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

Pre-ETS Notice

This part of the website has been updated to reflect the Notice of Interpretation in the Federal Register.

Regulation:
  • (a)(3) Reservation for pre-employment transition services.

    (i) Pursuant to section 110(d) of the Act, the State must reserve at least 15 percent of the State’s allotment, received in accordance with section 110(a) of the Act for the provision of pre-employment transition services, as described in §361.48(a) of this part.

    (ii) The funds reserved in accordance with paragraph (3)(i) of this section--

    (A) Must only be used for pre-employment transition services specified in §361.48(a); and

    (B) Must not be used to pay for administrative costs, (as defined in §361.5(c)(2)) associated with the provision of such services or any other vocational rehabilitation services.

  • Exemption From the Reservation of Funds Requirement for Pre-Employment Transition Services (§ 361.65) found in the preamble Final VR Regulations at 81 FR 55701 (August 19, 2016)

    • 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.
  • Use of Reserved Funds for Other Vocational Rehabilitation Services found in the preamble Final VR Regulations at 81 FR 55701 (August 19, 2016)

    • 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.
  • Amount of Funds to be Reserved found in the preamble Final VR Regulations at 81 FR 55701-55702 (August 19, 2016)

    • 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 commenters 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.

  • Application of the Reservation of Funds to the State and to the State Allotment found in the preamble Final VR Regulations at 81 FR 55702 (August 19, 2016)

    • 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.

  • Effect of Reallotment and Carryover on the Reservation of Funds found in the preamble Final VR Regulations at 81 55702 (August 19, 2016)

    • 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.

  • Tracking of the Reserved Funds found in the preamble Final VR Regulations at 81 FR 55703 (August 19, 2016)

    • 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.
  • Use of Reserved Funds for Authorized Activities found in the preamble Final VR Regulations at 81 FR 55703 (August 19, 2016)

    • Discussion:nbsp; 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.

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