of the Act, so long as they follow the requirements of the holder of those records, which typically require the informed written consent of the client or client-applicant.

PAIR programs have limited monitoring authority. PAIR programs provide advocacy and legal services to protect the rights of individuals with disabilities who are not eligible for services from other components of the protection and advocacy system and whose concerns are beyond the scope of the CAP. Since section 112 of the Act specifically authorizes the CAP to assist individuals with disabilities receiving services under section 511, such activities would fall outside the scope of the PAIR programs.

Despite the suggestion that independent advocates ensure that DSUs and entities adhere to the requirements of section 511 to make the most of the opportunity presented in the Act to improve the employment of individuals with disabilities, there is no statutory basis to require independent advocates to take on this role. There is no mention of independent advocates in section 511 of the Act, and these entities are not within the purview of the Department. Having said this, there is nothing in section 511 to preclude a DSU or the Department of Labor from contracting with an independent advocate to conduct reviews of documentation.

On the other hand, section 112 of the Act, as amended by WIOA, does not authorize CAPs to engage in advocacy for the sole purpose of gaining general access to records or conducting monitoring. Since section 112 of the Start Printed Page 55714Act, as amended by WIOA, references the applicability of the requirements of the CAP to section 511 already, we do not believe that additional language is needed in final part 397. The Department has, however, made minor revisions to final 34 CFR part 370 to clarify that CAPs may advocate on behalf of clients or client-applicants requesting assistance with issues arising under section 511. Final 34 CFR part 370 is published elsewhere in this issue of the Federal Register.

Changes: None.

Rules of Construction (§ 397.3)

Comments: A few commenters requested that we revise § 397.3 to emphasize that nothing in section 511 or final part 397 changes or affects a State's obligations under the U.S. Supreme Court's 1999 Olmstead decision, subsequent U.S. Department of Justice enforcement actions, or the rules established for home- and community-based services by the U.S. Department of Health and Human Services' Center for Medicare and Medicaid Services (CMS).

Discussion: Section 511 and final part 397 are consistent with the Olmstead decision and other requirements for community- and home-based services. Under each of the requirements mentioned by the commenters, services must be provided in the community to the extent possible.

Section 511 gives individuals every opportunity possible to obtain competitive integrated employment by requiring that youth with disabilities receive certain services before beginning employment at subminimum wages and that individuals with disabilities of any age receive certain services every six months for the first year of subminimum wage employment and annually thereafter as long as subminimum wage employment continues.

Moreover, under section 511(b)(1) of the Act, nothing in section 511 is to be construed as changing the purpose of the Act, which is to empower individuals with disabilities to maximize their opportunities to achieve competitive integrated employment, nor is section 511 to be construed as promoting subminimum wage. Final § 397.3 sets forth the “rules of construction” consistent with those set forth in section 511(b) of the Act. Paragraphs (a) and (b) of final § 397.3 promote opportunities for competitive integrated employment for individuals with disabilities. Therefore, the Secretary declines to make the suggested revision.

Changes: None.

What regulations apply? (§ 397.4)

Comments: None.

Discussion: Although we received no comments specific to proposed § 397.4, we received several comments about various provisions in part 397 regarding informed choice and confidentiality. Specifically, we received comments asking whether an individual with a disability has the right to refuse to participate in activities required by section 511 of the Act and part 397. As the Secretary has stated throughout this preamble, an individual has the right to exercise informed choice regarding participation in the activities required by this part. The Secretary has revised final § 397.4(b) to highlight 34 CFR 361.52 as being applicable to final part 397.

In addition, we received comments asking whether the DSU could provide documentation to a family member of an individual with a disability. A DSU must protect all personal information regarding an individual in its possession, pursuant to final 34 CFR 361.38. To highlight this requirement, we have revised final § 397.4(b) to specifically mention the confidentiality requirements of final 34 CFR 361.38.

In addition to these specific changes in final part 397, we also made conforming changes in final 34 CFR part 361 to make clear that final 34 CFR 361.38 and 361.52 apply to applicants and recipients of services. In so doing, we ensure that individuals receiving services required by part 397, regardless of whether they have applied for or been determined eligible for vocational rehabilitation services, are still protected by the confidentiality and informed choice requirements. These changes were discussed in the preamble to final part 361 in Part B of the Analysis of Comments.

Changes: We have revised final § 397.4(b) to highlight final 34 CFR 361.38 and 34 CFR 361.52 as being applicable to final part 397.

What definitions apply? (§ 397.5)

Comments: A few commenters suggested that the Department provide specific definitions for the terms “self-advocacy,” “self-determination,” and “peer mentoring training opportunities” to ensure integrity and reflect the intent of section 511. One commenter requested a definition for “certain information.” Another commenter asked whether the term “special wage certificate” in proposed § 397.5(c)(2) included all types of section 14(c) certificates issued by the Department of Labor (e.g., business certificate holders and patient workers) among those certificate-holding entities that must comply with section 511 of the Act. The commenter also asked that we clarify in § 397.5(d) whether “entity” includes associated businesses affiliated with a section 14(c) certificate holder, such as a non-profit community rehabilitation program that has a for-profit business in the same location.

Discussion: We appreciate the commenters' recommendations for additional definitions; however, we use these terms in part 397 as they are commonly understood, just as they are used in section 511 of the Act. Attempting to define these terms could cause us to inadvertently define the terms too broadly or too narrowly. This is of particular concern both because we would be defining these terms after the comment period has ended, without the benefit of public input, and because this is a new statutory provision, and we do not yet have institutional experience with how DSUs may implement them in this context.

As commonly understood, “peer mentoring” generally involves individuals with disabilities providing guidance, counseling, and advice to other individuals with disabilities based upon their own experiences and training and the experiences of others they know. “Self-advocacy” generally involves developing the skills, knowledge, and confidence to stand up for oneself and using appropriate means to obtain one's goals. Finally, “self-determination” generally means having the abilities, attitudes, skills, and opportunities to play an active and prominent role in living and planning one's life and future. Neither final part 397 nor section 511 of the Act includes the phrase “certain information.”

Next, “special wage certificate” applies to all entities holding section 14(c) certificates, including work centers (also known as community rehabilitation programs), hospital/residential care centers (facilities that employ patient workers), business establishments that are not a work center or an employer of patient workers, and School Work Experience Programs (SWEP). All must comply with section 511 of the Act, which provides for no exceptions and refers simply to entities holding special wage certificates issued under section 14(c) of the FLSA.

Whether “entity,” as defined in final § 397.5(d), includes associated businesses affiliated with a section 14(c) certificate holder depends upon individual circumstances. As defined, “entity” refers to any employer who holds a special wage certificate issued under section 14(c) of the FLSA. Start Printed Page 55715Therefore, the factors to consider include, but are not limited to, whether the associated business is separately incorporated, operates under the same or a separate special wage certificate described in section 14(c) of the FLSA, employs or jointly employs as defined in the FLSA, individuals with disabilities at subminimum wages, shares subminimum wage employees with the section 14(c) certificate holder, or operates as a contractor or subcontractor for the section 14(c) certificate holder. The for-profit nature of an associated business of a non-profit is not a determining factor since both may hold a special wage certificate under the FLSA.

Changes: None.

Coordinated Documentation Process (§ 397.10)

Comments: Most commenters on proposed § 397.10 supported the requirement that the DSU, in consultation with the State educational agency, develop a process, or utilize an existing process to document the completion of required activities under section 511 of the Act by youth with disabilities prior to seeking or entering subminimum wage employment. A few commenters strongly supported using the DSU's formal interagency agreement with the State educational agency required by 34 CFR 361.22(b) as the mechanism to develop a robust documentation process, and a few commenters requested that final § 397.10 reflect the role of the State Rehabilitation Council in this process. One commenter suggested that we require the interagency agreement to include a requirement that students and parents or guardians be provided training on subminimum wage employment. One commenter recommended that we require the interagency agreements to be developed with local educational agencies, in addition to State educational agencies. In addition, the commenter recommended that interagency agreements that specify data sharing requirements be developed with State agencies serving individuals with intellectual and developmental disabilities as well. The commenter suggested that the interagency agreements indicate how each agency will ensure compliance with the requirements in this section.

Several commenters recommended that the Department provide guidance detailing the documentation and collaboration requirements of DSUs, educational agencies, and other entities under section 511. Similarly, one commenter requested that we include more specific language in the regulations regarding the types of documentation that would be acceptable, emphasizing that guidance should be sufficient to ensure that documentation is complete and meets the intent of section 511 of the Act. Some stated that proposed § 397.10 focused heavily on compliance with the documentation requirements, and not the congressional intent of limiting the use of subminimum wages.

Many commenters expressed concerns about the 90-day time frame for providing documentation to youth with disabilities in proposed § 397.10(c)(2) and recommended shorter time frames, such as 30 or 45 days. They noted that allowing the DSU up to 90 days to provide documentation to youth with disabilities after completing each of the required activities, which may or may not take place concurrently, could result in prolonged delays for such youth seeking to enter subminimum wage employment since there are several steps and multiple activities in the process that the youth must complete.

One commenter asked the Department to define “completed” in proposed § 397.10(b)(2)(i), stating that transition services are typically ongoing and may continue until a student graduates from high school. The same commenter posed a series of additional questions about proposed § 397.10(b)(2)(ii). The commenter asked about what constitutes documentation; the level of detail required; requirements for the rigor and quality of the activities; the need for signatures, dates, descriptions and settings of activities; information about the location or setting of activities; and the DSU's obligations if the educational agency fails to provide documentation of transition activities or such activities are deemed substandard.

One commenter urged the Department to include a new paragraph in § 397.10 or, alternatively, in § 397.50, to require the DSU to retain copies of documentation required by this part and to provide this documentation for review by the CAP or a protection and advocacy agency.

One commenter remarked that documentation of required activities denotes completion of these activities without regard to consumer choice to participate, whereas other commenters requested clarification of what documentation would be required if an individual, exercising informed choice, refuses vocational rehabilitation services.

Finally, one commenter asked for clarification regarding whether a documentation process between the DSU and the State educational agency must be developed and what documentation is required in those States that prohibit subminimum wages for individuals with disabilities. Alternatively, the commenter suggested that emphasis should be placed upon tracking services in the regulations regardless of whether a subminimum wage prohibition exists.

Discussion: We appreciate the many comments we received regarding the documentation process. Compliance with the documentation process requirements is intended to result in limiting the use of subminimum wages. The Secretary agrees that the formal interagency agreement between the DSU and the State educational agency provides an optimal mechanism to develop and describe the documentation process required in final § 397.10, and the Department appreciates the strong support we received from commenters on this point. As noted by the commenters, final 34 CFR 361.22(b)(5) requires the DSU and State educational agency to develop a formal interagency agreement that, at a minimum, provides for coordination necessary to satisfy documentation requirements set forth in final § 397.10. Under final 34 CFR 361.20(c) and (d), the State Rehabilitation Council (SRC) must provide input into the VR services portion of the Unified or Combined State Plan, and the DSU must actively consult with the SRC, if it has a Council, on its policies and procedures governing the provision of vocational rehabilitation services. The functions of the SRC in final 34 CFR 361.17(h) support Council involvement in developing the coordinated documentation process. Therefore, the Secretary does not believe it necessary to specifically state the role of the SRC in the documentation process in final § 397.10.

While the Secretary agrees that students and parents or guardians can benefit from training about subminimum wage employment, the Act does not require the formal interagency agreement to include such a requirement. To add it would be inconsistent with the statutorily required actions that must be taken by either the DSU or the State educational agency with regard to the documentation process. Nonetheless, nothing in the Act precludes the DSU and State educational agency from including a training requirement in the formal interagency agreement.

Similarly, we do not believe it necessary to require, in final part 397, the DSU to enter into interagency agreements with local educational Start Printed Page 55716agencies and State agencies serving individuals with intellectual and developmental disabilities, because final 34 CFR 361.24(f) and (g) provide for the DSU to enter into cooperative agreements and engage in interagency collaboration with these State agencies. These cooperative agreements could provide a mechanism for addressing, as appropriate, the requirements in final § 397.10 and promote data sharing. The Secretary encourages the DSUs, local educational agencies, and State agencies serving individuals with developmental and intellectual disabilities to work collaboratively to identify individuals with disabilities, particularly youth with disabilities, who are considering or who are already engaged in subminimum wage employment.

The Secretary agrees that further operational guidance regarding the requirements for collaboration, development, and implementation of the documentation process is warranted. Therefore, the Department's Office of Special Education and Rehabilitative Services intends to collaborate with the Department of Labor's Wage and Hour Division in issuing guidance about implementing the requirements in final part 397, particularly the documentation process. This guidance will help to ensure that the documentation process works smoothly within already-established procedures for the DSUs and State and local educational agencies, especially with regard to the protection of personally identifiable information, while also enabling efficient and effective reviews of any such documentation by the Department of Labor.

Final §§ 397.10 and 397.30 specify the documentation requirements. Final § 397.20 describes the activities for which documentation must be provided, all of which are familiar to DSUs and local educational agencies and should pose no additional administrative burden. Each DSU has case management practices for documenting various steps in the vocational rehabilitation process, such as eligibility and ineligibility determinations, the individualized plan for employment, the provision of vocational rehabilitation services (including pre-employment transition services), and case closure. State educational agencies also have methods for documenting transition services provided to students under the IDEA. In developing the documentation process, each DSU, in coordination with the State educational agency, has flexibility to determine the most appropriate procedures for documenting required activities and for timely provision of the documentation to youth with disabilities upon their completion of the required activities.

As proposed, § 397.10(c)(2) required the DSU to provide the documentation of the completion of each of the required actions in §§ 397.20 and 397.30 to a youth as soon as possible, but no later than 90 days, following the completion of each of the actions. We understand the concerns raised by commenters, and we want to emphasize that we anticipate DSUs and State educational agencies will develop a process whereby the documentation in most instances will be provided either concurrently with the completion of the activity or very shortly thereafter, and we encourage them to do so.

For example, DSUs typically provide documentation of eligibility or ineligibility determinations to the individual within a very short time after the decision is made. Similarly, DSUs typically provide a copy of the individualized plan for employment to the individual at the time both parties sign the document. With regard to providing services, such as pre-employment transition services or transition services, we anticipate that the DSUs and schools will develop a streamlined approach for transmittal of the documentation by the DSU to the youth.

We proposed a period of up to 90 days to be consistent with other time frames in the vocational rehabilitation process and to enable DSUs to obtain documentation from local educational agency personnel who may not be available due to extenuating circumstances. It was never the Department's intent to delay the provision of the required documentation to any individual seeking subminimum wage employment. After considerable deliberation and balancing competing interests while not imposing undue burden on the DSUs or schools, the Secretary has modified the time frame in these final regulations. Final § 397.10(c)(2) requires the DSU to provide the requisite documentation, including documentation received from the local educational agency, to the youth within 45 calendar days of completion of the activity.

For example, if a student completes a required activity provided by the local educational agency, the documentation must be transmitted to the DSU and provided to the youth all within 45 calendar days. However, if, due to extenuating circumstances additional time is needed, documentation must be provided to the youth within 90 calendar days after completion of the activity. As provided in final § 397.10(c)(2)(i)(B), this exception for extenuating circumstances is a limited exception that would cover circumstances such as, the unexpected absence of the individual necessary to provide the documentation, or a natural disaster. That said, DSUs and State educational agencies could establish a shorter time frame in their documentation processes.

We recognize that providing transition services, as well as pre-employment transition services, may be ongoing for students with disabilities. For example, under the IDEA, a student with a disability may receive transition services until the student graduates from high school with a regular diploma or exceeds the age of eligibility for a free appropriate public education. Similarly, students with disabilities may receive pre-employment transition services under the Act for as long as the student remains in an educational program and meets the definition of a “student with a disability” under final 34 CFR 361.5(c)(51). For purposes of final § 397.10(b)(2)(i), the local educational agency must, consistent with confidentiality requirements of FERPA and/or the IDEA, provide the DSU documentation of transition services when a student has completed all transition services in the individualized education program. The final regulations do not contain a definition of “completion,” as suggested by commenters, because the definition would vary widely depending on the activity. The Secretary will provide more guidance in the general operational guidance for the documentation process required by section 511 and final part 397.

Section 511 of the Act does not address what constitutes documentation, the level of detail required, requirements related to the rigor and quality of the activities, the need for signatures, dates, descriptions and settings of activities, information about the location or setting of activities, and the DSU's obligations if the education agency fails to provide documentation of transition activities or such activities are deemed substandard. Some of these issues are best left to the DSU and State educational agency to negotiate when developing the interagency agreement or the documentation process to maximize State flexibility and accommodate the unique needs within a State. However, the Secretary agrees that some guidance would be helpful. Therefore, the Secretary has revised final § 397.10(a) to state that the documentation process must address both the actual production and transmittal of documentation. Start Printed Page 55717Again, the transmittal of all documentation by the educational agency to the DSU must comply with the confidentiality requirements of FERPA and the IDEA.

In addition, the Secretary has revised final § 397.10(a) by adding three new paragraphs. Final § 397.10(a)(1) establishes minimum requirements for information to be contained in the documentation of determinations made or the completion of an activity. Final § 397.10(a)(2) establishes minimum requirements for information that must be contained in documentation in the event that a youth, or his or her parent or guardian, exercises informed choice and refuses to participate in an activity required by section 511 of the Act or final part 397. Final § 397.10(a)(3) requires the DSU to retain a copy of all required documentation provided to the youth. The DSU must retain this documentation just as it would any other documentation in its case management system, and the documentation must be retained in accordance with the requirements of 2 CFR 200.333, which governs record retention for all Federal grantees.

In using an existing process or developing a new documentation process, the DSU and the State educational agency may wish to consider questions such as those posed by the commenter but not addressed in these final regulations. In addition, the Secretary has revised final § 397.10(b)(2)(i) to require the educational agency to provide the documentation to the DSU. The Secretary has also added a new requirement in final § 397.10(c)(3) that the DSU provide, when transmitting documentation of the last determination made or activity completed, a cover sheet that itemizes all documentation provided to the youth. The Secretary hopes that these additions will assist DSUs and State educational agencies in developing a streamlined documentation process that will enable the expedient completion and transmittal of the documentation to the youth, and allow for the expedient review of the documentation, if a review is conducted by the DSU or the Wage and Hour Division of the Department of Labor.

Additionally, for the reasons discussed in the section titled Jurisdiction (§ 397.2), any access to these records by CAPs or protection and advocacy systems is subject to the requirements of sections 112 and 509 of the Act, respectively, and implementing final regulations in 34 CFR part 370 and 34 CFR part 381.

Although section 511 of the Act and final part 397 establish prerequisites for a youth with a disability to work in subminimum wage employment, as with any vocational rehabilitation service, the youth with a disability, or his or her parent or guardian, as applicable, may exercise informed choice and refuse to participate. If a youth chooses not to participate in the activities required by section 511 of the Act and final part 397, or chooses to opt out of the vocational rehabilitation process entirely, such a choice will impact the permissibility of the youth to work at subminimum wage and preclude him or her from obtaining subminimum wage employment given the limitations imposed by section 511 of the Act and final part 397. Accordingly, DSUs should inform youth with disabilities and/or their guardians of the youth's ineligibility for subminimum wage employment if he or she refuses to participate in the required activities. As discussed previously, final § 397.10(a)(2) establishes documentation requirements for when a youth refuses to participate in the required activities. Meeting these requirements demonstrates the DSU's compliance under section 511 and final part 397. The Secretary believes it is appropriate to establish an even shorter time frame for the transmittal of documentation demonstrating the youth's refusal to participate in required activities under final part 397 because there should be few administrative reasons for delay. Thus, in this circumstance, final § 397.10(b)(2)(ii) requires that the documentation be provided to the youth, within 10 calendar days of the youth's refusal.

In a State that prohibits the payment of subminimum wages to individuals with disabilities, the DSU and the State educational agency still must develop a documentation process in accordance with final § 397.10, although it may be used infrequently. This documentation would be necessary if a youth with a disability seeks subminimum wage employment in another State that does not prohibit subminimum wages.

Finally, the Department, upon further review, notes that the documentation of pre-employment transition services in final § 397.10(b)(1) refers to a “student with a disability” rather than a “youth with a disability” because only a student with a disability may receive pre-employment transition services. Further, the section states more directly that the appropriate school official responsible for providing transition services will provide the DSU documentation of completion of appropriate transition services under the IDEA.

Changes: We made several changes to final § 397.10. First, we revised final § 397.10(a) to state that the documentation process must cover both the production and transmittal of the documentation. The process must ensure all confidentiality requirements of FERPA and the IDEA are satisfied.

Second, we revised final § 397.10(a) by adding three paragraphs. Final § 397.10(a)(1) establishes minimum information that must be contained in documentation of a youth's completion of required activities. Final § 397.10(a)(2) establishes the minimum information that must be contained in documentation when a youth refuses to participate in the required activities. Final § 397.10(a)(3) requires the DSU to retain copies of all documentation required by final part 397.

We revised final § 397.10(b)(1) to clarify that we are referring to a “student with a disability” with regard to the documentation of the completion of appropriate pre-employment transition services. We also revised § 397.10(b)(2)(i) to clarify that the appropriate school official responsible for the provision of transition services must provide the DSU documentation of completion of appropriate transition services under the IDEA. We revised final § 397.10(c)(2) by adding two new paragraphs. Final § 397.10(c)(2)(i) requires the DSU to provide all requisite documentation to the youth within 45 calendar days of the determination or the completion of the required activities, unless extenuating circumstances make additional time necessary. In that case, the documentation must be provided to the youth within 90 calendar days of the determination or completion of the activity or service. The final regulations also provide examples of what could constitute extenuating circumstances necessitating the additional time. Final § 397.10(c)(2)(ii) requires the DSU to provide documentation of the youth's refusal to participate in required activities within 10 calendar days of the refusal. Lastly, final § 397.10(c)(3) was added to require the DSU to provide a coversheet that itemizes all documentation provided to the youth when transmitting documentation of the last determination made or activity completed.Start Printed Page 55718

Responsibilities of a DSU to Youth With Disabilities Who Are Known To Be Seeking Subminimum Wage Employment (§ 397.20)

Reasonable Period of Time

Comments: Most commenters on this section recommended changes in proposed § 397.20(a)(2)(ii)(B) and proposed § 397.20(b)(3)(i) related to the determination that a youth with a disability is not able to achieve the employment goal specified in his or her individualized plan for employment, other than supported employment, after working toward the goal for a reasonable period of time with appropriate supports and vocational rehabilitation services. The commenters recommended that, for these youth, the reasonable period of time be consistent with, or no less than, the time period provided in proposed § 397.20(b)(3)(ii) for individuals with disabilities whose specified employment goal is in supported employment. A few commenters recommended defining the time frame for “reasonable period of time” for all youth, regardless of whether they were seeking supported employment outcomes or other outcomes, as 36 months or up to four years since the DSU is being allowed to provide up to four years of extended services for youth in supported employment. The commenters stated that limiting the length of time the DSU can devote to helping youth with disabilities achieve competitive integrated employment creates barriers to the policy of maximizing steps to facilitate attaining competitive integrated employment and requested that the Department amend the proposed rule to designate a minimum, not maximum, period of time during which DSUs must assist youth with disabilities to attain integrated employment outcomes, including supported employment. Citing the low participation rate of individuals with disabilities in the labor force, coupled with the significant barriers to employment faced by these individuals, one commenter recommended a minimum of three years as the appropriate amount of time for youth with disabilities to work toward competitive integrated employment before considering segregated work and subminimum wage employment. This commenter stated that, without a minimum time frame, the proposed regulations offer little to prevent youth from continuing to settle for subminimum wage employment. Some premised their suggestion of extending the time frame to four years based upon the DSU being allowed to provide up to four years of extended services for youth in supported employment. On the other hand, one commenter suggested that, consistent with the provision of supported employment services, in no case should the reasonable period of time exceed two years.

Suggesting that the distinctions in “reasonable period of time” between those youth with supported employment goals and those with other employment goals prove more confusing than helpful, a few commenters supported language that reflects an individualized approach for defining “reasonable period of time” for all youth, including those individuals in supported employment. One commenter stated that, without uniform time frames for both youth with disabilities seeking supported employment outcomes and youth seeking other competitive integrated employment outcomes, DSUs may circumvent the necessary level of effort needed in working with individuals by simply writing an individualized plan for employment that does not include the goal of supported employment.

Discussion: We appreciate the many comments we received about defining “reasonable period of time” before closing a service record as unsuccessful when a youth has been pursuing, through an individualized plan for employment, an employment outcome (as defined under final 34 CFR 361.5(c)(15)), other than in supported employment.

Although many commenters requested a specified time frame—of anywhere from 24 months, to coincide with that for the provision of supported employment services, to up to four years to coincide with the amount of time allowed for the provision of extended services for a youth with a disability—we believe that a “reasonable period of time” must take into account the disability-related and vocational needs of the individual, as well as the anticipated length of time required to complete the services identified in the individualized plan for employment to achieve an employment outcome. The time frame for providing supported employment services is prescribed in section 7(39) of the Act, as amended by WIOA, and final 34 CFR 361.5(c)(54), but the Act does not limit the amount of time for providing any other vocational rehabilitation service. Therefore, we believe that it is not in the best interest of individuals with disabilities to limit the time for providing vocational rehabilitation services other than supported employment services. To do so might unnecessarily restrict the amount of time an individual may need to complete the services necessary to achieve an employment outcome in competitive integrated employment.

We understand the concerns expressed by many of the commenters about limitations on the amount of time the DSU may devote to assisting youth with disabilities to achieve competitive integrated employment, especially if someone is not seeking supported employment. We also understand the desire to provide a minimum time, rather than a maximum time, during which the DSU may help youth with disabilities attain employment outcomes, including supported employment. However, we believe that with allowable extensions, and based upon the needs of the individual and the individual's disability, DSUs have the flexibility to provide all services and supports necessary for an individual to achieve competitive integrated employment in a reasonable time prior to closing the individual's service record as unsuccessful.

Changes: None.

Requirements for Closure

Comments: A few commenters recommended that we revise proposed § 397.20(a)(2)(ii)(C) to reference 34 CFR 361.47(10) rather than the more general 34 CFR 361.47 when addressing the requirements for closure of the service record of a youth with a disability. The commenters stated that under 34 CFR 361.47(10), the vocational rehabilitation counselor will not accidentally classify the youth with a disability as having achieved competitive integrated employment, when, in fact, the youth has obtained subminimum wage employment. One commenter also suggested that this change would serve as a reminder to vocational rehabilitation counselors that a placement of a youth with a disability in a subminimum wage environment is less desirable than a placement into competitive integrated employment.

Discussion: We do not agree with the recommendation that we revise proposed § 397.20(a)(2)(ii)(C) to reference final 34 CFR 361.47(10), rather than the more general final 34 CFR 361.47, when addressing the requirements for closure of a service record for a youth with a disability. Final 34 CFR 361.47 contains other requirements, and limiting the reference to final 34 CFR 361.47(10) could provide the impression that other requirements do not apply. We anticipate that the discussion in part 361 of these regulations found elsewhere in this issue of the Federal Register regarding “competitive Start Printed Page 55719integrated employment” and “employment outcome” will serve to clarify that employment at subminimum wages is not a successful outcome for purposes of the VR program.

Changes: None.

Pre-employment Transition Services

Comments: Several commenters provided comments about the DSU's responsibility to document completed pre-employment transition services. One commenter asked that the final regulations specifically prohibit the use of segregated settings such as sheltered workshops for providing pre-employment transition services, regardless of whether these settings pay subminimum wages. Given that this section applies to youth with disabilities, a commenter requested clarification regarding how youth with disabilities who are age 24 or younger, who are not students with disabilities, may be provided pre-employment transition services that are, by definition, provided to students with disabilities. The commenter stated that although a youth with a disability who is no longer a student may have received pre-employment transition services, or transition services under the IDEA, a DSU would find it challenging to document the services after the youth has left the education system. As an alternative, the commenter suggested that we make an exception to the definition of “pre-employment transition services” for the purpose of proposed § 397.20 to include all youth in the provision and documentation of pre-employment transition services. Another commenter stated that it would be overly burdensome to track all individuals receiving pre-employment transition services and their activities in order to provide documentation to those few considering subminimum wage employment. The commenter recommended removing the requirement for documentation of pre-employment transition services from proposed § 397.20(a)(1).

One commenter was concerned that proposed § 397.20 served as a loophole for the education system to continue to view subminimum wage employment as a viable alternative and suggested that the final regulations be strengthened by specifying that youth must be provided exposure to, and opportunities for, experiences such as integrated work-based learning programs, summer jobs, summer volunteering, and summer internships to enable them to make an informed choice to pursue subminimum wage employment.

Discussion: As discussed in the Analysis of Comments and Changes section for part 361 earlier in this preamble, we do not have the authority to prohibit the use of segregated settings, such as sheltered workshops, for providing pre-employment transition services. That being said, assessment services and pre-employment transition services are to be carried out in an integrated setting to the maximum extent possible in accordance with final 34 CFR 361.5(c)(5) and final 34 CFR 361.48(a)(2), respectively.

We understand the confusion created by proposed § 397.20(a)(1), which covered the documentation of completed pre-employment transition services that must be provided to youth by the DSU, when, in fact, pre-employment transition services are provided to students with disabilities, not to all youth with disabilities. We have revised this paragraph to clarify that documentation for the completion of pre-employment transition services applies to students with disabilities. We have made further revisions for the documentation of the completion of transition services under the IDEA, which the DSU is also responsible for providing to youth once the local educational agency has provided such documentation to the DSU.

We disagree with the commenter's alternative suggestion of making an exception to the definition of “pre-employment transition services” in final 34 CFR 361.5(c)(42) to include all youth for purposes of this part, as that would be inconsistent with section 113 of the Act.

We understand that a DSU would find it challenging to obtain documentation of services after a youth has left the education system; however, educational systems must maintain records of the provision of transition services to students provided through an individualized education program.

We appreciate the commenter's concern about the burden of tracking individuals receiving pre-employment transition services and their activities in order to provide documentation to a few individuals that might seek subminimum wage employment. The commenter recommended removing the requirement from final § 397.20(a)(1). However, this would be inconsistent with section 511(d)(2)(a) of the Act.

We agree that youth with disabilities may find integrated work based learning programs, summer jobs, summer volunteering, and summer internships valuable and these experiences could better enable them to make an informed choice of whether to pursue subminimum wage employment. However, we do not believe that embedding this language in the regulations in part 397 would strengthen the final regulations, as they already incorporate the requirements to document the completion of pre-employment transition services and/or transition services for youth with disabilities, which include these activities.

Finally, we made a technical change in the title of this section, replacing “considering” with “seeking” to be consistent with § 397.30. “Seeking” more appropriately describes those youth who have determined that they would like to pursue subminimum wage employment.

Changes: We added § 397.20(a)(1)(i) and (ii) to require DSUs to document completion of transition services under the IDEA in addition to completion of pre-employment transition services under the VR program. Additionally, we inserted “a student with a disability” in final § 397.20(a)(1)(i) because pre-employment transition services are available only to students with disabilities. Finally, we replaced the word “considering” with “seeking” in the title of this section to be consistent with the title in § 397.30.

Other Comments

Comments: A commenter posed a series of questions and concerns about how to serve eligible VR consumers who might be contemplating subminimum wage employment if there is a lag time or lack of supported employment providers or customized employment and the consequences to consumers and families, as well as DSUs, if an individual chooses to opt out of the vocational rehabilitation process.

Other commenters asked whether the employment goal specified in the individualized plan for employment needs to be consistent with competitive integrated employment when considering the individual's strengths, resources, priorities, concerns, abilities, capabilities, interests and informed choice. Also, they asked what the expectations are around the determination of ineligibility, including how many work experiences must be provided and how long to pursue supported employment after the 24-month period or customized employment when resources for long-term supports are not available. Finally, commenters asked how to consider an individual's geographic area when providing referrals to Federal and State programs and other resources that offer employment-related services and supports designed to enable the individual to explore, discover, experience, and attain competitive integrated employment.Start Printed Page 55720

Discussion: We understand that commenters have concerns and questions about the responsibilities of DSUs in this section. Limited resources and available providers of services, including providers of long-term supports, provide a challenge for DSUs as they work to locate services that will assist individuals with disabilities in achieving competitive integrated employment or supported employment. Without sufficient service providers or resources, a youth may choose to opt out of the VR process entirely, precluding him or her from achieving even subminimum wage employment given the limitations imposed by section 511 of the Act and final part 397. In the event a youth opts out of the vocational rehabilitation process because of a lack of resources in the community, there would be no consequences for the DSU under this part.

The specified employment goal must be consistent with the general goal of competitive integrated employment when considering the individual's strengths, resources, priorities, concerns, abilities, capabilities, interests, and informed choice in accordance with section 102(b)(4) of the Act, as amended by WIOA, and final 34 CFR 361.46(a). The answers to the other questions posed by the commenter are dependent upon circumstances and require the judgment of the DSU and the vocational rehabilitation counselor in consideration of the consumer's choice and needs.

Changes: None.

Responsibilities of a Local Educational Agency to Youth With Disabilities Who Are Known To Be Seeking Subminimum Wage Employment (§ 397.30)

Comments: Commenters recommended several changes to proposed § 397.30 regarding the responsibilities of a local educational agency to youth with disabilities seeking subminimum wage employment. Several commenters recommended that we require the local educational agency to retain copies of documentation that a youth has completed transition services and to make this documentation available for review by the CAP or a protection and advocacy system. A few commenters also recommended that the phrase “who are known to be seeking subminimum wage employment” or, alternatively, “who are known to be” be deleted from the title of proposed § 397.30, presumably to include all youth with disabilities under the responsibilities of the local educational agency in this part, not just those seeking subminimum wage employment. Commenters also recommended that the language indicating that a local educational agency may provide a youth with a disability documentation of transitions services received under the IDEA be changed to indicate that this is not optional, but a requirement. Finally, one commenter offered additional language that a local educational agency is responsible for referring youth with disabilities considering subminimum wage employment as a transition outcome to the designated State unit in order to complete the requirements under proposed § 397.20.

Discussion: We appreciate all of the comments and suggestions on this section. While the suggestion to require local educational agencies to retain copies of documentation that a youth has completed transition services is unnecessary given the requirements of 2 CFR 200.333, we understand the concerns expressed. After much consideration, the Secretary has revised final § 397.30 to require the educational agency to retain a copy of all documentation provided to the DSU in accordance with 2 CFR 200.333. This requirement in final § 397.30(d) should pose no additional burden to the local educational agencies because the agencies are already subject to Federal record retention requirements. Final § 397.30(d) is consistent with a similar provision in final § 397.10(c), thereby ensuring consistency between the DSU and local educational agencies for purposes of the documentation process. Similarly, the Secretary has revised final § 397.30(a) to state that the documentation transmitted to the DSU must comply with the confidentiality requirements of FERPA and the IDEA. Additionally, final § 397.30 is revised to establish minimum information content requirements for the documentation to be provided to the DSU upon completion of the transition services under the IDEA or the youth's refusal to participate in those activities. In addition, the Secretary has also added a new paragraph in final § 397.30 to require a time frame for the transmittal of the documentation to the DSU—of no more than 30 calendar days after completion of the transition service, or no more than 60 calendar days after completion of the transition service if additional time is needed due to extenuating circumstances, or within 5 calendar days of the youth refusal to participate. This gives the DSU the time necessary to transmit the documentation to the youth within the time required by final § 397.10(c).

In addition, final § 397.30(c)(2) requires educational personnel, when transmitting documentation of the last service or activity completed by the youth to the DSU, to provide a coversheet that itemizes all documentation transmitted to the DSU regarding that youth. In so doing, the DSU will have a checklist to ensure receipt of each documentation, thereby ensuring the youth obtains all necessary documentation. These additional provisions are necessary to ensure consistency between the DSU and the local educational agencies in the documentation process. All of these changes are consistent with those made in final § 397.10.

As previously discussed in other sections of this part, the CAP and protection and advocacy systems already have access to records in accordance with their governing statutes and regulations and section 511 of the Act does not expand this access.

We disagree with the recommendation to remove the phrase “who are known to be seeking subminimum wage employment” or, alternatively, “who are known to be” from the title in final § 397.30. The provisions relate directly to youth who are contemplating or seeking subminimum wage employment, and local educational agencies have knowledge of these individuals in meeting the IDEA requirements for transition services in the individualized education program in 20 U.S.C. 1414(d)(1)(A)(i)(VIII)(aa)-(bb).

In considering the commenter who recommended making it mandatory for the local educational agency to provide documentation of the completion of required activities to the student, upon further review, the Department has determined that providing documentation of completed activities by the local educational agency directly to a youth with a disability seeking subminimum wage employment is not mandatory, and we are removing this language in the final regulation to be more consistent with the statute and final § 397.10. The documentation must be provided by the local education agency to the DSU in accordance with section 511(d)(2)(ii) and (iii).

The local educational agency, in accordance with the requirements in section 511(d)(2) and the documentation process developed by the DSU in consultation with the State educational agency, must provide documentation to the DSU. The DSU is then responsible under section 511(d)(2)(A)(iii) to provide this documentation to the student with a disability. Final §§ 397.10 and 397.30 make this requirement clear and ensure Start Printed Page 55721consistency with specific statutory requirements.

While we agree that it is in the best interest of a student with a disability considering subminimum wage employment to be referred by a local educational agency to the DSU in order to complete the requirements under final § 397.20, we believe that this is best left to the DSU and the State educational agency to negotiate when developing the interagency agreement required by 34 CFR 361.22. Nevertheless, we believe that this practice represents the type of coordination and cooperation that should exist between DSUs and local educational agencies and enables collaboration with the student with a disability to provide a complete program of services that may result in an employment outcome in competitive integrated employment. See a more detailed discussion of this issue earlier in this preamble. Regardless, once the DSU receives documentation of completed transition activities from the local educational agency, then the individual will become known to the DSU, and thus “referred.”

Changes: We have revised final § 397.30 in several ways. We have revised final § 397.30(a) by deleting the language stating that a local educational agency may provide documentation to a youth of the completion of actions described in § 397.20(a) and inserting in its place language that the local educational agency must provide the DSU with such documentation in accordance with section 511(d)(2). We also stated that the documentation must be transmitted in a manner that complies with the confidentiality requirements of FERPA and the IDEA. We added final § 397.30(b), which establishes minimum content requirements for the documentation that must be transmitted by the local educational agency to the DSU. We added final § 397.30(c), which establishes the time frame under which a local educational agency must provide the DSU with required documentation and requires the local educational agency to retain a copy of all documentation provided to the DSU under this part. Final § 397.30(c)(2) requires educational personnel to transmit a coversheet to the DSU that itemizes all documentation provided to the DSU regarding the youth. This coversheet is to be provided when the educational personnel transmits documentation of the last activity completed by the youth. Lastly, we added final § 397.30(d), which establishes the timeline in which documentation must be transmitted by the educational agency to the DSU.

Contracting Prohibition on Educational Agencies (§ 397.31)

Comments: A few commenters supported proposed § 397.31. A few commenters also suggested that the Department of Labor has the responsibility to oversee the DSUs and State educational agencies to ensure that subminimum wage employment is not being used inappropriately.

Most commenters expressed concern that the proposed regulation was being interpreted by educational agencies and DSUs to mean that an entity that holds a section 14(c) certificate is automatically prohibited from providing any service paid for by local and State educational agencies and that this was not the intent of section 511(b)(2) of the Act. The commenters requested that we clarify that State and local educational agencies may contract with entities holding section 14(c) certificates such as community rehabilitation programs for other purposes, including transition and pre-employment transition services that are beneficial to students with disabilities and supported by parents of these individuals. One commenter asked whether proposed § 397.31 eliminates the ability of local educational agencies to contract with holders of section 14(c) certificates for the provision of internships and work-based tryouts, among other services.

One commenter mentioned that in rural States or areas, the availability of services may be limited to providers who hold special wage certificates, thus provisions in part 397 should not preclude students from accessing the expertise section 14(c) certificate holders have in assisting people into competitive integrated employment.

Additionally, a commenter strongly emphasized the desire to sustain a wide range of quality rehabilitation services for youth with disabilities and believed that restricting the legitimate engagement of State educational agencies with section 14(c) certificate holders would result in a reduction of service availability, and curtail learning opportunities and services available to youth with disabilities.

A commenter asked whether schools may contract with providers that offer subminimum wage and minimum wage services when the only service being contracted for would be opportunities paid at minimum wage.

A few commenters suggested that the regulatory language as proposed should not be modified to suggest that some types of contracts between an educational agency and an entity using section 14(c) certificates are permissible. A few others expressed support for the regulation but suggested that the language should clearly indicate that States cannot engage at all in any contracts for any vocational rehabilitation services with agencies that pay subminimum wages.

One commenter emphasized that the types of jobs students with disabilities are introduced to during high school correlate to the types of jobs they will obtain following graduation. They therefore supported proposed § 397.31, which reduces students' exposure to subminimum wage employment and increases students' opportunities for obtaining competitive integrated employment. Similarly, another commenter stated that limiting the opportunity for inadvertent slotting into subminimum wage employment is a step in the right direction for students with disabilities toward achieving competitive integrated employment. One commenter, citing research predicting post-school employment, suggested that all work-related activities to prepare individuals with disabilities for jobs and careers should happen in realistic integrated environments, not in segregated workplaces or where an individual is paid a subminimum wage.

A few commenters suggested that the formal interagency agreement between the DSU and the State educational agency in proposed 34 CFR 361.22 prohibit contracts or arrangements with, or referrals to, programs in which youth with disabilities are employed at subminimum wages. Commenters also recommended inserting the requirement for referrals in proposed § 397.31.

Other commenters suggested inserting the word “sub-contract” between “contract” and “other arrangements” to align proposed § 397.31 with the language in section 511(a) of the Act regarding entities, including contractors and subcontractors of entities. Additionally, many of these commenters also requested that the prohibition be extended to local and State educational agencies that operate a program where a youth with a disability is engaged in subminimum wage employment. A few commenters were unclear about the term “other arrangement” and interpreted this as not specifically prohibiting referrals to programs employing youth with disabilities at subminimum wages.

A number of commenters requested either that the Department issue guidance to local and State educational agencies clarifying that the contracting prohibitions only apply to contracts for the purposes of operating a program under which a youth with disabilities is Start Printed Page 55722employed at subminimum wage. In the alternative, the commenters suggested that the Department require State educational agencies to issue clear policy directives to local educational agencies regarding the prohibition on State and local educational agencies contracting with section 14(c) certificate holders in order to pay individuals subminimum wages. In addition, commenters asked that the Department add additional language regarding the responsibilities of State educational agencies to enforce this provision.

Discussion: We appreciate the support for proposed § 397.31. We disagree with the recommendation that the Department of Labor should have oversight responsibility for the DSUs and the State educational agencies to ensure that subminimum wage employment is not being used inappropriately. Rather, both the Departments of Education and Labor have responsibilities for oversight under section 511. Specifically, the Department has sole responsibility for overseeing all requirements under section 511 and final part 397 that relate to requirements that fall under its purview, such as the documentation process and the prohibition against a State or local educational agency entering into a contract with an entity holding a special wage certificate for the purpose of operating a program in which a youth is compensated for work at subminimum wage. The Department of Labor, on the other hand, has sole responsibility for overseeing requirements that fall under its purview, such as those related to entities holding special wage certificates paying individuals with disabilities subminimum wages without the requirements of section 511 of the Act and final part 397 being met. There is no statutory authority for the Department to compel the Department of Labor to oversee entities, such as the DSUs and educational agencies, that are under the Department's purview.

We appreciate the significance of the contracting prohibition in section 511(b)(2) of the Act and the comments received in response to proposed § 397.31 seeking clarification and making recommendations. We agree with the substantial number of commenters that this section does not preclude State and local educational agencies from contracting with entities holding section 14(c) certificates, such as community rehabilitation programs, for purposes other than operating a program for youth under which work is compensated at a subminimum wage. In other words, nothing in section 511(b)(2) of the Act or final § 397.31 precludes a State or local educational agency from contracting with an entity, even if that entity holds a special wage certificate under section 14(c) of the FLSA, for another purpose, including the provision of transition and pre-employment transition services that are beneficial to students with disabilities, so long as they are not paid subminimum wage if compensation is provided. Pre-employment transition services under final 34 CFR 361.48(a) and assessment services provided to vocational rehabilitation consumers must be provided in integrated settings to the maximum extent possible. Further, nothing in section 511(b)(2) of the Act or final § 397.31 prohibits a State or local educational agency from contracting with an entity holding a special wage certificate for the purpose of operating a program in which the youth is paid at or above minimum wage. A State or local educational agency, prior to entering into such a contract, must ensure that the youth will be paid at least minimum wage. Only in doing this can the local or State educational agency ensure its compliance with section 511(b)(2) and final § 397.31. It is not necessary to revise final § 397.31 because the regulation mirrors the statute and states that the prohibition is against contracting for “the purpose” of operating a program for youth under which work is compensated at a subminimum wage.

The Department also agrees with commenters who regard the contracting prohibition as a step toward limiting the progression of students and transition-age youth into subminimum wage employment, since it seeks to limit the exposure of these individuals to settings that pay subminimum wages. Final § 397.31 raises expectations for both youth with disabilities and their families, and redirects them toward experiences leading to competitive integrated employment in the community.

While we understand the commenters' desire to align the language in final § 397.31 with section 511(a) of the Act, which references entities holding special wage certificates as well as their contractors and subcontractors, we disagree that it is necessary to specifically mention “subcontractors” in these final regulations. Final § 397.31 prohibits the State or local educational agency from entering into a contract or other arrangement with an “entity, as defined in § 397.5(d)” for the purpose of operating a program in which the youth is engaged in work compensated at a subminimum wage. Final § 397.5(d) defines “entity” as an employer, or a contractor or subcontractor of that employer, that holds a special wage certificate described in section 14(c) of the FLSA. Therefore, contractors and subcontractors of the employer holding the special wage certificate are already included in that definition, making specific reference to contractors and subcontractors unnecessary. The reference to “other arrangements” in both section 511(b)(2) and final § 397.31 refers to any other type of agreement (other than a contract), such as a memorandum of understanding or subcontract, through which the State or local educational agency makes arrangements with entities operating programs in which youth with disabilities are paid subminimum wages under section 14(c) of the FLSA. The term allows for a broad interpretation of the relationships that might exist between a local or State educational agency and an entity, as well as the types of agreements they may enter into to establish those relationships, including sub-contracts. For purposes of the requirements and limitations in final part 397 (including the contracting prohibition in final § 397.31), a local or State educational agency that holds a section 14(c) certificate to operate a program in which a youth with a disability is engaged in work compensated at a subminimum wage is treated in the same manner as any other entity holding a special wage certificate under section 14(c) of the FLSA.

We agree that the interagency agreement between the DSU and State educational agency, as described in 34 CFR 361.22, should include reference to the prohibition in final § 397.31. Therefore, 34 CFR 361.22(b)(6), both proposed and final, requires the interagency agreement to include an assurance that neither the State or local educational agency will enter into a contract or other arrangement for the purpose of operating a program in which youth with disabilities are engaged in work compensated at a subminimum wage. Thus, final 34 CFR 361.22(b)(6) ensures consistency between the interagency agreement required under that part and the requirements of final § 397.31.

The Secretary disagrees with the recommendation to revise final § 397.31 to prohibit local or State educational agencies from making referrals to entities holding special wage certificates. As discussed previously, as well as in detail in the preamble to final 34 CFR part 361, the Act does not prohibit services such as assessments, pre-employment transition services, and other services from being provided by Start Printed Page 55723entities holding special wage certificates under section 14(c) of the FLSA. However, the Act requires that each of these services be provided, to the maximum extent possible, in integrated settings. We wish to point out that entities holding special wage certificates under section 14(c) of the FLSA, also include businesses, in addition to community rehabilitation programs, that operate in integrated settings in the community. The focus of the prohibition in final § 397.31 is the payment of subminimum wages to youth with disabilities-not the setting in which the work is performed. Therefore, there is nothing in the Act to prohibit a State or local educational agency from making a referral to such entity, so long as the purpose of the referral is not for the payment of subminimum wages to the youth with a disability.

With regard to the request that final § 397.31 be revised to specify that the State educational agency is responsible for enforcing final § 397.31, the Secretary disagrees that such change is necessary. First, the Department will be enforcing this provision through its regular monitoring activities. Second, the prohibition applies to both the State and local educational agencies; therefore, it would not be appropriate for the State educational agency to enforce a requirement against itself. As stated above, the Department intends to issue operating guidance to the States regarding the implementation of the requirements of final part 397, including the prohibition contained in final § 397.31.

Changes: None.

Responsibilities of a DSU for Individuals Regardless of Age in Subminimum Wage Employment (§ 397.40)

Counseling, Information and Referral Services

Comments: Many commenters expressed support for the provision of services by DSUs described in proposed § 397.40 for individuals employed at a subminimum wage, regardless of age. Many were encouraged by the requirement for ongoing information and referral, as well as, career counseling and the potential benefit that it could bring to consumers in the future. Others suggested that proposed § 397.40 require information be provided to family members and/or caregivers as appropriate, in addition to the individual. Still others asked that this section require the provision of benefits counseling so that individuals would understand the impact and benefits, rather than the perceived barriers, of moving out of subminimum wage employment into competitive integrated employment. A few indicated that it is imperative that any career counseling provide participants with information on Federal and State programs that continue healthcare and income supports to individuals with disabilities who engage in the workforce.

A few commenters expressed concerns related to the requirement to provide information and career counseling-related services to adults working in subminimum wage jobs, suggesting that the requirement places pressure on DSU staff and fiscal resources due to the sheer numbers of these individuals, and could impact the ability to serve all eligible individuals in the State through the VR program without implementing an order of selection.