[Federal Register Volume 59, Number 101 (Thursday, May 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12905]


[[Page Unknown]]

[Federal Register: May 26, 1994]


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Part V





Department of Education





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Intent To Award Grantback Funds to New Jersey Department of Labor; 
Notice
DEPARTMENT OF EDUCATION

 

Intent To Repay to the New Jersey Department of Labor, Division 
of Vocational Rehabilitation Services (DOL/DVRS), Funds Recovered as a 
Result of a Final Audit Determination

AGENCY: Education.

ACTION: Notice of intent to award grantback funds.

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SUMMARY: Under Section 459 of the General Education Provisions Act 
(GEPA), 20 U.S.C 1234h (1990), the U.S. Secretary of Education 
(Secretary) intends to repay to the New Jersey Department of Labor, 
Division of Vocational Rehabilitation Services (State agency), under a 
grantback arrangement, an amount equal to 75 percent of the funds 
recovered by the Department of Education (Department) as a result of a 
final action taken by the Department on February 11, 1993, on an audit 
determination. This notice describes the State agency's plans for the 
use of the repaid funds and the terms and conditions under which the 
Secretary intends to make these funds available to the State agency. 
This notice invites comments on the proposed grantback.

DATES: All comments must be received on or before June 27, 1994.

ADDRESSES: Comments concerning the grantback should be addressed to Peg 
Covello, U.S. Department of Education, 400 Maryland Avenue SW., room 
3222, Switzer Building, Washington, DC 20202-2735.

FOR FURTHER INFORMATION CONTACT: Peg Covello. Telephone: (202) 205-
5539. Individuals who use a telecommunications device for the deaf 
(TDD) may call the Federal Information Relay Service (FIRS) at 1-800-
877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through 
Friday.

SUPPLEMENTARY INFORMATION

A. Background

    The Department has recovered $627,778 from the New Jersey 
Department of Labor, Division of Vocational Rehabilitation Services, in 
response to a claim arising from an audit conducted by the Department's 
Office of Inspector General (OIG). The audit covered Federal fiscal 
years (FYs) 1989, 1990, and 1991.
    The claim involved the State agency's administration of The State 
Vocational Rehabilitation Services Program under Title I of the 
Rehabilitation Act of 1973, as amended. The final audit determination 
of the Regional Commissioner, which was issued on August 19, 1992, 
found that during FYs 1989, 1990, and 1991 the State agency had 
violated the regulatory requirements in 34 CFR 361.44, including its 
assurance in section 8.9 of the approved State Plan, concerning the 
procedures for authorizing client services. The OIG found instances in 
which the agency charged to one Federal fiscal year the costs of client 
services that had been initiated or completed in the prior Federal 
fiscal year by deferring the issuance of the agency's authorization 
form. As a result of these violations, the State agency had charged 
expenditures to the wrong Federal fiscal years, thereby failing to 
preserve the integrity of Federal accountability requirements. The 
final determination sought the recovery of $2,176,802 from the State 
agency.
    The State agency appealed the Regional Commissioner's determination 
to the Department's Office of Administrative Law Judges (OALJ) 
(Application of the State of New Jersey Department of Labor: Docket No. 
92-103-R) on September 21, 1992. In a Joint Notice of Reduction of 
Claim and Motion to Dismiss, filed with the OALJ on February 11, 1993, 
both parties agreed that, based upon an analysis of all the evidence in 
the case, the amount of the disallowance should be reduced to $627,778. 
The notice also certified that the State agency had returned the 
$627,778 to the Department on January 22, 1993. On February 18, 1993, 
the OALJ dismissed the case.
    New Jersey DOL/DVRS has submitted a request for a grantback of 
$470,833 (75 percent) of the $627,778 recovered by the Department of 
Education. In its request, DOL/DVRS provided documentation of the 
actions taken to correct the practices of the State agency that 
resulted in the final audit determination.
    Following the audit, the State agency issued a new policy directive 
to field staff on the procedures for authorizing and approving client 
services. The purpose of the new directive was to prevent charging case 
service expenditures to the wrong Federal fiscal years. A subsequent 
site review of the State agency by the Department resulted in the 
agency strengthening further its policies governing the procedures for 
case service authorizations.

B. Authority for Awarding a Grantback

    Section 459(a) of GEPA, 20 U.S.C. 1234h(a), provides that, whenever 
the Secretary has recovered funds following a final audit determination 
with respect to an applicable program, the Secretary may consider those 
funds to be additional funds available for that program and may arrange 
to repay to the State agency affected by that determination an amount 
not to exceed 75 percent of the recovered funds. The Secretary may 
enter into this so-called ``grantback'' arrangement if the Secretary 
determines that--
    (a) The practices and procedures of the State agency that resulted 
in the final audit determination have been corrected and the State 
agency is, in all other respects, in compliance with requirements of 
the applicable program;
    (b) The State agency has submitted to the Secretary a plan for the 
use of the funds to be awarded under the grantback arrangement that 
meets the requirements of the program and, to the extent possible, 
benefits the population that was affected by the failure to comply or 
by the misexpenditures that resulted in the audit exception; and
    (c) The use of funds to be awarded under the grantback arrangement 
in accordance with the State agency's plan would serve to achieve the 
purposes of the program under which funds were originally granted.

C. Plan for Use of Funds Awarded Under a Grantback Arrangement

    In its December 13, 1993, request for a grantback, the State agency 
submitted a plan, in accordance with section 459(a)(2) of GEPA, for the 
proposed use of the requested funds. In its plan, the State proposes to 
use the grantback of $470,833 plus the required State matching funds in 
the amount of $127,430 to supplement current program services to 
eligible individuals with disabilities under The State Vocational 
Rehabilitation Services Program. The grantback and State matching funds 
would be used to provide time-limited employment site job coaching and 
support services through traditional community rehabilitation programs 
to increase the number of competitive placements in integrated settings 
made by these traditional programs.
    There are currently 32 traditional programs that are CARF (Council 
on Accreditation of Rehabilitation Facilities) accredited and approved 
to provide work adjustment training and extended employment to DOL/
DVRS. These traditional programs, also known as sheltered workshops, 
most frequently serve individuals with the most severe disabilities. In 
the majority of the cases, these individuals are rehabilitated as 
extended employees of the programs. According to the agency, 402 
individuals were placed in competitive work in integrated settings 
during or at the conclusion of work adjustment training in FY 1993. By 
initiating time-limited employment site job coaching and support 
services through these programs, DOL/DVRS expects placements in 
competitive work in integrated settings to increase by at least 10 
percent in both FY 1995 and FY 1996 compared to the number placed in FY 
1993.
    Initiatives facilitating placements of individuals with 
disabilities in competitive work in integrated work settings were 
identified as needs during public hearings concerning the 
reauthorization of the Rehabilitation Act and DOL/DVRS' State and 
Strategic Plans.

D. The Secretary's Determinations

    The Secretary has reviewed the State agency's request for the 
repayment of funds, the State agency's plan (as outlined in section C 
of this notice), and other information submitted by the State agency. 
Based upon that review, the Secretary has determined that the 
conditions contained in section 459 of GEPA have been met. This 
determination is based upon the best information available to the 
Secretary at the present time. If this information is, at a later date, 
discovered to have been inaccurate or incomplete, the Secretary will 
not be precluded from taking appropriate administrative action at that 
time. On finding that the conditions of section 459 of GEPA have been 
met, the Secretary makes no determination concerning any pending audit 
recommendation or final audit determination.

E. Notice of the Secretary's Intent To Enter Into a Grantback 
Arrangement

    Section 459(d) of GEPA requires that, at least 30 days prior to 
entering into an arrangement to award funds under a grantback, the 
Secretary publish in the Federal Register a notice of intent to do so, 
and the terms and conditions under which the payment will be made.
    In accordance with section 459(d) of GEPA, notice is hereby given 
that the Secretary intends to make funds available to the New Jersey 
Department of Labor, Division of Vocational Rehabilitation Services, 
under a grantback arrangement, as authorized by section 459. The 
grantback award will be in the amount of $470,833. This amount is 75 
percent--the maximum percentage authorized by section 459--of the 
amount of funds recovered by the Department. The Secretary's intent to 
award the maximum amount of grantback funds possible under section 459 
is based upon the determination outlined in section D of this notice.

F. Terms and Conditions Under Which Payments Under a Grantback 
Arrangement Will Be Made

    The State agency agrees to comply with the following terms and 
conditions under which payments under a grantback arrangement will be 
made:
    (a) The funds awarded under the grantback and the required State 
matching funds must be expended in accordance with--
    (1) All applicable statutory and regulatory requirements of the 
Title I, State Vocational Rehabilitation Services Program including 
those provisions relating to an order of selection if such an order is 
in effect during the grantback period;
    (2) The plan and the request for the grantback that were submitted 
on December 13, 1993, and any other amendments to that plan that are 
approved in advance of the grantback award by the Secretary; and
    (3) The budget that was submitted with the plan and any amendments 
to the budget that are approved in advance by the Secretary.
    (b) Pursuant to section 459(c) of GEPA, all funds received under 
this grantback arrangement must be obligated not later than September 
30, 1996.
    (c) The State agency must, not later than January 1, 1995, January 
1, 1996, and January 1, 1997, submit reports to the Secretary that--
    (1) Indicate how the funds awarded under the grantback and the 
State matching funds have been expended in accordance with the proposed 
plan; and
    (2) Describe the results and effectiveness of the project for which 
the funds were expended.
    (d) The State matching funds expended under the grantback 
arrangement will be counted for maintenance of effort purposes under 
the Title I State Vocational Rehabilitation Services Program.
     (e) Separate accounting records must be maintained documenting the 
expenditure of all funds under the grantback arrangement.
    (f) Before funds will be repaid pursuant to this notice, the State 
agency must repay to the Department any debts that become overdue or 
enter into a repayment agreement for those debts.

(Catalog of Federal Domestic Assistance Number 84.126, 
Rehabilitation Services--Basic Support)

    Dated: May 23, 1994.
Andrew J. Pepin,
Acting Assistant Secretary, for Special Education and Rehabilitative 
Services.
[FR Doc. 94-12905 Filed 5-25-94; 8:45 am]
BILLING CODE 4000-01-P