[Federal Register Volume 59, Number 111 (Friday, June 10, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14106]


[[Page Unknown]]

[Federal Register: June 10, 1994]


_______________________________________________________________________

Part VI





Department of Education





_______________________________________________________________________



34 CFR Part 75




Direct Grant Programs; Final Rule
DEPARTMENT OF EDUCATION

34 CFR Part 75

RIN 1880-AA61

 
Direct Grant Programs

AGENCY: Department of Education.

ACTION: Final regulations with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Secretary amends the Education Department General 
Administrative Regulations (EDGAR) to amend regulations governing the 
requirements for non-competing continuation (NCC) discretionary grant 
awards. The amendments will eliminate the requirement for recipients to 
submit an application for NCCs. Instead, the due dates for performance 
reports will be adjusted so they may be used to determine whether a 
recipient has met the criteria for receiving a continuation award. 
EDGAR is also amended to clarify the Department's policy for the use of 
funds that remain unobligated by the recipient and carried over from 
one budget period of a project to the next budget period of a project. 
The action is being taken to improve the effectiveness, integrity, and 
efficiency of the grant award process, and to contribute to the 
effectiveness and integrity of the grants. Because these changes are 
procedural, the Secretary is not publishing these regulations as a 
proposed rule. However, the Secretary is interested in comments from 
the public on ways to further improve the non-competing continuation 
award process.

DATES: Effective Dates: These regulations take effect either 45 days 
after publication in the Federal Register or later if the Congress 
takes certain adjournments. Sections 75.118 and 75.590 will become 
effective after the information collection requirements contained in 
those sections have been submitted by the Department of Education and 
approved by the Office of Management and Budget under the Paperwork 
Reduction Act of 1980. If you want to know the effective date of these 
regulations, call or write the Department of Education contact person. 
A document announcing the effective date will be published in the 
Federal Register.
    Applicability Dates: The final regulations published in this 
document will apply only to those competitions for new grants that will 
be awarded on or after October 1, 1994 and that are announced in the 
Federal Register on or after June 10, 1994. The Department's Combined 
Application Notice (CAN) for fiscal year 1995 is published elsewhere in 
this issue of the Federal Register and announces competitions that will 
be subject to the regulations contained in this document. For those 
competitions announced before today's CAN, applicants are subject to 
the EDGAR regulations as they existed before this regulation becomes 
effective regarding what had to be included in an application.
    Recipients that receive initial year awards on the basis of 
competitions that were conducted under the prior EDGAR regulation will 
have to submit a continuation application, as they have in the past, 
for the first continuation award made after October 1, 1994. That 
continuation application must include a complete budget for each of the 
remaining budget periods of the project that is equivalent to the 
budget information that will be required under Sec. 75.117 after the 
effective date of these final regulations. For any continuation awards 
made after this initial continuation award, the recipient must submit a 
performance report, as required by these new regulations, rather than 
submitting further continuation applications.

COMMENTS: Comments must be received on or before August 9, 1994.

ADDRESSES: All comments concerning these final regulations should be 
addressed to Sherlyn Taylor, Grants and Contracts Service, U.S. 
Department of Education, 400 Maryland Avenue, SW., room 3636, ROB-3, 
Washington, DC 20202-4700.
    A copy of any comments that concern information collection 
requirements should also be sent to the Office of Management and Budget 
at the address listed in the Paperwork Reduction Act section of this 
preamble.

FOR FURTHER INFORMATION CONTACT: Kathy Thomas, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 3636, ROB-3, Washington, DC 
20202-4700. Telephone: (202) 401-6901. 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: To improve the administration of 
discretionary grants and to clarify for recipients the procedures and 
requirements of the Department, the Secretary is amending sections in 
the Education Department General Administrative Regulations (EDGAR) on 
non-competing continuation applications and the use of unobligated 
funds.

Background

    In 1993 the Department chartered a Quality Improvement Team for 
Non-Competing Continuation Grants (the Team). The Team studied the 
Department's process for awarding non-competing continuation grants. To 
conduct its analysis, the Team collected information from a wide 
variety of sources within and outside the Department, including 
flowcharting, analyzing data from the Department's automated grants 
management information system, conducting focus groups and interviews 
of program and grants staff at all levels in the Department, and 
benchmarking the grant award processes with other Federal agencies. The 
Team developed four options, ranging from retaining the current non-
competing continuation award process (with certain refinements and 
improvements) to establishing a new process for making NCC awards. The 
outline of these options was shared with the public during the data 
gathering stage of the Team's work.
    The public was given the opportunity to comment on improving the 
process for making non-competing continuation awards by submitting 
written comments or presenting testimony at a public meeting. Both the 
meeting and the invitation to submit written comments were announced in 
a notice published by the Department in the Federal Register on July 
19, 1993 (55 FR 40630). Thirteen written comments were received in 
response to that request. The Team received additional comments at a 
public meeting held on August 18, 1993.
    The information gained from these extensive data gathering 
activities allowed the Team to identify deficiencies in the current 
process on which to base recommendations for modifying and improving 
the current process.

Recommendation to Streamline the Non-competing Continuation Award 
Process

    Based on input from interested parties, both inside and outside the 
Department, the Team recommended that the Department make non-competing 
continuation awards on the basis of acceptable and timely performance 
reports without requiring the recipient to submit applications for 
those awards. The Team's recommendation is consistent with the goals of 
the Government Performance and Results Act and the specific 
recommendations of the National Performance Review to ``eliminate the 
continuation application process for budget years within the project 
period'' and that the process ``be replaced by yearly program progress 
reports focusing on program outcomes and problems related to program 
implementation and service delivery.'' Instead, funding levels for each 
budget period of a project will be determined at the time of the 
initial award.
    Changes in funding will be made on an ``as needed'' basis using 
prior approval standards already in place under 34 CFR 74.105 and 34 
CFR 80.30(c). Under these standards and the procedures in Secs.  74.102 
and 80.30(f), a recipient must seek prior approval for certain changes 
to a budget and submit the request to the Grants Division of the Grants 
and Contracts Service. A request for a change in a recipient's budget 
should be made at the time that the recipient becomes aware of the need 
for the change, whether the change affects the current budget period or 
any or all future budget periods.
    If the change affects the next budget period and the recipient 
becomes aware of the need for the change at the time that it submits 
its performance report, the recipient may submit the request at the 
time that it submits the performance report. However, the Secretary 
notes that submission of proposed budget changes with, or after, the 
performance report may delay the recipient's receipt of the 
continuation award. Any funding of a continuation award, whether or not 
made in conjunction with a request for a budget change, is contingent 
upon the availability of funds.
    Annual awards will be made after approval of performance reports by 
the program offices. Based on public comment, it was clear to the Team 
that recipients understand the importance of providing information 
about progress of grant activities but feel that more timely 
performance reports would be preferable to an annual application timed 
to meet the Department's award schedule. Also, there was a perception 
among recipients that the Non-competing Continuation process 
demonstrates an ``enforcement'' mentality on the part of the Federal 
Government, at the expense of a collaborative and assisting attitude. 
Recipients favored a new paradigm whereby performance reporting would 
be tied more to projects' reporting on results and performance, and 
less to the threat of a cut-off in funding (even though extremely rare 
in practice). This option was chosen to implement an entirely new 
paradigm for the NCC award process.
    Continuation funding will be based, as it has in the past, on 
evidence that the grantee has met the standards for continuation 
contained in 34 CFR 75.253. These standards include requirements that 
Congress appropriate sufficient funds to continue existing awards, that 
the grantee make substantial progress toward achieving the objectives 
of the project or obtain approval from the Secretary for certain 
changes to the grant, that continuation of the project is in the best 
interests of the Federal Government, and that the grantee submit, as 
required by Sec. 75.118, every report that it must submit to get the 
continuation award. This last standard will take on increased 
importance under the amended regulations because the continuation award 
decision--including the decision about whether the grantee has made 
substantial progress--will be based entirely on the submission of 
reports as specified by the Secretary, rather than on the submission of 
a continuation award application. Moreover, having recipients submit 
their performance reports closer to the date when funding decisions 
must be made will make the reports more valuable instruments than the 
previous continuation applications. Until now, recipients often have 
been required to submit performance data in continuation applications 
before their projects had completed more than a few months of 
activities.
    The Secretary stresses to recipients the increased importance of 
performance reports. Because these reports will be key to the decision 
to continue funding, recipients will be expected to submit high quality 
reports. A performance report must contain the most current performance 
information specified in EDGAR and any applicable program requirements. 
These requirements include an evaluation of the grantee's progress in 
achieving the objectives of the approved application, the effectiveness 
of the project in meeting the purposes of the program under which it 
was funded, and the effect of the project on the participants it serves 
(Sec. 75.590); and a discussion of the reasons for slippage if 
established goals were not met, and a computation of the cost per unit 
of output if the output of the project can be quantified 
(Secs. 74.82(c) and 80.40(b)).
    If a recipient fails to submit a performance report as directed by 
the Secretary, the recipient will not receive a continuation award. See 
Sec. 75.253(a)(3). To merit receipt of a continuation award, the report 
must demonstrate that a recipient has made substantial progress in 
fulfilling the objectives of the grant. The Secretary intends that 
employees of the Department will scrutinize these reports closely to 
ensure that the recipient has, in fact, met this standard. The 
Department currently is developing a generic performance report for 
approval by the Office of Management and Budget (OMB).
    The new process will provide many benefits to recipients. It will 
free up time previously spent on duplicative processes, both internal 
and external. For example, certifications and assurances (e.g., 
Lobbying; Debarment) must be submitted whenever an entity applies for 
funds. Since recipients will no longer submit an application to receive 
continuation funding, they will no longer be required to resubmit these 
assurances annually for the life of the project. The new process for 
making continuation awards should free up resources for both the 
recipients and Department staff that can be reinvested in higher 
quality project management, technical assistance, and monitoring.

Section-by-Section Analysis

    Section 75.100 is revised to remove references to the application 
process that will no longer be used to make non-competing continuation 
awards.
    Section 75.112 is amended by revising paragraph (b) to require an 
applicant for a new grant to describe in its application how, in each 
budget period of the grant, the applicant plans to meet each objective 
of the project.
    Section 75.117 is revised to reflect the new procedure for 
determining the award amounts for all budget periods in a multi-year 
grant at the time the initial award is made. The revision ensures that 
the applicant provides multi-year budgetary information in its initial 
application since continuation applications will no longer be required.
    Section 75.118 is revised to remove references to items that were 
formerly required in a continuation application. The items listed in 
paragraph (b) of this section are no longer needed because adequate 
information already will be provided in the initial application in 
accordance with the revised Sec. 75.117. The performance report now 
will become due before the beginning of the continuation award, and 
will provide the information on which the funding decision will be 
made. This section makes clear that a performance report must be 
submitted, prior to the next budget period, for all multi-year awards, 
and that the Secretary will establish the specific due date for 
submission of the report. In addition, this section changes any 
references to ``applicant'' so that it now will refer to the 
``recipient'' because an application will no longer be a part of the 
continuation award process.
    Section 75.232 is revised to incorporate the new procedure under 
which the Department performs its cost analysis on the basis of the 
initial application. The Department does a cost analysis to verify cost 
data in the detailed budget. In doing so, it evaluates specific 
elements of cost, and examines an applicant's proposed costs to 
determine if they are necessary, reasonable, and allowable under 
applicable statutes and regulations.
    Section 75.253 is amended to make the performance reports due by 
the dates set by the Secretary (Sec. 75.253(a)). It is important that 
recipients understand that performance reports now will be due before 
the end of the current budget period because this information will be 
used in lieu of continuation applications in deciding whether to make 
continuation awards. If a recipient fails to submit a performance 
report as required by these regulations, the Secretary will not 
continue funding for the project.
    Paragraph (c) of Sec. 75.253 also is amended to clarify the 
Department's policy regarding funds that remain unobligated by a 
recipient. The current Sec. 75.253(c) states when the Department would 
reduce the amount of new funds made available for a continuation award 
to a recipient. Implicit in the current rule is the policy that the 
Department would, under certain circumstances, add the unobligated 
funds to the amount of new funds made available for a continuation 
award. Consistent with this policy, Sec. 75.253(c) clearly indicates 
the circumstances under which the Department will add the amount of 
unobligated funds to the amount of new funds made available for a 
continuation award, as well as the circumstances under which it will 
reduce those funds.
    Section 75.590 is revised to clarify that the grant recipient's 
annual evaluation is its performance report. The current regulation in 
Sec. 75.590 requires a recipient to evaluate the project annually but 
does not require the recipient to submit the evaluation to the 
Department. Under this amended regulation, the criteria for the annual 
evaluation required by Sec. 75.590 is incorporated into the performance 
report. In this regard, the revised introduction to this section now 
says that a ``recipient shall submit a performance report, or, for the 
last year of a project, a final report, that evaluates [the project] at 
least annually * * *.'' This change is designed to make clear that the 
performance report required under Sec. 75.117, as amended by these 
regulations, must meet the standards established in Sec. 75.590. These 
standards require an evaluation of the recipient's progress in 
achieving the objectives in its approved application, the effectiveness 
of the project in meeting the purposes of the program under which it is 
funded, and the effect of the project on the participants being served 
by the project. Under the amended Secs. 75.590 and 75.117, a recipient 
will no longer have to submit a continuation application and also 
prepare a separate evaluation of the project. Instead, a single 
performance report, meeting the standards of Sec. 75.590 will be 
submitted. Also, the final report of a project required under 
Secs. 74.82(b) and 80.40(b) must meet the standards in Sec. 75.590.

Executive Order 12866

    These final regulations have been reviewed in accordance with 
Executive Order 12866. Under the terms of the order the Secretary has 
assessed the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
resulting from statutory requirements and those determined by the 
Secretary to be necessary for administering the Department's programs 
effectively and efficiently. Burdens, specifically associated with 
information collection requirements, if any, are identified and 
explained elsewhere in this preamble under the heading Paperwork 
Reduction Act of 1980.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these regulations, the Secretary has determined 
that the benefits of the regulations justify the costs.
    The Secretary has also determined that this regulatory action does 
not unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.

Regulatory Flexibility Act Certification

    The Secretary certifies that these final regulations will not have 
a significant economic impact on a substantial number of small 
entities. For the most part these revisions are adopted to streamline 
the non-competing continuation award process and the process of 
reviewing requests for the use of unobligated funds carried over from 
one budget period to the next. The final revisions will not result in 
major changes in Departmental policy that might have significant 
economic impact on small entities. Rather, the effect of these rules is 
to shift the time when certain information is provided to the 
Department and eliminate the need for cumbersome continuation award 
applications.

Paperwork Reduction Act of 1980

    Sections 75.112, 75.117, 75.118 and 75.590 contain information 
collection requirements. The information collection requirements for 
Secs. 75.112 and 75.117 have already been approved under the Office of 
Management and Budget control number 1875-0102.
    These regulations affect the following types of entities which are 
eligible, depending on the individual program, to apply for 
discretionary grants: State and local governments, nonprofit 
institutions, institutions of higher education, for profit 
organizations, and individuals. The Department needs the information in 
the performance reports to enable the Secretary to determine if the 
recipient meets the criteria for an additional year of funding. The 
performance report enables the Secretary to determine if the recipient 
has made substantial progress toward meeting the objectives in its 
approved application. Substantial progress is one of the requirements 
for a recipient to be eligible for continuation funds. Other 
requirements for continuation are described earlier in this preamble in 
the discussion regarding 34 CFR 75.253. The annual reporting burden for 
these collections of information is estimated to vary from 13 to 22 
hours per response, with an average of 17.5 hours per response for 
30,000 respondents, for a total annual burden of 525,000 hours, 
including the time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing the collections of information. (44 U.S.C. 3504(h)).
    The revisions to Secs. 75.118 and 75.590, have not been approved by 
OMB under the Paperwork Reduction Act of 1980. The Department of 
Education will submit a collection submission to the Office of 
Management and Budget (OMB) for its review of these sections under the 
law.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to the Office of 
Information and Regulatory Affairs, OMB, room 3002, New Executive 
Office Building, Washington, DC 20503; Attention: Daniel J. Chenok.

Intergovernmental Review

    Programs receiving multi-year continuation awards are subject to 
the requirements of Executive Order 12372 and the regulations in 34 CFR 
part 79. However, for discretionary grants, the non-competing 
continuations referred to in 34 CFR 79.8 will no longer be required. 
Therefore, the Secretary will notify the recipient that the performance 
reports must be submitted for intergovernmental review. The objective 
of the Executive order is to foster an intergovernmental partnership 
and a strengthened federalism by relying on processes developed by 
State and local governments for coordination and review of proposed 
Federal financial assistance.
    In accordance with the order, this document is intended to provide 
early notification of the Department's specific plans and actions for 
programs subject to 34 CFR part 75.

Waiver of Proposed Rulemaking

    Under 5 U.S.C. 553(b)(A) the Secretary may waive proposed 
rulemaking for rules of agency procedure. These procedural regulations 
do not affect the substantive rights of recipients to receive new or 
continuation awards. The procedures established in these regulations 
merely reduce and shift burden regarding budget submissions and 
financial and performance reports. Therefore, the Secretary has decided 
to waive proposed rulemaking for these procedural regulations so that 
they may be used in the upcoming funding cycle to inform applicants for 
new awards what must be included in the application for a new award.
    Regarding the amendment to 34 CFR 75.253(c), this amendment merely 
restates the longstanding current regulation in clearer language. The 
Department has interpreted the current 34 CFR 75.253 consistent with 
the language contained in the revised paragraph 75.253(c). 5 U.S.C. 
553(b)(A) also provides that an agency may waive proposed rulemaking 
for interpretative rules. Because the amendment to 34 CFR 75.253(c) is 
consistent with current interpretation of the existing 34 CFR 
75.253(c), the Secretary has decided to waive proposed rulemaking 
regarding this provision as well. Accordingly, the Secretary waives 
proposed rulemaking for the amendments to 34 CFR part 75 made in this 
final rulemaking document.

Invitation To Comment

    The amendments to these regulations are procedural in nature and 
intended to streamline discretionary grants administration. However, 
interested persons are invited to submit comments and recommendations 
regarding these final regulations because the Department is always 
interested in ways it can further improve its discretionary grant 
management practices. All comments submitted will be considered in 
further streamlining and refining procedures for processing non-
competing continuation awards and requests for the use of funds that 
remain unobligated by the recipient and are carried over to the next 
budget period. All comments submitted in response to these final 
regulations will be available for public inspection, during and after 
the comment period, in room 3636, Regional Office Building No. 3, 
Seventh and D Streets SW., Washington, DC, between the hours of 9 a.m. 
and 4 p.m., Monday through Friday of each week except Federal holidays.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether the final 
regulations in this document would require transmission of information 
that is being gathered by or is available from any other agency or 
authority of the United States.

List of Subjects in 34 CFR Part 75

    Education Department, discretionary grant programs, continuation 
funding, grant administration, reporting and recordkeeping 
requirements, performance reports, unobligated funds.

    Dated: May 10, 1994.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Number does not apply.)

    The Secretary amends part 75 of title 34 of the Code of Federal 
Regulations as follows:

PART 75--DIRECT GRANT PROGRAMS

    1. The authority for 34 CFR part 75 continues to read as follows:

    Authority: 20 U.S.C. 1221e-3(a)(1) and 3474, unless otherwise 
noted.


Sec. 75.100  [Amended]

    2. Section 75.100 is amended by removing paragraph (c).
    3. Section 75.112 is amended by revising paragraph (b) and adding 
an OMB control number to read as follows:


Sec. 75.112  Include a proposed project period and a timeline.

* * * * *
    (b) An application must include a narrative that describes how and 
when, in each budget period of the project, the applicant plans to meet 
each objective of the project.

(Approved by the Office of Management and Budget under control 
number 1875-0102)
* * * * *
    4. Section 75.117 is amended by revising paragraph (b), removing 
paragraph (c) and adding an OMB control number to read as follows:


Sec. 75.117  Information needed for a multi-year project.

* * * * *
    (b) A budget narrative accompanied by a budget form prescribed by 
the Secretary, that provides budget information for each budget period 
of the proposed project period.

(Approved by the Office of Management and Budget under control 
number 1875-0102)
* * * * *
    5. Section 75.118 is revised to read as follows:


Sec. 75.118  Requirements for a continuation award.

    (a) A recipient that wants to receive a continuation award shall 
submit a performance report that provides the most current performance 
and financial expenditure information, as directed by the Secretary, 
that is sufficient to meet the reporting requirements of 34 CFR 74.82, 
75.590, 75.720, and 80.40.
    (b) If a recipient fails to submit a performance report that meets 
the requirements of paragraph (a) of this section, the Secretary denies 
continued funding for the grant.

    Cross-Reference. See Sec. 75.117 Information needed for a multi-
year project, and Secs. 75.250 through 75.253 Approval of multi-year 
projects, Sec. 75.590 Evaluation by the recipient, Sec. 75.720 
Financial and performance reports, Sec. 74.82 Performance Reports 
under nonconstruction grants, and Sec. 80.40 Monitoring and 
reporting program performance.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 3474)

Sec. 75.232  [Amended]

    6. Section 75.232 is amended by adding the word ``new'' in 
paragraph (a) before the word ``grant''.
    7. Section 75.253 is amended by removing the word ``grantee'' and 
adding, in its place, the word ``recipient'' in paragraphs (a)(2) and 
(a)(2)(ii)(B), and by revising paragraphs (a)(3), (c), and (e) to read 
as follows:


Sec. 75.253  Continuation of a multi-year project after the first 
budget period.

    (a) * * *
    (3) The recipient has submitted all reports as required by 
Sec. 75.118, and
* * * * *
    (c) The Secretary considers any funds remaining unobligated by the 
recipient at the end of a budget period in determining the amount of 
new funds to be awarded for the next budget period of the grant as 
follows:
    (1) If the unobligated funds are needed to complete activities that 
were approved for the budget period that is about to end, the Secretary 
may add the unobligated funds to the amount of funds to be approved for 
the next budget period of the grant.
    (2) If the unobligated funds are not needed to complete activities 
that were approved for the budget period that is about to end, the 
Secretary may reduce the amount of new funds awarded for the next 
budget period by the amount of unobligated funds.
* * * * *
    (e) Unless prohibited by program regulations, a recipient that is 
in the final budget period of a project period may seek continued 
assistance for the project under the procedures for selecting new 
projects.
    8. Section 75.590 is amended by removing the word ``grantee'' and 
adding, in its place, the word ``recipient'' in paragraph (a) and 
revising the heading and the undesignated introductory text to read as 
follows:


Sec. 75.590  Evaluation by the recipient.

    A recipient shall submit a performance report, or, for the last 
year of a project, a final report, that evaluates at least annually--
* * * * *
[FR Doc. 94-14106 Filed 6-9-94; 8:45 am]
BILLING CODE 4000-01-P