[Federal Register Volume 62, Number 28 (Tuesday, February 11, 1997)]
[Rules and Regulations]
[Pages 6308-6363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3159]



[[Page 6307]]

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Part II





Department of Education





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34 CFR Part 361 et al.



The State Vocational Rehabilitation Services Program; Final Rule

  Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / 
Rules and Regulations  

[[Page 6308]]



DEPARTMENT OF EDUCATION

34 CFR Parts 361, 363, 376, and 380

RIN 1820-AB12


The State Vocational Rehabilitation Services Program

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary amends the regulations governing The State 
Vocational Rehabilitation Services Program. These amendments are needed 
to implement changes to the Rehabilitation Act of 1973 (Act) made by 
the Rehabilitation Act Amendments of 1992, enacted on October 29, 1992, 
as amended by the 1993 technical amendments (hereinafter collectively 
referred to as the 1992 Amendments).

EFFECTIVE DATE: These regulations take effect March 13, 1997.

FOR FURTHER INFORMATION CONTACT: Beverlee Stafford, U.S. Department of 
Education, 600 Independence Avenue, SW., Room 3014, Mary E. Switzer 
Building, Washington, DC. 20202-2531. Telephone (202) 205-8831. 
Individuals who use a telecommunications device for the deaf (TDD) may 
call (202) 205-5538.

SUPPLEMENTARY INFORMATION: The State Vocational Rehabilitation Services 
Program (program) is authorized by Title I of the Act (29 U.S.C. 701-
744). This program provides support to each State to assist it in 
operating a comprehensive, coordinated, effective, efficient, and 
accountable State program to assess, plan, develop, and provide 
vocational rehabilitation (VR) services to individuals with 
disabilities so that those individuals may prepare for and engage in 
gainful employment, consistent with their strengths, resources, 
priorities, concerns, abilities, capabilities, and informed choice.
    On December 15, 1995, the Secretary published a notice of proposed 
rulemaking (NPRM) for this program in the Federal Register (60 FR 
64476).
    Additionally, pursuant to Executive Order 12866, which encourages 
Federal agencies to facilitate meaningful participation in the 
regulatory development process, the Rehabilitation Services 
Administration (RSA) made available draft proposed regulations (draft 
regulations) in accessible formats, including an electronic format, to 
a broad spectrum of parties for informal review and comment prior to 
publishing the December 15, 1995 NPRM. RSA also gathered public input 
on the draft regulations through public meetings and focus groups and 
analyzed over 600 letters of comments on the draft regulations.
    These final regulations implement changes made to the program by 
the 1992 Amendments with the exception of the evaluation standards and 
performance indicator requirements in section 106 of the Act, which are 
being implemented in a separate rulemaking document, and incorporate 
some of the burden-reducing changes previously proposed in an NPRM for 
this program that was published on July 3, 1991 (56 FR 30620) (1991 
NPRM). The 1991 NPRM was not finalized at the request of Congress. 
These regulations also implement changes that the Secretary believes 
are important to update, consolidate, clarify, and in other ways 
improve the regulations for this program.
    The Supplementary Information section to the NPRM includes a 
discussion of the major changes to Title I of the Act made by the 1992 
Amendments. These changes have far-reaching implications for the 
program. Individuals are encouraged to refer to the NPRM (60 FR 64476-
64477) for a discussion of the major themes associated with the 1992 
Amendments.
    These final regulations contain a limited number of significant 
changes to the proposed regulations based on public comment and 
interdepartmental review. A detailed description of these changes 
follows. In addition, the final regulations have been reviewed and 
revised in accordance with the Department's Principles for Regulating, 
which were developed as part of the Administration's regulatory 
reinvention initiative under the National Performance Review II. The 
principles are designed to ensure that the Department regulates in the 
most flexible, most equitable, and least burdensome way possible.
    The Secretary also notes that the changes to supported employment 
definitions included in these final regulations affect those 
definitions in 34 CFR parts 363, 376, and 380. Corresponding regulatory 
changes to those parts follow the final regulations amending 34 CFR 
part 361.

Goals 2000: Educate America Act

    The Goals 2000: Educate America Act (Goals 2000) focuses the 
Nation's education reform efforts on the eight National Education Goals 
and provides a framework for meeting them. Goals 2000 promotes new 
partnerships to strengthen schools and expands the Department's 
capacities for helping communities to exchange ideas and obtain 
information needed to achieve the goals.
    These regulations address the National Education Goal that every 
adult American, including individuals with disabilities, will possess 
the knowledge and skills necessary to compete in a global economy and 
exercise the rights and responsibilities of citizenship.

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 as necessary for administering this program effectively and 
efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these final regulations, the Secretary has 
determined that the benefits of the final 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.

Summary of potential costs and benefits

    The potential costs and benefits of these final regulations were 
summarized in the preamble to the NPRM under the following headings: 
Improved Organization of Regulations; Notes and Examples; Reduction of 
Grantee Burden; Enhanced Protections for Individuals with Disabilities 
(60 FR 64495); Increased Flexibility of Grantees to Satisfy Statutory 
Requirements; and Additional Benefits (60 FR 64496). Additional 
discussion of potential costs and benefits is included in the following 
Analysis of Comments and Changes section of this preamble.

Analysis of Comments and Changes

    In response to the Secretary's invitation in the NPRM, more than 
400 parties submitted comments on the proposed regulations. RSA 
gathered additional public input on the NPRM through a series of public 
meetings. An analysis of the comments and of the changes in the 
regulations since publication of the NPRM follows.
    Major issues are grouped according to subject under appropriate 
sections of the regulations. Other substantive issues are discussed 
under the section of the regulations to which they pertain. Technical 
and other minor changes--and suggested changes the Secretary is not 
legally authorized to make under the

[[Page 6309]]

applicable statutory authority--generally are not addressed. However, 
some suggested changes that the Secretary is not authorized to make 
also raise important policy issues and, therefore, are discussed under 
the appropriate section of the analysis.
    References in the analysis of comments to the ``proposed 
regulations'' refer to the regulatory provisions in the December 15, 
1995 NPRM, whereas references to the ``draft regulations'' refer to 
provisions in the draft proposed regulations that were circulated for 
informal comment prior to publishing the NPRM.

Section 361.5(b)  Applicable definitions

 Administrative Costs Under the State Plan
    Comments: Some commenters requested that this definition be revised 
to specifically limit administrative costs to expenditures incurred by 
the Designated State Unit (DSU) in administering the VR program. One 
commenter recommended that the definition identify indirect costs as a 
type of administrative cost. Finally, one commenter sought to exclude 
costs incurred by DSUs in providing technical assistance to businesses 
and industries from the definition on the basis that those costs 
represent expenditures for the provision of services under 
Sec. 361.49(a) of the proposed regulations.
    Discussion: The Secretary agrees that administrative costs under 
the VR State plan are those costs that the DSU incurs in administering 
the VR program. While most indirect costs (those costs that cannot be 
allocated to a single cost objective and that benefit more than one 
program) are generally types of administrative expenditures, they need 
not be limited to administrative expenditures. The Secretary does not 
believe it is necessary to classify indirect costs in order to ensure 
their allowability under the program. All indirect costs that are 
approved under an indirect cost agreement or cost allocation plan are 
allowable. The Secretary emphasizes that indirect costs related to 
multiple State programs (e.g., operating expenses for State buildings 
occupied by DSU staff and staff from other State-administered programs) 
can be charged to the VR program only to the extent that the costs are 
attributable to the VR program.
    In addition, the Secretary agrees that although technical 
assistance to businesses, in some cases, is considered an 
administrative cost, any technical assistance provided by a DSU to a 
business or industry that seeks to employ individuals with disabilities 
and that is not subject to the Americans with Disabilities Act (ADA) 
does not constitute an administrative cost. Technical assistance 
provided under these circumstances is authorized by section 103(b)(5) 
of the Act and Sec. 361.49(a)(4) of the regulations as a service for 
groups of individuals with disabilities.
    Changes: The Secretary has revised Sec. 361.5(b)(2) to clarify that 
administrative costs are expenditures that are incurred by the DSU in 
performing administrative functions related to the VR program. The 
definition also has been amended to exclude technical assistance 
provided to businesses and industries as a service under the conditions 
in Sec. 361.49(a)(4).
 Appropriate Modes of Communication
    Comments: One commenter opposed defining ``appropriate modes of 
communication'' as specialized media systems and devices that 
facilitate communication on the basis that not all modes of 
communication used by persons with disabilities are ``media systems and 
devices.'' Several commenters requested that the definition identify 
graphic presentations, simple language, and other modes of 
communication used by individuals with cognitive impairments.
    Discussion: The Secretary agrees that ``appropriate modes of 
communication'' are not limited to specific systems, devices, or 
equipment, as indicated by the proposed definition, and include any 
type of aid or support needed by an individual with a disability to 
communicate with others effectively. For example, the use of an 
interpreter by a person who is deaf is an appropriate mode of 
communication, but is not typically viewed as a system or device.
    The Secretary believes it would be useful for the definition of 
appropriate modes of communication to include examples of communication 
methods used by individuals with cognitive impairments. However, the 
Secretary emphasizes that the examples of communication services and 
materials listed in the definition in the final regulations are not 
all-inclusive and that other appropriate modes of communication not 
specified in the definition are also available to address the 
particular communication needs of an individual with a disability.
    Changes: The Secretary has amended Sec. 361.5(b)(5) to clarify that 
appropriate modes of communication include any aid or support that 
enables an individual with a disability to comprehend and respond to 
information being communicated. In addition, the definition has been 
amended to include graphic presentations and simple language materials 
as examples of modes of communication that may be appropriate for 
individuals with cognitive impairments.
 Assistive Technology Service
    Comments: Some commenters asked that particular services be 
identified in this definition as examples of permissible assistive 
technology services. For instance, one commenter suggested that the 
definition specifically identify modifications to vehicles used by 
individuals with disabilities as an assistive technology service.
    Discussion: The definition of the term ``assistive technology 
service'' in both the proposed and final regulations tracks the 
definition of that term in the Technology-Related Assistance for 
Individuals with Disabilities Act of 1988 (Tech Act), as required by 
section 7(24) of the Act. The Tech Act defines assistive technology 
services generally to include any service that directly assists an 
individual with a disability in the selection, acquisition, or use of 
an assistive technology device. The definition in the regulations, 
therefore, is intended to address the scope of service-related needs of 
individuals who use assistive technology devices (e.g., the need to 
acquire a particular device or the need to receive training on the 
operation of a device) rather than to identify actual services that an 
individual might receive. Nevertheless, the Secretary recognizes that 
any modification to a vehicle that is necessary to enable an individual 
with a disability to use that vehicle is considered an adaptation or a 
customization of an assistive technology device under 
Sec. 361.5(b)(7)(iii) and, therefore, constitutes an assistive 
technology service. This position is consistent with current RSA 
policy.
    Changes: None.
 Community Rehabilitation Program
    Comments: Some commenters requested that the definition of 
``community rehabilitation program'' specify additional services, such 
as rehabilitation teaching services, that could be provided under a 
community rehabilitation program for individuals with disabilities.
    Discussion: The definition of ``community rehabilitation program'' 
in both the proposed and final regulations is based on the statutory 
definition in section 7(25) of the Act. However, paragraph (i)(Q) of 
this definition, like section 7(25)(Q) of the Act, authorizes community 
rehabilitation programs that

[[Page 6310]]

provide services similar to the services specified in the definition. 
Thus, the Secretary believes that a community rehabilitation program 
could provide rehabilitation teaching services for individuals who are 
blind because those services are similar to orientation and mobility 
services for individuals who are blind, which are expressly authorized 
under paragraph (i)(K) of the definition.
    Changes: None.
 Comparable Services and Benefits
    Comments: Several commenters requested clarification of the 
requirement in the proposed regulations that comparable services and 
benefits be available to the individual within a reasonable period of 
time. Some commenters requested that the regulations allow DSUs to use 
comparable services and benefits only if they are currently available 
at the time the individual's Individualized Written Rehabilitation 
Program (IWRP) is developed. Other commenters suggested that comparable 
services and benefits should be available when necessary to meet the 
rehabilitation objectives identified in the individual's IWRP.
    Discussion: The definition of ``comparable services and benefits'' 
is intended to support the statutory purpose of conserving 
rehabilitation funds, while ensuring the provision of appropriate and 
timely services. The proposed requirement in the NPRM that comparable 
services and benefits be available within a reasonable period of time 
was intended to enable DSUs to conserve VR funds by searching for 
alternative sources of funds without jeopardizing the timely provision 
of VR services to eligible individuals. The Secretary agrees that 
additional clarification in the regulations is required to ensure that 
VR services are provided to eligible individuals at the time they are 
needed.
    Changes: The Secretary has revised Sec. 361.5(b)(9)(ii) of the 
proposed regulations to require that comparable services and benefits 
be available to the individual at the time that the relevant service is 
needed to achieve the rehabilitation objectives in the individual's 
IWRP. This change is consistent with revisions made to Sec. 361.53 of 
the proposed regulations, which are discussed in the analysis of 
comments to that section.
 Competitive Employment and Integrated Setting
    Comments: Some commenters opposed the definition of ``competitive 
employment'' in the proposed regulations on the basis that it limited 
competitive employment outcomes to those in which an individual with a 
disability earns at least the minimum wage. Because the proposed 
definition applied to supported employment placements, these commenters 
believed that the minimum wage requirement would restrict employment 
opportunities for individuals with the most severe disabilities who 
need supported employment services in order to work. These commenters 
stated that some individuals with the most severe disabilities would be 
unable to obtain competitive employment unless the definition permitted 
employers to compensate employees in accordance with section 14(c) of 
the Fair Labor Standards Act (FLSA) (i.e., wages based on individual 
productivity that would be less than the minimum wage). Other 
commenters supported the proposed definition and the requirement that 
individuals in competitive employment earn at least the minimum wage.
    Several commenters opposed the requirement in the proposed 
regulations that individuals in competitive employment earn at least 
the prevailing wage for the same or similar work in the local community 
performed by non-disabled individuals. The commenters believed that it 
would be unduly burdensome for DSUs to ascertain the relevant 
prevailing wage given the potential differences in wages provided by 
employers within the same community. In addition, these commenters 
stated that the prevailing wage standard would dissuade some employers 
from hiring individuals with disabilities when the wage to be provided, 
although at least the minimum wage, would have to be increased to be 
consistent with higher wages provided by other employers in the 
community for the same or similar work.
    Several commenters on the proposed regulations opposed the 
requirement that competitive employment be performed in an integrated 
setting. Several other commenters questioned or requested clarification 
of the proposed definition of integrated setting with respect to the 
provision of services or the achievement of an employment outcome. In 
light of the interrelationship between the terms ``competitive 
employment'' and ``integrated setting'' and the fact that the Secretary 
considers integration to be an essential component of competitive 
employment, comments on both the proposed definition of ``integrated 
setting'' and the use of the term ``integrated setting'' as an element 
of competitive employment are addressed in the following paragraphs.
    Commenters who opposed limiting competitive employment to 
placements in integrated settings believed that requiring individuals 
with disabilities to interact with non-disabled persons at the work 
site would preclude certain kinds of employment outcomes from the scope 
of competitive employment. Specifically, the commenters identified 
self-employment, home-based employment, and various forms of 
telecommuting as examples of employment outcomes that are competitive 
but are not located in integrated settings. The commenters stated that 
these placement options should be available to individuals with 
disabilities to same extent that they are available to non-disabled 
persons.
    Some commenters believed that the definition of ``integrated 
setting'' in the proposed regulations was too weak. These commenters 
recommended that the proposed definition, which defined integrated 
setting as ``. . . a setting typically found in the community in which 
an applicant or eligible individual has an opportunity to interact 
regularly with non-disabled persons . . .,'' be amended to require 
actual interaction between the applicant or eligible individual and 
non-disabled individuals. Other commenters stated that individuals in 
competitive employment should be required to interact with non-disabled 
persons only to the extent that non-disabled individuals in similar 
positions interact with others. Finally, some commenters suggested that 
the definition clarify that sheltered workshops and other employment 
settings that are established specifically for the purpose of employing 
individuals with disabilities do not constitute integrated settings.
    Discussion: The Secretary agrees with the commenters who believe 
that competitive employment outcomes should be limited to those in 
which individuals earn at least the minimum wage. Consequently, the 
Secretary does not consider placements in supported employment settings 
in which individuals receive wages below the minimum wage under section 
14(c) of the FLSA to be competitive employment. This position, which 
would modify longstanding RSA regulatory policy, is consistent with the 
requirement in the 1992 Amendments (section 101(a)(16) of the Act) that 
DSUs annually review and reevaluate the status of each individual in an 
employment setting under section 14(c) of the FLSA in order to 
determine the individual's readiness for competitive employment. This 
statutory requirement indicates that supported employment

[[Page 6311]]

settings in which individuals are compensated below the minimum wage in 
accordance with the FLSA do not constitute competitive employment. The 
Secretary wishes to clarify that the minimum wage requirement for 
individuals placed in supported employment applies at the time of 
transition to extended services. If an individual is unable to obtain 
the minimum wage at this time, the individual would still be considered 
to have achieved an employment outcome but it would not be considered a 
supported employment outcome.
    The Secretary agrees that requiring individuals in competitive 
employment to earn at least the prevailing wage for the same or similar 
work in the local community performed by non-disabled individuals is 
unduly restrictive and that requiring individuals with disabilities who 
achieve competitive employment outcomes to be compensated at the wage 
level typically paid to non-disabled individuals who perform the same 
or similar work for the same employer is a more reasonable standard. 
This standard requires that competitively employed individuals with 
disabilities receive the customary wage and level of benefits (e.g., 
insurance premiums, retirement contributions) received by non-disabled 
workers performing comparable jobs for the same employer. Clarification 
in the final regulations that comparable compensation includes both the 
wage and benefit level typically paid by the employer is necessary, the 
Secretary believes, in order to ensure that competitive employment 
outcomes for individuals with disabilities are truly ``competitive.'
    A key purpose of the 1992 Amendments is to ensure that individuals 
with disabilities achieve employment outcomes in the most integrated 
settings possible, consistent with the individual's informed choice. 
Consequently, the Secretary believes that placement in an integrated 
setting is an essential component of ``competitive employment.'
    The Secretary agrees with those commenters who believe that the 
definition of integrated setting in the proposed regulations did not 
sufficiently ensure actual interaction between individuals with 
disabilities and non-disabled persons. The Secretary also agrees with 
those commenters who contend that the best measure of integration in an 
employment setting for individuals with disabilities is to require 
parity with the integration experienced by non-disabled workers in 
similar positions. Consequently, the final regulations establish a 
standard of integration with respect to employment outcomes that is 
based on ensuring the same level of interaction by disabled individuals 
with non-disabled persons as that experienced by a non-disabled worker 
in the same or similar job. An integrated setting for purposes of a job 
placement is one in which an applicant or eligible individual interacts 
with non-disabled persons, excluding service providers, to the same 
extent that a non-disabled worker in a comparable position interacts 
with others.
    The Secretary believes, however, that interaction between 
individuals with disabilities and non-disabled persons need not be 
face-to-face in order to meet this standard. Persons with disabilities 
who are self-employed or telecommute may interact regularly with non-
disabled persons through a number of mediums (e.g., telephone, 
facsimile, or computer). Self-employment, home-based employment, and 
other forms of employment in which individuals communicate regularly 
from separate locations, therefore, would satisfy the integration 
requirement of competitive employment as long as the eligible 
individual interacts with non-disabled persons other than service 
providers to the same extent as a non-disabled person in a comparable 
job.
    The Secretary, like many of the commenters, also believes that 
settings that are established specifically for the purpose of employing 
individuals with disabilities (e.g., sheltered workshops) do not 
constitute integrated settings since there are no comparable settings 
for non-disabled individuals.
    Changes: The Secretary has amended Sec. 361.5(b)(10) to define 
``competitive employment,'' in part, as work for which an individual 
earns at least the minimum wage but not less than the customary wage 
and level of benefits provided by the same employer to non-disabled 
workers who perform the same or similar work. The Secretary also has 
amended Sec. 361.5(b)(30) to define ``integrated setting'' with respect 
to an employment outcome as a setting typically found in the community 
in which applicants or eligible individuals interact with non-disabled 
individuals to the same extent that non-disabled individuals in 
comparable positions interact with other persons. The definition of 
``integrated setting'' with respect to the provision of services has 
been similarly strengthened to require actual interaction between 
individuals with disabilities receiving services and non-disabled 
individuals.
 Designated State Unit
    Comments: Some commenters requested that the regulatory definition 
of ``designated State unit'' prohibit DSUs from administering 
vocational and other rehabilitation programs other than those programs 
authorized or funded under the Act.
    Discussion: Sections 101(a)(1) and (a)(2) of the Act require that 
the State VR Services Program be administered by a State entity that is 
primarily concerned with vocational rehabilitation or vocational and 
other rehabilitation of individuals with disabilities, but does not 
restrict this rehabilitation focus to only programs authorized or 
funded under the Act. The Secretary wishes to give States as much 
organizational flexibility as is permitted by statute.
    Changes: None.
 Employment Outcome
    Comments: Several commenters opposed the definition of ``employment 
outcome'' in the proposed regulations on the basis that it failed to 
exclude outcomes other than competitive employment (e.g., homemaker, 
self-employment). Other commenters disagreed with the emphasis in the 
definition on competitive employment.
    Discussion: The definition of ``employment outcome'' in the final 
regulations, like the proposed definition, elaborates on the definition 
in section 7(5) of the Act by incorporating into the definition the 
statutory concept that an employment outcome must be consistent with an 
individual's strengths, resources, priorities, concerns, abilities, 
capabilities, interests, and informed choice. Although the definition 
does not contain a full list of permissible employment outcomes, it 
does not exclude any employment outcomes that have been permitted in 
the past. Thus, for example, homemaker, extended employment, and self-
employment remain acceptable employment outcomes even though they are 
not specifically identified in the definition. The Secretary also 
believes, however, that competitive employment, which is the optimal 
employment outcome under the program, should be considered for each 
individual who receives services under the program and should, 
therefore, be highlighted in the definition.
    Changes: None.
 Establishment, Development, or Improvement of a Public or 
Nonprofit Community Rehabilitation Program
    Comments: Some commenters opposed that part of the proposed

[[Page 6312]]

definition of the term ``establishment, development, or improvement of 
a public or nonprofit community rehabilitation program'' that would 
reduce over a four-year period Federal financial support of staffing 
costs associated with operating a community rehabilitation program. 
Some of these commenters also opposed the prohibition in the definition 
of Federal support for ongoing operating expenses of a community 
rehabilitation program. The commenters were concerned that these 
provisions would make it difficult or impossible to develop new 
community rehabilitation programs.
    Discussion: The definition elaborates on the statutory definition 
of the term ``establishment of a community rehabilitation program'' 
under section 7(6) of the Act by incorporating all of the types of 
expenditures for which a DSU can receive Federal financial support. The 
limitations on staffing costs in the proposed definition are based on 
the authorization in section 7(6) of the Act for the Secretary to 
include as part of the costs of establishment any additional staffing 
costs that the Secretary considers appropriate. The limitations are 
similar to those previously proposed in the 1991 NPRM. Specifically, 
the proposed regulations established a limitation on staffing costs by 
providing, after the first 12 months of staffing assistance, for an 
annual decrease in the percentage of staffing costs (from 100 percent 
to 45 percent) for which Federal financial participation (FFP) is 
available. This limitation, like the staffing cost requirements 
proposed in the 1991 NPRM, is influenced by and in part based on the 
conclusions of a 1979 General Accounting Office (GAO) report (HRD-79-
84). The GAO Report to Congress recommended amending the Act to provide 
for a gradual reduction of Federal funding for staffing costs in the 
establishment authority. Legislative change is unnecessary to 
accomplish this purpose because section 7(6) of the Act vests the 
Secretary with the authority to determine what staffing costs are 
appropriate for Federal financial participation. The Secretary believes 
that the GAO recommendation is still relevant and needs to be 
implemented. The limitation on staffing costs is intended, in part, to 
ensure that facilities bear an increasing share of the responsibility 
for running community rehabilitation programs, while preserving VR 
funds needed to support necessary development or expansion of community 
rehabilitation facilities. More generally, the limitation on staffing 
costs is intended to preserve the amount of funds available to the DSU 
for providing VR services to eligible individuals.
    The final regulations also authorize Federal support for other 
costs needed to establish, develop, or improve a community 
rehabilitation program as long as these costs are not ongoing 
operational expenses of the program. The Secretary believes that this 
prohibition is consistent with the Act, which limits Federal financial 
support to costs associated with setting up, renovating, converting, or 
otherwise improving community rehabilitation programs.
    The Secretary also notes that recent audits of State agencies have 
indicated, in some cases, that VR funds have been used under the 
authority for establishing community rehabilitation programs for 
purposes other than providing services under the VR program. In 
response, the Secretary believes the proposed definition should be 
amended to ensure that Federal support for the establishment, 
development, or improvement of a public or nonprofit community 
rehabilitation program is provided only if the purpose of the 
expenditures is to provide services to applicants and eligible 
individuals under the VR program.
    Changes: The Secretary has amended Sec. 361.5(b)(16) to ensure that 
costs associated with the establishment, development, or improvement of 
a public or nonprofit community rehabilitation program must be 
necessary to the provision of VR services to applicants and eligible 
individuals. Changes to this definition and to the State plan 
requirements in Sec. 361.33(b) of the regulations are intended to 
address the violations identified in recent audits of State agencies.
 Extended Employment
    Comments: Several commenters requested that the definition of 
``extended employment'' in the proposed regulations be broadened to 
include placements in integrated settings. Other commenters sought to 
expand the proposed definition to include employment with profitmaking 
organizations. Finally, some commenters requested that the regulations 
exclude extended employment from the scope of potential employment 
outcomes under the program.
    Discussion: Section 101(a)(16) of the Act requires DSUs to annually 
review and reevaluate the status of each individual in extended 
employment to determine the individual's readiness for competitive 
employment in an integrated setting. This statutory requirement 
indicates that extended employment is limited to placements in non-
integrated settings. The lack of integration in extended employment 
placements is a key factor in differentiating between extended 
employment and competitive employment outcomes.
    The Secretary does not believe that extended employment includes 
work performed on behalf of profitmaking organizations. Extended 
employment, according to section 101(a)(16) of the Act, means work 
performed in community rehabilitation programs, including workshops, or 
in other non-integrated employment settings in which individuals are 
compensated pursuant to the FLSA. The Secretary believes that 
employment in private, profitmaking organizations should be viewed as 
competitive employment in which individuals shall earn at least the 
minimum wage and work in integrated settings. Incorporating placements 
in profitmaking organizations into the definition of extended 
employment would expand the scope of potential extended employment 
placements and would be contrary to the statutory policy that promotes 
movement from extended employment to competitive employment, the 
optimal employment outcome under the program. Nevertheless, the final 
regulations will continue to recognize extended employment as a 
possible employment outcome under the program consistent with 
101(a)(16) of the Act.
    Changes: None.
 Impartial Hearing Officer
    Comments: One commenter requested that the regulations prohibit a 
member of a State Rehabilitation Advisory Council from serving as an 
impartial hearing officer for any DSU within that State.
    Discussion: The definition of ``impartial hearing officer'' in the 
proposed regulations specified that a member of a DSU's State 
Rehabilitation Advisory Council (Council) could not serve as an 
impartial hearing officer for that same DSU. The proposed definition, 
however, did allow a member of a DSU's Council to serve as an impartial 
hearing officer in cases involving another DSU within the same State. 
For example, a member of the Council for a State unit serving 
individuals who are blind was not precluded under the proposed 
regulations, solely on the basis of that membership, from serving as an 
impartial hearing officer in cases involving the State unit that serves

[[Page 6313]]

individuals with disabilities other than individuals with visual 
disabilities. The Secretary believes that prohibiting members of a 
Council from serving as impartial hearing officers in cases involving 
any DSU within the State would be unduly restrictive. The Secretary 
also believes that other impartiality requirements in the definition 
that apply to all impartial hearing officers, including those who are 
members of Councils for other DSUs (e.g., the individual has no 
personal, professional, or financial conflict of interest) will 
sufficiently ensure the absence of potential conflicts between the 
hearing officer and the parties to the dispute.
    Changes: None.
 Maintenance
    Comments: Some commenters requested that the definition of 
``maintenance'' in the proposed regulations be expanded to include 
expenses other than living expenses (e.g., food, shelter, and 
clothing). As an example, the commenters stated that maintenance should 
be authorized to support costs incurred by eligible individuals who 
take part in enrichment activities as part of a training program in a 
higher education institution. Several other commenters recommended 
deletion of the fourth example in the note following the proposed 
definition, which stated that maintenance could be used to pay for 
food, shelter, and clothing for homeless or recently 
deinstitutionalized individuals until other financial assistance is 
secured. These commenters asserted that these costs should be supported 
by welfare or other public assistance agencies rather than DSUs.
    Discussion: The Secretary agrees that maintenance may include costs 
other than standard living expenses (i.e., food, shelter, and clothing) 
as long as the expenses are in excess of the normal expenses incurred 
by an eligible individual or an individual receiving extended 
evaluation services. Limiting maintenance to additional costs incurred 
by individuals receiving services under an IWRP or under a written plan 
for providing extended evaluation services is consistent with section 
103(a)(5) of the Act, which restricts the provision of maintenance to 
``additional costs while participating in rehabilitation.'
    The Secretary also agrees that the fourth example of permissible 
maintenance expenses in the proposed regulations was inadvisable. 
Permitting DSUs to support the full costs of a homeless or 
deinstitutionalized individual's subsistence under the maintenance 
authority, until other financial assistance becomes available, is 
inconsistent with the policy of limiting maintenance costs to those in 
excess of the individual's normal expenses. In addition, the Secretary 
agrees that welfare and other social service agencies are better 
equipped to support the everyday living expenses of the homeless or 
deinstitutionalized. However, a DSU could choose to provide short-term 
emergency financial assistance to those individuals under 
Sec. 361.48(a)(20) as ``other'' services that the DSU determines are 
necessary for the individual to achieve an employment outcome.
    Changes: The Secretary has deleted the term ``living'' from 
Sec. 361.5(b)(31) of the proposed regulations to clarify that 
maintenance may include expenses other than living expenses. In 
addition, the Secretary has deleted the fourth example in the note 
following the proposed definition of maintenance and replaced it with 
an example of a permissible maintenance cost that would not constitute 
a living expense.
 Ongoing Support Services
    Comments: Some commenters recommended that the Secretary place a 
time limit on the provision of ongoing support services furnished by 
extended services providers. The commenters stated that the regulations 
should permit ongoing support services to ``fade'' once they are no 
longer needed to maintain an individual in supported employment.
    Discussion: It is RSA's longstanding policy that individuals with 
the most severe disabilities who are placed in supported employment 
should require ongoing support services throughout the course of their 
placement. The need for ongoing support services provides a critical 
distinction (i.e., the provision of ongoing supports) between supported 
employment and other kinds of employment outcomes. The Secretary 
believes that if an individual in supported employment no longer 
requires ongoing support services that individual is no longer an 
appropriate candidate for supported employment.
    Changes: None.
 Personal Assistance Services
    Comments: Some commenters requested that the definition of 
``personal assistance services'' in the proposed regulations be amended 
to more closely track the statutory definition of that term in section 
7(11) of the Act. The commenters stated that revision to the proposed 
definition is needed to clarify that personal assistance services need 
not be provided on the job site.
    Discussion: The Secretary agrees that personal assistance services 
may be provided off the job site as long as they are necessary to 
assist an individual with a disability to perform daily living 
functions and achieve an employment outcome and are provided while the 
individual is participating in a program of VR services. The Secretary 
believes the proposed definition clearly authorized personal assistance 
services needed by an individual to perform everyday activities off the 
job but, nevertheless, agrees that further clarification may be 
helpful.
    Changes: The Secretary has amended Sec. 361.5(b)(34) of the 
proposed regulations to track the language in section 7(11) of the Act 
authorizing personal assistance services needed to increase the 
individual's control in life and ability to perform everyday activities 
on or off the job.
 Physical and Mental Restoration Services
    Comments: Some commenters requested that the regulatory definition 
of ``physical and mental restoration services'' specifically include 
psychological services provided by qualified personnel under State 
licensure laws.
    Discussion: The Secretary agrees that psychological services are a 
form of mental restoration services. Psychological services, however, 
are subsumed within the broader term ``mental health services'' in 
paragraph (xiii) of the definition and need not be identified 
separately. Moreover, section 103(a)(4) of the Act authorizes services, 
including psychological services, that are needed to diagnose and treat 
mental or emotional disorders only if those services are provided by 
qualified personnel in accordance with State licensure laws. This 
requirement, which was included in the proposed definition, is 
reflected in paragraph (ii) of the definition in the final regulations.
    Changes: None.
 Physical or Mental Impairment
    Comments: Some commenters requested clarification of the 
requirement in the proposed regulations that a physical or mental 
impairment will probably result in materially limiting mental or 
physical functioning if it is not treated. One commenter stated that 
the definition should be limited to conditions that cause present 
functional limitations so as not to unnecessarily expand the pool of 
eligible individuals.

[[Page 6314]]

    Discussion: The Secretary agrees that clarification is needed. The 
proposed regulations defined ``physical or mental impairment'' as an 
injury, disease, or other condition that materially limits, or if not 
treated will probably result in materially limiting, mental or physical 
functioning. The existence of a physical or mental impairment is the 
first criterion for determining eligibility under the program (see 
Sec. 361.42(a) of the final regulations). The proposed definition was 
designed to include progressive conditions that may cause functional 
limitations in the future even though current functional limitations 
may not be evident. Although a DSU may not always know with certainty 
whether a certain condition will limit an individual's functional 
abilities, the Secretary believes that the definition must account for 
situations in which there is a strong likelihood that functional 
limitations will result if treatment is not provided. On the other 
hand, the Secretary does not believe that accounting for progressive 
conditions will result in an unwarranted increase in eligible 
individuals since all eligible individuals, including those who do not 
currently experience a limitation in functioning, must meet each of the 
eligibility criteria in Sec. 361.42(a).
    Changes: The Secretary has amended Sec. 361.5(b)(36) of the 
proposed regulations to clarify that a physical or mental impairment 
must materially limit, or if untreated must be expected to materially 
limit, physical or mental functioning.
 Post-Employment Services
    Comments: Some commenters requested that the regulations specify a 
time limit for providing post-employment services following the 
achievement of an employment outcome. Other commenters opposed the 
availability of post-employment services for purposes of assisting an 
individual to advance in employment. Finally, several commenters 
recommended that the definition enable individuals to receive post-
employment services in order to maintain, regain, or advance in 
employment that is consistent with the individual's informed choice.
    Discussion: The Secretary believes that it would be inappropriate 
to establish an absolute time limit after which post-employment 
services would be unavailable. DSUs are responsible for determining on 
a case-by-case basis whether an eligible individual who has achieved an 
employment outcome requires post-employment services in accordance with 
the definition in the regulations. As stated in the note following the 
proposed definition, post-employment services are available to meet 
rehabilitation needs that do not require a complex and comprehensive 
provision of services and, therefore, should be limited in scope and 
duration. If the DSU determines that an individual requires extensive 
services or requires services over an extended period of time, then the 
DSU should consider beginning a new rehabilitation effort for the 
individual, starting with a redetermination of whether, under current 
circumstances, the individual is eligible under the VR program.
    The Secretary emphasizes that post-employment services are 
available if the DSU determines that the services are necessary to 
enable an individual to advance in employment consistent with the 
individual's strengths, resources, priorities, concerns, abilities, 
capabilities, and interests. Section 103(a)(2) of the Act specifically 
authorizes the provision of post-employment services for purposes of 
assisting an individual to maintain, regain, or advance in employment.
    The Secretary agrees that the provision of post-employment services 
must be consistent with the individual's informed choice. However, the 
Secretary believes that it is unnecessary to add informed choice as an 
element in the definition of ``post-employment services'' because 
informed choice is specifically identified as a condition that applies 
to the provision of any VR service, including post-employment services, 
under Sec. 361.48(a).
    Changes: None.
 Substantial Impediment To Employment
    Comments: The majority of commenters supported the definition of 
``substantial impediment to employment'' in the proposed regulations. 
However, some commenters opposed the proposed definition on the basis 
that it requires only that an impairment hinder the individual from 
preparing for, entering into, engaging in, or retaining employment. 
These commenters recommended that the Secretary reinstate the standard 
from the draft regulations that an impairment must prevent the 
individual from employment in order for it to constitute a substantial 
impediment to employment.
    Discussion: An individual's disability must result in a substantial 
impediment to employment for the individual to be found eligible under 
the VR program (see Sec. 361.42(a)). The Secretary believes that the 
proposed definition establishes the appropriate standard for 
determining whether the individual's impairment causes a substantial 
impediment to employment when read in conjunction with the remaining 
eligibility requirements in Sec. 361.42(a). This standard does not 
extend eligibility under the program to individuals with disabilities 
who do not experience material functional limitation or who do not need 
VR services to obtain appropriate employment since these individuals 
would not meet the criteria in Sec. 361.42(a). On the other hand, the 
Secretary believes that requiring that an impairment prevent the 
individual from employment is too stringent and would exclude from the 
program those individuals who are underemployed and who need VR 
services to obtain new employment that is consistent with their 
abilities and capabilities.
    Changes: None.
 Supported Employment
    Comments: One commenter suggested that, given the requirement in 
the proposed regulations that limits competitive employment outcomes to 
those in which individuals earn at least the minimum wage, competitive 
employment should not be a required element of supported employment. 
Another commenter stated that an individual in a supported employment 
setting should be viewed as competitively employed as long as the 
individual earns at least the minimum wage at the time of transition to 
an extended services provider rather than at the time of initial 
placement in supported employment.
    Discussion: Section 7(18) of the Act defines supported employment 
as competitive employment in an integrated setting with ongoing support 
services. Thus, individuals in supported employment shall earn at least 
the minimum wage consistent with the definition of competitive 
employment in the final regulations. The Secretary agrees, however, 
that the minimum wage requirement applies to individuals in supported 
employment at the time the individual has made the transition from 
support provided by the DSU to extended services provided by an 
appropriate State or private entity.
    Changes: None.
 Transitioning Student
    Comments: Some commenters were concerned that omitting the term 
applicant from the definition of ``transitioning student'' would mean 
that students with disabilities who apply for VR services might not be 
evaluated for program eligibility. In addition, some commenters stated 
that the term ``transitioning student'' is confusing and is 
inappropriately used in

[[Page 6315]]

other sections of the proposed regulations, specifically Sec. 361.22 
(Cooperation with agencies responsible for transitioning students).
    Discussion: The proposed regulations defined ``transitioning 
student'' as a student who is eligible under the VR program and is 
receiving transition services. The Secretary believes that transition 
services, which are authorized under section 103(a)(14) of the Act and 
defined in Sec. 361.5(b)(47) of the final regulations, are limited to 
those services identified in an eligible student's IWRP that promote or 
facilitate the accomplishment of long-term rehabilitation goals and 
intermediate rehabilitation objectives. Because assessment services are 
provided prior to the development of an IWRP and, therefore, are not 
transition services, student applicants under the program were not 
included within the proposed definition of ``transitioning student.'' 
Nevertheless, this interpretation does not alter the responsibility of 
DSUs to evaluate student applicants for eligibility for VR services. As 
with any individual with a disability, DSUs shall promptly handle a 
referral of a student for VR services, evaluate the student following 
application for services, and determine the student's eligibility under 
the program within 60 days after the application is submitted.
    The Secretary agrees that the definition of the term 
``transitioning student'' in the proposed regulations is confusing, as 
evidenced by the previous comments questioning the DSU's responsibility 
with regard to student applicants. Other commenters were confused by 
Sec. 361.22(b) of the proposed regulations, which referred to students 
with disabilities who are not receiving special education services as 
``transitioning students.'
    Changes: The Secretary has eliminated the definition of the term 
``transitioning student'', which is not defined in the Act, from the 
final regulations and has replaced that term in the regulations with 
the term ``student with a disability,'' which includes students who are 
receiving special education services and students who are not.
 Transportation
    Comments: One commenter requested that the regulations clarify that 
transportation is a support service. Other commenters opposed the 
example following the definition that identified the purchase and 
repair of vehicles as a possible transportation expense. These 
commenters stated that adherence to this example would severely deplete 
DSU resources.
    Discussion: ``Transportation'' is defined in both the proposed and 
final regulations as travel and related expenses that are necessary to 
enable an applicant or eligible individual to participate in a VR 
service. The Secretary believes that it is clear from this definition 
that transportation is not a stand-alone service but must be tied to 
the provision of other services identified in an IWRP.
    The Secretary emphasizes that the examples provided under this 
definition, like all examples throughout the regulations, are provided 
solely for purposes of illustration and guidance and are not intended 
to substitute for DSU determinations in individual cases. Accordingly, 
the example opposed by some commenters neither requires nor encourages 
DSUs to purchase or repair vehicles. The example states only that the 
purchase or repair of vehicles is authorized as a transportation 
expense in those limited circumstances in which the DSU determines that 
provision of this service is necessary for an individual to participate 
in a VR service and is consistent with DSU policies that govern the 
provision of services. Appropriately developed DSU policies covering 
the nature and scope of services dictate the extent to which any 
service, including transportation, can be provided.
    Changes: None.

Sec. 361.10  Submission, approval, and disapproval of the State plan.

    Comments: None.
    Discussion: The Secretary has revised the requirements governing 
the duration of State plans to reflect recent amendments to section 436 
of the General Education Provisions Act (GEPA). Section 436 of GEPA, 
which applies to Rehabilitation Act programs, authorizes the Secretary 
to establish a State plan period that is longer than the standard 
three-year period specified in section 101(a) of the Rehabilitation Act 
and Sec. 361.10(e) of the proposed regulations. Although RSA will 
continue to require the submission of a new State plan every three 
years, the regulations now permit RSA to establish a State plan period 
other than the regular three-year period if circumstances warrant. For 
example, RSA used this statutory authority in FY 1996 to extend for a 
fourth year the State plan covering FYs 1994 through 1996 in order to 
allow these final regulations to become effective before requiring 
submission of a new State plan. The flexibility afforded RSA through 
this regulatory change also obviates the need for Sec. 361.10(h) of the 
proposed regulations, which would have permitted the Secretary to 
require an interim State plan covering less than three years following 
a reauthorization of the Act and prior to the publication of final 
regulations.
    Changes: The Secretary has amended Sec. 361.10(e) to state that the 
State plan must cover a multi-year period as determined by the 
Secretary. In addition, Sec. 361.10(h) of the proposed regulations has 
been deleted from the final regulations.

Sec. 361.13  State agency for administration

    Comments: Some commenters opposed the elimination of the 
requirement from the draft proposed regulations that the State plan 
describe the organizational structure of the State agency and its 
organizational units. These commenters stated that the absence of this 
description in the State plan would make it impossible for RSA to 
determine whether each DSU operates at a level comparable to that of 
other organizational units within the State agency. Other commenters 
recommended, consistent with requirements in the draft proposed 
regulations, that the final regulations authorize the designated State 
agency to define the scope of the program and direct its administration 
without external administrative controls. Additionally, in response to 
the Secretary's request in the NPRM, some commenters identified 
additional program functions that were not included in the proposed 
regulations for which the DSU shall be responsible in order to meet the 
statutory requirement in section 101(a)(2)(A) that it be responsible 
for the VR program. The additional functions identified by the 
commenters (determinations of whether an individual has achieved an 
employment outcome; policy development; and administrative control of 
VR funds) were specified in the draft proposed regulations. Finally, 
some commenters stated that the requirement in the proposed regulations 
that at least 90 percent of DSU staff shall be employed full time on 
rehabilitation work was unduly restrictive.
    Discussion: This section of the proposed regulations was 
significantly revised under the Department's Principles for Regulating 
in an effort to reduce the paperwork requirements imposed on State 
agencies. For example, the Secretary proposed to remove from current 
regulations the requirement that the State plan describe the 
organizational structure of the State agency and its organizational 
units

[[Page 6316]]

because the Secretary considered the requirement unduly burdensome. The 
Secretary intended to reduce the paperwork burden on State agencies in 
developing their State plans and to emphasize the underlying 
administrative responsibility of States by relying on an assurance, 
required by statute, that if the State agency is required to have a 
vocational rehabilitation unit, the unit is located at an 
organizational level comparable to other organizational units within 
the State agency. The Secretary does not believe that continuing to 
require by regulations that an organizational description be included 
in the State plan would necessarily ensure that a DSU actually operates 
at a level comparable to that of other units within the State agency. 
Moreover, the Secretary believes that determinations as to whether a 
State agency meets the organizational requirements in this section, 
including whether the State unit operates at a comparable level to that 
of other State entities, can be better addressed by RSA through its 
monitoring process.
    In an effort to reduce regulatory burden and increase State 
flexibility in accordance with the Department's Principles for 
Regulating, the Secretary also proposed to remove from current 
regulations the requirement that a designated State agency that has as 
its major function vocational rehabilitation or vocational and other 
rehabilitation of individuals with disabilities shall ``have the 
authority, subject to the supervision of the Governor, if appropriate, 
to define the scope of the program within the provisions of State and 
Federal law and to direct its administration without external 
administrative controls.'' This non-statutory requirement applies under 
current regulations to only one of the three designated State agency 
options. The Secretary believes, however, that a State should have the 
same authority to review or oversee the administration of its VR 
program regardless of the option under which it chooses to organize its 
agency. Elimination of this requirement will enable a State to locate 
and administer its vocational rehabilitation program within the limits 
permitted by statute without being influenced by the existence or non-
existence of varying levels of control outside of the DSU.
    In the preamble to the proposed regulations, the Secretary 
solicited public comment on whether the regulations should expand or 
otherwise clarify essential program functions for which the DSU shall 
be responsible in order to meet the statutory requirement in section 
101(a)(2)(A) of the Act that it be responsible for the VR program. 
Consistent with current regulations, the proposed regulations specified 
that the DSU shall be responsible for determinations of eligibility, 
development of IWRPs, and decisions regarding the provision of 
services. The Secretary interprets this non-delegation provision to 
mean that the DSU shall carry out these functions or activities using 
its own staff. While some commenters believed that States should have 
the flexibility to delegate responsibility for other programmatic 
functions to State entities other than the DSU, the overwhelming 
majority of commenters stated that the additional functions that were 
identified in the draft regulations (determinations that service 
recipients have achieved appropriate employment outcomes, the 
formulation and implementation of program policy, and the allocation 
and expenditure of program funds) must be carried out by the DSU to 
ensure that the program is administered properly. In light of the 
public comment received, the Secretary agrees that responsibility for 
these additional functions must be retained by the DSU to ensure that 
State agencies that consolidate staff to administer multiple State and 
federally funded programs do not entrust these key VR programmatic 
decisions to individuals who lack experience in meeting the needs of 
individuals with disabilities. Moreover, the Secretary believes that 
the benefits derived from DSU retention of these functions--enhanced 
program efficiency and effectiveness--outweigh any costs that may be 
associated with the non-delegation requirements in the final 
regulations.
    The Secretary does not believe that the proposed requirement that 
at least 90 percent of the designated State unit staff shall work full 
time on the rehabilitation work of the organizational unit is unduly 
restrictive. This provision means that if the organizational unit 
provides other rehabilitation services, in addition to vocational 
rehabilitation, the 90 percent staffing requirement applies to all unit 
staff providing rehabilitation services, not to just the vocational 
rehabilitation staff. ``Other rehabilitation'' includes, but is not 
limited to, other programs that provide medical, psychological, 
educational, or social services to individuals with disabilities. 
Although some commenters believed the 90 percent staffing requirement 
sets too restrictive a standard, the Secretary believes that this 
requirement is consistent with the statutory requirement in section 
101(a)(2)(A)(iii) of the Act that ``substantially all'' of the DSU's 
staff shall work on rehabilitation and with RSA's longstanding 
interpretation of ``substantially all'' to mean 90 percent.
    Changes: The Secretary has revised Sec. 361.13(c) by adding three 
functions--determination that an individual has achieved an employment 
outcome, formulation and implementation of program policy, and 
allocation and expenditure of program funds--that must be carried out 
by the DSU.

Sec. 361.15  Local administration

    Comments: One commenter requested clarification of the requirement 
that each local agency administering the program be ``under the 
supervision of the DSU.''
    Discussion: Section 7(9) of the Act defines the term ``local 
agency'' as a local governmental unit that has an agreement with the 
designated State agency to conduct the VR program in accordance with 
the State plan. Accordingly, the requirement in this section that each 
local agency is subject to the supervision of the DSU means that the 
DSU is responsible for ensuring that the program is administered in 
accordance with the State plan. This provision does not require the DSU 
to supervise the day-to-day operations of each local agency's program 
staff.
    Changes: For purposes of clarification, the Secretary has revised 
Sec. 361.15 to add a cross-reference to the regulatory definition of 
``sole local agency.'' The Secretary has also made technical changes to 
the citations of authority for this section.

Sec. 361.16  Establishment of an independent commission or a State 
Rehabilitation Advisory Council

    Comments: One commenter requested clarification of the scope of the 
proposed requirement that the State plan summarize annually the advice 
provided by the Council.
    Discussion: Section 101(a)(36)(A)(iii) of the Act requires the DSU 
to include in its State plan or amendment to the plan a summary of 
advice provided by the Council. Accordingly, Sec. 361.16(a)(2)(iv) of 
the regulations requires that the State plan ``annually summarize the 
advice provided by the Council.'' This ``annual'' requirement means 
that any State plan submission, whether a new three-year plan or an 
annual amendment to an existing plan, must include, as appropriate, a 
summary of the advice provided by the Council on the new plan or the 
plan amendment. Thus, a summary of the advice provided by the Council 
on the entire plan must be submitted once every three years in 
conjunction with

[[Page 6317]]

the DSU's new, three-year State plan. During the interim between new 
plans, the DSU shall summarize the advice provided by the Council on 
the amendments to the existing plan and submit that summary in 
conjunction with its annual submission of amendments to the plan. 
Annual amendments to the plan include any amendment generated by a 
change to a State policy or practice that is reflected in the current 
State plan, as well as those amendments that are required by the Act or 
these regulations. Consistent with the general requirement in section 
101(a)(36)(A)(iii), this section also requires the DSU to annually 
summarize the advice provided by the Council on matters other than 
those addressed in the State plan. A summary of the advice provided by 
the Council on these issues should be included also in the annual 
summaries.
    Changes: None.

Sec. 361.18  Comprehensive system of personnel development

    Comments: Some commenters questioned the authority for requiring 
the involvement of the State Rehabilitation Advisory Council in the 
development of the State agency's personnel standards, whereas other 
commenters supported a role for the Council in this area. Some 
commenters sought clarification of what it means for the Council to be 
``involved'' in the development of personnel standards. Additional 
commenters sought an expanded role for the Council that would involve 
it in the formulation of other aspects of the State agency's 
comprehensive system of personnel development in addition to the State 
agency's personnel standards.
    Some commenters stated that the data collection requirements in 
paragraph (a) of this section are unduly burdensome and should be 
eliminated.
    A number of commenters opposed the authorization of State personnel 
requirements as comparable requirements upon which a State agency could 
develop its personnel standards under paragraph (c) of this section. 
These commenters stated that a State agency's personnel standards 
should be based solely on the licensing and certification requirements 
applicable to the profession in which DSU employees provide VR services 
in order to ensure that DSU personnel are ``qualified'' within the 
meaning of the Act. Similarly, several commenters opposed the use of 
``equivalent experience'' as a substitute for academic degrees in the 
definition of ``highest requirements in the State* * *'' under 
paragraph (c) of this section. One commenter stated that the personnel 
standards developed by State agencies under this section should be 
prospective only and that agencies should be permitted to retain 
current DSU personnel who do not meet the ``highest requirements in the 
State.'' In addition, some commenters recommended that the regulations 
specifically provide for DSU employment for individuals who, due to the 
existence of their disability, are unable to satisfy certification or 
licensure standards applicable to a particular profession. As an 
example, these commenters stated that, historically, individuals who 
are blind have been excluded on the basis of their disability from 
obtaining necessary certification to teach orientation and mobility to 
other blind individuals even though they are fully qualified to work in 
that profession.
    Some commenters believed that the regulations should require that 
DSU staff receive mandatory training in all of the areas identified in 
paragraph (d)(2) of this section. Paragraph (d)(2) listed examples of 
training areas (e.g., the Americans with Disabilities Act and the 
Individuals with Disabilities Education Act (IDEA)) that State 
agencies, at their discretion, may incorporate into their staff 
development systems.
    Several commenters opposed the statement in the preamble to the 
proposed regulations that supported a DSU's use of family members and 
community volunteers for purposes of communicating in an applicant's or 
eligible individual's native language. The commenters believed that the 
availability of family members or volunteers should not relieve the 
State agency of its responsibility to hire qualified personnel who are 
able to meet the communication needs of individuals with disabilities. 
One commenter asked whether the State agency's responsibility to employ 
persons who can address the communication needs of applicants and 
eligible individuals means that the State agency shall include sign-
language interpreters among its personnel.
    Finally, one commenter stated that the number of individuals that a 
rehabilitation counselor assists in achieving an employment outcome 
should not be considered as a factor in the evaluation of the 
rehabilitation counselor's performance under paragraph (f) of this 
section.
    Discussion: The Act requires that the Council generally advise the 
State unit in connection with the carrying out of its responsibilities. 
In addition, the Council is required to advise the State agency on 
issues affecting the development of the State plan. Because an 
effective system of personnel development is an essential part of the 
State plan and a critical element to the success of The State 
Vocational Rehabilitation Services Program, the Secretary believes it 
is necessary for the Council to be involved in the development of key 
aspects of the State agency's personnel development system. 
Specifically, the Secretary agrees with the commenters who stated that 
the Council should provide advice to the State agency in connection 
with the development of the recruitment, preparation, and retention 
plan under paragraph (b) of this section; staff development policies 
and procedures under paragraph (d) of this section; and the performance 
evaluation system under paragraph (f) of this section; as well as in 
the development of personnel standards under paragraph (c) of this 
section, as was stated in the proposed regulations.
    The Secretary emphasizes that this section of the regulations is 
not intended to expand or alter the role of the Council beyond the 
advisory role contemplated by the Act, but only to identify those areas 
of personnel development in which the Council must be involved in an 
advisory capacity. The Secretary believes that to fulfill its advisory 
role, the Council, at a minimum, must be afforded an opportunity to 
review and comment on relevant plans, policies, and procedures prior to 
their implementation. This ``opportunity for review and comment'' is 
necessary to ensure that the Council plays a meaningful, although 
advisory, role in the development of a system that ensures an adequate 
supply of qualified DSU personnel.
    The data system and data collection requirements specified in 
paragraph (a) of this section are statutorily required. However, the 
Secretary emphasizes that the regulations require only that the State 
plan include a description of the system used to collect the data on 
personnel needs and personnel development and do not require the State 
to submit the actual data to the Secretary.
    The Secretary agrees with those commenters who stated that the 
State agency's personnel standards must be based solely on existing 
licensing or certification requirements applicable to the profession in 
which DSU employees provide VR services. The Secretary interprets 
section 101(a)(7)(B) of the Act to permit DSUs to base their personnel 
standards on other ``comparable'' requirements only if certification or 
licensing requirements applicable to a particular profession do not 
exist. This interpretation is consistent with the

[[Page 6318]]

statute's emphasis on qualified personnel and with the requirement in 
the Act that State agencies develop personnel standards that are based 
on the ``highest requirements in the State.'' State personnel 
requirements may be used as ``comparable requirements'' by the State 
agency only in those very limited instances in which there is no 
national or statewide certification or license that applies to the 
professional or paraprofessional providing VR services (e.g., case 
aides). Under those circumstances, State personnel requirements may, in 
fact, represent the highest requirements in the State for the 
particular profession.
    The proposed regulations authorized States to base the highest 
personnel standards in the State on equivalent experience, as well as 
on academic degrees, in an effort to stress the significance of 
relevant work experience and to expand the pool from which qualified 
personnel can be selected. The overwhelming majority of commenters on 
this issue, however, asserted that the use of ``equivalent experience'' 
as a substitute for academic degrees for purposes of meeting the 
``highest requirements in the State * * *'' significantly weakened the 
Act's focus on qualified personnel. In light of these comments, the 
Secretary agrees that the ``highest requirements in the State'' should 
be limited to the highest entry-level academic degree needed for a 
national or State license or certification in order to ensure that the 
DSU employs those professionals who are most capable of assessing the 
specialized needs of individuals with disabilities and addressing those 
needs through an appropriate provision of VR services. The Secretary 
recognizes the extent to which the qualified personnel standard in the 
Act would be undermined if States chose to ignore widely recognized, 
nationally approved or State-approved licensing standards and to employ 
less qualified individuals on the basis of ``equivalent experience.''
    The Secretary interprets the Act and regulations to permit State 
agencies to retain current DSU personnel who do not meet the ``highest 
requirements in the State.'' This position is consistent with paragraph 
(c)(1)(ii) of this section, which requires the State agency to describe 
the steps it plans to take to retrain or hire personnel to meet 
standards that are based on the highest requirements in the State if 
the State's current standards are not based on the highest requirements 
in the State.
    The Secretary recognizes the concerns of those commenters who 
sought to safeguard DSU employment opportunities for individuals who, 
because of their disability, are prohibited from obtaining the license 
or certification applicable to their particular profession. To the 
extent that certification and licensing requirements are discriminatory 
on the basis of disability, these issues should be addressed as 
compliance issues under section 504 of the Act and the ADA. 
Nevertheless, the Secretary is cognizant of the particular difficulty 
experienced by blind individuals who, historically, have been excluded 
on the basis of their disability from becoming certified as orientation 
and mobility instructors. The Secretary emphasizes that these 
regulations do not inhibit DSUs or other VR service providers from 
hiring blind individuals as orientation and mobility teachers even 
though those individuals may not meet current certification 
requirements. To the extent that a DSU employs blind individuals who do 
not meet the ``highest requirements in the State'' applicable to the 
orientation and mobility profession, the State agency's plan under 
paragraph (c)(1)(ii) of this section must identify the steps the agency 
plans to take to assist employees in meeting those requirements. In 
this regard, the Secretary is supporting a national project to develop 
alternative certification standards for orientation and mobility 
instructors in order to ensure that individuals who are blind can meet 
necessary certification standards within the timeframe outlined in the 
DSU's plan under paragraph (c)(1)(ii) of this section.
    The Secretary does not believe it is prudent to make the training 
areas identified in paragraph (d) of this section mandatory for all 
staff employed by each DSU. The Secretary believes that the specific 
training areas for staff development adopted by a State unit must be 
based on the particular needs of that State unit. Thus, the final 
regulations, like the proposed regulations, identify specific training 
areas as examples that State agencies may incorporate into their staff 
development systems in light of the DSU's needs.
    Paragraph (e) of this section requires the State unit to describe 
in the State plan how it includes among its personnel or obtains the 
services of--(1) Individuals able to communicate in the native 
languages of applicants and eligible individuals who have limited 
English speaking ability; and (2) Individuals able to communicate with 
applicants or eligible individuals in appropriate modes of 
communication. Personnel under the first requirement may include State 
agency staff, family members of an applicant or eligible individual, 
community volunteers, and other individuals able to communicate in the 
appropriate native language. However, the Secretary agrees that a DSU 
cannot institute an across-the-board policy of using family members or 
volunteers as a substitute for addressing the communication needs of 
individuals with limited English proficiency through the use of DSU 
staff or contract personnel. DSUs shall be prepared to address the 
individual communication needs of each applicant or eligible individual 
it serves. In addition, the Secretary believes that the DSU is 
responsible for employing or obtaining the services of sign-language 
interpreters, which fall within the definition of ``appropriate modes 
of communication'' in Sec. 361.5(b)(5), to the extent necessary to meet 
the communication needs of individuals who are deaf.
    The Secretary believes that in evaluating a rehabilitation 
counselor's performance, States should not focus primarily on the 
number of individuals that the counselor has assisted in achieving an 
employment outcome. At most, the number of employment outcomes for 
which the counselor is responsible should be considered as one of many 
factors in the assessment of the counselor's performance. The Act 
requires that the State's performance evaluation system facilitate the 
accomplishment of the policies and procedures outlined in the statute, 
including the policy of serving, among others, individuals with the 
most severe disabilities. Thus, counselors should be evaluated on the 
basis of their efforts in advancing the purposes of the program and, 
more precisely, on the basis of their performance in serving the most 
severely disabled. The Secretary notes the following passage from the 
report of the Senate Committee on Labor and Human Resources, which was 
also referenced in the preamble to the proposed regulations, to further 
support this position: ``The Committee is concerned that in some 
States, procedures used for evaluating performance of counselors may 
have the unintended consequence of providing a disincentive to serve 
individuals with the most severe disabilities and those clients 
requiring complex services.'' The performance evaluation system 
required under the Act and included in the regulations is designed to 
address these disincentives.
    Changes: The Secretary has amended Sec. 361.18 to require that the 
State Rehabilitation Advisory Council must be afforded an opportunity 
to review and comment on the following aspects of the State agency's 
comprehensive system of personnel development: The

[[Page 6319]]

plan for recruitment, preparation, and retention of qualified 
personnel. Personnel standards. Staff development. The performance 
evaluation system. In addition, the Secretary has clarified paragraph 
(c) of this section to permit DSUs to base their personnel standards on 
comparable requirements (including State personnel requirements) only 
if national or State-approved or -recognized certification, licensing, 
or registration requirements applicable to a particular profession do 
not exist. Finally, the term ``equivalent experience'' has been deleted 
from the definition of ``highest requirements in the State'' under 
paragraph (c) of this section.

Sec. 361.22  Cooperation with agencies responsible for students with 
disabilities

    Comments: Some commenters questioned whether this section requires 
DSUs to develop policies that enable transitioning students to live 
independently before leaving school. The commenters stated that the 
proposed regulations appeared to require DSUs to assist students in 
living independently while the student continues to receive special 
education services from an educational agency. Other commenters 
recommended that the regulations be revised to require the development 
and completion of the IWRP for a special education student who is 
eligible for VR services before the student leaves the school system.
    Several commenters believed that the elements of formal interagency 
agreements between State units and educational agencies identified in 
the proposed regulations should be mandatory for all interagency 
agreements developed under this section. Another commenter asked 
whether the regulations require DSUs to enter into formal interagency 
agreements with each local educational agency within the State.
    One commenter opposed the distinction in the proposed regulations 
between those students who receive special education services and those 
who do not receive special education services and argued that the 
requirements governing coordination between educational agencies and 
State units should apply for both groups of students. Finally, some 
commenters recommended that the term ``transitioning student'' be 
replaced by the term ``student with a disability'' for purposes of 
referring to students who do not receive special education services 
from an educational agency.
    Discussion: The proposed regulations required the DSU to develop 
plans, policies, and procedures designed to facilitate the transition 
of special education students from the school setting to the VR 
program. Specifically, the regulations stated these policies must be 
designed to facilitate the development and accomplishment of long-term 
rehabilitation goals, intermediate rehabilitation objectives, and goals 
and objectives related to enabling a transitioning student to live 
independently before leaving school. Although these regulatory 
requirements largely track the statutory requirements in section 
101(a)(24) of the Act, the Secretary agrees that clarification is 
needed.
    The Secretary does not believe that the Act places on the DSU the 
responsibility for assisting a student with a disability to become 
independent prior to leaving school. However, the Secretary interprets 
the Act to require that, before a student with a disability who is in a 
special education program leaves school, the DSU shall plan for that 
student's transition to the VR program in order to ensure that there is 
no delay in the provision of VR services once special education 
services end. This means that the IWRP for each student determined to 
be eligible under the VR program or, if the designated State unit is 
operating under an order of selection, the IWRP for each eligible 
student able to be served under the order, must be completed before the 
student leaves school and must, at a minimum, be consistent with the 
rehabilitation goals and objectives, including goals and objectives 
related to enabling the student to live independently, that were 
previously identified in the student's individualized education 
program. The Secretary believes that this position is further supported 
by the legislative history to the Act, particularly the Report of the 
Senate Committee on Labor and Human Resources, portions of which are 
restated in the note following this section of the regulations. 
Furthermore, the Secretary believes that requiring the development of 
the IWRP before a VR-eligible student leaves school does not impose any 
additional costs on the DSU since DSUs are already required to develop 
IWRPs for eligible individuals, including students with disabilities, 
if those individuals can be served. More importantly, the Secretary 
believes that this requirement will improve coordination between the 
State's special education and VR programs and will ensure that services 
are not interrupted after an eligible student leaves school.
    In the proposed regulations, the Secretary attempted to lessen the 
paperwork burden on State units by reducing the mandatory content 
requirements that the draft regulations made applicable to all formal 
interagency agreements between State units and educational agencies. 
Accordingly, the proposed regulations required only that interagency 
agreements identify provisions for determining State lead agencies and 
qualified personnel responsible for transition services and identify 
policies and practices that can be coordinated between the agencies. 
The remaining elements under the draft regulations (identification of 
available resources, financial responsibilities of each agency, dispute 
resolution procedures, and other necessary cooperative policies) were 
discretionary under the proposed regulations. However, most commenters 
on this section opposed the reduction in required elements and stated 
that each component is essential for ensuring the appropriate 
transition of special education students from the school setting to the 
VR program. Without detailed agreements, the commenters argue, 
resources may be wasted and key processes may not be delineated, 
resulting in delays in services once the special education student 
leaves school. Consequently, each identified element of formal 
interagency agreements is mandatory for all agreements developed under 
this section of the final regulations. The Secretary believes this 
position is consistent with the statutory requirements governing formal 
interagency agreements in section 101 (a)(11) and (a)(24) of the Act.
    In reviewing the regulations since publication of the NPRM, the 
Secretary identified an additional mandatory element of formal 
interagency agreements that was inadvertently omitted from the proposed 
regulations. This additional element implements the requirement in 
section 101(a)(11)(B) of the Act, which specifies that interagency 
cooperation between the DSU and other agencies, including educational 
agencies, must include training for staff of the agencies as to the 
availability, benefits of, and eligibility standards for vocational 
rehabilitation services, to the extent practicable.
    The Secretary notes that, although the regulations require the DSU 
to enter into a formal agreement with the State educational agency, it 
is within the discretion of each State to determine which local 
educational agencies should be parties to agreements with the DSU.
    The Secretary agrees that classifying students who do not receive 
special education services as ``transitioning students'' is confusing. 
As stated previously in the preamble analysis of comments on 
Sec. 361.5(b)(49), the

[[Page 6320]]

Secretary believes that replacing all references to ``transitioning 
students'' in the final regulations with the term ``students with 
disabilities'' and eliminating the definition of ``transitioning 
student'' from the final regulations will enable DSUs and educational 
agencies to more easily refer to, and differentiate between, students 
with disabilities who are receiving special education services and 
students with disabilities who are not receiving special education 
services. Moreover, these changes are consistent with the reference to 
``students who are individuals with disabilities'' in section 101 
(a)(24) and (a)(30) of the Act.
    The Secretary also notes that section 101(a)(30) of the Act 
warrants the separate treatment that is afforded students with 
disabilities who are not in special education programs as opposed to 
those who receive special education services. Paragraph (b) of this 
section implements this statutory provision by requiring DSUs to 
develop and implement policies for providing VR services to students 
with disabilities who do not receive special education services.
    Changes: The Secretary has revised Sec. 361.22 to clarify that DSU 
policies must provide for the development and completion of the IWRP 
for each student with a disability determined to be eligible for 
vocational rehabilitation services before the student leaves the school 
setting. This section has been revised further to expand the number of 
mandatory elements, including staff training to the extent practicable, 
that must be included in formal interagency agreements between DSUs and 
educational agencies. The Secretary also has revised this section by 
replacing the term ``transitioning student'' with the term ``student 
with a disability.'' Finally, the Secretary has expanded the note 
following this section in order to highlight the emphasis in the Act on 
the timely provision of VR services to special education students.

Sec. 361.23  Cooperation with other public agencies

    Comments: None.
    Discussion: The Secretary wishes to clarify the requirements 
governing interagency cooperation between State units and other public 
agencies that provide rehabilitation services to individuals with 
disabilities. Section 361.23(b)(3) of the proposed regulations would 
have required that all types of interagency cooperative initiatives 
developed pursuant to this section meet certain requirements. However, 
consistent with section 101(a)(11) of the Act, the Secretary wishes to 
clarify that the requirements specified in paragraph (b)(3) of this 
section (e.g., identification of policies that can be coordinated 
between agencies, description of financial responsibility of each 
agency, and procedures for resolving disputes) apply only if the State 
unit chooses to enter into formal interagency cooperative agreements 
with other agencies. It is within the discretion of the State to 
determine how the State unit will cooperate with agencies other than 
agencies responsible for students with disabilities and to determine 
whether the requirements identified in paragraph (b)(3) of this section 
should be addressed if the State adopts cooperative methods other than 
formal interagency agreements (e.g., interagency working groups).
    Changes: The Secretary has revised Sec. 361.23 to clarify that the 
mandatory policies, practices, and procedures specified in paragraph 
(b)(3) apply only to formal interagency cooperative agreements 
developed under this section.

Sec. 361.27  Shared funding and administration of joint programs

    Comments: One commenter supported the proposal to no longer require 
written agreements for joint programs. The majority of commenters, 
however, stated that written agreements are necessary to ensure that 
joint programs are administered consistent with the purposes of the VR 
program.
    Discussion: The proposed regulations removed the current regulatory 
requirements relating to written agreements for programs involving 
shared funding and administrative responsibility as part of the effort 
to reduce paperwork burden on State units and increase State 
flexibility. The Secretary maintains that it is within the discretion 
of the State to determine whether the public agencies administering a 
joint program for providing services to individuals with disabilities 
shall enter into a formal written agreement. However, the Secretary 
agrees with the commenters who indicated that DSUs should be 
accountable for the proper administration of joint rehabilitation 
programs authorized under section 101(a)(1)(A) of the Act. 
Accountability will be based on the extent to which joint programs are 
carried out consistent with the State plan description required by the 
final regulations. This limited description is much less extensive, and 
therefore less burdensome to DSUs, than the State plan requirements in 
the current regulations related to joint programs.
    Changes: The Secretary has amended Sec. 361.27 to require that the 
State plan describe the nature and scope of any joint program to be 
entered into by the DSU, including the services to be provided, the 
respective roles of each participating agency in the provision of 
services and in the administration of the services, and the share of 
the costs to be assumed by each agency.

Sec. 361.29  Statewide studies and evaluations

    Comments: One commenter requested that DSUs be required to conduct 
a comprehensive assessment of the rehabilitation needs of individuals 
with severe disabilities every five years rather than every three years 
as was specified in the proposed regulations. Another commenter asked 
whether the review of outreach procedures to identify and serve 
underserved populations and the review of the provision of VR services 
to individuals with the most severe disabilities required under 
paragraph (a) of this section are to be conducted on an annual or 
triennial basis. In addition, one commenter questioned the statutory 
basis for requiring the DSU to analyze the characteristics of 
individuals determined to be ineligible for VR services and the reasons 
for the ineligibility determinations.
    One commenter stated that requiring the DSU to analyze, as part of 
its annual evaluation under paragraph (b) of this section, the extent 
to which the State has achieved the objectives of the strategic plan is 
unnecessary and duplicative of the requirements in Sec. 361.72. Other 
commenters stated that it is unduly burdensome to require the 
submission of summaries or copies of the statewide studies and annual 
evaluations as attachments to the State plan. Finally, one commenter 
asked whether the DSU must provide copies of the statewide studies and 
annual evaluations to the State Rehabilitation Advisory Council.
    Discussion: The Secretary believes it is appropriate and necessary 
that a comprehensive assessment of the rehabilitation needs of 
individuals with severe disabilities be conducted every three years. 
This time period is intended to ensure that the DSU conducts the 
assessment and reviews its results in connection with the development 
of a new State plan which, in most instances, must be submitted every 
three years. Moreover, the Secretary believes that each review or 
assessment identified in the regulations as a minimum component of the 
DSU's continuing statewide studies must be conducted on a triennial 
basis in

[[Page 6321]]

conjunction with the development of the State plan.
    Section 101(a)(9)(D) of the Act requires that the State agency 
annually provide to the Secretary an analysis of the characteristics of 
those individuals determined to be ineligible for VR services and the 
reasons for the ineligibility determinations. This requirement, 
however, was mischaracterized in the proposed regulations as a 
statewide study component and should have been identified as an annual 
reporting requirement to be submitted in the State plan.
    The Secretary agrees that the proposed annual evaluation 
requirement related to the State's achievement of the objectives in its 
strategic plan is duplicative of the requirements in Sec. 361.72(e) and 
that the requirement should be deleted from paragraph (b) of this 
section.
    In recognition of the paperwork burden associated with including 
summaries or copies of the statewide studies and annual evaluations as 
attachments to the State plan, the Secretary intends to require only 
that DSUs maintain copies of the studies and evaluations and provide 
copies to the Secretary upon request. Copies of the studies and 
evaluations, however, should be provided to the State Rehabilitation 
Advisory Council so that the Council can meaningfully fulfill its 
advisory role in connection with the development of those documents as 
is required under section 105(c) of the Act. Additionally, although 
this program reporting requirement has been revised, the Secretary 
notes that, pursuant to section 635 of the Act, State agencies shall 
submit as part of the supported employment supplement to their State 
plan a summary of the results of the comprehensive, statewide 
assessment on the rehabilitation and career needs of individuals with 
severe disabilities and the need for supported employment services.
    Changes: The Secretary has amended Sec. 361.29 to clarify that each 
mandatory assessment and review identified in paragraph (a) as part of 
the DSU's continuing statewide studies must be conducted triennially in 
conjunction with the development of the State plan. In addition, 
paragraph (a)(3) of this section of the proposed regulations (annual 
analysis of ineligible individuals and ineligibility determinations) 
has been changed to a reporting requirement in the State plan and 
relocated to paragraph (c)(3) in the final regulations. The Secretary 
also has deleted the analysis of the State's progress in achieving the 
objectives in the strategic plan from the annual evaluation 
requirements in paragraph (b) of this section. Finally, the Secretary 
has revised paragraph (c)(3) of this section to require that the DSU 
maintain copies of its statewide studies and annual evaluations and 
make those copies available upon the request of the Secretary. This 
provision has been relocated to paragraph (c)(4) in the final 
regulations.

Sec. 361.33  Use, assessment, and support of community rehabilitation 
programs

    Comments: Some commenters opposed the requirement that vocational 
rehabilitation services received through community rehabilitation 
programs must be provided in the most integrated settings possible. 
Other commenters requested that this section be revised to require the 
development of a plan for improving existing community rehabilitation 
programs.
    Discussion: Section 102(b)(1)(B) of the Act requires that 
vocational rehabilitation services, including those provided by 
community rehabilitation programs, be provided in the most integrated 
settings possible. Thus, the standard of integration specified in this 
section is consistent with the Act and with other sections of the 
regulations governing the provision of services.
    The Secretary recognizes that the proposed regulations did not 
adequately address each statutory requirement in section 101(a) of the 
Act related to community rehabilitation programs. Consequently, the 
Secretary believes that this section of the final regulations should be 
reorganized, revised, and retitled in an effort to more accurately 
reflect all of these statutory requirements, including the requirement 
that DSUs develop plans for improving existing programs.
    In addition, the Secretary believes that DSUs should be required to 
describe in the State plan the need to use Federal funds in support of 
new or existing community rehabilitation programs in light of recent 
program audit findings indicating that some States have used Federal 
funds received under the authority for establishing, developing, or 
improving community rehabilitation programs for purposes other than 
providing VR services to applicants and eligible individuals. Any 
paperwork burden or cost associated with this description, the 
Secretary believes, is significantly outweighed by the need to ensure 
that program funds used to support community rehabilitation programs 
are properly expended.
    Changes: The Secretary has revised Sec. 361.33 to require that the 
State plan contain plans for improving existing community 
rehabilitation programs. In addition, the Secretary has revised this 
section to require States to describe in the State plan the need to 
establish, develop, or improve, as appropriate, a community 
rehabilitation program to provide VR services to applicants and 
eligible individuals. This requirement is consistent with revisions 
made to the definition of ``establishment, development, or improvement 
of a public or nonprofit community rehabilitation program'' in 
Sec. 361.5(b)(16) to clarify that Federal support of community 
rehabilitation programs is limited to the provision of services to 
applicants and eligible individuals under the VR program. Finally, this 
section has been retitled ``use, assessment, and support of community 
rehabilitation programs'' and has been reorganized to reflect these 
three types of requirements.

Sec. 361.34  Supported employment plan

    Comments: One commenter opposed the requirement in the proposed 
regulations that the DSU submit annual revisions to its supported 
employment plan as a supplement to its State plan.
    Discussion: The Secretary does not intend to require DSUs to 
annually revise each provision of its supported employment plan and 
submit those revisions to RSA every year. Section 635(a) of the Act 
requires that each State submit a State plan supplement for providing 
supported employment services and ``annual revisions [to] the plan 
supplement as may be necessary.'' Pursuant to section 635(b)(3) of the 
Act, however, RSA requires that each year the DSU explain how it will 
expend its annual allotment of supported employment funds received 
under section 632 of the Act. Thus, at a minimum, the DSU is required 
to submit an annual revision to its State plan attachment that 
describes its plans for distributing section 632 funds for purposes of 
providing supported employment services to individuals with the most 
severe disabilities. In addition, the State unit shall provide, on an 
annual basis, any revisions to its supported employment plan that are 
necessary to reflect corresponding changes in State policies or 
practices regarding the provision of supported employment services.
    Changes: The Secretary has revised Sec. 361.34(b) to clarify that 
the DSU is required to submit ``any needed'' annual revisions to its 
supported employment plan.

[[Page 6322]]

Sec. 361.35  Strategic plan

    Comments: Two commenters opposed the requirement that the strategic 
plan be submitted as a supplement to the State plan.
    Discussion: Section 120 of the Act requires that each State develop 
a strategic plan for developing, expanding, and improving VR services 
and submit the plan to RSA. In addition, section 101(a)(34)(A) of the 
Act requires that the State plan include an assurance that the State 
has developed and implemented a strategic plan. The statute, however, 
does not authorize the Secretary to approve or disapprove the strategic 
plan. Consistent with these requirements, the Secretary does not 
consider the strategic plan to be part of the State plan that is 
subject to the approval of the Secretary, but is requiring the DSU to 
submit the strategic plan and the State plan at the same time for 
purposes of administrative efficiency.
    Changes: The Secretary has amended Sec. 361.35(b) to require that 
the DSU submit the strategic plan at the same time that it submits the 
State plan.

Sec. 361.37  Establishment and maintenance of information and referral 
programs

    Comments: The majority of commenters on this section of the 
proposed regulations supported the new provision that would authorize 
State units operating under an order of selection to establish an 
expanded information and referral program for eligible individuals who 
do not meet the order of selection criteria for receiving VR services. 
Some commenters did seek additional clarification as to whether 
counseling and guidance services are authorized or whether an IWRP is 
to be developed for individuals served under the expanded program. One 
commenter requested that the Secretary define the term ``referral for 
job placement.'' Other commenters requested that DSUs be permitted to 
count as successful outcomes those individuals who obtain employment 
following a referral by the DSU. A limited number of commenters 
believed the expanded program to be inconsistent with the order of 
selection requirements in the Act.
    Discussion: The expanded information and referral program 
authorized in this section is intended to address the concerns of some 
State units operating under an order of selection. These State units 
believe they should be permitted to provide limited non-purchased 
services to eligible individuals who do not qualify for services under 
the State unit's priority categories. An order of selection is required 
under section 101(a)(5)(A) of the Act if a State unit determines that 
it is unable to provide services to all eligible individuals. 
Authorization of an expanded information and referral program under 
this section is consistent with the Act as long as the DSU, in carrying 
out the expanded program, does not use funds needed to provide VR 
services to eligible individuals who are able to be served under the 
State unit's order of selection. An assurance to this effect is a key 
condition to operating an expanded program. In addition, the Secretary 
expects a DSU to expend a limited level of resources (e.g., staff time 
and equipment) in support of its referral program. For example, a DSU 
staff member can administer the expanded program only to extent that 
the staff person is not needed to provide VR services to eligible 
individuals who qualify for services. This limited commitment of 
resources must be reflected in the DSU's description of its program 
under paragraph (c)(2) of this section.
    The Secretary agrees that it is appropriate to provide counseling 
and guidance services under the expanded referral program. 
Authorization of these services further distinguishes the expanded 
program from the general information and referral functions performed 
by the DSU for any individual with a disability. However, DSUs are not 
expected to develop IWRPs for eligible individuals receiving expanded 
information and referral services since these individuals do not meet 
the DSU's criteria for receiving services under its order of selection 
and, therefore, cannot receive the full range of services under section 
103(a) of the Act to address their rehabilitation needs.
    The Secretary believes that the term ``referral for job placement'' 
is self-explanatory. The expanded program authorizes DSUs to refer 
individuals to various public and private placement agencies in the 
community that may be able to assist the individual in obtaining 
employment.
    Although the proposed regulations had required DSUs to track the 
results of its expanded information and referral program, the final 
regulations make this a State option. For those DSUs that choose to 
track and report on individuals who obtain employment following their 
participation in the expanded information and referral program, the 
final regulations require that the DSU report to RSA the number of 
individuals served and the number who obtain employment. However, the 
Secretary emphasizes that the number of individuals who are assisted, 
in part, under the expanded information and referral program and who 
subsequently obtain employment must be identified separately from those 
individuals who receive full services under an IWRP and achieve an 
employment outcome under the VR program. Individuals who obtain 
employment following their receipt of limited counseling, guidance, and 
referral services through the expanded program are not considered to 
have achieved an employment outcome under Sec. 361.56 of the 
regulations.
    Changes: The Secretary has revised Sec. 361.37(c) to authorize 
counseling and guidance services under the DSU's expanded information 
and referral program. In addition, paragraph (c) of this section has 
been amended to give the DSU the discretion to determine whether to 
track the results of its expanded information and referral program.

Sec. 361.38  Protection, use, and release of personal information

    Comments: One commenter questioned whether the regulations 
authorize the release of personal information to the State 
Rehabilitation Advisory Council for purposes of evaluating program 
effectiveness and consumer satisfaction. Other commenters stated that 
this section should permit applicants or eligible individuals to 
examine, as well as receive copies of, the information in their record 
of services.
    Some commenters argued that determinations as to whether 
information is harmful under paragraph (c)(2) of this section should be 
made by objective third parties rather than DSUs. These commenters were 
concerned that a conservative interpretation of the term ``harmful'' by 
a State unit would result in limited access to important information.
    Additional commenters requested that applicants and eligible 
individuals be given unrestricted access to personal information 
obtained by the DSU from other agencies and organizations. Other 
commenters sought authorization in this section for the removal of 
inaccurate or misleading information from the record of services. 
Finally, some commenters requested clarification of the term ``judicial 
officer'' in paragraph (e)(4) of this section, which is used in 
connection with the release of information in response to a judicial 
order.
    Discussion: Paragraph (d) of this section authorizes the release of 
personal information to entities that evaluate the VR program as long 
as the evaluation is directly related to the

[[Page 6323]]

administration of the program or to the improvement of the quality of 
life for applicants and eligible individuals. State Rehabilitation 
Advisory Councils are responsible for evaluating the effectiveness of, 
and consumer satisfaction with, the State agency and VR services. 
Because the Council's evaluations are designed to facilitate 
improvement in the administration of the VR program and in the 
provision of VR services, personal information may be released to the 
Council for purposes of carrying out its evaluative functions, provided 
that the Council safeguards the confidentiality of the information 
consistent with the requirements in paragraph (d).
    The Secretary recognizes that, in some instances, an applicant or 
eligible individual may need ready access to the information in his or 
her case record, in addition to copies of the information. The proposed 
regulations were not intended to foreclose the current regulatory 
option that permits applicants and eligible individuals to examine the 
information in their record of services.
    The Secretary believes it would be unduly burdensome to require 
that an objective third party rather than the DSU determine whether 
information requested by an applicant or eligible individual is 
``harmful'' to that individual. Moreover, the Secretary regards any 
inconvenience resulting from the individual's inability to directly 
receive ``harmful'' information as minimal since the relevant 
information must still be provided to the individual, except that it 
shall be provided through a third party chosen by the applicant or 
eligible individual. The Secretary also notes that the individual's 
right under paragraph (c)(2) of this section to choose the person to 
whom harmful information is released supersedes any conflicting State 
confidentiality policy developed under paragraph (a)(1) that designates 
a specific individual to receive harmful information (e.g., medical 
professional). Nevertheless, if a representative has been assigned by a 
court to represent the applicant or eligible individual, the harmful 
information must be released to the individual through the court-
appointed representative. This exception is particularly applicable if 
the applicant or eligible individual is a minor or has limited 
cognitive capacity.
    The Secretary does not believe that there is a basis for requiring 
that applicants and eligible individuals be given unrestricted access 
to personal information obtained by the DSU from other agencies and 
organizations. Release of information developed or compiled by another 
agency or organization is subject to the conditions established by that 
entity in accordance with paragraph (c)(3) of this section.
    The Secretary recognizes that any applicant or eligible individual 
would prefer that inaccurate or misleading information be removed from 
the individual's record of services. On the other hand, the Secretary 
also believes it would be unduly burdensome to impose, through these 
regulations, costly and time-consuming due process procedures that 
would enable an individual to legally challenge the accuracy of the 
information in his or her file. It is within the discretion of the DSU 
to determine the extent to which an individual may challenge the 
information in that individual's record of services. However, the 
Secretary believes, at a minimum, that applicants and eligible 
individuals should be given an opportunity to question the accuracy of 
the information in the individual's record of services and, if 
unsuccessful in having the information removed, should be permitted to 
include a statement in the record that identifies the information that 
the individual considers to be inaccurate.
    The Secretary emphasizes that DSUs are not authorized to release 
personal information in response to a subpoena or other document issued 
by a party to a dispute or an attorney. Release is authorized only if a 
judge or other judicial officer orders the State unit to release the 
information. The term ``judicial officer'' in the proposed regulations 
was intended to mean any judge, magistrate, or other official who is 
authorized to decide the merits of, and issue, a court order. The 
Secretary has clarified this intention in the final regulations.
    Changes: The Secretary has expanded paragraph (c)(1) of Sec. 361.38 
to require that the DSU make the information in the record of services 
available for inspection by the applicant or eligible individual. In 
addition, paragraph (c)(2) has been amended to clarify that if a court 
has appointed a representative to represent an applicant or eligible 
individual, then any requested information that is considered harmful 
to the individual shall be provided to the individual through the 
court-appointed representative. The Secretary also has expanded 
paragraph (c) to authorize applicants and eligible individuals to 
request that misleading or inaccurate information in the individual's 
record of services be amended and to have the request documented in the 
individual's file. Finally, paragraph (e)(4) has been clarified to 
require the release of information in response to an order issued by a 
judge, magistrate, or other authorized judicial officer.

Sec. 361.41  Processing referrals and applications

    Comments: Some commenters opposed the proposed requirement that the 
DSU develop timelines for informing individuals referred to the DSU for 
VR services of its application requirements and for gathering 
information necessary to assess the individual's eligibility and 
priority for services. While these commenters viewed the timeline 
requirements as unduly burdensome, other commenters supported the 
provision and emphasized the need for DSUs to respond timely to 
individuals during the pre-application stage.
    One commenter stated that authorized extensions of the 60-day time 
period for determining eligibility should be limited in duration. Other 
commenters stated that all individuals should be required to complete 
the DSU's formal application form before the 60-day time period begins 
to run. Finally, one commenter requested clarification as to whether 
all individuals must provide information necessary to conduct an 
assessment for determining eligibility and priority for services before 
being considered ``to have submitted an application.''
    Discussion: The Secretary believes that it is important to retain 
in the final regulations the requirement that DSUs develop timelines 
for making good faith efforts to inform individuals referred to the VR 
program of the DSU's application requirements and to obtain information 
needed to assess the individual's eligibility and priority for 
services. The Secretary agrees with those commenters who indicated that 
these timelines are necessary to ensure that there is no unreasonable 
delay between the individual's referral and application for VR 
services. Moreover, this requirement is unlikely to cause DSUs undue 
burden since many States already have in place timelines for handling 
referrals. However, the Secretary believes that the development of an 
appropriate, good faith timeline for processing referrals is a matter 
of State discretion and that it would be inappropriate to impose in the 
final regulations a specific Federal time period for this purpose.
    Section 102(a)(5)(A) authorizes extensions of the 60-day time 
period for determining eligibility if (1) exceptional or unforeseen 
circumstances arise or (2) an extended evaluation of the individual is 
necessary, which may not exceed 18 months. The Secretary agrees,

[[Page 6324]]

however, that extensions due to exceptional or unforeseen circumstances 
cannot be open-ended but must be limited to a specific time period that 
is mutually agreed upon by the individual and the DSU.
    The Secretary believes it would be unduly restrictive to require in 
all instances that an individual with a disability complete the DSU's 
application form before the DSU initiates an assessment for determining 
eligibility and priority for services. This limitation would be 
particularly burdensome for individuals in rural areas who may not have 
ready access to a DSU application form. Although the regulations 
require the DSU to make its application form widely available 
throughout the State, the Secretary considers it inappropriate to 
penalize individuals who are unable to secure an application. Thus, the 
Secretary maintains that the 60-day time period for determining 
eligibility begins once the individual (1) has either completed and 
signed an agency application form or has otherwise requested services 
and (2) has provided information necessary for the DSU to initiate the 
assessment. Once an individual or the individual's representative, as 
appropriate, requests services, it is expected that State units will 
make good faith efforts to obtain the assessment information as quickly 
as possible. The Secretary also notes that information needed to 
initiate the assessment must be provided before the 60-day timeline 
begins to run, whether the individual has completed an agency 
application form or has otherwise requested services. Of course, it is 
essential that the individual remain available during this period to 
complete the assessment process.
    Changes: The Secretary has amended Sec. 361.41 to require that 
extensions of the 60-day time period for determining eligibility due to 
exceptional or unforeseen circumstances be limited in duration and that 
a specific time period be agreed to by the individual and the DSU. In 
addition, the Secretary has revised this section to clarify that all 
individuals who have requested VR services, whether through the 
completion of an agency application or otherwise, shall be available to 
complete the assessment before the individual is considered to have 
submitted an application for VR services.

Sec. 361.42  Assessment for determining eligibility and priority for 
services

    Comments: With respect to the first eligibility criterion, several 
commenters opposed the standard in the proposed regulations that 
required qualified personnel ``licensed or certified in accordance with 
State law and regulation'' to determine the existence of a physical or 
mental impairment. The commenters further recommended that the 
regulations permit DSU employees who meet requirements that are 
``comparable'' to licensing or certification requirements to determine 
the existence of obvious physical impairments.
    Some commenters sought clarification under the second eligibility 
criterion that an impairment that hinders an individual from 
maintaining a job placement constitutes a ``substantial impediment to 
employment.'' These commenters were concerned that the proposed 
regulations appeared to limit ``substantial impediments to employment'' 
to impairments that prevent unemployed individuals from obtaining jobs.
    Other commenters recommended that the term ``determine'' be 
replaced by the statutory term ``demonstrate'' in paragraph (a)(2) of 
this section, in connection with rebutting the presumption that an 
individual who has a substantial impediment to employment can benefit 
in terms of an employment outcome from VR services. Finally, one 
commenter requested clarification as to whether individuals who qualify 
for Social Security benefits are presumed eligible for VR services.
    Several commenters recommended specific clarifying changes to some 
of the examples following this section, whereas other commenters 
opposed the use of examples under this section altogether.
    Discussion: The Secretary believes that the personnel standard 
proposed in connection with the first eligibility criterion is 
consistent with the Act. The proposed standard was based on the 
requirement in section 103(a)(1) of the Act, which states that the 
assessment for determining an individual's eligibility and VR needs 
must be conducted by qualified personnel. The Secretary interprets the 
term ``qualified personnel'' under section 103(a)(1) of the Act to 
refer to personnel who meet the DSU's personnel standards under 
Sec. 361.18(c) of these final regulations (i.e., national or State-
approved certification, licensing, or registration requirements or, if 
none of these requirements exist, other ``comparable requirements'' 
that apply to the profession in which the individual provides VR 
services). Thus, a determination that an individual has a physical or 
mental impairment, or meets any of the other eligibility criteria in 
Sec. 361.42(a), must be made by personnel who meet existing licensure, 
certification, or registration requirements applicable to their 
profession. Moreover, because DSUs are required under Sec. 361.18(c) to 
develop personnel standards based on existing certification or 
licensure requirements, it is expected that DSU personnel who determine 
the existence of impairments, including obvious physical impairments, 
will be qualified within the meaning of the Act.
    The Secretary agrees that an individual does not have to be 
unemployed to have a ``substantial impediment to employment.'' A 
``substantial impediment to employment,'' as defined in 
Sec. 361.5(b)(44), includes any impairment that hinders the individual 
from entering into, engaging in, or retaining employment consistent 
with the individual's abilities and capabilities. Given that the 
regulatory definition of the term ``substantial impediment to 
employment'' clearly recognizes that currently employed individuals may 
qualify for VR services for purposes of ``retaining'' their employment, 
the Secretary does not believe it is necessary to revise the second 
eligibility criterion in paragraph (a)(1)(ii) as the commenters 
recommended.
    Section 102(a)(4)(A) of the Act requires the DSU to presume that an 
individual can benefit in terms of an employment outcome, unless the 
DSU can ``demonstrate,'' based on clear and convincing evidence, that 
the individual is incapable of benefitting in terms of an employment 
outcome from VR services. The Secretary did not intend to weaken this 
statutory presumption by using the term ``determine'' in place of the 
term ``demonstrate'' in the proposed regulations and agrees that the 
regulations should be changed to track the stronger statutory language.
    In addition, the Secretary emphasizes that Social Security 
beneficiaries are not automatically eligible to receive VR services, 
but are presumed under section 102(a)(2) of the Act to meet only the 
first two eligibility criteria under paragraph (a)(1) of this section 
(i.e., the individual has a physical or mental impairment that 
constitutes or results in a substantial impediment to employment). 
Eligibility for services under the Social Security Act also means that 
the individual is presumed to meet the first element in the definition 
of ``individual with a severe disability'' under Sec. 361.5(b)(28). The 
Secretary believes that these limited presumptions were clearly 
reflected in the proposed regulations.
    Although the Secretary believes that most of the examples in the 
regulations represent useful guidance material, the Secretary agrees 
that the examples

[[Page 6325]]

following this section of the proposed regulations, which had 
identified six potential applications of the fourth eligibility 
criterion (an individual requires VR services), should be removed from 
the final regulations in light of the confusion expressed by commenters 
and in recognition of the fact that eligibility determinations are 
highly individualized. The commenters' confusion, the Secretary 
believes, stems from the possibility that the application of the fourth 
eligibility criterion may result in different outcomes for individuals 
with disabilities who face apparently similar circumstances. By 
removing these examples, the Secretary seeks to avoid causing similar 
confusion on the part of individual counselors charged with making 
individual eligibility determinations. Because the examples used 
elsewhere in the regulations (e.g., permissible expenses under the 
definitions of ``maintenance'' and ``transportation'') are 
straightforward applications of clear issues and do not create similar 
confusion among commenters, the Secretary believes that those examples 
should be retained in the final regulations.
    Changes: The Secretary has amended Sec. 361.42(a)(2) of this 
section to require a ``demonstration,'' based on clear and convincing 
evidence, that an individual is incapable of benefitting from VR 
services in order for the DSU to overcome the presumption that an 
individual can benefit from VR services. A technical change also has 
been made to paragraph (a)(1)(iii) to identify more accurately the 
third eligibility criterion as a ``presumption'' of benefit, not a 
``determination'' of benefit. In addition, the Secretary has removed 
from the final regulations the examples that had followed this section 
in the proposed regulations of how an individual may or may not meet 
the final eligibility criterion.

Sec. 361.43  Procedures for ineligibility determination

    Comments: Several commenters stated that DSUs should be required, 
in all instances, to inform individuals in writing of the DSU's 
ineligibility determination. These commenters were concerned that the 
proposed regulations authorized DSUs to inform individuals of 
ineligibility determinations through an appropriate mode of 
communication without a written record.
    In addition, several commenters indicated that it is unduly 
burdensome to require DSUs to review all ineligibility determinations 
within 12 months. These commenters stated that the review of 
ineligibility determinations should be limited to those determinations 
that are based on a finding that the individual is incapable of 
achieving an employment outcome. Other commenters asked that the 
regulations specify additional bases for not reviewing ineligibility 
determinations (e.g., that the individual's disability is rapidly 
progressive or terminal).
    Discussion: The proposed regulations incorrectly indicated that 
DSUs have the option of providing ineligibility notices in writing or 
through an appropriate mode of communication. The Secretary agrees 
that, at a minimum, notice of an ineligibility determination and other 
required information should be provided to the individual in writing 
and supplemented, as necessary, by other appropriate modes of 
communication in accordance with the individual's informed choice.
    The Secretary agrees with the suggestion to modify the requirements 
in paragraph (d) of this section governing the review of ineligibility 
determinations in light of the views expressed by public commenters. 
The proposed regulations required DSUs to review all ineligibility 
determinations at least once within 12 months and to review annually 
thereafter if requested by the individual determinations based on a 
finding that the individual cannot achieve an employment outcome. In 
order to reduce the process burden and associated costs on DSUs, 
however, the Secretary believes that DSUs should be required to review 
within 12 months, and annually thereafter if requested by the 
individual, only those ineligibility determinations that are based on a 
finding that the individual is incapable of achieving an employment 
outcome. Moreover, an additional exception to this review requirement, 
which is authorized under the current regulations, should be permitted 
for situations in which the individual's medical condition is rapidly 
progressive or terminal. The Secretary believes this narrower 
interpretation of the review requirements is supported by sections 
101(a)(9)(D) and 102(c) of the Act and notes that this position is 
consistent with the current regulations in 34 CFR 361.35(d). The 
Secretary also notes that the requirements of this section apply both 
to ineligibility determinations following an extended evaluation and to 
ineligibility determinations made after an individual has begun to 
receive services under an IWRP.
    Changes: The Secretary has revised Sec. 361.43 to specify that 
notice of ineligibility determinations must be provided in writing and 
must be supplemented, as necessary, by other appropriate modes of 
communication consistent with the individual's informed choice. For 
example, a DSU could meet these requirements by providing an 
ineligibility notice in braille or large print form to an applicant who 
has a visual impairment. In addition, the Secretary has revised this 
section to require DSUs to review only ineligibility determinations 
that are based on a finding that the individual is incapable of 
achieving an employment outcome. The final regulations also clarify 
that this review of ineligibility determinations need not be conducted 
if the individual's medical condition is rapidly progressive or 
terminal.

Sec. 361.44  Closure without eligibility determination

    Comments: One commenter requested that this section be amended to 
state that a DSU ``shall not close'' (rather than ``may not close'') an 
applicant's case prior to making an eligibility determination in order 
to clarify that the prohibition under this section is mandatory.
    Discussion: The Secretary emphasizes that State units are 
prohibited from closing an applicant's record of services prior to 
making an eligibility determination unless certain circumstances are 
evident (e.g., the applicant declines to participate in the assessment, 
and the DSU has made a reasonable number of attempts to encourage the 
applicant's participation). The Secretary interprets the phrase ``may 
not close'' to signify a mandatory prohibition.
    Changes: None.

Sec. 361.45  Development of the individualized written rehabilitation 
program

    Comments: Several commenters stated that the regulations should be 
strengthened to ensure that the eligible individual's employment goal 
is consistent with that individual's informed choice. In addition, some 
commenters opposed requiring DSUs to develop timelines for the prompt 
development of IWRPs, whereas other commenters supported the timeline 
requirement as a necessary protection for eligible individuals. 
Commenters also stated that the DSU should not be required to revise an 
individual's IWRP to reflect minor changes to services that are already 
identified in the IWRP.
    Discussion: The Secretary agrees that the informed choice of the 
individual, as well as the individual's strengths, priorities, 
concerns, abilities, capabilities, and interests, should be considered 
in determining the individual's employment goal. Addition

[[Page 6326]]

of the term ``informed choice'' to the list of factors to be considered 
under paragraph (a) of this section is also consistent with the 
consideration of informed choice in connection with the provision of 
services under Sec. 361.48 and in connection with the achievement of an 
employment outcome under Sec. 361.56.
    The Secretary believes that the proposed requirement that DSUs 
establish and implement timelines for the prompt development of IWRPs 
should be retained in the final regulations. The Secretary agrees with 
those commenters who indicated that these timelines are necessary to 
guard against unreasonable delays in the development of the IWRP once 
an individual is determined eligible for VR services. It should also be 
noted that this section does not require DSUs to apply an arbitrary 
time limit to the development of all IWRPs, as some commenters had 
questioned. Instead, DSUs are required to develop general standards 
that ensure the timely development of IWRPs as long as the standards 
include timelines that take into account the specific needs of the 
individual.
    Changes in an individual's vocational goal, intermediate 
objectives, or VR services must be documented through a revision in the 
IWRP after obtaining the agreement and signature of the individual. The 
Secretary believes that changing the reference from ``VR needs'' to 
``VR services'' will help clarify this provision.
    In addition, the Secretary agrees that minor changes to an 
individual's program of services do not have to be recorded in a 
revision to the IWRP. This means, for example, that a slight change in 
the cost of a previously authorized VR service would not warrant a 
revision to the IWRP. On the other hand, a substantive change to an 
existing service (e.g., a change in service provider) or the addition 
of a new service must be documented by a revision. Regardless of 
whether a particular change to an individual's program necessitates a 
revision to the IWRP, however, the Secretary expects that the DSU will 
obtain the agreement of the individual before the change is 
implemented.
    Changes: The Secretary has revised Sec. 361.45 to clarify that the 
informed choice of the individual must be considered in the development 
of the IWRP and the identification of a vocational goal. The Secretary 
also has amended this section to require the DSU to incorporate into 
the IWRP any revisions necessary to reflect changes to the individual's 
goal, objectives, or VR services and to obtain the individual's 
agreement and signature to the revisions.

Sec. 361.46  Content of the IWRP

    Comments: Some commenters on the proposed regulations questioned 
certain required elements of the IWRP, contending they were 
inconsistent with the Act and unnecessarily burdensome. Specifically, 
several commenters questioned the basis for requiring that the long-
term vocational goal identified in the IWRP be ``specific.'' Similarly, 
other commenters stated that intermediate rehabilitation objectives 
need not be ``measurable.'' Additional commenters opposed requiring a 
projected date for the achievement of the vocational goal. Several 
commenters recommended that the record of the DSU's evaluations of 
individual progress be removed from the IWRP and added to the record of 
services under Sec. 361.47. Finally, some commenters opposed the 
requirement that the individual be provided with information concerning 
the availability and qualifications of alternative service providers.
    Discussion: The Secretary believes that the long-term vocational 
goal must be stated with some specificity in the IWRP in order for it 
to be meaningful. The Secretary does not intend that the IWRP identify 
the exact job that the individual intends to obtain, but expects, at a 
minimum, that the vocational goal be described in terms of a particular 
type of profession or occupation. For example, ``clerical work'' is a 
sufficiently detailed vocational goal under this requirement, whereas a 
vocational goal of ``supported employment'' or ``self-employment'' 
would be impermissibly vague.
    The requirement in the proposed regulations that the intermediate 
rehabilitation objectives must be ``measurable'' was misplaced and has 
been eliminated from the final regulations. The use of this term was 
based on the requirement in section 102(b)(1)(B)(vii) of the Act that 
the DSU shall develop procedures for evaluating the individual's 
progress toward meeting the intermediate rehabilitation objectives. The 
final regulations also clarify that the progress of the individual in 
satisfying the objectives must be measured periodically by the DSU, but 
a record of the reviews and evaluations need not be included in the 
IWRP. These reviews and evaluations, the Secretary agrees, should be 
maintained as part of the individual's record of services under 
Sec. 361.47, as some commenters suggested.
    The Secretary does not expect DSUs to specify a date certain on 
which an employment outcome shall be achieved. Thus, the term 
``projected date'' for the achievement of the individual's vocational 
goal in paragraph (a)(4) of this section in the proposed regulations 
has been replaced by the term ``projected timeframe'' in the final 
regulations. This provision is intended to ensure that the individual 
understands how long the rehabilitation process is expected to take.
    The Secretary believes that the requirement in this section 
concerning the individual's description of how information was provided 
about the availability and qualification of alternative service 
providers should be removed from the final regulations since it is 
duplicative of the choice requirements in Sec. 361.52. Section 
361.52(b) specifies that the DSU shall provide the individual, or 
assist the individual in acquiring, information necessary to make an 
informed choice about VR services and service providers, including 
information about the qualifications of potential service providers.
    Changes: The Secretary has revised Sec. 361.46 by removing the term 
``measurable'' from paragraph (a)(2). The Secretary also has replaced 
the term ``projected date'' in paragraph (a)(4) of this section with 
the term ``projected timeframe'' in connection with the achievement of 
the individual's vocational goal. Additionally, the record of reviews 
and evaluations of individual progress has been removed from paragraph 
(a)(5) of this section as an IWRP requirement and relocated to 
Sec. 361.47(h) as a record of services requirement. Finally, the 
reference in the individual's statement to the availability and 
qualifications of alternative service providers has been removed from 
paragraph (a)(6).

Sec. 361.47  Record of services

    Comments: None.
    Discussion: In the proposed regulations, the Secretary proposed to 
delete from the record of services a number of requirements that were 
considered burdensome or were adequately addressed in other regulatory 
provisions. In particular, several requirements that were duplicative 
of IWRP content requirements in Sec. 361.46 were proposed for removal 
from this section. For the same reason, the Secretary believes that 
proposed Sec. 361.47(h) should be deleted from the final regulations. 
This provision would have required documentation in the record of 
services of the DSU's reasons for terminating services to an individual 
and, if appropriate, documentation of the

[[Page 6327]]

DSU's basis for determining that the individual has achieved an 
employment outcome under Sec. 361.56. The Secretary believes that 
further reducing the paperwork burden on DSUs by removing proposed 
Sec. 361.47(h) is appropriate given that this requirement is adequately 
addressed by Sec. 361.46(a)(10).
    However, in order to ensure that individuals in competitive 
employment are compensated in accordance with the definition of 
``competitive employment'' in Sec. 361.5(b)(10), the Secretary believes 
that the record of services for those individuals must include 
documentation that the individual is compensated at or above the 
minimum wage and receives at least the customary wage and benefit level 
paid to non-disabled persons performing similar work for the same 
employer.
    Changes: The Secretary has removed from Sec. 361.47 the 
documentation requirements relating to the termination of services and 
the achievement of an employment outcome and has added a cross-
reference in Sec. 361.46(a)(10) to Sec. 361.56 for additional 
clarification. In addition, this section has been amended to require 
that the DSU verify in the record of services that an individual with a 
disability in competitive employment is compensated at or above the 
minimum wage and that the individual's wage and level of benefits are 
not less than that paid by the employer for the same or similar work 
performed by non-disabled individuals. This new requirement is located 
in paragraph (i) of this section.

Sec. 361.48  Scope of vocational rehabilitation services for 
individuals with disabilities

    Comments: Some commenters recommended that this section of the 
final regulations identify assessment services, counseling and 
guidance, and rehabilitation technology as mandatory services that the 
DSU shall provide to all individuals in need of these services. Other 
commenters opposed limiting counseling and guidance services authorized 
under this section to ``vocational counseling and guidance.'' Two 
commenters requested that the final regulations clarify that it is the 
joint responsibility of the DSU and the individual to secure grant 
assistance from sources other than VR program funds to pay for training 
in institutions of higher education. Other commenters recommended that 
language be added to paragraph (a)(13) of this section to ensure that 
job search and placement services are not discontinued before an 
individual achieves the employment outcome specified in the 
individual's IWRP. One commenter opposed the requirement in paragraph 
(b) that the State plan descriptions related to the provision of 
rehabilitation technology and personal assistance services be provided 
on an annual basis. Another commenter stated that the description of 
the DSU's strategies for expanding the availability of personal 
assistance services under Sec. 361.48(b)(3) of the proposed regulations 
is unduly burdensome and is not required by the Act. Finally, several 
commenters recommended that the final regulations require, consistent 
with the Act, a description in the State plan of how assistive 
technology devices are provided or worksite assessments are made as 
part of the assessment for determining eligibility and VR needs of the 
individual.
    Discussion: Section 361.48, which implements section 103(a) of the 
Act, authorizes specific vocational rehabilitation services necessary 
to address the rehabilitation needs of individuals with disabilities. 
These services must be included in each DSU's program of VR services 
and, consistent with Sec. 361.45(a) and Sec. 361.46(a), must be 
provided to an eligible individual if the service is needed to achieve 
the intermediate rehabilitation objectives or vocational goal included 
in the individual's IWRP. In addition, Sec. 361.42 requires DSUs to 
conduct an assessment for determining eligibility and priority for 
services for each applicant and to provide rehabilitation technology 
devices and services during the assessment if needed to determine 
eligibility. In light of these requirements, the Secretary does not 
believe it is necessary to identify assessment services, counseling and 
guidance, and rehabilitation technology as mandatory services under 
this section of the regulations, as some commenters had recommended. 
The commenters correctly noted that section 101(a)(8) of the Act 
exempts these services from the required search for comparable service 
and benefits. Regardless of whether a particular service is subject to 
the comparable service and benefits requirements, however, the 
regulations clearly require DSUs to conduct an assessment for 
determining eligibility and priority for services for each applicant 
and to ensure that each eligible individual receives needed VR services 
in accordance with the individual's IWRP.
    Those commenters who opposed changing the term ``counseling and 
guidance'' to ``vocational counseling and guidance'' in the proposed 
regulations were concerned that the change would limit the scope of 
counseling and guidance currently provided under the program. 
Specifically, the commenters were concerned that this term would 
prohibit the provision of personal adjustment counseling and other 
related counseling services currently provided by vocational 
rehabilitation counselors--services that are necessary to address 
issues confronted by individuals with disabilities seeking employment, 
including issues associated with adjusting to environmental barriers, 
medical issues, family and social issues, and other related issues that 
are not considered ``vocational.'' However, the use of the term 
``vocational counseling and guidance'' in the proposed regulations was 
not intended to limit the scope of the counseling and guidance that an 
individual may need in order to achieve a vocational goal. Rather, the 
term ``vocational counseling and guidance'' was intended merely as a 
means of distinguishing discrete, therapeutic counseling and guidance 
services that are necessary for an individual to achieve an employment 
outcome from the general supportive role that the VR counselor performs 
throughout the rehabilitation process in connection with any service. 
Discrete, therapeutic counseling and guidance services include personal 
adjustment counseling, counseling that addresses medical, family, or 
social issues, vocational counseling, and any other form of counseling 
and guidance that is necessary for an individual with a disability to 
achieve an employment outcome. The Secretary agrees that changing the 
term ``vocational counseling and guidance'' to ``vocational 
rehabilitation counseling and guidance'' in the final regulations, as 
some commenters suggested, better reflects this broad interpretation. 
Like the term used in the proposed regulations, this change does not 
affect the general counseling and guidance relationship that exists 
between the counselor and the individual during the entire 
rehabilitation process.
    The Secretary agrees that the DSU and the individual share a joint 
responsibility to secure grant assistance from sources other than VR 
program funds in order to pay for training in institutions of higher 
education. This position is consistent with RSA's longstanding policy 
relating to the requirement that available comparable services and 
benefits be located and used before a DSU expends program funds to pay 
for VR services. Under this policy, DSUs are responsible for 
identifying providers of comparable services and benefits and for 
assisting

[[Page 6328]]

eligible individuals in obtaining those resources. The individual, on 
the other hand, is responsible for applying for appropriate comparable 
services and benefits identified by the DSU. The Secretary believes 
that this policy is equally applicable to the requirement in section 
103(a)(3) of the Act that maximum efforts be made to secure alternative 
sources to pay for training in institutions of higher education. 
Accordingly, it is expected that DSUs will locate alternative funding 
sources to support the cost of training in colleges and universities 
and, to the extent necessary, assist eligible individuals in obtaining 
this assistance. It is further expected that an individual in need of 
training in a higher education institution will pursue and apply for 
alternative funding sources identified by the DSU.
    Commenters on Sec. 361.48(a)(13) of the proposed regulations were 
concerned that DSUs could terminate job placement services anytime an 
eligible individual obtains a job even if the job is inconsistent with 
the vocational goal identified in the individual's IWRP. As a result, 
these commenters recommended that this section specifically authorize 
job search and placement assistance until the individual achieves an 
employment outcome that is consistent with his or her abilities, 
capabilities, interests, and informed choice. The Secretary believes, 
however, that the commenters' concerns are fully addressed by 
Sec. 361.56 of the regulations. That section contains the requirements 
for determining whether an individual has achieved an employment 
outcome, including the requirement in Sec. 361.56(b) that the 
employment outcome be consistent with the individual's abilities, 
capabilities, interests, and informed choice. Thus, termination of 
services on the basis that the individual has achieved an employment 
outcome is dependent, in part, upon whether the job placement is 
appropriate for the individual in accordance with Sec. 361.56(b). If an 
eligible individual receiving VR services is underemployed (i.e., 
placed in a job that is not consistent with the individual's abilities, 
capabilities, interests, and informed choice), the DSU may not 
discontinue services, including job search and placement assistance, 
that the individual needs in order to achieve the vocational goal 
specified in the individual's IWRP.
    In an effort to further reduce the paperwork burden and associated 
costs on DSUs, the Secretary has made two regulatory changes to 
paragraph (b) of this section that were recommended by commenters on 
the proposed regulations. First, the final regulations require the DSU 
to submit descriptions related to the provision of rehabilitation 
technology and personal assistance services triennially as part of its 
new State plan. The proposed regulations would have required submission 
of these descriptions annually as revisions to the State plan. Second, 
the proposed State plan description of the DSU's strategies for 
expanding the availability of personal assistance services has been 
removed from the final regulations because it is not required by 
statute and could be more appropriately addressed in a DSU's strategic 
plan. Additionally, the Secretary has added to Sec. 361.48(b) of the 
final regulations a requirement that the State plan describe how 
assistive technology devices are provided or worksite assessments are 
made as part of the assessment for determining eligibility and VR needs 
of the individual. This State plan component, which is required under 
section 101(a)(31) of the Act, was inadvertently omitted from the 
proposed regulations.
    Changes: The Secretary has revised Sec. 361.48 of the proposed 
regulations by changing the term ``vocational counseling and guidance'' 
under paragraph (a)(3) of this section to ``vocational rehabilitation 
counseling and guidance.'' The Secretary also has revised this section 
by clarifying under paragraph (a)(6) that it is the joint 
responsibility of the DSU and the individual to secure grant assistance 
from other sources before using VR funds to pay for training in 
institutions of higher education. In addition, the term ``annually'' 
has been removed from paragraph (b) of this section. The description in 
the State plan regarding the DSU's strategies for expanding the 
availability of personal assistance services that would have been 
required under Sec. 361.48(b)(3) of the proposed regulations also has 
been removed from the final regulations. Finally, the Secretary has 
added to this section the requirement that the State plan describe the 
manner in which assistive technology devices are provided or worksite 
assessments are made as part of the assessment for determining 
eligibility and VR needs of the individual.

Sec. 361.49  Scope of Vocational Rehabilitation Services for Groups of 
Individuals With Disabilities

    Comments: None.
    Discussion: Because the final regulations limit Sec. 361.50 to 
written policies that cover the nature and scope of services provided 
to individuals under Sec. 361.48, the Secretary believes that the 
requirement regarding written policies for services to groups properly 
belongs in Sec. 361.49(b)(2) of the final regulations. This provision 
is intended to ensure that if a DSU chooses to provide services to 
groups under Sec. 361.49, then the DSU develops and maintains written 
policies covering each service and the criteria under which each 
service is provided.
    Changes: The Secretary has revised Sec. 361.49 by relocating the 
requirement regarding written policies for services to groups from 
Sec. 361.50 of the proposed regulations to Sec. 361.49(b)(2).

Sec. 361.50  Written Policies Governing the Provision of Services for 
Individuals With Disabilities

    Comments: One commenter stated that it is inappropriate for this 
section to require DSUs to develop written policies governing the 
provision of VR services to groups since these services are not 
included in the individual's IWRP. Several commenters recommended 
requiring that the written policies developed under this section must 
ensure that the provision of services to each individual is consistent 
with the individual's informed choice. Finally, one commenter 
questioned whether DSUs can prohibit verbal authorization for services 
in all instances.
    Discussion: The Secretary recognizes the inconsistency in requiring 
the DSU to develop written policies that cover the scope of VR services 
for groups under Sec. 361.49 and, at the same time, ensure that the 
provision of services is based on the needs of the individual as 
identified in the individual's IWRP. The commenter on the proposed 
regulations who raised this issue correctly noted that group services 
under Sec. 361.49 are not necessarily included in the IWRP to address a 
rehabilitation need of the individual. The Secretary intends that the 
policies developed under Sec. 361.50 will ensure that the provision of 
services to any eligible individual will be based on that individual's 
needs and that no arbitrary limits, including limits pertaining to the 
location, cost, or duration of a particular service, will be placed on 
an individual's receipt of VR services.
    The Secretary agrees that the provision of VR services must be 
consistent with the informed choice of the individual. This position is 
clearly reflected in Sec. 361.48 of the regulations. Consequently, the 
final regulations specify that the DSU's written policies developed 
under Sec. 361.50 must ensure that the provision of VR services is 
based on the individual's rehabilitation needs and is consistent with 
the individual's informed choice.

[[Page 6329]]

    Consistent with the proposed regulations, Sec. 361.50(d) of the 
final regulations requires DSUs to establish policies related to the 
timely authorization of services, including any conditions under which 
it allows verbal authorization. Although the Secretary expects that, in 
most instances, the DSU will provide written authorization of services 
before or at the same time that the services are provided, the 
Secretary agrees that DSUs should have the flexibility to determine the 
circumstances under which verbal authorization for services is 
permitted. The Secretary recognizes, however, that some States prohibit 
verbal authorization under all circumstances. This provision is not 
intended to infringe on this State prerogative and requires only that 
the DSU specify the conditions, if any, under which verbal 
authorization can be given.
    Changes: The Secretary has amended Sec. 361.50 by clarifying that 
this section applies only to the provision of services to individuals 
with disabilities under Sec. 361.48. This section also has been 
retitled to reflect this change. A corresponding requirement regarding 
written policies for services to groups has been added to 
Sec. 361.49(b) of the final regulations. In addition, the Secretary has 
revised Sec. 361.50 to specify that the DSU's written policies must 
ensure that the provision of services is consistent with the 
individual's informed choice. Finally, paragraph (d) of this section 
has been clarified to require that the DSU's policies regarding the 
timely authorization of services identify any conditions under which 
verbal authorization can be given.

Sec. 361.51  Written Standards for Facilities and Providers of Services

    Comments: None.
    Discussion: The Secretary believes it is necessary to revise the 
requirements relating to qualified personnel in paragraph (b)(1) of 
this section to reflect corresponding changes to the personnel 
standards included in the State agency's comprehensive system of 
personnel development under Sec. 361.18(c) of these regulations. A 
change is necessary to clarify that individuals who provide VR services 
shall meet existing national or State-approved certification, 
licensing, or registration requirements that apply to the discipline in 
which that rehabilitation professional provides VR services. 
Individuals who meet ``comparable requirements,'' such as State 
personnel requirements, developed by the DSU under Sec. 361.18(c) would 
be authorized to provide VR services only if there are no existing 
licensing, certification, or registration requirements applicable to 
their particular profession. As stated in the analysis of comments on 
Sec. 361.18(c), the Secretary believes that the Act precludes the use 
of less rigorous ``comparable requirements'' in place of existing 
national or statewide certification, licensing, or registration 
requirements that apply to the discipline in which a rehabilitation 
professional provides VR services.
    Changes: The Secretary has revised Sec. 361.51(b) consistent with 
Sec. 361.18(c) to clarify that individuals who provide VR services 
shall meet applicable certification, licensing, or registration 
requirements or, if none exist, other ``comparable requirements'' 
developed by the DSU under its comprehensive system of personnel 
development.

Sec. 361.52  Opportunity To Make Informed Choices

    Comments: Some commenters requested clarification of the meaning of 
the term ``informed choice.'' Other commenters stated that the DSUs 
should be required to inform individuals of their right to make 
informed choices and to explain how informed choice may be exercised. 
Additional commenters recommended requiring DSUs to provide through 
appropriate modes of communication information that is necessary for an 
individual to make an informed choice and to assist individuals with 
cognitive disabilities in exercising choice.
    Some commenters opposed the requirement that DSUs provide, or 
assist individuals in obtaining, information related to the level of 
consumer satisfaction with each service. These commenters stated that 
information pertaining to consumer satisfaction may not be available to 
the DSU in all instances. In addition, several commenters questioned 
whether the sources of information specified in paragraph (c) of this 
section must be used by DSUs to ensure that individuals have sufficient 
information to make informed choices.
    Discussion: ``Informed choice'' is a decisionmaking process in 
which the individual analyzes relevant information and selects, with 
the assistance of the rehabilitation counselor or coordinator, a 
vocational goal, intermediate rehabilitation objectives, VR services, 
and VR service providers. Accordingly, this section of the regulations 
requires each DSU, in consultation with its Council if it has one, to 
develop its own policies and procedures that enable individuals with 
disabilities to make informed choices throughout their participation in 
the VR program. In addition, the regulations identify minimum types of 
information that must be provided to the individual by the DSU or 
through the DSU's assistance in connection with the development of the 
IWRP (e.g., information pertaining to cost, accessibility, and duration 
of services, qualifications of service providers, and degree of 
integration associated with a service). Beyond these limited 
informational requirements, the Secretary believes it would be 
inappropriate to impose, through these regulations, an across-the-board 
definition of ``informed choice,'' as some commenters suggested. It is 
within the discretion of the DSU to develop appropriate policies that 
facilitate access to, at a minimum, the types of information specified 
in the regulations and that enable each individual to make informed 
choices.
    However, the Secretary agrees that individuals must be 
appropriately informed of their opportunity to make informed choices 
throughout the rehabilitation process and that requirements should be 
added to the final regulations that are designed to ensure that 
individuals are aware of their right to make an informed choice about 
their vocational goal, rehabilitation objectives, services, and service 
providers and that they understand how to exercise that right. In 
addition, the Secretary believes that requiring DSUs to apprise 
eligible individuals of their statutory right to informed choice is an 
essential protection for individuals with disabilities that 
significantly outweighs any additional burden associated with the 
information requirements in this section.
    The Secretary recognizes that, in some instances, DSUs may not have 
access to information regarding the level of consumer satisfaction with 
a particular service and that DSUs should be required to provide, or 
assist the individual in acquiring, this information to the extent that 
it is available.
    In addition, the Secretary emphasizes that the information sources 
and methods of obtaining information identified in paragraph (c) of 
this section are intended to serve only as examples. A DSU can assist 
individuals in making informed choices by using the identified methods 
(e.g., referring individuals to local consumer groups or disability 
advisory councils), by providing the listed sources of information 
(e.g., State or regional lists of services and services providers), or 
by using other methods or information sources that it considers 
appropriate.
    Changes: The Secretary has revised Sec. 361.52(a) to require DSUs 
to develop

[[Page 6330]]

policies that ensure that each individual receives, through appropriate 
modes of communication, information concerning the availability and 
scope of informed choice, the manner in which informed choice may be 
exercised, and, consistent with section 12(e)(2)(F) of the Act, the 
availability of support services for individuals with cognitive or 
other disabilities who require assistance in exercising informed 
choice. In addition, the Secretary has clarified in paragraph (b) that 
the DSU shall provide the individual, or assist the individual in 
acquiring, information regarding consumer satisfaction with relevant 
services to the extent that that information is available.

Sec. 361.53  Availability of Comparable Services and Benefits

    Comments: Several commenters requested clarification of the 
proposed requirement that comparable services and benefits must be 
available within a reasonable period of time. Other commenters sought 
clarification of proposed paragraph (b) of this section, which 
identifies those services for which a DSU is not required to determine 
whether comparable services and benefits are available. Some commenters 
recommended that the regulations direct DSUs to provide the services 
specified in paragraph (b) in all instances. Other commenters asked 
whether a DSU, although not required, has the discretion to search for 
and use comparable services and benefits in connection with the 
provision of the services identified in paragraph (b).
    Discussion: The proposed regulations required DSUs to use 
comparable services and benefits for all non-exempt services if 
available to the eligible individual within a reasonable period of time 
so that the intermediate rehabilitation objectives in the individual's 
IWRP can be met. The proposed regulations were intended to require DSUs 
to determine what constitutes a reasonable period of time on a case-by-
case basis according to the services and rehabilitation objectives 
identified in each individual's IWRP. However, in light of the 
confusion expressed by commenters about both this section of the 
regulations and the proposed definition of ``comparable services and 
benefits, the Secretary believes that requiring comparable services and 
benefits to be available at the time that the service is needed to 
accomplish the rehabilitation objectives in the individual's IWRP 
represents a clearer standard for DSUs to follow.
    The proposed regulations also were intended to exempt specific 
services from the comparable services and benefits requirement 
consistent with section 101(a)(8) of the Act. The statute requires DSUs 
to provide certain services (e.g., rehabilitation technology) as 
mandatory services without determining the availability of comparable 
services and benefits as is required for the remaining VR services. The 
Secretary agrees that the statement in proposed paragraph (b) of this 
section that a comparable services and benefits determination ``is not 
required'' prior to the provision of the services identified in section 
101(a)(8) of the statute is unclear and that the final regulations 
should clarify that the exempted services are not subject to a prior 
comparable services and benefits determination, i.e., the DSU has the 
affirmative responsibility to provide these services without 
determining the availability of alternative funding sources. 
Nevertheless, the Secretary agrees that, if an exempted service such as 
an assistive technology device is known to be readily available from an 
alternative source at the time the service is needed to accomplish a 
rehabilitation objective in the individual's IWRP, it is prudent for 
the DSU to use those sources in order to conserve funds provided under 
this program. The Secretary notes, however, that projects supported by 
the Technology-Related Assistance for Individuals with Disabilities Act 
of 1988 (Tech Act) are not alternative sources to the VR program for 
purposes of providing rehabilitation technology. Tech Act projects are 
designed to assist States in developing and implementing effective 
systems for securing from other programs technology-related assistance 
for individuals with disabilities. These projects do not provide actual 
assistive technology devices or services to individuals.
    Changes: The Secretary has revised paragraph (a)(2) of Sec. 361.53 
to require DSUs to use comparable services and benefits that are 
available to the individual at the time the services are needed to 
achieve the rehabilitation objectives in the individual's IWRP. This 
change is consistent with the changes made to the proposed definition 
of ``comparable services and benefits'' discussed previously in the 
preamble analysis of comments under Sec. 361.5(b). In addition, the 
Secretary has revised this section to clarify that the services listed 
in paragraph (b) are exempt from a determination of the availability of 
comparable services and benefits.

Sec. 361.54  Participation of Individuals in Cost of Services Based on 
Financial Need

    Comments: None.
    Discussion: The Secretary believes it is necessary to clarify that 
State policies governing individual participation levels in the cost of 
VR services must take into consideration the disability-related 
expenses born by an individual when determining the individual's 
financial need. Although the Secretary presumes that DSUs already 
consider the individual's disability-related expenses when determining 
financial need, the Secretary seeks to emphasize the importance of 
disability-related expenses given the significant impact that they may 
have on an individual's ability to contribute to the cost of VR 
services.
    Changes: The Secretary has revised Sec. 361.54 by requiring in 
paragraph (b)(2)(v)(C) that an individual's disability-related expenses 
be considered in determining the extent to which an individual shall 
contribute toward the cost of VR services.

Sec. 361.55  Review of extended employment in community rehabilitation 
programs or other employment under section 14(c) of the Fair Labor 
Standards Act

    Comments: Some commenters requested that DSUs be permitted to limit 
the number of annual reviews of individuals in extended employment that 
DSUs are required to conduct. In addition, some commenters requested 
that the regulations specify that the annual review requirement in this 
section applies to individuals in supported employment who earn less 
than the minimum wage.
    Discussion: Section 101(a)(16) of the Act requires DSUs to review 
annually the status of each eligible individual in extended employment 
in order to determine the individual's needs and interests related to 
competitive employment. The Act does not provide for any exceptions to 
this annual review requirement. Thus, the Secretary interprets section 
101(a)(16) of the Act to prohibit DSUs from discontinuing annual 
reviews of individuals who remain in extended employment for extensive 
periods. This position represents a modification to the policy in the 
RSA Manual, which had permitted States to place limitations on the 
number of annual reviews of those in extended employment. Given the 
expanded scope of competitive employment, supported employment, and 
other integrated employment opportunities that may become available

[[Page 6331]]

to individuals in extended employment in future years, the Secretary 
believes that discontinuing annual reviews would be inconsistent with 
the emphasis that the statute places on competitive and integrated 
employment.
    In addition to conducting reviews of individuals in extended 
employment, section 101(a)(16) of the Act requires DSUs to review 
annually the job status of individuals employed in ``other employment 
settings'' in which the individual is compensated under section 14(c) 
of the FLSA. This review requirement applies to any eligible individual 
employed in an integrated setting who earns below the minimum wage, 
including individuals in supported employment settings who are unable 
to earn the minimum wage at the time of transition to extended 
services. In each case, the DSU is required to review the individual's 
employment status and determine his or her needs and interests in 
becoming competitively employed.
    Changes: None.

Sec. 361.56  Individuals determined to have achieved an employment 
outcome

    Comments: Several commenters responded to the Secretary's request 
in the NPRM for comments on the potential effect of the proposed time 
standard for maintaining a job placement in order to achieve an 
employment outcome. Many of the commenters questioned the proposed 
standard--the duration of the employers's probationary period or 90 
days if the employer does not have an established probationary period--
by stating that reliance on employer probationary periods would be too 
burdensome for DSUs to administer or would not ensure job stability in 
instances in which the probationary period is very short (e.g., two 
weeks). Some commenters supported the proposed standard, while others 
suggested that the regulatory time period be 90 days or the employer's 
probationary period, whichever is longer. However, a large majority of 
the commenters recommended that the regulations establish a uniform 
time period applicable to all job placements. Some commenters suggested 
retaining the 60-day time period required under the current 
regulations, whereas other commenters recommended that the current 
standard be increased to 90 or 180 days.
    Discussion: The requirement in the proposed regulations that an 
individual maintain a job placement for the employer's probationary 
period or, if the employer does not have a probationary period, for at 
least 90 days was intended to better reflect whether an individual has 
successfully achieved an employment outcome. Like many of the 
commenters on the proposed regulations, the Secretary believes that the 
60-day standard under the current regulations is too short a period to 
determine whether the individual will be able to successfully maintain 
the job placement over time. The proposed regulations were designed 
both to strengthen the existing standard and to base the decision that 
an individual has achieved an employment outcome, in part, on the 
individual's ability to satisfy the requirements imposed by the 
employer on any employee. If the employer did not have a probationary 
period in place, the 90-day period was considered an adequate safeguard 
to ensure that the individual is performing well and is likely to 
maintain the employment outcome.
    Nevertheless, the Secretary understands the concerns of many 
commenters that the proposed standard may cause DSUs to avoid placing 
individuals with employers who have lengthy probationary periods, 
thereby shrinking the pool of potential job placements, or may be 
inconsistent with the informed choice of an individual who seeks to 
cease contact with the DSU prior to the end of the relevant 
probationary period. In addition, it is clear that most commenters 
prefer a fixed time period that applies equally to each individual who 
receives VR services. At the same time, however, the Secretary 
recognizes that in some instances 90 days may be too short a period to 
ensure job stability. For these reasons, the final regulations contain 
a uniform, minimum 90-day standard that applies to all individuals who 
obtain employment under the VR program. This uniform standard, the 
Secretary expects, enables DSU staff to conserve time and work more 
efficiently than would be possible under an individual employer-based 
standard and also affords DSUs the flexibility to increase the 90-day 
minimum time period whenever circumstances warrant. For example, a DSU 
may decide to extend the period to conform to an employer's longer 
probationary period if at the end of 90 days it is uncertain whether 
the individual will be able to successfully satisfy the probationary 
period without DSU support. Similarly, a DSU should extend the job-
retention period if requested by the individual. The Secretary also 
emphasizes that paragraph (e) precludes DSUs from ceasing contact with 
an individual who obtains employment unless at the end of the 
appropriate retention period (90 days or longer), the individual and 
the rehabilitation counselor or coordinator consider the employment 
outcome satisfactory and agree that the individual is performing well 
on the job.
    Additional safeguards that were specified in the proposed 
regulations also are retained in the final regulations, including the 
requirement that the employment outcome be consistent with the 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice of the individual and that the 
employment outcome be located in the most integrated setting possible.
    Changes: The Secretary has revised Sec. 361.56 to require in all 
instances that an individual shall maintain employment for a period of 
at least 90 days in order to be considered to have achieved an 
employment outcome.

Sec. 361.57  Review of rehabilitation counselor and coordinator 
determinations

    Comments: One commenter requested that the prohibition in paragraph 
(b)(2) of this section against suspending services being provided under 
an IWRP pending resolution of a dispute be broadened to cover 
assessment services. Another commenter stated that this prohibition 
should apply to any service identified in an IWRP, including those 
services that the individual has yet to receive.
    Two commenters stated that State policies used as a basis for an 
impartial hearing officer's decision under paragraph (b)(4) of this 
section, or for a DSU director's decision under paragraph (b)(9) of 
this section, must be consistent with Federal requirements. Other 
commenters recommended that paragraph (b)(7) of this section identify 
specific Federal standards of review for determining whether a DSU can 
review the decision of a hearing officer. In addition, one commenter 
stated that, anytime the DSU director reverses the decision of an 
impartial hearing officer, the director should be required to inform 
the individual of the statutory, regulatory, or policy basis for the 
reversal.
    Several commenters opposed the removal of the current regulatory 
timelines governing key stages of the review process. These commenters 
asserted that the timelines in the current regulations represent 
essential protections for individuals with disabilities and are 
critical to the timeliness of appeal procedures. These commenters also 
stated that the current timelines are reasonable, do not pose 
significant difficulties for DSUs, and are necessary to ensure that 
issues related to

[[Page 6332]]

the provision of VR services are resolved in a timely fashion.
    Finally, some commenters recommended that the regulations require 
DSUs to inform individuals at each stage of the rehabilitation process 
of their right to appeal a counselor's determination.
    Discussion: The Secretary believes that it is necessary to clarify 
in the final regulations that time extensions for informally resolving 
an individual's appeal of a counselor's determination under paragraph 
(a) of this section must be agreed to by both parties and must be 
specific in length. This change is necessary to ensure the timely 
resolution of disputes through formal review procedures.
    Section 102(d)(5) of the Act, which is implemented by paragraph 
(b)(2) of this section, states that the DSU may not institute a 
suspension, reduction, or termination of services being provided under 
the individual's IWRP pending final resolution of an individual's 
challenge to a determination of a rehabilitation counselor unless the 
individual so requests or the services have been obtained through 
misrepresentation, fraud, collusion, or criminal conduct on the part of 
the individual. This statutory prohibition does not apply to assessment 
or other services that are not included in the IWRP. Similarly, the 
statutory reference to services ``being provided under the IWRP'' means 
that the DSU is prohibited from suspending only those services in the 
IWRP that the individual has begun to receive prior to requesting a 
review of a counselor's determination. However, the Secretary notes 
that the DSU cannot discontinue a service during a regular interruption 
in that service (e.g., between semesters at an institution of higher 
education in which training is provided) as long as the service is 
included in the IWRP and has been initiated.
    The Secretary agrees that any State policy used as a basis for an 
impartial hearing officer's decision under paragraph (b)(4) of this 
section or for a modification of that decision by the director of the 
DSU under paragraph (b)(9) of this section must be consistent with 
Federal statutory and regulatory requirements.
    Section 361.57(b)(7) of the proposed and final regulations requires 
that any decision by a DSU director to review the decision of an 
impartial hearing officer must be based on standards of review 
established under written State policy. Although DSUs have the 
discretion to establish appropriate standards of review, the Secretary 
intends that standards developed under paragraph (b)(7) of this section 
be consistent with RSA policy, specifically Chapter 0545 of the 
Rehabilitation Services Manual (Clients'' Rights to Appeal Decisions), 
which specifies a number of fundamental issues that should be addressed 
in connection with determining whether to review a hearing officer's 
decision (e.g., Is the initial decision arbitrary, capricious, an abuse 
of discretion or otherwise unreasonable? Is the initial decision 
consistent with the facts of the case and applicable Federal and State 
policies?).
    Section 361.57(b)(10) of the proposed regulations provided that if 
the DSU director decided to review the decision of an impartial hearing 
officer, the director would provide to the individual a full report of 
the director's final decision and of the findings and grounds for the 
decision. The Secretary intended the term ``grounds'' to include any 
applicable law or policy on which the decision was based and believes 
that changing that term in the final regulations to ``statutory, 
regulatory, and policy grounds'' will clarify this intention. As stated 
previously, any State policy that is used to support the director's 
decision must be consistent with Federal statutory and regulatory 
requirements.
    The proposed regulations would have afforded DSUs the discretion to 
develop timelines for the prompt handling of appeals instead of 
specifying Federal timelines for certain stages of the appeals process. 
However, there was near-unanimity among commenters in opposing this 
change from current regulations. The commenters stressed the importance 
of protecting individuals from delays in the resolution of issues 
affecting an individual's receipt of VR services and vigorously 
asserted that Federal timelines are the best means of ensuring that 
State appeal procedures are conducted in a timely fashion.
    For the reasons stated by the commenters, the Secretary agrees that 
the current regulatory timelines should be retained in the final 
regulations. State units have not indicated that the Federal timelines 
are unreasonable or unnecessarily burdensome. Moreover, commenters on 
the proposed regulations indicated that a number of DSUs have failed to 
meet the current timelines in the past. In light of these comments, the 
Secretary believes that at this time affording DSUs the additional 
flexibility to develop their own timelines for handling appeals is 
neither warranted nor appropriate and that retaining the current 
timelines does not impose additional costs on DSUs.
    Finally, the Secretary agrees that individuals must be informed of 
their appeal rights during key stages of the rehabilitation process. 
Section 361.46 (a)(8) and (a)(9) requires that these rights, as well as 
the availability of representation through the Client Assistance 
Program (CAP) under 34 CFR part 370, be clearly delineated in the IWRP. 
Moreover, Sec. 361.43(c) requires DSUs to provide individuals with 
information concerning the CAP whenever an individual is found 
ineligible to receive VR services. The Secretary believes that these 
provisions sufficiently ensure that individuals are apprised of their 
right to challenge any determination made by a counselor regarding the 
provision or denial of services.
    Changes: The Secretary has revised Sec. 361.57 to clarify that time 
extensions for informally resolving an individual's request for review 
of a counselor's determination under paragraph (a) must be specific and 
agreed upon by both parties. In addition, paragraphs (b)(4) and (b)(9) 
of this section have been revised to clarify that any State policy on 
which the decision of an impartial hearing officer or DSU director is 
based must be consistent with applicable Federal requirements. 
Paragraph (b)(10) of this section also has been amended to clarify that 
the director's decision and corresponding report must specify the 
statutory, regulatory, or policy grounds for the decision. Finally, the 
Secretary also has revised this section by applying specific timelines 
to certain stages of the appeals process. Like the current regulations, 
the final regulations require that an impartial hearing officer conduct 
a formal hearing within 45 days of an individual's request for review; 
that the hearing officer render a decision within 30 days of the 
completion of the hearing; and that the DSU director issue a final 
decision within 30 days of notifying the individual of the director's 
intent to review the initial decision. The requirement that the 
individual be notified of the director's intent to review the initial 
decision within 20 days of its issuance is specified in the Act and is 
implemented by Sec. 361.57(b)(5) of the regulations. Because the 
current regulatory timelines have been reinserted into this section of 
the final regulations, the Secretary has removed from the final 
regulations the requirement under paragraph (c) of the proposed 
regulations that the DSU develop timelines applicable to these stages 
of the review process.

Sec. 361.60  Matching Requirements

    Comments: Two commenters opposed the prohibition in this section 
against using third party in-kind contributions to meet the non-Federal 
share under the

[[Page 6333]]

VR program. Another commenter expressed concern about the impact of 
this prohibition on the use, as non-Federal match, of funds provided by 
other public agencies under third-party cooperative arrangements.
    Discussion: ``Third party in-kind contributions,'' which are a 
permissible source of State matching funds under the Education 
Department General Administrative Regulations (EDGAR), are defined in 
34 CFR 80.3 as ``property or services which benefit a federally 
assisted project or program and which are contributed by non-Federal 
third parties without charge to the grantee. * * *'' However, it is 
RSA's policy to not allow the use of third-party in-kind contributions 
to meet the State matching requirement under the VR program in the 
absence of specific statutory authority. Where the Act permits the use 
of in-kind expenditures as match for certain programs, that authority 
is expressed (e.g., the State Independent Living Program under section 
712(b)(2) of the Act). Thus, Sec. 361.60(b)(2) specifies that these 
contributions may not be used as part of the DSU's non-Federal share 
under the program. This provision is consistent with the definition of 
``State and local funds'' under Sec. 361.76 of the current regulations 
and with the current regulatory prohibition on the use of in-kind 
contributions as match in Sec. 361.24(c).
    Nevertheless, this prohibition has no effect on a DSU's ability to 
enter into third-party cooperative arrangements under Sec. 361.28 of 
the regulations for providing VR services with another public agency 
that is furnishing part or all of the non-Federal share under the 
program. As long as the third party is contributing funds to support VR 
services, those dollars may be used as part of the DSU's non-Federal 
share (e.g., staff salaries paid by the third party that are allowable 
matching expenditures). If, on the other hand, the DSU enters into an 
arrangement under which a third party provides equipment or property 
used in the administration of the VR program, the costs associated with 
those items cannot be used as non-Federal matching funds.
    Changes: None.

Sec. 361.62  Maintenance of Effort Requirements

    Comments: One commenter suggested that recoveries of State 
maintenance of effort deficits should always be deducted from the 
State's allotment in a future fiscal year.
    Discussion: Section 111(a)(2)(B)(ii) of the Act, which is 
implemented by Sec. 361.62(a)(1) of the regulations, requires the 
Department to recover maintenance of effort deficits through a 
deduction in the State's allotment for the following Federal fiscal 
year. However, there is no statutory authority to deduct an allotment 
other than in the year immediately following a maintenance of effort 
shortfall. Thus, Sec. 361.62(a)(2) of the regulations specifies that 
when a maintenance of effort deficit is discovered too late to adjust 
the allotment for the following year, then the deficit will be 
recovered through an audit disallowance.
    Changes: None.

Sec. 361.71  Procedures for Developing the Strategic Plan

    Comments: Two commenters recommended that the DSU be required to 
consult the State Client Assistance Program prior to developing its 
strategic plan. Other commenters recommended that DSUs be required only 
to review rather than to revise the strategic plan on an annual basis 
under paragraph (c) of this section.
    Discussion: Section 122(b) of the Act specifies that, prior to 
developing the strategic plan, the DSU shall hold public forums and 
solicit recommendations specifically from the State Rehabilitation 
Advisory Council and the Statewide Independent Living Council. The 
Secretary agrees that the views of the CAP also should be considered in 
connection with the development of the strategic plan. The public 
participation requirements in Sec. 361.71(a) afford the CAP and other 
interested parties the opportunity to provide the DSU with its comments 
and recommendations. The annual revision requirement under paragraph 
(c) of this section is based on section 122(a) of the Act, which states 
that the strategic plan must be updated on an annual basis to reflect 
actual experience over the previous year and input from the Council and 
other interested parties. The Secretary believes that merely requiring 
an annual review would be inconsistent with this statutory requirement.
    Changes: None.

Paperwork Reduction Act of 1995

    Under the Paperwork Reduction Act of 1995, no persons are required 
to respond to a collection of information unless it displays a valid 
OMB control number. The valid OMB control number assigned to the 
collections of information in these final regulations is displayed at 
the end of the affected sections of the regulations.

Intergovernmental Review

    This program is subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. 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 
this program.

Assessment of Educational Impact

    In the notice of proposed rulemaking, the Secretary requested 
comments on whether the proposed regulations would require transmission 
of information that is being gathered by or is available from any other 
agency or authority of the United States.
    Based on the response to the proposed regulations and on its own 
review, the Department has determined that the regulations in this 
document do not 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

 34 CFR Part 361

    Reporting and recordkeeping requirements, State-administered grant 
program--education, Vocational rehabilitation.

34 CFR Part 363

    State-administered grant program--education, Supported employment.

34 CFR Part 376

    Special projects and demonstrations, Transitional rehabilitation 
services.

34 CFR Part 380

    Special projects and demonstrations, Supported employment, 
Technical assistance.

    Dated: December 1, 1996.
Richard W. Riley,
Secretary of Education.

 (Catalog of Federal Domestic Assistance Numbers: 84.126 The State 
Vocational Rehabilitation Services Program; 84.187 The State 
Supported Employment Services Program; 84.235 Special Projects and 
Demonstrations for Providing Transitional Rehabilitation Services to 
Youth with Disabilities; 84.128 Special Projects and Demonstrations 
for Providing Supported Employment Services to Individuals with the 
Most Severe Disabilities and Technical Assistance Projects)

    The Secretary amends Title 34, Chapter III, of the Code of Federal 
Regulations as follows:
    1. Part 361 is revised to read as follows:

[[Page 6334]]

PART 361--THE STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

Subpart A--General

Sec.
361.1  Purpose.
361.2  Eligibility for a grant.
361.3  Authorized activities.
361.4  Applicable regulations.
361.5  Applicable definitions.

Subpart B--State Plan for Vocational Rehabilitation Services

361.10  Submission, approval, and disapproval of the State plan.
361.11  Withholding of funds.

State Plan Content: Administration

361.12  Methods of administration.
361.13  State agency for administration.
361.14  Substitute State agency.
361.15  Local administration.
361.16  Establishment of an independent commission or a State 
Rehabilitation Advisory Council.
361.17  Requirements for a State Rehabilitation Advisory Council.
361.18  Comprehensive system of personnel development.
361.19  Affirmative action for individuals with disabilities.
361.20  State plan development.
361.21  Consultations regarding the administration of the State 
plan.
361.22  Cooperation with agencies responsible for students with 
disabilities.
361.23  Cooperation with other public agencies.
361.24  Coordination with the Statewide Independent Living Council.
361.25  Statewideness.
361.26  Waiver of statewideness.
361.27  Shared funding and administration of joint programs.
361.28  Third-party cooperative arrangements involving funds from 
other public agencies.
361.29  Statewide studies and evaluations
361.30  Services to special groups of individuals with disabilities.
361.31  Utilization of community resources.
361.32  Utilization of profitmaking organizations for on-the-job 
training in connection with selected projects.
361.33  Use, assessment, and support of community rehabilitation 
programs.
361.34  Supported employment plan.
361.35  Strategic plan.
361.36  Ability to serve all eligible individuals; order of 
selection for services
361.37  Establishment and maintenance of information and referral 
programs.
361.38  Protection, use, and release of personal information.
361.39  State-imposed requirements.
361.40  Reports.

State Plan Content: Provision and Scope of Services

361.41  Processing referrals and applications.
361.42  Assessment for determining eligibility and priority for 
services.
361.43  Procedures for ineligibility determination.
361.44  Closure without eligibility determination.
361.45  Development of the individualized written rehabilitation 
program.
361.46  Content of the individualized written rehabilitation 
program.
361.47  Record of services.
361.48 Scope of vocational rehabilitation services for individuals 
with disabilities.
361.49  Scope of vocational rehabilitation services for groups of 
individuals with disabilities.
361.50  Written policies governing the provision of services for 
individuals with disabilities.
361.51  Written standards for facilities and providers of services.
361.52  Opportunity to make informed choices.
361.53  Availability of comparable services and benefits.
361.54  Participation of individuals in cost of services based on 
financial need.
361.55  Review of extended employment in community rehabilitation 
programs or other employment under section 14(c) of the Fair Labor 
Standards Act.
361.56  Individuals determined to have achieved an employment 
outcome.
361.57  Review of rehabilitation counselor or coordinator 
determinations.

Subpart C--Financing of State Vocational Rehabilitation Programs

361.60  Matching requirements.
361.61  Limitation on use of funds for construction expenditures.
361.62  Maintenance of effort requirements.
361.63  Program income.
361.64  Obligation of Federal funds and program income.
361.65  Allotment and payment of Federal funds for vocational 
rehabilitation services.
Subpart D--Strategic Plan for Innovation and Expansion of Vocational 
Rehabilitation Services
361.70  Purpose of the strategic plan.
361.71  Procedures for developing the strategic plan.
361.72  Content of the strategic plan.
361.73  Use of funds.
361.74  Allotment of Federal funds.

    Authority: 29 U.S.C. 711(c), unless otherwise noted.

Subpart A--General


Sec. 361.1  Purpose.

    Under the State Vocational Rehabilitation Services Program 
(program), the Secretary provides grants to assist States in operating 
a comprehensive, coordinated, effective, efficient, and accountable 
program that is designed to assess, plan, develop, and provide 
vocational rehabilitation services for individuals with disabilities, 
consistent with their strengths, resources, priorities, concerns, 
abilities, capabilities, and informed choice, so that they may prepare 
for and engage in gainful employment.

(Authority: Sec. 12(c) and 100(a)(2) of the Act; 29 U.S.C. 711(c) 
and 720(a)(2))


Sec. 361.2  Eligibility for a grant.

    Any State that submits to the Secretary a State plan that meets the 
requirements of section 101(a) of the Act and this part is eligible for 
a grant under this program.

(Authority: Sec. 101(a) of the Act; 29 U.S.C. 721(a))


Sec. 361.3  Authorized activities.

    The Secretary makes payments to a State to assist in--
    (a) The costs of providing vocational rehabilitation services under 
the State plan;

    (b) Administrative costs under the State plan; and
    (c) The costs of developing and implementing the strategic plan.

(Authority: Sec. 111(a)(1) of the Act; 29 U.S.C. 731(a)(1))


Sec. 361.4  Applicable regulations.

    The following regulations apply to this program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 74 (Administration of Grants to Institutions of 
Higher Education, Hospitals, and Nonprofit Organizations), with respect 
to subgrants to entities that are not State or local governments or 
Indian tribal organizations.
    (2) 34 CFR part 76 (State-Administered Programs).
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments), except for 
Sec. 80.24(a)(2).
    (6) 34 CFR part 81 (General Education Provisions Act-Enforcement).
    (7) 34 CFR part 82 (New Restrictions on Lobbying).
    (8) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free 
Workplace (Grants)).
    (9) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 361.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

[[Page 6335]]

Sec. 361.5  Applicable definitions.

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR 77.1:

Department
EDGAR
Fiscal year
Nonprofit
Private
Public
Secretary

    (b) Other definitions. The following definitions also apply to this 
part:
    (1) Act means the Rehabilitation Act of 1973 (29 U.S.C. 701 et 
seq.), as amended.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (2) Administrative costs under the State plan means expenditures 
incurred in the performance of administrative functions under the 
vocational rehabilitation program. Administrative costs include 
expenses related to program planning, development, monitoring, and 
evaluation, including, but not limited to, quality assurance; 
budgeting, accounting, financial management, information systems, and 
related data processing; providing information about the program to the 
public; technical assistance to other State agencies, private nonprofit 
organizations, and businesses and industries, except for technical 
assistance and support services described in Sec. 361.49(a)(4); the 
State Rehabilitation Advisory Council and other advisory committees; 
professional organization membership dues for State unit employees; the 
removal of architectural barriers in State vocational rehabilitation 
agency offices and State-operated rehabilitation facilities; operating 
and maintaining State unit facilities, equipment, and grounds; 
supplies; administration of the comprehensive system of personnel 
development, including personnel administration, administration of 
affirmative action plans, and training and staff development; 
administrative salaries, including clerical and other support staff 
salaries, in support of these functions; travel costs related to 
carrying out the program, other than travel costs related to the 
provision of services; costs incurred in conducting reviews of 
rehabilitation counselor or coordinator determinations under 
Sec. 361.57; and legal expenses required in the administration of the 
program.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (3) American Indian means an individual who is a member of an 
Indian tribe.

(Authority: Sec. 7(20) of the Act; 29 U.S.C. 706(20))

    (4) Applicant means an individual who submits an application for 
vocational rehabilitation services in accordance with 
Sec. 361.41(b)(2).

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (5) Appropriate modes of communication means specialized aids and 
supports that enable an individual with a disability to comprehend and 
respond to information that is being communicated. Appropriate modes of 
communication include, but are not limited to, the use of interpreters, 
open and closed captioned videos, specialized telecommunications 
services and audio recordings, Brailled and large print materials, 
materials in electronic formats, augmentative communication devices, 
graphic presentations, and simple language materials.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (6) Assistive technology device means any item, piece of equipment, 
or product system, whether acquired commercially off the shelf, 
modified, or customized, that is used to increase, maintain, or improve 
the functional capabilities of an individual with a disability.

(Authority: Sec. 7(23) of the Act; 29 U.S.C. 706(23))

    (7) Assistive technology service means any service that directly 
assists an individual with a disability in the selection, acquisition, 
or use of an assistive technology device, including--
    (i) The evaluation of the needs of an individual with a disability, 
including a functional evaluation of the individual in his or her 
customary environment;
    (ii) Purchasing, leasing, or otherwise providing for the 
acquisition by an individual with a disability of an assistive 
technology device;
    (iii) Selecting, designing, fitting, customizing, adapting, 
applying, maintaining, repairing, or replacing assistive technology 
devices;
    (iv) Coordinating and using other therapies, interventions, or 
services with assistive technology devices, such as those associated 
with existing education and rehabilitation plans and programs;
    (v) Training or technical assistance for an individual with a 
disability or, if appropriate, the family members, guardians, 
advocates, or authorized representatives of the individual; and
    (vi) Training or technical assistance for professionals (including 
individuals providing education and rehabilitation services), 
employers, or others who provide services to, employ, or are otherwise 
substantially involved in the major life functions of individuals with 
disabilities, to the extent that training or technical assistance is 
necessary to the achievement of an employment outcome by an individual 
with a disability.

(Authority: Sec. 7(24) and 12(c) of the Act; 29 U.S.C. 706(24) and 
711(c))

    (8) Community rehabilitation program.
    (i) Community rehabilitation program means a program that provides 
directly or facilitates the provision of one or more of the following 
vocational rehabilitation services to individuals with disabilities to 
enable those individuals to maximize their opportunities for 
employment, including career advancement:
    (A) Medical, psychiatric, psychological, social, and vocational 
services that are provided under one management.
    (B) Testing, fitting, or training in the use of prosthetic and 
orthotic devices.
    (C) Recreational therapy.
    (D) Physical and occupational therapy.
    (E) Speech, language, and hearing therapy.
    (F) Psychiatric, psychological, and social services, including 
positive behavior management.
    (G) Assessment for determining eligibility and vocational 
rehabilitation needs.
    (H) Rehabilitation technology.
    (I) Job development, placement, and retention services.
    (J) Evaluation or control of specific disabilities.
    (K) Orientation and mobility services for individuals who are 
blind.
    (L) Extended employment.
    (M) Psychosocial rehabilitation services.
    (N) Supported employment services and extended services.
    (O) Services to family members if necessary to enable the applicant 
or eligible individual to achieve an employment outcome.
    (P) Personal assistance services.
    (Q) Services similar to the services described in paragraphs (A) 
through (P) of this definition.
    (ii) For the purposes of this definition, the word program means an 
agency, organization, or institution, or unit of an agency, 
organization, or institution, that provides directly or facilitates the 
provision of vocational rehabilitation services as one of its major 
functions.

(Authority: Sec. 7(25) and 12(c) of the Act; 29 U.S.C. 706(25) and 
711(c))

    (9) Comparable services and benefits means services and benefits 
that are--

[[Page 6336]]

    (i) Provided or paid for, in whole or in part, by other Federal, 
State, or local public agencies, by health insurance, or by employee 
benefits;
    (ii) Available to the individual at the time needed to achieve the 
intermediate rehabilitation objectives in the individual's 
Individualized Written Rehabilitation Program (IWRP) in accordance with 
Sec. 361.53; and
    (iii) Commensurate to the services that the individual would 
otherwise receive from the vocational rehabilitation agency.

(Authority: Sec. 12(c) and 101(a)(8) of the Act; 29 U.S.C. 711(c) 
and 721(a)(8))

    (10) Competitive employment means work
    (i) In the competitive labor market that is performed on a full-
time or part-time basis in an integrated setting; and
    (ii) For which an individual is compensated at or above the minimum 
wage, but not less than the customary wage and level of benefits paid 
by the employer for the same or similar work performed by individuals 
who are not disabled.

(Authority: Sec. 7(5), 7(18), and 12(c) of the Act; 29 U.S.C. 
706(5), 706(18), and 711(c))

    (11) Construction of a facility for a public or nonprofit community 
rehabilitation program means--
    (i) The acquisition of land in connection with the construction of 
a new building for a community rehabilitation program;
    (ii) The acquisition of existing buildings;
    (iii) The remodeling, alteration, or renovation of existing 
buildings;
    (iv) The construction of new buildings and expansion of existing 
buildings;
    (v) Architect's fees, site surveys, and soil investigation, if 
necessary, in connection with the construction project;
    (vi) The acquisition of initial fixed or movable equipment of any 
new, newly acquired, newly expanded, newly remodeled, newly altered, or 
newly renovated buildings that are to be used for community 
rehabilitation program purposes; and
    (vii) Other direct expenditures appropriate to the construction 
project, except costs of off-site improvements.

(Authority: Sec. 7(1) and 12(c) of the Act; 29 U.S.C. 706(1) and 
711(c))

    (12) Designated State agency or State agency means the sole State 
agency, designated in accordance with Sec. 361.13(a), to administer, or 
supervise local administration of, the State plan for vocational 
rehabilitation services. The term includes the State agency for 
individuals who are blind, if designated as the sole State agency with 
respect to that part of the plan relating to the vocational 
rehabilitation of individuals who are blind.

(Authority: Sec. 7(3)(A) and 101(a)(1)(A) of the Act; 29 U.S.C. 
706(3)(A) and 721(a)(1)(A))

    (13) Designated State unit or State unit means either--
    (i) The State agency vocational rehabilitation bureau, division, or 
other organizational unit that is primarily concerned with vocational 
rehabilitation or vocational and other rehabilitation of individuals 
with disabilities and that is responsible for the administration of the 
vocational rehabilitation program of the State agency, as required 
under Sec. 361.13(b); or
    (ii) The independent State commission, board, or other agency that 
has vocational rehabilitation, or vocational and other rehabilitation, 
as its primary function.

(Authority: Sec. 7(3)(B) and 101(a)(2)(A) of the Act; 29 U.S.C. 
706(3)(B) and 721(a)(2)(A))

    (14) Eligible individual means an applicant for vocational 
rehabilitation services who meets the eligibility requirements of 
Sec. 361.42(a).

(Authority: Sec. 7(8)(a) and 102(a)(1) of the Act; 29 U.S.C. 706(8) 
and 722(a)(1))

    (15) Employment outcome means, with respect to an individual, 
entering or retaining full-time or, if appropriate, part-time 
competitive employment in the integrated labor market to the greatest 
extent practicable; supported employment; or any other type of 
employment that is consistent with an individual's strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice.

(Authority: Sec. 7(5), 12(c), 100(a)(2), and 102(b)(1)(B)(i) of the 
Act; 29 U.S.C. 706(5), 711(c), 720(a)(2), and 722(b)(1)(B)(i))

    (16) Establishment, development, or improvement of a public or 
nonprofit community rehabilitation program means--
    (i) The establishment of a facility for a public or nonprofit 
community rehabilitation program as defined in paragraph (b)(17) of 
this section to provide vocational rehabilitation services to 
applicants or eligible individuals;
    (ii) Staffing, if necessary to establish, develop, or improve a 
community rehabilitation program for the purpose of providing 
vocational rehabilitation services to applicants or eligible 
individuals, for a maximum period of four years, with Federal financial 
participation available at the applicable matching rate for the 
following levels of staffing costs:
    (A) 100 percent of staffing costs for the first year.
    (B) 75 percent of staffing costs for the second year.
    (C) 60 percent of staffing costs for the third year.
    (D) 45 percent of staffing costs for the fourth year; and
    (iii) Other expenditures related to the establishment, development, 
or improvement of a community rehabilitation program that are necessary 
to make the program functional or increase its effectiveness in 
providing vocational rehabilitation services to applicants or eligible 
individuals, but are not ongoing operating expenses of the program.

(Authority: Secs. 7(6) and 12(c) of the Act; 29 U.S.C. 706(6) and 
711(c))
    (17) Establishment of a facility for a public or nonprofit 
community rehabilitation program means--
    (i) The acquisition of an existing building, and if necessary the 
land in connection with the acquisition, if the building has been 
completed in all respects for at least one year prior to the date of 
acquisition and the Federal share of the cost of the acquisition is not 
more than $300,000;
    (ii) The remodeling or alteration of an existing building, provided 
the estimated cost of remodeling or alteration does not exceed the 
appraised value of the existing building;
    (iii) The expansion of an existing building, provided that--
    (A) The existing building is complete in all respects;
    (B) The total size in square footage of the expanded building, 
notwithstanding the number of expansions, is not greater than twice the 
size of the existing building;
    (C) The expansion is joined structurally to the existing building 
and does not constitute a separate building; and
    (D) The costs of the expansion do not exceed the appraised value of 
the existing building;
    (iv) Architect's fees, site survey, and soil investigation, if 
necessary in connection with the acquisition, remodeling, alteration, 
or expansion of an existing building; and
    (v) The acquisition of fixed or movable equipment, including the 
costs of installation of the equipment, if necessary to establish, 
develop, or improve a community rehabilitation program;

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (18) Extended employment means work in a non-integrated or 
sheltered setting for a public or private nonprofit

[[Page 6337]]

agency or organization that provides compensation in accordance with 
the Fair Labor Standards Act and any needed support services to an 
individual with a disability to enable the individual to continue to 
train or otherwise prepare for competitive employment, unless the 
individual through informed choice chooses to remain in extended 
employment.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (19) Extended services, as used in the definition of ``Supported 
employment,'' means ongoing support services and other appropriate 
services that are needed to support and maintain an individual with a 
most severe disability in supported employment and that are provided by 
a State agency, a private nonprofit organization, employer, or any 
other appropriate resource, from funds other than funds received under 
this part, 34 CFR part 363, 34 CFR part 376, or 34 CFR part 380, after 
an individual with a most severe disability has made the transition 
from support provided by the designated State unit.

(Authority: Sec. 7(27) of the Act; 29 U.S.C. 706(27))

    (20) Extreme medical risk means a probability of substantially 
increasing functional impairment or death if medical services, 
including mental health services, are not provided expeditiously.

(Authority: Secs. 12(c) and 101(a)(8) of the Act; 29 U.S.C. 711(c) 
and 721(a)(8))

    (21) Family member, for purposes of receiving vocational 
rehabilitation services in accordance with Sec. 361.48(a)(9), means an 
individual--
    (i) Who either--
    (A) Is a relative or guardian of an applicant or eligible 
individual; or
    (B) Lives in the same household as an applicant or eligible 
individual;
    (ii) Who has a substantial interest in the well-being of that 
individual; and
    (iii) Whose receipt of vocational rehabilitation services is 
necessary to enable the applicant or eligible individual to achieve an 
employment outcome.

(Authority: Secs. 12(c) and 103(a)(3) of the Act; 29 U.S.C. 711(c) 
and 723(a)(3))

    (22) Impartial hearing officer.
    (i) Impartial hearing officer means an individual who--
    (A) Is not an employee of a public agency (other than an 
administrative law judge, hearing examiner, or employee of an 
institution of higher education);
    (B) Is not a member of the State Rehabilitation Advisory Council 
for the designated State unit;
    (C) Has not been involved in previous decisions regarding the 
vocational rehabilitation of the applicant or eligible individual;
    (D) Has knowledge of the delivery of vocational rehabilitation 
services, the State plan, and the Federal and State regulations 
governing the provision of services;
    (E) Has received training with respect to the performance of 
official duties; and
    (F) Has no personal, professional, or financial interest that would 
be in conflict with the objectivity of the individual.
    (ii) An individual may not be considered to be an employee of a 
public agency for the purposes of this definition solely because the 
individual is paid by the agency to serve as a hearing officer.

(Authority: Sec. 7(28) of the Act; 29 U.S.C. 706(28))

    (23) Indian tribe means any Federal or State Indian tribe, band, 
rancheria, pueblo, colony, or community, including any Alaskan native 
village or regional village corporation (as defined in or established 
pursuant to the Alaska Native Claims Settlement Act).

(Authority: Sec. 7(21) of the Act; 29 U.S.C. 706(21))

    (24) Individual who is blind means a person who is blind within the 
meaning of the applicable State law.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (25) Individual with a disability, except in Secs. 361.17 (a), (b), 
(c), and (j), 361.19, 361.20, and 361.51(b)(2), means an individual--
    (i) Who has a physical or mental impairment;
    (ii) Whose impairment constitutes or results in a substantial 
impediment to employment; and
    (iii) Who can benefit in terms of an employment outcome from the 
provision of vocational rehabilitation services.

(Authority: Sec. 7(8)(A) of the Act; 29 U.S.C. 706(8)(A))

    (26) Individual with a disability, for purposes of Secs. 361.17 
(a), (b), (c), and (j), 361.19, 361.20, and 361.51(b)(2), means an 
individual--
    (i) Who has a physical or mental impairment that substantially 
limits one or more major life activities;
    (ii) Who has a record of such an impairment; or
    (iii) Who is regarded as having such an impairment.

(Authority: Sec. 7(8)(B) of the Act; 29 U.S.C. 706(8)(B))

    (27) Individual with a most severe disability means an individual 
with a severe disability who meets the designated State unit's criteria 
for an individual with a most severe disability. These criteria must be 
consistent with the requirements in Sec. 361.36(c)(3).

(Authority: Sec. 101(a)(5) of the Act; 29 U.S.C. 721(a)(5))

    (28) Individual with a severe disability means an individual with a 
disability--
    (i) Who has a severe physical or mental impairment that seriously 
limits one or more functional capacities (such as mobility, 
communication, self-care, self-direction, interpersonal skills, work 
tolerance, or work skills) in terms of an employment outcome;
    (ii) Whose vocational rehabilitation can be expected to require 
multiple vocational rehabilitation services over an extended period of 
time; and
    (iii) Who has one or more physical or mental disabilities resulting 
from amputation, arthritis, autism, blindness, burn injury, cancer, 
cerebral palsy, cystic fibrosis, deafness, head injury, heart disease, 
hemiplegia, hemophilia, respiratory or pulmonary dysfunction, mental 
retardation, mental illness, multiple sclerosis, muscular dystrophy, 
musculo-skeletal disorders, neurological disorders (including stroke 
and epilepsy), spinal cord conditions (including paraplegia and 
quadriplegia), sickle cell anemia, specific learning disability, end-
stage renal disease, or another disability or combination of 
disabilities determined on the basis of an assessment for determining 
eligibility and vocational rehabilitation needs to cause comparable 
substantial functional limitation.

(Authority: Sec. 7(15)(A) of the Act; 29 U.S.C. 708(15)(A))

    (29) Individual's representative means any representative chosen by 
an applicant or eligible individual, including a parent, guardian, 
other family member, or advocate, unless a representative has been 
appointed by a court to represent the individual, in which case the 
court-appointed representative is the individual's representative.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (30) Integrated setting,--
    (i) With respect to the provision of services, means a setting 
typically found in the community in which applicants or eligible 
individuals interact with non-disabled individuals other than non-
disabled individuals who are providing services to those applicants or 
eligible individuals;

[[Page 6338]]

    (ii) With respect to an employment outcome, means a setting 
typically found in the community in which applicants or eligible 
individuals interact with non-disabled individuals, other than non-
disabled individuals who are providing services to those applicants or 
eligible individuals, to the same extent that non-disabled individuals 
in comparable positions interact with other persons.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    (31) Maintenance means monetary support provided to an eligible 
individual or an individual receiving extended evaluation services for 
those expenses, such as food, shelter, and clothing, that are in excess 
of the normal expenses of the individual and that are necessitated by 
the individual's participation in a program of vocational 
rehabilitation services.

(Authority: Secs. 12(c) and 103(a)(5) of the Act; 29 U.S.C. 711(c) 
and 723(a)(5))

    Note: The following are examples of expenses that would meet the 
definition of maintenance. The examples are purely illustrative, do 
not address all possible circumstances, and are not intended to 
substitute for individual counselor judgement.

    Example: The cost of a uniform or other suitable clothing that 
is required for an individual's job placement or job seeking 
activities.
    Example: The cost of short-term shelter that is required in 
order for an individual to participate in vocational training at a 
site that is not within commuting distance of an individual's home.
    Example: The initial one-time costs, such as a security deposit 
or charges for the initiation of utilities, that are required in 
order for an individual to relocate for a job placement.
    Example: The costs of an individual's participation in 
enrichment activities related to that individual's training program.

    (32) Nonprofit, with respect to a community rehabilitation program, 
means a community rehabilitation program carried out by a corporation 
or association, no part of the net earnings of which inures, or may 
lawfully inure, to the benefit of any private shareholder or individual 
and the income of which is exempt from taxation under section 501(c)(3) 
of the Internal Revenue Code of 1954.

(Authority: Sec. 7(10) of the Act; 29 U.S.C. 706(10))

    (33) Ongoing support services, as used in the definition of 
``Supported employment''--
    (i) Means services that are--
    (A) Needed to support and maintain an individual with a most severe 
disability in supported employment;
    (B) Identified based on a determination by the designated State 
unit of the individual's needs as specified in an individualized 
written rehabilitation program; and
    (C) Furnished by the designated State unit from the time of job 
placement until transition to extended services, unless post-employment 
services are provided following transition, and thereafter by one or 
more extended services providers throughout the individual's term of 
employment in a particular job placement or multiple placements if 
those placements are being provided under a program of transitional 
employment;
    (ii) Must include an assessment of employment stability and 
provision of specific services or the coordination of services at or 
away from the worksite that are needed to maintain stability based on--
    (A) At a minimum, twice-monthly monitoring at the worksite of each 
individual in supported employment; or
    (B) If under special circumstances, especially at the request of 
the individual, the individualized written rehabilitation program 
provides for off-site monitoring, twice-monthly meetings with the 
individual;
    (iii) Consist of--
    (A) Any particularized assessment supplementary to the 
comprehensive assessment of rehabilitation needs described in this 
part;
    (B) The provision of skilled job trainers who accompany the 
individual for intensive job skill training at the work site;
    (C) Job development and placement;
    (D) Social skills training;
    (E) Regular observation or supervision of the individual;
    (F) Follow-up services including regular contact with the 
employers, the individuals, the parents, family members, guardians, 
advocates or authorized representatives of the individuals, and other 
suitable professional and informed advisors, in order to reinforce and 
stabilize the job placement;
    (G) Facilitation of natural supports at the worksite;
    (H) Any other service identified in the scope of vocational 
rehabilitation services for individuals, described in Sec. 361.48; or
    (I) Any service similar to the foregoing services.

(Authority: Sec. 7(33) and 12(c) of the Act; 29 U.S.C. 706(33) and 
711(c))

    (34) Personal assistance services means a range of services 
provided by one or more persons designed to assist an individual with a 
disability to perform daily living activities on or off the job that 
the individual would typically perform without assistance if the 
individual did not have a disability. The services must be designed to 
increase the individual's control in life and ability to perform 
everyday activities on or off the job. The services must be necessary 
to the achievement of an employment outcome and may be provided only 
while the individual is receiving other vocational rehabilitation 
services. The services may include training in managing, supervising, 
and directing personal assistance services.

(Authority: Sec. 7(11) and 103(a)(15) of the Act; 29 U.S.C. 706(11) 
and 29 U.S.C. 723)

    (35) Physical and mental restoration services means--
    (i) Corrective surgery or therapeutic treatment that is likely, 
within a reasonable period of time, to correct or modify substantially 
a stable or slowly progressive physical or mental impairment that 
constitutes a substantial impediment to employment;
    (ii) Diagnosis of and treatment for mental or emotional disorders 
by qualified personnel in accordance with State licensure laws;
    (iii) Dentistry;
    (iv) Nursing services;
    (v) Necessary hospitalization (either inpatient or outpatient care) 
in connection with surgery or treatment and clinic services;
    (vi) Drugs and supplies;
    (vii) Prosthetic, orthotic, or other assistive devices, including 
hearing aids;
    (viii) Eyeglasses and visual services, including visual training, 
and the examination and services necessary for the prescription and 
provision of eyeglasses, contact lenses, microscopic lenses, telescopic 
lenses, and other special visual aids prescribed by personnel that are 
qualified in accordance with State licensure laws;
    (ix) Podiatry;
    (x) Physical therapy;
    (xi) Occupational therapy;
    (xii) Speech or hearing therapy;
    (xiii) Mental health services;
    (xiv) Treatment of either acute or chronic medical complications 
and emergencies that are associated with or arise out of the provision 
of physical and mental restoration services, or that are inherent in 
the condition under treatment;
    (xv) Special services for the treatment of individuals with end-
stage renal disease, including transplantation, dialysis, artificial 
kidneys, and supplies; and
    (xvi) Other medical or medically related rehabilitation services.


[[Page 6339]]


(Authority: Sec. 12(c) and 103(a)(4) of the Act; 29 U.S.C. 711(c) 
and 723(a)(4))

    (36) Physical or mental impairment means an injury, disease, or 
other condition that materially limits, or if not treated is expected 
to materially limit, mental or physical functioning.

(Authority: Sec. 7(8)(A) and 12(c) of the Act; 29 U.S.C. 706(8)(A) 
and 711(c))

    (37) Post-employment services means one or more of the services 
identified in Sec. 361.48 that are provided subsequent to the 
achievement of an employment outcome and that are necessary for an 
individual to maintain, regain, or advance in employment, consistent 
with the individual's strengths, resources, priorities, concerns, 
abilities, capabilities, and interests.

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))

    Note: Post-employment services are intended to ensure that the 
employment outcome remains consistent with the individual's 
strengths, resources, priorities, concerns, abilities, capabilities, 
and interests. These services are available to meet rehabilitation 
needs that do not require a complex and comprehensive provision of 
services and, thus, should be limited in scope and duration. If more 
comprehensive services are required, then a new rehabilitation 
effort should be considered. Post-employment services are to be 
provided under an amended individualized written rehabilitation 
program; thus, a re-determination of eligibility is not required. 
The provision of post-employment services is subject to the same 
requirements in this part as the provision of any other vocational 
rehabilitation service. Post-employment services are available to 
assist an individual to maintain employment, e.g., the individual's 
employment is jeopardized because of conflicts with supervisors or 
co-workers and the individual needs mental health services and 
counseling to maintain the employment; to regain employment, e.g., 
the individual's job is eliminated through reorganization and new 
placement services are needed; and to advance in employment, e.g., 
the employment is no longer consistent with the individual's 
strengths, resources, priorities, concerns, abilities, capabilities, 
and interests.

    (38) Rehabilitation engineering means the systematic application of 
engineering sciences to design, develop, adapt, test, evaluate, apply, 
and distribute technological solutions to problems confronted by 
individuals with disabilities in functional areas, such as mobility, 
communications, hearing, vision, and cognition, and in activities 
associated with employment, independent living, education, and 
integration into the community.

(Authority: Secs. 7(13) and 12(c) of the Act; 29 U.S.C. 706(13) and 
711(c))

    (39) Rehabilitation technology means the systematic application of 
technologies, engineering methodologies, or scientific principles to 
meet the needs of, and address the barriers confronted by, individuals 
with disabilities in areas that include education, rehabilitation, 
employment, transportation, independent living, and recreation. The 
term includes rehabilitation engineering, assistive technology devices, 
and assistive technology services.

(Authority: Sec. 7(13) of the Act; 29 U.S.C. 706(13))

    (40) Reservation means a Federal or State Indian reservation, 
public domain Indian allotment, former Indian reservation in Oklahoma, 
and land held by incorporated Native groups, regional corporations, and 
village corporations under the provisions of the Alaska Native Claims 
Settlement Act.

(Authority: Sec. 130(c) of the Act; 29 U.S.C. 750(c))

    (41) Sole local agency means a unit or combination of units of 
general local government or one or more Indian tribes that has the sole 
responsibility under an agreement with, and the supervision of, the 
State agency to conduct a local or tribal vocational rehabilitation 
program, in accordance with the State plan.

(Authority: Sec. 7(9) of the Act; 29 U.S.C. 706(9))

    (42) State means any of the 50 States, the District of Columbia, 
the Commonwealth of Puerto Rico, the United States Virgin Islands, 
Guam, American Samoa, and the Commonwealth of the Northern Mariana 
Islands.

(Authority: Sec. 7(16) of the Act; 29 U.S.C. 706(16))

    (43) State plan means the State plan for vocational rehabilitation 
services or the vocational rehabilitation services part of a 
consolidated rehabilitation plan under Sec. 361.10(c).

(Authority: Secs. 12(c) and 101 of the Act; 29 U.S.C. 711(c) and 
721)

    (44) Substantial impediment to employment means that a physical or 
mental impairment (in light of attendant medical, psychological, 
vocational, educational, and other related factors) hinders an 
individual from preparing for, entering into, engaging in, or retaining 
employment consistent with the individual's abilities and capabilities.

(Authority: Secs. 7(8)(A) and 12(c) of the Act; 29 U.S.C. 706(8)(A) 
and 711(c))

    (45) Supported employment means--
    (i) Competitive employment in an integrated setting with ongoing 
support services for individuals with the most severe disabilities--
    (A) For whom competitive employment has not traditionally occurred 
or for whom competitive employment has been interrupted or intermittent 
as a result of a severe disability; and
    (B) Who, because of the nature and severity of their disabilities, 
need intensive supported employment services from the designated State 
unit and extended services after transition in order to perform this 
work; or
    (ii) Transitional employment for individuals with the most severe 
disabilities due to mental illness.

(Authority: Sec. 7(18) of the Act; 29 U.S.C. 706(18)(A))

    (46) Supported employment services means ongoing support services 
and other appropriate services needed to support and maintain an 
individual with a most severe disability in supported employment that 
are provided by the designated State unit--
    (i) For a period of time not to exceed 18 months, unless under 
special circumstances the eligible individual and the rehabilitation 
counselor or coordinator jointly agree to extend the time in order to 
achieve the rehabilitation objectives identified in the individualized 
written rehabilitation program; and
    (ii) Following transition, as post-employment services that are 
unavailable from an extended services provider and that are necessary 
to maintain or regain the job placement or advance in employment.

(Authority: Sec. 7(34) and 12(c) of the Act; 29 U.S.C. 706(34) and 
711(c))

    (47) Transition services means a coordinated set of activities for 
a student designed within an outcome-oriented process that promotes 
movement from school to post-school activities, including postsecondary 
education, vocational training, integrated employment (including 
supported employment), continuing and adult education, adult services, 
independent living, or community participation. The coordinated set of 
activities must be based upon the individual student's needs, taking 
into account the student's preferences and interests, and must include 
instruction, community experiences, the development of employment and 
other post-school adult living objectives, and, if appropriate, 
acquisition of daily living skills and functional vocational 
evaluation. Transition services must

[[Page 6340]]

promote or facilitate the accomplishment of long-term rehabilitation 
goals and intermediate rehabilitation objectives identified in the 
student's IWRP.

(Authority: Section 7(35) and 103(a)(14) of the Act; 29 U.S.C. 
706(35) and 723(a)(14))

    (48) Transitional employment, as used in the definition of 
``Supported employment,'' means a series of temporary job placements in 
competitive work in integrated settings with ongoing support services 
for individuals with the most severe disabilities due to mental 
illness. In transitional employment, the provision of ongoing support 
services must include continuing sequential job placements until job 
permanency is achieved.

(Authority: Secs. 7(18) and 12(c) of the Act; 29 U.S.C. 706(18) and 
711(c))

    (49) Transportation means travel and related expenses that are 
necessary to enable an applicant or eligible individual to participate 
in a vocational rehabilitation service.

(Authority: Secs. 12(c) and 103(a)(10) of the Act; 29 U.S.C. 711(c) 
and 723(a)(10))

    Note: The following are examples of expenses that would meet the 
definition of transportation. The examples are purely illustrative, 
do not address all possible circumstances, and are not intended to 
substitute for individual counselor judgement.

    Example: Travel and related expenses for a personal care 
attendant or aide if the services of that person are necessary to 
enable the applicant or eligible individual to travel to participate 
in any vocational rehabilitation service.
    Example: Short-term travel-related expenses, such as food and 
shelter, incurred by an applicant participating in evaluation or 
assessment services that necessitates travel.
    Example: Relocation expenses incurred by an eligible individual 
in connection with a job placement that is a significant distance 
from the eligible individual's current residence.
    Example: The purchase and repair of vehicles, including vans, 
but not the modification of these vehicles, as modification would be 
considered a rehabilitation technology service.

    (50) Vocational rehabilitation services--
    (i) If provided to an individual, means those services listed in 
Sec. 361.48; and
    (ii) If provided for the benefit of groups of individuals, also 
means those services listed in Sec. 361.49.

(Authority: Sec. 103 (a) and (b) of the Act; 29 U.S.C. 723 (a) and 
(b))

Subpart B--State Plan for Vocational Rehabilitation Services


Sec. 361.10  Submission, approval, and disapproval of the State plan.

    (a) Purpose. In order for a State to receive a grant under this 
part, the designated State agency shall submit to the Secretary, and 
obtain approval of, a State plan that contains a description of the 
State's vocational rehabilitation services program, the plans and 
policies to be followed in carrying out the program, and other 
information requested by the Secretary, in accordance with the 
requirements of this part.
    (b) Separate part relating to rehabilitation of individuals who are 
blind. If a separate State agency administers or supervises the 
administration of a separate part of the State plan relating to the 
rehabilitation of individuals who are blind, that part of the State 
plan must separately conform to all requirements under this part that 
are applicable to a State plan.
    (c) Consolidated rehabilitation plan. The State may choose to 
submit a consolidated rehabilitation plan that includes the State plan 
for vocational rehabilitation services and the State's plan for its 
program for persons with developmental disabilities. The State planning 
and advisory council for developmental disabilities and the agency 
administering the State's program for persons with developmental 
disabilities must concur in the submission of a consolidated 
rehabilitation plan. A consolidated rehabilitation plan must comply 
with, and be administered in accordance with, the Act and the 
Developmental Disabilities Assistance and Bill of Rights Act, as 
amended.
    (d) Public participation. The State shall develop the State plan 
with input from the public, through public meetings, in accordance with 
the requirements of Sec. 361.20.
    (e) Duration. The State plan must cover a multi-year period to be 
determined by the Secretary.
    (f) Submission of the State plan. The State shall submit the State 
plan to the Secretary for approval--
    (1) No later than July 1 of the year preceding the first fiscal 
year for which the State plan is submitted; or
    (2) With the prior approval of the Secretary, no later than the 
date on which the State is required to submit a State plan under 
another Federal law.
    (g) Revisions to the State plan. The State shall submit to the 
Secretary for approval revisions to the State plan in accordance with 
the requirements of this part and 34 CFR 76.140.
    (h) Approval. The Secretary approves a State plan and revisions to 
the State plan that conform to the requirements of this part and 
section 101(a) of the Act.
    (i) Disapproval. The Secretary disapproves a State plan that does 
not conform to the requirements of this part and section 101(a) of the 
Act, in accordance with the following procedures:
    (1) Informal resolution. Prior to disapproving a State plan, the 
Secretary attempts to resolve disputes informally with State officials.
    (2) Notice. If, after reasonable effort has been made to resolve 
the dispute, no resolution has been reached, the Secretary provides 
notice to the State agency of the intention to disapprove the State 
plan and of the opportunity for a hearing.
    (3) State plan hearing. If the State agency requests a hearing, the 
Secretary designates one or more individuals, either from the 
Department or elsewhere, not responsible for or connected with the 
administration of this program, to conduct a hearing in accordance with 
the provisions of 34 CFR Part 81, Subpart A.
    (4) Initial decision. The hearing officer issues an initial 
decision in accordance with 34 CFR 81.41.
    (5) Petition for review of an initial decision. The State agency 
may seek the Secretary's review of the initial decision in accordance 
with 34 CFR part 81.
    (6) Review by the Secretary. The Secretary reviews the initial 
decision in accordance with 34 CFR 81.43.
    (7) Final decision of the Department. The final decision of the 
Department is made in accordance with 34 CFR 81.44.
    (8) Judicial review. A State may appeal the Secretary's decision to 
disapprove the State plan by filing a petition for review with the 
United States Court of Appeals for the circuit in which the State is 
located, in accordance with section 107(d) of the Act.

(Approved by the Office of Management and Budget under control 
number 1820-0500.

(Authority: Sec. 6, 101 (a) and (b), and 107(d) of the Act; 20 
U.S.C. 1231g(a); and 29 U.S.C. 705, 721 (a) and (b), and 727(d))


Sec. 361.11  Withholding of funds.

    (a) Basis for withholding. The Secretary may withhold or limit 
payments under sections 111, 124, or 632(a) of the Act, as provided by 
section 107 (c) and (d) of the Act, if the Secretary determines that--
    (1) The State plan, including the supported employment supplement, 
has been so changed that it no longer conforms with the requirements of 
this part or 34 CFR part 363; or

[[Page 6341]]

    (2) In the administration of the State plan, there has been a 
failure to comply substantially with any provision of that plan or a 
program improvement plan established in accordance with section 106 of 
the Act.
    (b) Informal resolution. Prior to withholding or limiting payments 
in accordance with this section, the Secretary attempts to resolve 
disputed issues informally with State officials.
    (c) Notice. If, after reasonable effort has been made to resolve 
the dispute, no resolution has been reached, the Secretary provides 
notice to the State agency of the intention to withhold or limit 
payments and of the opportunity for a hearing.
    (d) Withholding hearing. If the State agency requests a hearing, 
the Secretary designates one or more individuals, either from the 
Department or elsewhere, not responsible for or connected with the 
administration of this program, to conduct a hearing in accordance with 
the provisions of 34 CFR part 81, Subpart A.
    (e) Initial decision. The hearing officer issues an initial 
decision in accordance with 34 CFR 81.41.
    (f) Petition for review of an initial decision. The State agency 
may seek the Secretary's review of the initial decision in accordance 
with 34 CFR 81.42.
    (g) Review by the Secretary. The Secretary reviews the initial 
decision in accordance with 34 CFR 81.43.
    (h) Final decision of the Department. The final decision of the 
Department is made in accordance with 34 CFR 81.44
    (i) Judicial review. A State may appeal the Secretary's decision to 
withhold or limit payments by filing a petition for review with the 
U.S. Court of Appeals for the circuit in which the State is located, in 
accordance with section 107(d) of the Act.

(Authority: Secs. 101(b), 107(c), and 107(d) of the Act; 29 U.S.C. 
721(b), 727(c)(1) and (2), and 727(d))

State Plan Content: Administration


Sec. 361.12  Methods of administration.

    The State plan must assure that the State agency, and the 
designated State unit if applicable, employs methods of administration 
found necessary by the Secretary for the proper and efficient 
administration of the plan and for carrying out all functions for which 
the State is responsible under the plan and this part. These methods 
must include procedures to ensure accurate data collection and 
financial accountability.

(Authority: Sec. 101(a)(6) of the Act; 29 U.S.C. 721(a)(6))


Sec. 361.13  State agency for administration.

    (a) Designation of State agency. The State plan must designate a 
State agency as the sole State agency to administer the State plan, or 
to supervise its administration in a political subdivision of the State 
by a sole local agency, in accordance with the following requirements:
    (1) General. Except as provided in paragraphs (a) (2) and (3) of 
this section, the State plan must provide that the designated State 
agency is one of the following types of agencies:
    (i) A State agency that is an independent State commission, board, 
or other agency that has as its major function vocational 
rehabilitation or vocational and other rehabilitation of individuals 
with disabilities.
    (ii) The State agency administering or supervising the 
administration of education or vocational education in the State, 
provided that it includes a vocational rehabilitation unit as provided 
in paragraph (b) of this section.
    (iii) A State agency that includes a vocational rehabilitation 
unit, as provided in paragraph (b) of this section, and at least two 
other major organizational units, each of which administers one or more 
of the State's major programs of public education, public health, 
public welfare, or labor.
    (2) American Samoa. In the case of American Samoa, the State plan 
must designate the Governor.
    (3) Designated State agency for individuals who are blind. If a 
State commission or other agency that provides assistance or services 
to individuals who are blind is authorized under State law to provide 
vocational rehabilitation services to individuals who are blind, and 
this commission or agency is primarily concerned with vocational 
rehabilitation or includes a vocational rehabilitation unit as provided 
in paragraph (b) of this section, the State plan may designate that 
agency as the sole State agency to administer the part of the plan 
under which vocational rehabilitation services are provided for 
individuals who are blind or to supervise its administration in a 
political subdivision of the State by a sole local agency.
    (b) Designation of State unit. (1) If the designated State agency 
is of the type specified in paragraph (a)(1)(ii) or (a)(1)(iii) of this 
section, or if the designated State agency specified in paragraph 
(a)(3) of this section does not have as its major function vocational 
rehabilitation or vocational and other rehabilitation of individuals 
with disabilities, the State plan must assure that the agency (or each 
agency if two agencies are designated) includes a vocational 
rehabilitation bureau, division, or unit that--
    (i) Is primarily concerned with vocational rehabilitation or 
vocational and other rehabilitation of individuals with disabilities 
and is responsible for the administration of the State agency's 
vocational rehabilitation program under the State plan, including those 
responsibilities specified in paragraph (c) of this section;
    (ii) Has a full-time director;
    (iii) Has a staff, at least 90 percent of whom are employed full 
time on the rehabilitation work of the organizational unit; and
    (iv) Is located at an organizational level and has an 
organizational status within the State agency comparable to that of 
other major organizational units of the agency or, in the case of an 
agency described in paragraph (a)(1)(ii) of this section, is so located 
and has that status or has a director who is the executive officer of 
the State agency.
    (2) In the case of a State that has not designated a separate State 
agency for individuals who are blind, as provided for in paragraph 
(a)(3) of this section, the State may assign responsibility for the 
part of the plan under which vocational rehabilitation services are 
provided to individuals who are blind to one organizational unit of the 
designated State agency and may assign responsibility for the rest of 
the plan to another organizational unit of the designated State agency, 
with the provisions of paragraph (b)(1) of this section applying 
separately to each of these units.
    (c) Responsibility for administration. (1) The State plan must 
assure that, at a minimum, the following activities are the 
responsibility of the designated State unit or the sole local agency 
under the supervision of the State unit:
    (i) All decisions affecting eligibility for vocational 
rehabilitation services, the nature and scope of available services, 
and the provision of these services.
    (ii) The determination that an individual has achieved an 
employment outcome under Sec. 361.56.
    (iii) Policy formulation and implementation.
    (iv) The allocation and expenditure of vocational rehabilitation 
funds.
    (2) This responsibility may not be delegated to any other agency or 
individual.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 101(a)(1) and 101(a)(2) of the Act; 29 U.S.C. 
721(a)(1) and 721(a)(2))

[[Page 6342]]

Sec. 361.14  Substitute State agency.

    (a) General provisions. (1) If the Secretary has withheld all 
funding from a State under Sec. 361.11, the State may designate another 
agency to substitute for the designated State agency in carrying out 
the State's program of vocational rehabilitation services.
    (2) Any public or nonprofit private organization or agency within 
the State or any political subdivision of the State is eligible to be a 
substitute agency.
    (3) The substitute agency shall submit a State plan that meets the 
requirements of this part.
    (4) The Secretary makes no grant to a substitute agency until the 
Secretary approves its plan.
    (b) Substitute agency matching share. The Secretary does not make 
any payment to a substitute agency unless it has provided assurances 
that it will contribute the same matching share as the State would have 
been required to contribute if the State agency were carrying out the 
vocational rehabilitation program.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 107(c)(3) of the Act; 29 U.S.C. 727(c)(3))


Sec. 361.15  Local administration.

    (a) If the State plan provides for local administration, it must--
    (1) Identify each local agency;
    (2) Assure that each local agency is under the supervision of the 
designated State unit and is the sole local agency as defined in 
Sec. 361.5(b)(41) that is responsible for the administration of the 
program within the political subdivision that it serves; and
    (3) Describe the methods each local agency will use to administer 
the vocational rehabilitation program, in accordance with the State 
plan.
    (b) A separate local agency serving individuals who are blind may 
administer that part of the plan relating to vocational rehabilitation 
of individuals who are blind, under the supervision of the designated 
State unit for individuals who are blind.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 7(9) and 101(a)(1)(A) of the Act; 29 U.S.C. 706(9) 
and 721(a)(1)(A))


Sec. 361.16  Establishment of an independent commission or a State 
Rehabilitation Advisory Council.

    (a) General requirement. Except as provided in paragraph (b) of 
this section, the State plan must contain one of the following two 
assurances:
    (1) An assurance that the State agency is an independent State 
commission that--
    (i) Is primarily concerned with vocational rehabilitation or 
vocational and other rehabilitation services, in accordance with 
Sec. 361.13(a)(1)(i);
    (ii) Is consumer-controlled by persons who--
    (A) Are individuals with physical or mental impairments that 
substantially limit major life activities; and
    (B) Represent individuals with a broad range of disabilities;
    (iii) Includes individuals representing family members, advocates, 
and authorized representatives of individuals with mental impairments; 
and
    (iv) Conducts a review and analysis of the effectiveness of and 
consumer satisfaction with vocational rehabilitation services and 
providers in the State, in accordance with the provisions in 
Sec. 361.17(h)(3).
    (2) An assurance that--
    (i) The State has established a State Rehabilitation Advisory 
Council (Council) that meets the requirements of Sec. 361.17;
    (ii) The designated State unit seeks and seriously considers, on a 
regular and ongoing basis, advice from the Council regarding the 
development, implementation, and amendment of the State plan, the 
strategic plan, and other policies and procedures of general 
applicability pertaining to the provision of vocational rehabilitation 
services in the State;
    (iii) The designated State unit transmits to the Council--
    (A) All plans, reports, and other information required under the 
Act to be submitted to the Secretary;
    (B) Copies of all written policies, practices, and procedures of 
general applicability provided to or used by rehabilitation personnel; 
and
    (C) Copies of due process hearing decisions in a manner that 
preserves the confidentiality of the participants in the hearings; and
    (iv) The State plan summarizes annually the advice provided by the 
Council, including recommendations from the annual report of the 
Council, the survey of consumer satisfaction, and other reports 
prepared by the Council, and the State agency's response to the advice 
and recommendations, including the manner in which the State will 
modify its policies and procedures based on the survey of consumer 
satisfaction and explanations of reasons for rejecting any advice or 
recommendations of the Council.
    (b) Exception for separate State agency for individuals who are 
blind. In the ase of a State that designates a separate State agency, 
under Sec. 361.13(a)(3), to administer the part of the State plan under 
which vocational rehabilitation services are provided to individuals 
who are blind, the State plan must contain one of the following four 
assurances:
    (1) An assurance that an independent commission in accordance with 
paragraph (a)(1) of this section is responsible under State law for 
operating or overseeing the operation of the vocational rehabilitation 
program of both the State agency that administers the part of the State 
plan under which vocational rehabilitation services are provided to 
individuals who are blind and the State agency that administers the 
remainder of the State plan.
    (2) An assurance that--
    (i) An independent commission that is consumer-controlled by, and 
represents the interests of, individuals who are blind and conducts a 
review and analysis of the effectiveness of and consumer satisfaction 
with vocational rehabilitation services and providers, in accordance 
with the provisions of Sec. 361.17(h)(3), is responsible under State 
law for operating, or overseeing the operation of, the vocational 
rehabilitation program in the State for individuals who are blind; and
    (ii) An independent commission that is consumer-controlled in 
accordance with paragraph (a)(1)(i) of this section and conducts a 
review and analysis of the effectiveness of and consumer satisfaction 
with vocational rehabilitation services and providers, in accordance 
with Sec. 361.17(h)(3), is responsible under State law for operating, 
or overseeing the operation of, the vocational rehabilitation program 
in the State for all individuals with disabilities, except individuals 
who are blind.
    (3) An assurance that--
    (i) An independent commission that is consumer-controlled by, and 
represents the interests of, individuals who are blind and that 
conducts a review and analysis of the effectiveness of and consumer 
satisfaction with vocational rehabilitation services and providers, in 
accordance with Sec. 361.17(h)(3), is responsible under State law for 
operating, or overseeing the operation of, the vocational 
rehabilitation program in the State for individuals who are blind; and
    (ii) The State has established a State Rehabilitation Advisory 
Council that meets the criteria in Sec. 361.17 and carries out the 
duties of a Council with respect to functions for, and services 
provided to, individuals with disabilities, except for individuals who 
are blind.
    (4) An assurance that--
    (i) An independent commission that is consumer-controlled in 
accordance

[[Page 6343]]

with paragraph (a)(1)(i) of this section and conducts a review and 
analysis of the effectiveness of and consumer satisfaction with 
vocational rehabilitation services and providers, in accordance with 
the provisions of Sec. 361.17(h)(3), is responsible under State law for 
operating or overseeing the operation of the vocational rehabilitation 
services for all individuals in the State, except individuals who are 
blind; and
    (ii) The State has established a State Rehabilitation Advisory 
Council that meets the criteria in Sec. 361.17 and carries out the 
duties of a Council with respect to functions for, and services 
provided to, individuals who are blind.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 101(a)(32) and 101(a)(36) of the Act; 29 U.S.C. 
721(a)(32) and 721(a)(36))

Sec. 361.17  Requirements for a State Rehabilitation Advisory Council.

    If the State plan contains an assurance that the State has 
established a Council under Sec. 361.16(a)(2), (b)(3)(ii), or 
(b)(4)(ii), the State plan must also contain an assurance that the 
Council meets the following requirements:
    (a) Appointment. (1) The members of the Council shall be--
    (i) Appointed by the Governor; or
    (ii) If State law vests appointment authority in an entity other 
than, or in conjunction with, the Governor (such as one or more houses 
of the State legislature or an independent board that has general 
appointment authority), appointed by that entity or entities.
    (2) The appointing authority shall select members of the Council 
after soliciting recommendations from representatives of organizations 
representing a broad range of individuals with disabilities and 
organizations interested in individuals with disabilities.
    (b) Composition.--(1) General. Except as provided in paragraph 
(b)(3) of this section, the Council shall be composed of at least 13 
members, including--
    (i) At least one representative of the Statewide Independent Living 
Council, who shall be the chairperson of, or other individual 
recommended by, the Statewide Independent Living Council;
    (ii) At least one representative of a parent training and 
information center established pursuant to section 631(e)(1) of IDEA;
    (iii) At least one representative of the Client Assistance Program 
(CAP), established under 34 CFR Part 370, who shall be the director of, 
or other individual recommended by, the CAP;
    (iv) At least one vocational rehabilitation counselor with 
knowledge of and experience with vocational rehabilitation programs who 
serves as an ex officio, nonvoting member if employed by the designated 
State agency;
    (v) At least one representative of community rehabilitation program 
service providers;
    (vi) Four representatives of business, industry, and labor;
    (vii) Representatives of disability groups that include a cross 
section of--
    (A) Individuals with physical, cognitive, sensory, and mental 
disabilities; and
    (B) Parents, family members, guardians, advocates, or authorized 
representatives of individuals with disabilities who have difficulty 
representing themselves due to their disabilities;
    (viii) Current or former applicants for, or recipients of, 
vocational rehabilitation services; and
    (ix) The director of the designated State unit as an ex officio, 
nonvoting member.
    (2) Employees of the designated State agency. Employees of the 
designated State agency may serve only as nonvoting members of the 
Council.
    (3) Composition of a separate Council for a separate State agency 
for individuals who are blind. Except as provided in paragraph (b)(4) 
of this section, if the State establishes a separate Council for a 
separate State agency for individuals who are blind, that Council 
shall--
    (i) Conform with all of the composition requirements for a Council 
under paragraph (b)(1) of this section, except the requirements in 
paragraph (b)(1)(vii), unless the exception in paragraph (b)(4) of this 
section applies; and
    (ii) Include--
    (A) At least one representative of a disability advocacy group 
representing individuals who are blind; and
    (B) At least one parent, family member, guardian, advocate, or 
authorized representative of an individual who is blind, has multiple 
disabilities, and has difficulty representing himself or herself due to 
disabilities.
    (4) Exception. If State law in effect on October 29, 1992 requires 
a separate Council under paragraph (b)(3) of this section to have fewer 
than 13 members, the separate Council is deemed to be in compliance 
with the composition requirements in paragraphs (b)(1)(vi) and 
(b)(1)(viii) of this section if it includes at least one representative 
who meets the requirements for each of those paragraphs.
    (c) Majority. A majority of the Council members shall be 
individuals with disabilities who are not employed by the designated 
State unit.
    (d) Chairperson. The chairperson shall be--
    (1) Selected by the members of the Council from among the voting 
members of the Council, subject to the veto power of the Governor; or
    (2) If the Governor does not have veto power pursuant to State law, 
selected by the Governor, or by the Council if required by the 
Governor, from among the voting members of the Council.
    (e) Terms of appointment. (1) Each member of the Council shall be 
appointed for a term of no more than three years and may serve for no 
more than two consecutive full terms.
    (2) A member appointed to fill a vacancy occurring prior to the end 
of the term for which the predecessor was appointed shall be appointed 
for the remainder of the predecessor's term.
    (3) The terms of service of the members initially appointed must be 
for varied numbers of years to ensure that terms expire on a staggered 
basis.
    (f) Vacancies. (1) A vacancy in the membership of the Council must 
be filled in the same manner as the original appointment.
    (2) No vacancy affects the power of the remaining members to 
execute the duties of the Council.
    (g) Conflict of interest. No member of the Council shall cast a 
vote on any matter that would provide direct financial benefit to the 
member or the member's organization or otherwise give the appearance of 
a conflict of interest under State law.
    (h) Functions. The Council shall--
    (1) Review, analyze, and advise the designated State unit regarding 
the performance of the State unit's responsibilities under this part, 
particularly responsibilities related to--
    (i) Eligibility, including order of selection;
    (ii) The extent, scope, and effectiveness of services provided; and
    (iii) Functions performed by State agencies that affect or 
potentially affect the ability of individuals with disabilities to 
achieve rehabilitation goals and objectives under this part;
    (2) Advise, and at the discretion of the State agency assist, the 
State unit in the preparation of applications, the State plan, the 
strategic plan, and amendments to the plans, reports, needs 
assessments, and evaluations required by this part;
    (3) To the extent feasible, conduct a review and analysis of the 
effectiveness of, and consumer satisfaction with--
    (i) The functions performed by State agencies and other public and 
private

[[Page 6344]]

entities responsible for serving individuals with disabilities; and
    (ii) The vocational rehabilitation services provided by State 
agencies and other public and private entities responsible for 
providing vocational rehabilitation services to individuals with 
disabilities from funds made available under the Act or through other 
public or private sources;
    (4) Prepare and submit to the Governor, or appropriate State 
entity, and to the Secretary no later than 90 days after the end of the 
Federal fiscal year an annual report on the status of vocational 
rehabilitation programs operated within the State and make the report 
available to the public through appropriate modes of communication;
    (5) Coordinate with other councils within the State, including the 
Statewide Independent Living Council established under 34 CFR part 364, 
the advisory panel established under section 613(a)(12) of IDEA, the 
State Planning Council described in section 124 of the Developmental 
Disabilities Assistance and Bill of Rights Act, and the State mental 
health planning council established under section 1916(e) of the Public 
Health Service Act;
    (6) Advise the designated State agency and provide for coordination 
and the establishment of working relationships between the designated 
State agency and the Statewide Independent Living Council and centers 
for independent living within the State; and
    (7) Perform other comparable functions, consistent with the purpose 
of this part, that the Council determines to be appropriate.
    (i) Resources. (1) The Council, in conjunction with the designated 
State unit, shall prepare a plan for the provision of resources, 
including staff and other personnel, that may be necessary for the 
Council to carry out its functions under this part.
    (2) In implementing the resources plan, the Council shall rely on 
existing resources to the maximum extent possible.
    (3) Any disagreements between the designated State unit and the 
Council regarding the amount of resources necessary must be resolved by 
the Governor or other appointing entity, consistent with paragraphs 
(i)(1) and (2) of this section.
    (4) The Council shall, consistent with State law, supervise and 
evaluate the staff and personnel that are necessary to carry out its 
functions.
    (5) Those staff and personnel that are assisting the Council in 
carrying out its functions may not be assigned duties by the designated 
State unit or any other agency or office of the State that would create 
a conflict of interest.
    (j) Meetings. The Council shall--
    (1) Convene at least four meetings a year to conduct Council 
business that are publicly announced, open and accessible to the 
public, including individuals with disabilities, unless there is a 
valid reason for an executive session; and
    (2) Conduct forums or hearings, as appropriate, that are publicly 
announced, open and accessible to the public, including individuals 
with disabilities.
    (k) Compensation. Funds appropriated under Title I of the Act, 
except funds to carry out sections 112 and 130 of the Act, may be used 
to compensate and reimburse the expenses of Council members in 
accordance with section 105(g) of the Act.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 105 of the Act; 29 U.S.C. 725)


Sec. 361.18  Comprehensive system of personnel development.

    The State plan must describe the procedures and activities the 
State agency will undertake to establish and maintain a comprehensive 
system of personnel development designed to ensure an adequate supply 
of qualified rehabilitation personnel, including professionals and 
paraprofessionals, for the designated State unit. If the State agency 
has a State Rehabilitation Advisory Council, this description must, at 
a minimum, specify that the Council has an opportunity to review and 
comment on the development of plans, policies, and procedures necessary 
to meet the requirements of paragraphs (b) through (d) and paragraph 
(f) of this section. This description must also conform with the 
following requirements:
    (a) Data system on personnel and personnel development. The State 
plan must describe the development and maintenance of a system by the 
State agency for collecting and analyzing on an annual basis data on 
qualified personnel needs and personnel development, in accordance with 
the following requirements:
    (1) Data on qualified personnel needs must include--
    (i) The number of personnel who are employed by the State agency in 
the provision of vocational rehabilitation services in relation to the 
number of individuals served, broken down by personnel category;
    (ii) The number of personnel currently needed by the State agency 
to provide vocational rehabilitation services, broken down by personnel 
category; and
    (iii) Projections of the number of personnel, broken down by 
personnel category, who will be needed by the State agency to provide 
vocational rehabilitation services in the State in five years based on 
projections of the number of individuals to be served, including 
individuals with severe disabilities, the number of personnel expected 
to retire or leave the field, and other relevant factors.
    (2) Data on personnel development must include--
    (i) A list of the institutions of higher education in the State 
that are preparing vocational rehabilitation professionals, by type of 
program;
    (ii) The number of students enrolled at each of those institutions, 
broken down by type of program; and
    (iii) The number of students who graduated during the prior year 
from each of those institutions with certification or licensure, or 
with the credentials for certification or licensure, broken down by the 
personnel category for which they have received, or have the 
credentials to receive, certification or licensure.
    (b) Plan for recruitment, preparation, and retention of qualified 
personnel. The State plan must describe the development, updating, and 
implementation of a plan to address the current and projected needs for 
personnel who are qualified in accordance with paragraph (c) of this 
section. The plan must identify the personnel needs based on the data 
collection and analysis system described in paragraph (a) of this 
section and must provide for the coordination and facilitation of 
efforts between the designated State unit and institutions of higher 
education and professional associations to recruit, prepare, and retain 
personnel who are qualified in accordance with paragraph (c) of this 
section, including personnel from minority backgrounds and personnel 
who are individuals with disabilities.
    (c) Personnel standards. (1) The State plan must include the State 
agency's policies and describe the procedures the State agency will 
undertake to establish and maintain standards to ensure that 
professional and paraprofessional personnel needed within the State 
unit to carry out this part are appropriately and adequately prepared 
and trained, including--
    (i) 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

[[Page 6345]]

comparable requirements (including State personnel requirements), that 
apply to the profession or discipline in which that category of 
personnel is providing vocational rehabilitation services; and
    (ii) To the extent that existing standards are not based on the 
highest requirements in the State, the steps the State is currently 
taking and the steps the State plans to take to retrain or hire 
personnel to meet standards that are based on the highest requirements 
in the State, including measures to notify State unit personnel, the 
institutions of higher education identified under paragraph (a)(2)(i) 
of this section, and other public agencies of these steps and the 
timelines for taking each step.
    (2) As used in this section--
    (i) Highest requirements in the State applicable to that profession 
or discipline means the highest entry-level academic degree needed for 
any national or State-approved or -recognized certification, licensing, 
registration, or other comparable requirements that apply to that 
profession or discipline. The current requirements of all State 
statutes and regulations of other agencies in the State applicable to 
that profession or discipline must be considered and must be kept on 
file by the designated State unit and available to the public.
    (ii) Profession or discipline means a specific occupational 
category, including any paraprofessional occupational category, that--
    (A) Provides rehabilitation services to individuals with 
disabilities;
    (B) Has been established or designated by the State; and
    (C) Has a specified scope of responsibility.
    (d) Staff development. (1) The State plan must include the State 
agency's policies and describe the procedures and activities the State 
agency will undertake to ensure that all personnel employed by the 
State unit receive appropriate and adequate training, including a 
description of--
    (i) A system of staff development for rehabilitation professionals 
and paraprofessionals within the State unit, particularly with respect 
to rehabilitation technology; and
    (ii) Procedures for acquiring and disseminating to rehabilitation 
professionals and paraprofessionals within the designated State unit 
significant knowledge from research and other sources, including 
procedures for providing training regarding the amendments to the 
Rehabilitation Act of 1973 made by the Rehabilitation Act Amendments of 
1992.
    (2) The specific training areas for staff development must be based 
on the needs of each State unit and may include, but are not limited 
to, training with respect to the requirements of the Americans with 
Disabilities Act, IDEA, and Social Security work incentive programs, 
training to facilitate informed choice under this program, and training 
to improve the provision of services to culturally diverse populations.
    (e) Personnel to address individual communication needs. The State 
plan must describe how the State unit--
    (1) Includes among its personnel, or obtains the services of, 
individuals able to communicate in the native languages of applicants 
and eligible individuals who have limited English speaking ability; and
    (2) Includes among its personnel, or obtains the services of, 
individuals able to communicate with applicants and eligible 
individuals in appropriate modes of communication.
    (f) Performance evaluation system. The State plan must describe how 
the system for evaluating the performance of rehabilitation counselors, 
coordinators, and other personnel used in the State unit facilitates, 
and in no way impedes, the accomplishment of the purpose and policy of 
the program as described in sections 100(a)(2) and 100(a)(3) of the 
Act, including the policy of serving, among others, individuals with 
the most severe disabilities.
    (g) Coordination with personnel development under IDEA. The State 
plan must describe the procedures and activities the State agency will 
undertake to coordinate its comprehensive system of personnel 
development under the Act with personnel development under IDEA.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 101 (a)(7) and (a)(35) of the Act; 29 U.S.C. 721(a) 
(7) and (35))

    Note: Under the Act and the regulations in this part, the State 
agency is required to collect and analyze data regarding personnel 
needs by type or category of personnel. The personnel data must be 
collected and analyzed according to personnel category breakdowns 
that are based on the major categories of staff in the State unit. 
Similarly, the data from institutions of higher education must be 
broken down by type of program to correspond as closely as possible 
with the personnel categories of the State unit.


Sec. 361.19  Affirmative action for individuals with disabilities.

    The State plan must assure that the State agency takes affirmative 
action to employ and advance in employment qualified individuals with 
disabilities.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 101(a)(6)(A) of the Act; 29 U.S.C. 721(a)(6)(A))


Sec. 361.20  State plan development.

    (a) Public participation requirements.--(1) Plan development and 
revisions. The State plan must assure that the State unit conducts 
public meetings throughout the State to provide all segments of the 
public, including interested groups, organizations, and individuals, an 
opportunity to comment on the State plan prior to its development and 
to comment on any revisions to the State plan.
    (2) Notice requirements. The State plan must assure that the State 
unit, prior to conducting public meetings, provides appropriate and 
sufficient notice throughout the State of the meetings in accordance 
with--
    (i) State law governing public meetings; or
    (ii) In the absence of State law governing public meetings, 
procedures developed by the State unit in consultation with the State 
Rehabilitation Advisory Council.
    (3) Revisions based on consumer satisfaction surveys. The State 
plan must describe the manner in which the State's policies and 
procedures will be revised based on the results of consumer 
satisfaction surveys conducted by the State Rehabilitation Advisory 
Council under Sec. 361.17(h)(3) or by the State agency if it is an 
independent commission in accordance with the requirements of 
Sec. 361.16.
    (b) Special consultation requirements. The State plan must assure 
that, as appropriate, the State unit actively consults in the 
development and revision of the State plan with the CAP director, the 
State Rehabilitation Advisory Council, and, as appropriate, those 
Indian tribes, tribal organizations, and native Hawaiian organizations 
that represent significant numbers of individuals with disabilities 
within the State.
    (c) Summary of public comments. The State plan must include a 
summary of the public comments on the State plan, including comments on 
revisions to the State plan and the State unit's response to those 
comments.
    (d) Appropriate modes of communication. The State unit shall 
provide, through appropriate modes of communication, the notices of the 
public meetings, any materials furnished prior to or during the public 
meetings, and the approved State plan.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)


[[Page 6346]]


(Authority: Sec. 101(a)(20), 101(a)(23), 101(a)(32), and 105(c)(2) 
of the Act; 29 U.S.C. 721(a)(20), (23), and (32) and 725(c)(2))


Sec. 361.21  Consultations regarding the administration of the State 
plan.

    (a) The State plan must assure that, in connection with matters of 
general policy development and implementation arising in the 
administration of the State plan, the State unit seeks and takes into 
account the views of--
    (1) Individuals who receive vocational rehabilitation services or, 
as appropriate, the individuals' representatives;
    (2) Personnel working in the field of vocational rehabilitation;
    (3) Providers of vocational rehabilitation services;
    (4) The CAP director; and
    (5) The State Rehabilitation Advisory Council, if the State has a 
Council.
    (b) The State plan must specifically describe the manner in which 
the State unit will take into account the views regarding State policy 
and administration of the State plan that are expressed in the consumer 
satisfaction surveys conducted by the State Rehabilitation Advisory 
Council under Sec. 361.17(h)(3) or by the State agency if it is an 
independent commission in accordance with the requirements of 
Sec. 361.16(a)(1).

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 101(a)(18), 101(a)(32), and 105(c)(2) of the Act; 
29 U.S.C. 721(a)(18), 721(a)(32), and 725(c)(2))


Sec. 361.22  Cooperation with agencies responsible for students with 
disabilities.

    (a) Students with disabilities who are receiving special education 
services.--(1) General. The State plan must contain plans, policies, 
and procedures that are designed to facilitate the transition of 
students who are receiving special education services from the 
provision of a free appropriate public education under the 
responsibility of an educational agency to the provision of vocational 
rehabilitation services under the responsibility of the designated 
State unit. These plans, policies, and procedures must provide for the 
development and completion of the IWRP before the student leaves the 
school setting for each student determined to be eligible for 
vocational rehabilitation services or, if the designated State unit is 
operating under an order of selection, for each eligible student able 
to be served under the order. The IWRP must, at a minimum, identify the 
long-term rehabilitation goals, intermediate rehabilitation objectives, 
and goals and objectives related to enabling the student to live 
independently, to the extent these goals and objectives are included in 
the student's individualized education program.
    (2) Formal interagency agreement. The State plan must assure that 
the State unit enters into formal interagency agreements with the State 
educational agency and, as appropriate, with local educational 
agencies, that are responsible for the free appropriate public 
education of students with disabilities who are receiving special 
education services. Formal interagency agreements must, at a minimum, 
identify--
    (i) Policies, practices, and procedures that can be coordinated 
between the agencies, including definitions, standards for eligibility, 
policies and procedures for making referrals, procedures for outreach 
to and identification of youth who are receiving special education 
services and are in need of transition services, and procedures and 
timeframes for evaluation and follow-up of those students;
    (ii) The roles of each agency, including provisions for determining 
State lead agencies and qualified personnel responsible for transition 
services;
    (iii) Procedures for providing training for staff of State and 
local educational agencies as to the availability, benefits of, and 
eligibility standards for vocational rehabilitation services, to the 
extent practicable;
    (iv) Available resources, including sources of funds for the 
development and expansion of services;
    (v) The financial responsibility of each agency in providing 
services to students with disabilities who are receiving special 
education services, consistent with State law;
    (vi) Procedures for resolving disputes between the agencies that 
are parties to the agreement; and
    (vii) All other components necessary to ensure meaningful 
cooperation among agencies, including procedures to facilitate the 
development of local teams to coordinate the provision of services to 
individuals, sharing data, and coordinating joint training of staff in 
the provision of transition services.
    (b) Students with disabilities who are not receiving special 
education services. The State plan must contain plans, policies, and 
procedures, including cooperation with appropriate agencies, designed 
to ensure that students with disabilities who are not receiving special 
education services have access to and can receive vocational 
rehabilitation services, if appropriate, and to ensure outreach to and 
identification of those students.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 101(a)(11)(C), 101(a)(24) and 101(a)(30) of the 
Act; 29 U.S.C. 721 (a)(11), (a)(24), and (a)(30))

    Note: The following excerpt from page 33 of Senate Report No. 
102-357 further clarifies the provision of transition services by 
the State vocational rehabilitation agency:
    The overall purpose of this provision is to ensure that all 
students who require vocational rehabilitation services receive 
those services in a timely manner. There should be no gap in 
services between the education system and the vocational 
rehabilitation system * * *. The committee intends that students 
with disabilities who are eligible for, and who need, vocational 
rehabilitation services will receive those services as soon as 
possible, consistent with Federal and State law. These provisions 
are not intended in any way to shift the responsibility of service 
delivery from education to rehabilitation during the transition 
years. School officials will continue to be responsible for 
providing a free and appropriate public education as defined by the 
IEP. The role of the rehabilitation system is primarily one of 
planning for the student's years after leaving school. (S. Rep. No. 
357, 102d Cong., 2d. Sess. 33 (1992))


Sec. 361.23  Cooperation with other public agencies.

    (a) Coordination of services with vocational education and Javits-
Wagner-O'Day programs. The State plan must assure that specific 
arrangements or agreements are made for the coordination of services 
for any individual who is eligible for vocational rehabilitation 
services and is also eligible for services under the Carl D. Perkins 
Vocational and Applied Technology Education Act or the Javits-Wagner-
O'Day Act.
    (b) Cooperation with other Federal, State, and local public 
agencies providing services related to the rehabilitation of 
individuals with disabilities. (1) The State plan must assure that the 
State unit cooperates with other Federal, State, and local public 
agencies providing services related to the rehabilitation of 
individuals with disabilities, including, as appropriate, establishing 
interagency working groups or entering into formal interagency 
cooperative agreements with, and using the services and facilities of--
    (i) Federal agencies providing services related to the 
rehabilitation of individuals with disabilities, including the Social 
Security Administration, the Office of Workers' Compensation Programs 
of the Department of Labor,

[[Page 6347]]

and the Department of Veterans Affairs; and
    (ii) State and local public agencies providing services related to 
the rehabilitation of individuals with disabilities, including State 
and local public agencies administering the State's social services and 
financial assistance programs and other State programs for individuals 
with disabilities, such as the State's developmental disabilities 
program, veterans programs, health and mental health programs, 
education programs (including adult education, higher education, and 
vocational education programs), workers' compensation programs, job 
training and placement programs, and public employment offices.
    (2) Interagency cooperation under paragraph (b)(1) of this section, 
to the extent practicable, must provide for training for staff of the 
agencies as to the availability, benefits of, and eligibility standards 
for vocational rehabilitation services.
    (3) If the State unit chooses to enter into formal interagency 
cooperative agreements developed under paragraph (b)(1) of this 
section, the agreements must--
    (i) Identify policies, practices, and procedures that can be 
coordinated among the agencies (particularly definitions, standards for 
eligibility, the joint sharing and use of evaluations and assessments, 
and procedures for making referrals);
    (ii) Identify available resources and define the financial 
responsibility of each agency for paying for necessary services 
(consistent with State law) and procedures for resolving disputes 
between agencies; and
    (iii) Include all additional components necessary to ensure 
meaningful cooperation and coordination.
    (c) Reciprocal referral services with a separate agency for 
individuals who are blind. If there is a separate State unit for 
individuals who are blind, the State plan must assure that the two 
State units establish reciprocal referral services, use each other's 
services and facilities to the extent feasible, jointly plan activities 
to improve services in the State for individuals with multiple 
impairments, including visual impairments, and otherwise cooperate to 
provide more effective services, including, if appropriate, entering 
into a written cooperative agreement.

(Authority: Secs. 101(a)(11) and 101(a)(22) of the Act; 29 U.S.C. 
721(a)(11) and 721(a)(22))


Sec. 361.24  Coordination with the Statewide Independent Living 
Council.

    The State plan must assure that the State unit will coordinate and 
establish working relationships with the Statewide Independent Living 
Council established under 34 CFR Part 364 and with independent living 
centers within the State.

(Authority: Sec. 101(a)(33) of the Act; 29 U.S.C. 721(a)(33))


Sec. 361.25  Statewideness.

    The State plan must assure that services provided under the State 
plan will be available in all political subdivisions of the State, 
unless a waiver of statewideness is requested and approved in 
accordance with Sec. 361.26.

(Authority: Section 101(a)(4) of the Act; 29 U.S.C. 721(a)(4))


Sec. 361.26  Waiver of statewideness.

    (a) Availability. The State unit may provide services in one or 
more political subdivisions of the State that increase services or 
expand the scope of services that are available statewide under the 
State plan if--
    (1) The non-Federal share of the cost of these services is met from 
funds provided by a local public agency, including funds contributed to 
a local public agency by a private agency, organization, or individual;
    (2) The services are likely to promote the vocational 
rehabilitation of substantially larger numbers of individuals with 
disabilities or of individuals with disabilities with particular types 
of impairments; and
    (3) The State includes in its State plan, and the Secretary 
approves, a request for a waiver of the statewideness requirement, in 
accordance with the requirements of paragraph (b) of this section.
    (b) Request for waiver. The request for a waiver of statewideness 
must--
    (1) Identify the types of services to be provided;
    (2) Contain a written assurance from the local public agency that 
it will make available to the State unit the non-Federal share of 
funds;
    (3) Contain a written assurance that State unit approval will be 
obtained for each proposed service before it is put into effect; and
    (4) Contain a written assurance that all other State plan 
requirements, including a State's order of selection requirements, will 
apply to all services approved under the waiver.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 101(a)(4) of the Act; 29 U.S.C. 721(a)(4))


Sec. 361.27  Shared funding and administration of joint programs.

    (a) If the State plan provides for a joint program involving shared 
funding and administrative responsibility with another State agency or 
a local public agency to provide services to individuals with 
disabilities, the plan must include a description of the nature and 
scope of the joint program, the services to be provided, the respective 
roles of each participating agency in the provision of services and in 
their administration, and the share of the costs to be assumed by each 
agency.
    (b) If a proposed joint program does not comply with the 
statewideness requirement in Sec. 361.25, the State unit shall obtain a 
waiver of statewideness, in accordance with Sec. 361.26.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Section 101(a)(1)(A) of the Act; 29 U.S.C. 721(a)(1)(A))


Sec. 361.28  Third-party cooperative arrangements involving funds from 
other public agencies.

    (a) If the designated State unit enters into a third-party 
cooperative arrangement for providing or administering vocational 
rehabilitation services with another State agency or a local public 
agency that is furnishing part or all of the non-Federal share, the 
State plan must assure that--
    (1) The services provided by the cooperating agency are not the 
customary or typical services provided by that agency but are new 
services that have a vocational rehabilitation focus or existing 
services that have been modified, adapted, expanded, or reconfigured to 
have a vocational rehabilitation focus;
    (2) The services provided by the cooperating agency are only 
available to applicants for, or recipients of, services from the 
designated State unit;
    (3) Program expenditures and staff providing services under the 
cooperative arrangement are under the administrative supervision of the 
designated State unit; and
    (4) All State plan requirements, including a State's order of 
selection, will apply to all services provided under the cooperative 
program.
    (b) If a third party cooperative agreement does not comply with the 
statewideness requirement in Sec. 361.25, the State unit shall obtain a 
waiver of statewideness, in accordance with Sec. 361.26.

(Authority: Sec. 101(a)(1)(A) of the Act; 29 U.S.C. 721(a)(1)(A))

[[Page 6348]]

Sec. 361.29  Statewide studies and evaluations.

    (a) Statewide studies. The State plan must assure that the State 
unit conducts continuing statewide studies to determine the current 
needs of individuals with disabilities within the State and the best 
methods to meet those needs. As part of the development of the State 
plan, the continuing statewide studies, at a minimum, must include--
    (1) A triennial comprehensive assessment of the rehabilitation 
needs of individuals with severe disabilities who reside in the State;
    (2) A triennial review of the effectiveness of outreach procedures 
used to identify and serve individuals with disabilities who are 
minorities and individuals with disabilities who are unserved and 
underserved by the vocational rehabilitation system; and
    (3) A triennial review of a broad variety of methods to provide, 
expand, and improve vocational rehabilitation services to individuals 
with the most severe disabilities, including individuals receiving 
supported employment services under 34 CFR part 363.
    (b) Annual evaluation. The State plan must assure that the State 
unit conducts an annual evaluation of the effectiveness of the State's 
vocational rehabilitation program in providing vocational 
rehabilitation and supported employment services, especially to 
individuals with the most severe disabilities. The annual evaluation 
must analyze the extent to which--
    (1) The State has achieved the goals and priorities established in 
the State plan and annual amendments to the plan; and
    (2) The State is in compliance with the evaluation standards and 
performance indicators established by the Secretary pursuant to section 
106 of the Act.
    (c) Reporting requirements. (1) The State plan must describe 
annually those changes that have been adopted in policy, in the State 
plan and its amendments, and in the strategic plan and its amendments 
as a result of the statewide studies and the annual program evaluation.
    (2) The State plan must contain an annual description of the 
methods used to expand and improve vocational rehabilitation services 
to individuals with the most severe disabilities, including the State 
unit's criteria for determining which individuals are individuals with 
the most severe disabilities.
    (3) The State plan must contain an annual analysis of the 
characteristics of individuals determined to be ineligible for services 
and the reasons for the ineligibility determinations.
    (4) The State unit shall maintain copies of the statewide studies 
and the annual evaluations and shall make the copies available to the 
Secretary upon request.
    (d) Role of the State Rehabilitation Advisory Council. The State 
plan must assure that the State unit seeks the advice of the State 
Rehabilitation Advisory Council, if the State has a Council, regarding 
the continuing statewide studies and the annual evaluation and, at the 
discretion of the State agency, seeks assistance from the Council in 
the preparation and analysis of the studies and evaluation.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sections 101(a)(5) (A) and (B), 101(a)(9)(D), 101(a)(15) 
(A), (C), and (D), 101(a)(19), and 105(c)(2) of the Act; 29 U.S.C. 
721(a) (5), (9), (15), and (19) and 725(c)(2))


Sec. 361.30  Services to special groups of individuals with 
disabilities.

    (a) Civil employees of the United States. The State plan must 
assure that vocational rehabilitation services are available to civil 
employees of the U.S. Government who are disabled in the line of duty, 
under the same terms and conditions applied to other individuals with 
disabilities.
    (b) Public safety officers. (1) The State plan must assure that 
special consideration will be given to those individuals with 
disabilities whose disability arose from an impairment sustained in the 
line of duty while performing as a public safety officer and the 
immediate cause of that impairment was a criminal act, apparent 
criminal act, or a hazardous condition resulting directly from the 
officer's performance of duties in direct connection with the 
enforcement, execution, and administration of law or fire prevention, 
firefighting, or related public safety activities.
    (2) For the purposes of paragraph (b) of this section, special 
consideration for States under an order of selection means that those 
public safety officers who meet the requirements of paragraph (b)(1) of 
this section must receive priority for services over other eligible 
individuals in the same priority category of the order of selection.
    (3) For the purposes of paragraph (b) of this section, criminal act 
means any crime, including an act, omission, or possession under the 
laws of the United States, a State, or a unit of general local 
government that poses a substantial threat of personal injury, 
notwithstanding that by reason of age, insanity, intoxication, or 
otherwise, the person engaging in the act, omission, or possession was 
legally incapable of committing a crime.
    (4) For the purposes of paragraph (b) of this section, public 
safety officer means a person serving the United States or a State or 
unit of local government, with or without compensation, in any activity 
pertaining to--
    (i) The enforcement of the criminal laws, including highway patrol, 
or the maintenance of civil peace by the National Guard or the Armed 
Forces;
    (ii) A correctional program, facility, or institution if the 
activity is potentially dangerous because of contact with criminal 
suspects, defendants, prisoners, probationers, or parolees;
    (iii) A court having criminal or juvenile delinquent jurisdiction 
if the activity is potentially dangerous because of contact with 
criminal suspects, defendants, prisoners, probationers, or parolees; or
    (iv) Firefighting, fire prevention, or emergency rescue missions.
    (c) American Indians. (1) The State plan must assure that 
vocational rehabilitation services are provided to American Indians 
with disabilities residing in the State to the same extent that these 
services are provided to other significant groups of individuals with 
disabilities residing in the State.
    (2) The State plan also must assure that the designated State unit 
continues to provide vocational rehabilitation services, including, as 
appropriate, services traditionally used by Indian tribes, to American 
Indians with disabilities who reside on reservations and are eligible 
for services by a special tribal program under 34 CFR part 371.

(Authority: Secs. 7, 101(a)(13), 101(a)(20), and 130(b)(3) of the 
Act; 29 U.S.C. 706, 721(a)(13), 721(a)(20), and 750(b)(3))


Sec. 361.31  Utilization of community resources.

    The State plan must assure that, in providing vocational 
rehabilitation services, public or other vocational or technical 
training programs or other appropriate community resources are used to 
the maximum extent feasible.

(Authority: Sec. 101(a)(12)(A) of the Act; 29 U.S.C. 721(a)(12)(A))


Sec. 361.32  Utilization of profitmaking organizations for on-the-job 
training in connection with selected projects.

    The State plan must assure that the State unit has the authority to 
enter into contracts with profitmaking organizations for the purpose of 
providing on-the-job training and related programs for individuals with

[[Page 6349]]

disabilities under the Projects With Industry program, 34 CFR part 379, 
if it has been determined that they are better qualified to provide 
needed services than nonprofit agencies, organizations, or programs in 
the State.

(Authority: Sec. 101(a)(21) of the Act; 29 U.S.C. 721(a)(21))


Sec. 361.33  Use, assessment, and support of community rehabilitation 
programs.

    (a) The State plan must contain a description of how the designated 
State unit uses community rehabilitation programs to the maximum extent 
feasible to provide vocational rehabilitation services in the most 
integrated settings possible, consistent with the informed choices of 
the individuals. This description must--
    (1) Include the methods the designated State unit uses to ensure 
the appropriate use of community rehabilitation programs;
    (2) Provide, as appropriate, for entering into agreements with the 
operators of those community rehabilitation programs;
    (3) Specify the manner in which the designated State unit will 
establish cooperative agreements with private nonprofit vocational 
rehabilitation service providers;
    (4) Contain the findings resulting from an assessment of the 
capacity and effectiveness of community rehabilitation programs, 
including programs under the Javits-Wagner-O'Day Act, based on the use 
of those programs; and
    (5) Contain plans for improving community rehabilitation programs 
based on the assessment in paragraph (a)(4) of this section.
    (b) If the State plan provides for the establishment, development, 
or improvement of a public or nonprofit community rehabilitation 
program, the State plan must contain a description of the need to 
establish, develop, or improve, as appropriate, the community 
rehabilitation program to provide vocational rehabilitation services to 
applicants and eligible individuals, based on the assessment and 
improvement plans required in paragraphs (a)(4) and (a)(5) of this 
section.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 101(a)(5)(A), 101(a)(12)(B), 101(a)(15)(B), 
101(a)(27), 101(a)(28), and 103(b)(2) of the Act; 29 U.S.C. 
721(a)(5), (12), (15), (27), and (28) and 723(b)(2))


Sec. 361.34  Supported employment plan.

    (a) The State plan must assure that the State has an acceptable 
plan under 34 CFR part 363 that provides for the use of funds under 
that part to supplement funds under this part for the cost of services 
leading to supported employment.
    (b) The supported employment plan, including any needed annual 
revisions, must be submitted as a supplement to the State plan.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 101(a)(25) and 635(a) of the Act; 29 U.S.C. 
721(a)(25))


Sec. 361.35  Strategic plan.

    (a) The State plan must assure that the State--
    (1) Has developed and implemented a strategic plan for expanding 
and improving vocational rehabilitation services for individuals with 
disabilities on a statewide basis in accordance with subpart D of this 
part; and
    (2) Will use at least 1.5 percent of its allotment under this 
program for expansion and improvement activities in accordance with 
Sec. 361.73(b).
    (b) The strategic plan must be submitted at the same time as the 
State plan.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 101(a)(34) and 120 of the Act; 29 U.S.C. 
721(a)(34) and 740)


Sec. 361.36  Ability to serve all eligible individuals; order of 
selection for services.

    (a) General provisions. (1) The State plan must contain--
    (i) An assurance that the designated State unit is able to provide 
the full range of services listed in section 103(a) of the Act, as 
appropriate, to all eligible individuals. The assurance must be 
supported by an explanation that satisfies the requirements of 
paragraph (a)(2) or (a)(3) of this section and describes how, on the 
basis of the designated State unit's projected fiscal and personnel 
resources and its assessment of the rehabilitation needs of individuals 
with severe disabilities within the State, it will--
    (A) Continue to provide services to all individuals currently 
receiving services;
    (B) Provide assessment services to all individuals expected to 
apply for services in the next fiscal year;
    (C) Provide services to all individuals who are expected to be 
determined eligible in the next fiscal year; and
    (D) Meet all program requirements; or
    (ii) The order to be followed in selecting eligible individuals to 
be provided services, a justification of that order of selection, and a 
description of the outcome and service goals and service costs to be 
achieved for individuals with disabilities in each category within the 
order and the time within which these goals may be achieved.
    (2) For those designated State units that provided assurances in 
their State plans for the current fiscal year and the preceding fiscal 
year that they are able to provide the full range of services, as 
appropriate, to all eligible individuals, the explanation required by 
paragraph (a)(1)(i) of this section must include a statement that, 
during the current fiscal year and the preceding fiscal year, the DSU 
has in fact--
    (i) Provided assessment services to all applicants and the full 
range of services, as appropriate, to all eligible individuals;
    (ii) Made referral forms widely available throughout the State;
    (iii) Conducted outreach efforts to identify and serve individuals 
with disabilities who have been unserved or underserved by the 
vocational rehabilitation system; and
    (iv) Not delayed, through waiting lists or other means, 
determinations of eligibility, the development of individualized 
written rehabilitation programs (IWRPs) for individuals determined 
eligible, or the provision of services for eligible individuals for 
whom IWRPs have been developed.
    (3) For those designated State units unable to provide the full 
range of services to all eligible individuals during the current or 
preceding fiscal year, or unable to provide the statement required in 
paragraph (a)(2) of this section, the explanation required by paragraph 
(a)(1)(i) of this section must include--
    (i) A description of the circumstances that have changed that will 
allow the DSU to meet the requirements of paragraph (a)(1)(i) of this 
section in the next fiscal year, including a description of--
    (A) The estimated number of and projected costs of serving, in the 
next fiscal year, individuals with existing IWRPs;
    (B) The projected number of individuals with disabilities who will 
apply for services and will be determined eligible in the next fiscal 
year and the projected costs of serving those individuals;
    (C) The projected costs of administering the program in the next 
fiscal year, including, but not limited to, costs of staff salaries and 
benefits, outreach activities, and required statewide studies; and
    (D) The projected revenues and projected number of qualified 
personnel for the program in the next fiscal year;
    (ii) Comparable data, as relevant, for the current or preceding 
fiscal year, or for both years, of the costs listed in

[[Page 6350]]

paragraphs (a)(3)(i) (A) through (C) of this section and the resources 
identified in paragraph (a)(3)(i)(D) of this section and an explanation 
of any projected increases or decreases in these costs and resources; 
and
    (iii) A demonstration that the projected revenues and the projected 
number of qualified personnel for the program in the next fiscal year 
are adequate to cover the costs identified in paragraphs (a)(3)(i) (A) 
through (C) of this section so as to ensure the provision of the full 
range of services, as appropriate, to all eligible individuals.
    (b) Time for determining need for an order of selection. (1) The 
designated State unit shall determine, prior to the beginning of each 
fiscal year, whether to establish and implement an order of selection.
    (2) If the designated State unit determines that it does not need 
to establish an order of selection, it shall reevaluate this 
determination whenever changed circumstances during the course of a 
fiscal year, such as a decrease in its fiscal or personnel resources or 
an increase in its program costs, indicate that it may no longer be 
able to provide the full range of services, as appropriate, to all 
eligible individuals.
    (c) Establishing an order of selection--(1) Basis for order of 
selection. An order of selection must be based on a refinement of the 
three criteria in the definition of ``individual with a severe 
disability'' in section 7(15)(A) of the Act.
    (2) Factors that cannot be used in determining order of selection 
of eligible individuals. An order of selection may not be based on any 
other factors, including--
    (i) Any duration of residency requirement, provided the individual 
is present in the State;
    (ii) Type of disability;
    (iii) Age, gender, race, color, creed, or national origin;
    (iv) Source of referral;
    (v) Type of expected employment outcome;
    (vi) The need for specific services or anticipated cost of services 
required by an individual; or
    (vii) The income level of an individual or an individual's family.
    (3) Priority for individuals with the most severe disabilities. The 
State plan must assure that those individuals with the most severe 
disabilities are selected for service before other individuals with 
disabilities. The designated State unit shall establish criteria for 
determining which individuals are individuals with the most severe 
disabilities. The criteria must be consistent with the definition of 
``individual with a severe disability'' in section 7(15)(A) of the Act 
and the requirements in paragraphs (c) (1) and (2) of this section.
    (d) Administrative requirements. In administering the order of 
selection, the designated State unit shall--
    (1) Implement the order of selection on a statewide basis;
    (2) Notify all eligible individuals of the priority categories in a 
State's order of selection, their assignment to a particular category, 
and their right to appeal their category assignment;
    (3) Continue to provide all needed services to any eligible 
individual who has begun to receive services under an IWRP prior to the 
effective date of the order of selection, irrespective of the severity 
of the individual's disability;
    (4) Ensure that its funding arrangements for providing services 
under the State plan, including third-party arrangements and awards 
under the establishment authority, are consistent with the order of 
selection. If any funding arrangements are inconsistent with the order 
of selection, the designated State unit shall renegotiate these funding 
arrangements so that they are consistent with the order of selection.
    (e) State Rehabilitation Advisory Council. The designated State 
unit shall consult with and seriously consider the advice of the State 
Rehabilitation Advisory Council regarding the--
    (1) Need to establish an order of selection, including any 
reevaluation of the need under paragraph (b)(2) of this section;
    (2) Priority categories of the particular order of selection;
    (3) Criteria for determining individuals with the most severe 
disabilities; and
    (4) Administration of the order of selection.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 7(15)(A); 12(d); 17; 101(a)(4); 101(a)(5)(A); 
101(a)(7); 101(a)(11)(A); 101(a)(15)(D); 101(a)(24); 101(a)(30); 
101(a)(36)(A)(ii); 107(a)(4)(B); and 504(a) of the Act; 29 U.S.C. 
706(15)(A), 711(d), 716, 721(a)(4), 721(a)(5)(A), 721(a)(7), 
721(a)(11)(A), 721(a)(15)(D), 721(a)(24), 721(a)(30), 
721(a)(36)(A)(ii), 727(a)(4)(B), and 794(a))


Sec. 361.37  Establishment and maintenance of information and referral 
programs.

    (a) General provisions. The State plan must assure that--
    (1) The designated State unit will establish and maintain 
information and referral programs adequate to ensure that individuals 
with disabilities within the State are given accurate information about 
State vocational rehabilitation services, independent living services, 
vocational rehabilitation services available from other agencies, 
organizations, and community rehabilitation programs, and, to the 
extent possible, other Federal and State services and programs that 
assist individuals with disabilities, including client assistance and 
other protection and advocacy programs;
    (2) The State unit will refer individuals with disabilities to 
other appropriate Federal and State programs that might be of benefit 
to them; and
    (3) The State unit will use existing information and referral 
systems in the State to the greatest extent possible.
    (b) Appropriate modes of communication. The State plan further must 
assure that information and referral programs use appropriate modes of 
communication.
    (c) Special circumstances. If the State unit is operating under an 
order of selection for services, the State unit may elect to establish 
an expanded information and referral program that includes counseling, 
guidance, and referral for job placements for those eligible 
individuals who are not in the priority category or categories to 
receive vocational rehabilitation services under the State's order of 
selection.
    (1) If a State unit elects to establish an expanded information and 
referral program under paragraph (c) of this section, the State plan 
must include--
    (i) A description of how the expanded information and referral 
program will be established and how it will function, including the 
level of commitment of State unit staff and resources; and
    (ii) An assurance that, in carrying out this program, the State 
unit will not use funds that are needed to provide vocational 
rehabilitation services under IWRPs for eligible individuals in the 
priority category or categories receiving services under the State 
unit's order of selection or for other eligible individuals who have 
begun to receive services prior to the effective date of the order of 
selection.
    (2) If the designated State unit chooses to track the individuals 
who obtain employment through participation in an expanded information 
and referral program established under paragraph (c) of this section, 
the State plan must include a report of the number of individuals 
served and the number of individuals who obtain employment through this 
program.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 101(a)(22) of the Act; 29 U.S.C. 721(a)(22))

[[Page 6351]]

Sec. 361.38  Protection, use, and release of personal information.

    (a) General provisions. (1) The State plan must assure that the 
State agency and the State unit will adopt and implement policies and 
procedures to safeguard the confidentiality of all personal 
information, including photographs and lists of names. These policies 
and procedures must assure that--
    (i) Specific safeguards protect current and stored personal 
information;
    (ii) All applicants and eligible individuals and, as appropriate, 
those individuals' representatives, service providers, cooperating 
agencies, and interested persons are informed through appropriate modes 
of communication of the confidentiality of personal information and the 
conditions for accessing and releasing this information;
    (iii) All applicants or their representatives are informed about 
the State unit need to collect personal information and the policies 
governing its use, including--
    (A) Identification of the authority under which information is 
collected;
    (B) Explanation of the principal purposes for which the State unit 
intends to use or release the information;
    (C) Explanation of whether providing requested information to the 
State unit is mandatory or voluntary and the effects of not providing 
requested information;
    (D) Identification of those situations in which the State unit 
requires or does not require informed written consent of the individual 
before information may be released; and
    (E) Identification of other agencies to which information is 
routinely released;
    (iv) An explanation of State policies and procedures affecting 
personal information will be provided to each individual in that 
individual's native language or through the appropriate mode of 
communication; and
    (v) These policies and procedures provide no fewer protections for 
individuals than State laws and regulations.
    (2) The State unit may establish reasonable fees to cover 
extraordinary costs of duplicating records or making extensive searches 
and shall establish policies and procedures governing access to 
records.
    (b) State program use. All personal information in the possession 
of the State agency or the designated State unit must be used only for 
the purposes directly connected with the administration of the 
vocational rehabilitation program. Information containing identifiable 
personal information may not be shared with advisory or other bodies 
that do not have official responsibility for administration of the 
program. In the administration of the program, the State unit may 
obtain personal information from service providers and cooperating 
agencies under assurances that the information may not be further 
divulged, except as provided under paragraphs (c), (d), and (e) of this 
section.
    (c) Release to applicants and eligible individuals. (1) Except as 
provided in paragraphs (c)(2) and (c)(3) of this section, if requested 
in writing by an applicant or eligible individual, the State unit shall 
make all requested information in that individual's record of services 
accessible to and shall release the information to the individual or 
the individual's representative in a timely manner.
    (2) Medical, psychological, or other information that the State 
unit determines may be harmful to the individual may not be released 
directly to the individual, but must be provided to the individual 
through a third party chosen by the individual, which may include, 
among others, an advocate, a family member, or a qualified medical or 
mental health professional, unless a representative has been appointed 
by a court to represent the individual, in which case the information 
must be released to the court-appointed representative.
    (3) If personal information has been obtained from another agency 
or organization, it may be released only by, or under the conditions 
established by, the other agency or organization.
    (4) An applicant or eligible individual who believes that 
information in the individual's record of services is inaccurate or 
misleading may request that the designated State unit amend the 
information. If the information is not amended, the request for an 
amendment must be documented in the record of services.
    (d) Release for audit, evaluation, and research. Personal 
information may be released to an organization, agency, or individual 
engaged in audit, evaluation, or research only for purposes directly 
connected with the administration of the vocational rehabilitation 
program, or for purposes that would significantly improve the quality 
of life for applicants and eligible individuals and only if the 
organization, agency, or individual assures that--
    (1) The information will be used only for the purposes for which it 
is being provided;
    (2) The information will be released only to persons officially 
connected with the audit, evaluation, or research;
    (3) The information will not be released to the involved 
individual;
    (4) The information will be managed in a manner to safeguard 
confidentiality; and
    (5) The final product will not reveal any personal identifying 
information without the informed written consent of the involved 
individual or the individual's representative.
    (e) Release to other programs or authorities. (1) Upon receiving 
the informed written consent of the individual or, if appropriate, the 
individual's representative, the State unit may release personal 
information to another agency or organization for its program purposes 
only to the extent that the information may be released to the involved 
individual or the individual's representative and only to the extent 
that the other agency or organization demonstrates that the information 
requested is necessary for its program.
    (2) Medical or psychological information that the State unit 
determines may be harmful to the individual may be released if the 
other agency or organization assures the State unit that the 
information will be used only for the purpose for which it is being 
provided and will not be further released to the individual.
    (3) The State unit shall release personal information if required 
by Federal law or regulations.
    (4) The State unit shall release personal information in response 
to investigations in connection with law enforcement, fraud, or abuse, 
unless expressly prohibited by Federal or State laws or regulations, 
and in response to an order issued by a judge, magistrate, or other 
authorized judicial officer.
    (5) The State unit also may release personal information in order 
to protect the individual or others if the individual poses a threat to 
his or her safety or to the safety of others.

(Authority: Secs. 12(c) and 101(a)(6)(A) of the Act; 29 U.S.C. 
711(c) and 721(a)(6)(A))


Sec. 361.39  State-imposed requirements.

    The State plan must assure that the designated State unit 
identifies upon request those regulations and policies relating to the 
administration or operation of its vocational rehabilitation program 
that are State-imposed, including any regulations or policy based on 
State interpretation of any Federal law, regulations, or guideline.

(Authority: Sect. 17 of the Act; 29 U.S.C. 716)

[[Page 6352]]

Sec. 361.40  Reports.

    The State plan must assure that the State unit--
    (a) Will submit reports in the form and detail and at the time 
required by the Secretary, including reports required under sections 
13, 14, and 101(a)(10) of the Act; and
    (b) Will comply with any requirements necessary to ensure the 
correctness and verification of those reports.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 101(a)(10) of the Act; 29 U.S.C. 721(a)(10))

State Plan Content: Provision and Scope of Services


Sec. 361.41  Processing referrals and applications.

    (a) Referrals. The State plan must assure that the designated State 
unit has established and implemented standards for the prompt and 
equitable handling of referrals of individuals for vocational 
rehabilitation services. The standards must include timelines for 
making good faith efforts to inform these individuals of application 
requirements and to gather information necessary to initiate an 
assessment for determining eligibility and priority for services.
    (b) Applications. (1) The State plan must assure that once an 
individual has submitted an application for vocational rehabilitation 
services, an eligibility determination will be made within 60 days, 
unless--
    (i) Exceptional and unforeseen circumstances beyond the control of 
the agency preclude a determination within 60 days and the agency and 
the individual agree to a specific extension of time; or
    (ii) An extended evaluation is necessary, in accordance with 
Sec. 361.42(d).
    (2) An individual is considered to have submitted an application 
when the individual or the individual's representative, as 
appropriate,--
    (i) Has completed and signed an agency application form or has 
otherwise requested services;
    (ii) Has provided information necessary to initiate an assessment 
to determine eligibility and priority for services; and
    (iii) Is available to complete the assessment process.
    (3) The designated State unit shall ensure that its application 
forms are widely available throughout the State.

(Authority: Sec. 101(a)(6)(A) and 102(a)(5)(A) of the Act; 29 U.S.C. 
721(a)(6)(A) and 722(a)(5)(A))


Sec. 361.42  Assessment for determining eligibility and priority for 
services.

    The State plan must assure that, in order to determine whether an 
individual is eligible for vocational rehabilitation services and the 
individual's priority under an order of selection for services (if the 
State is operating under an order of selection), the designated State 
unit will conduct an assessment for determining eligibility and 
priority for services. The assessment must be conducted in the most 
integrated setting possible, consistent with the individual's needs and 
informed choice, and in accordance with the following provisions:
    (a) Eligibility requirements.--(1) Basic requirements. The State 
plan must assure that the State unit's determination of an applicant's 
eligibility for vocational rehabilitation services is based only on the 
following requirements:
    (i) A determination that the applicant has a physical or mental 
impairment.
    (ii) A determination that the applicant's physical or mental 
impairment constitutes or results in a substantial impediment to 
employment for the applicant.
    (iii) A presumption, in accordance with paragraph (a)(2) of this 
section, that the applicant can benefit in terms of an employment 
outcome from the provision of vocational rehabilitation services.
    (iv) A determination that the applicant requires vocational 
rehabilitation services to prepare for, enter into, engage in, or 
retain gainful employment consistent with the applicant's strengths, 
resources, priorities, concerns, abilities, capabilities, and informed 
choice.
    (2) Presumption of benefit. The State plan must assure that the 
designated State unit will presume that an applicant who meets the 
eligibility requirements in paragraphs (a)(1) (i) and (ii) of this 
section can benefit in terms of an employment outcome unless it 
demonstrates, based on clear and convincing evidence, that the 
applicant is incapable of benefitting in terms of an employment outcome 
from vocational rehabilitation services.
    (3) Limited presumption for Social Security beneficiaries. The 
State plan must assure that, if an applicant has appropriate evidence, 
such as an award letter, that establishes the applicant's eligibility 
for Social Security benefits under Title II or Title XVI of the Social 
Security Act, the designated State unit will presume that the 
applicant--
    (i) Meets the eligibility requirements in paragraphs (a)(1) (i) and 
(ii) of this section; and
    (ii) Has a severe physical or mental impairment that seriously 
limits one or more functional capacities in terms of an employment 
outcome.
    (b) Prohibited factors. The State plan must assure that-- (1) No 
duration of residence requirement is imposed that excludes from 
services any applicant who is present in the State;
    (2) No applicant or group of applicants is excluded or found 
ineligible solely on the basis of the type of disability;
    (3) The eligibility requirements are applied without regard to the 
age, gender, race, color, creed, or national origin of the applicant; 
and
    (4) The eligibility requirements are applied without regard to the 
particular service needs or anticipated cost of services required by an 
applicant or the income level of an applicant or applicant's family.
    (c) Review and assessment of data for eligibility determination. 
Except as provided in paragraph (d) of this section, the designated 
State unit shall base its determination of each of the basic 
eligibility requirements in paragraph (a) of this section on--
    (1) A review and assessment of existing data, including counselor 
observations, education records, information provided by the individual 
or the individual's family, information used by the Social Security 
Administration, and determinations made by officials of other agencies; 
and
    (2) To the extent existing data do not describe the current 
functioning of the individual or are unavailable, insufficient, or 
inappropriate to make an eligibility determination, an assessment of 
additional data resulting from the provision of vocational 
rehabilitation services, including assistive technology devices and 
services and worksite assessments, that are necessary to determine 
whether an individual is eligible.
    (d) Extended evaluation for individuals with severe disabilities. 
(1) Prior to any determination that an individual with a severe 
disability is incapable of benefitting from vocational rehabilitation 
services in terms of an employment outcome because of the severity of 
that individual's disability, the State unit shall conduct an extended 
evaluation to determine whether or not there is clear and convincing 
evidence to support such a determination.
    (2) During the extended evaluation period, which may not exceed 18 
months, vocational rehabilitation services must be provided in the most 
integrated setting possible, consistent with the informed choice of the 
individual.

[[Page 6353]]

    (3) During the extended evaluation period, the State unit shall 
develop a written plan for determining eligibility and for determining 
the nature and scope of services required to achieve an employment 
outcome. The State unit may provide during this period only those 
services that are necessary to make these two determinations.
    (4) The State unit shall assess the individual's progress as 
frequently as necessary, but at least once every 90 days, during the 
extended evaluation period.
    (5) The State unit shall terminate extended evaluation services at 
any point during the 18-month extended evaluation period if the State 
unit determines that--
    (i) There is sufficient evidence to conclude that the individual 
can benefit from the provision of vocational rehabilitation services in 
terms of an employment outcome; or
    (ii) There is clear and convincing evidence that the individual is 
incapable of benefiting from vocational rehabilitation services in 
terms of an employment outcome.
    (e) Data for determination of priority for services under an order 
of selection. If the State unit is operating under an order of 
selection for services, as provided in Sec. 361.36, the State unit 
shall base its priority assignments on--
    (1) A review of the data that was developed under paragraphs (c) 
and (d) of this section to make the eligibility determination; and
    (2) An assessment of additional data, to the extent necessary.

(Authority: Secs. 7(22)(A)(ii), 7(22)(C)(iii), 101(a)(9)(A), 
101(a)(14), 101(a)(31), 102(a)(1), 102(a)(2), 102(a)(3), 102(a)(4), 
103(a)(4), and 103(a)(6) of the Act; 29 U.S.C. 706(22)(A)(ii), 
706(22)(C)(iii), 721(a)(9)(a), 721(a)(14), 721(a)(31), 722(a)(1), 
722(a)(2), 722(a)(3), 722(a)(4), 723(a)(4), and 723(a)(6))

    Note: Clear and convincing evidence means that the designated 
State unit shall have a high degree of certainty before it can 
conclude that an individual is incapable of benefiting from services 
in terms of an employment outcome. The ``clear and convincing'' 
standard constitutes the highest standard used in our civil system 
of law and is to be individually applied on a case-by-case basis. 
The term clear means unequivocal. Given these requirements, a review 
of existing information generally would not provide clear and 
convincing evidence. For example, the use of an intelligence test 
result alone would not constitute clear and convincing evidence. 
Clear and convincing evidence might include a description of 
assessments, including situational assessments and supported 
employment assessments, from service providers who have concluded 
that they would be unable to meet the individual's needs due to the 
severity of the individual's disability. The demonstration of 
``clear and convincing evidence'' must include, if appropriate, a 
functional assessment of skill development activities, with any 
necessary supports (including assistive technology), in real life 
settings. (S. Rep. No. 357, 102d Cong., 2d. Sess. 37-38 (1992))


Sec. 361.43  Procedures for ineligibility determination.

    The State plan must assure that if the State unit determines that 
an applicant is ineligible for vocational rehabilitation services or 
determines that an individual receiving services under an 
individualized written rehabilitation program is no longer eligible for 
services, the State unit shall--
    (a) Make the determination only after providing an opportunity for 
full consultation with the individual or, as appropriate, with the 
individual's representative;
    (b) Inform the individual in writing, supplemented as necessary by 
other appropriate modes of communication consistent with the informed 
choice of the individual, of the ineligibility determination, including 
the reasons for that determination, the requirements under this 
section, and the means by which the individual may express and seek 
remedy for any dissatisfaction, including the procedures for review of 
a determination by the rehabilitation counselor or coordinator in 
accordance with Sec. 361.57;
    (c) Provide the individual with a description of services available 
from a client assistance program established under 34 CFR part 370 and 
information on how to contact that program; and
    (d) Review within 12 months and annually thereafter if requested by 
the individual or, if appropriate, by the individual's representative 
any ineligibility determination that is based on a finding that the 
individual is incapable of achieving an employment outcome. This review 
need not be conducted in situations in which the individual has refused 
it, the individual is no longer present in the State, the individual's 
whereabouts are unknown, or the individual's medical condition is 
rapidly progressive or terminal.

(Authority: Secs. 101(a)(9)(D), 102(a)(6), and 102(c) of the Act; 29 
U.S.C. 721(a)(9), 722(a)(6), and 722(c))


Sec. 361.44  Closure without eligibility determination.

    The State plan must assure that the State unit may not close an 
applicant's record of services prior to making an eligibility 
determination unless the applicant declines to participate in, or is 
unavailable to complete an assessment for determining eligibility and 
priority for services, and the State unit has made a reasonable number 
of attempts to contact the applicant or, if appropriate, the 
applicant's representative to encourage the applicant's participation.

(Authority: Secs. 12(c) and 101(a)(6)(A) of the Act; 29 U.S.C. 
711(c) and 721(a)(6))


Sec. 361.45  Development of the individualized written rehabilitation 
program.

    (a) Purpose. The State plan must assure that the State unit 
conducts an assessment for determining vocational rehabilitation needs 
for each eligible individual or, if the State is operating under an 
order of selection, for each eligible individual to whom the State is 
able to provide services. The purpose of this assessment is to 
determine the long-term vocational goal, intermediate rehabilitation 
objectives, and the nature and scope of vocational rehabilitation 
services to be included in the IWRP, which must be designed to achieve 
an employment outcome that is consistent with the individual's unique 
strengths, priorities, concerns, abilities, capabilities, career 
interests, and informed choice.
    (b) Procedural requirements. The State plan must assure that--
    (1) The IWRP is developed jointly, agreed to, and signed by the 
vocational rehabilitation counselor or coordinator and the individual 
or, as appropriate, the individual's representative within the 
framework of a counseling and guidance relationship;
    (2) The State unit has established and implemented standards for 
the prompt development of IWRPs for the individuals identified under 
paragraph (a) of this section, including timelines that take into 
consideration the needs of the individual;
    (3) The State unit advises each individual or, as appropriate, the 
individual's representative of all State unit procedures and 
requirements affecting the development and review of an IWRP, including 
the availability of appropriate modes of communication;
    (4) In developing an IWRP for a student with a disability who is 
receiving special education services, the State unit considers the 
student's individualized education program;
    (5) The State unit reviews the IWRP with the individual or, as 
appropriate, the individual's representative as often as necessary, but 
at least once each year to assess the individual's progress in meeting 
the objectives identified in the IWRP;
    (6) The State unit incorporates into the IWRP any revisions that 
are necessary to reflect changes in the individual's vocational goal, 
intermediate objectives, or vocational rehabilitation services, and 
obtains the

[[Page 6354]]

agreement and signature of the individual or, as appropriate, of the 
individual's representative to the revisions; and
    (7) The State unit promptly provides each individual or, as 
appropriate, the individual's representative, a copy of the IWRP and 
its amendments in the native language, or appropriate mode of 
communication, of the individual or, as appropriate, of the 
individual's representative.
    (c) Data for preparing the IWRP.--(1) Preparation without 
comprehensive assessment. To the extent possible, the vocational goal, 
intermediate objectives, and the nature and scope of rehabilitation 
services to be included in the individual's IWRP must be determined 
based on the data used for the assessment of eligibility and priority 
for services under section Sec. 361.42.
    (2) Preparation based on comprehensive assessment. (i) If 
additional data are necessary to prepare the IWRP, the designated State 
unit shall conduct a comprehensive assessment of the unique strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and needs, including the need for supported employment services, of an 
eligible individual, in the most integrated setting possible, 
consistent with the informed choice of the individual.
    (ii) The comprehensive assessment must be limited to information 
that is necessary to identify the rehabilitation needs of the 
individual and develop the IWRP and may, to the extent needed, 
include--
    (A) An analysis of pertinent medical, psychiatric, psychological, 
neuropsychological, and other pertinent vocational, educational, 
cultural, social, recreational, and environmental factors, and related 
functional limitations, that affect the employment and rehabilitation 
needs of the individual;
    (B) An analysis of the individual's personality, career interests, 
interpersonal skills, intelligence and related functional capacities, 
educational achievements, work experience, vocational aptitudes, 
personal and social adjustments, and employment opportunities;
    (C) An appraisal of the individual's patterns of work behavior and 
services needed to acquire occupational skills and to develop work 
attitudes, work habits, work tolerance, and social and behavior 
patterns suitable for successful job performance; and
    (D) An assessment, through provision of rehabilitation technology 
services, of the individual's capacities to perform in a work 
environment, including in an integrated setting, to the maximum extent 
feasible and consistent with the individual's informed choice.
    (iii) In preparing a comprehensive assessment, the State unit shall 
use, to the maximum extent possible and appropriate and in accordance 
with confidentiality requirements, existing information, including 
information that is provided by the individual, the family of the 
individual, and education agencies.

(Authority: Secs. 7(22)(B), 102(b)(1)(A), and 102(b)(2); 29 U.S.C. 
706(5), 721(a)(9), 722, and 723(a)(1))


Sec. 361.46  Content of the individualized written rehabilitation 
program.

    (a) General requirements. The State plan must assure that each IWRP 
includes, as appropriate, statements concerning--
    (1) The specific long-term vocational goal, which must be based on 
the assessment for determining vocational rehabilitation needs, 
including the individual's career interests, and must be, to the extent 
appropriate and consistent with the informed choice of the individual, 
in an integrated setting;
    (2) The specific intermediate rehabilitation objectives related to 
the attainment of the long-term vocational goal, based on the 
assessment for determining vocational rehabilitation needs and 
consistent with the informed choice of the individual;
    (3) The specific rehabilitation services under Sec. 361.48 to be 
provided to achieve the established intermediate rehabilitation 
objectives, including, if appropriate, rehabilitation technology 
services and on-the-job and related personal assistance services;
    (4) The projected dates for the initiation of each vocational 
rehabilitation service, the anticipated duration of each service, and 
the projected timeframe for the achievement of the individual's 
vocational goal;
    (5) A procedure and schedule for periodic review and evaluation of 
progress toward achieving intermediate rehabilitation objectives based 
upon objective criteria;
    (6) How, in the words of the individual or, as appropriate, in the 
words of the individual's representative, the individual was informed 
about and involved in choosing among alternative goals, objectives, 
services, providers, and methods used to procure or provide services;
    (7) The terms and conditions for the provision of vocational 
rehabilitation services, including--
    (i) The responsibilities of the individual in implementing the 
IWRP;
    (ii) The extent of the individual's participation in the cost of 
services;
    (iii) The extent to which goods and services will be provided in 
the most integrated settings possible, consistent with the informed 
choices of the individual;
    (iv) The extent to which comparable services and benefits are 
available to the individual under any other program; and
    (v) The entity or entities that will provide the services and the 
process used to provide or procure the services;
    (8) The rights of the individual under this part and the means by 
which the individual may express and seek remedy for any 
dissatisfaction, including the opportunity for a review of 
rehabilitation counselor or coordinator determinations under 
Sec. 361.57;
    (9) The availability of a client assistance program established 
under 34 CFR part 370; and
    (10) The basis on which the individual has been determined to have 
achieved an employment outcome in accordance with Sec. 361.56.
    (b) Supported employment requirements. The State plan must assure 
that the IWRP for individuals with the most severe disabilities for 
whom a vocational goal in a supported employment setting has been 
determined to be appropriate will also contain--
    (1) A description of the supported employment services to be 
provided by the State unit; and
    (2) A description of the extended services needed and 
identification of the source of extended services or, in the event that 
identification of the source is not possible at the time the IWRP is 
developed, a statement explaining the basis for concluding that there 
is a reasonable expectation that services will become available.
    (c) Post-employment services. The State plan must assure that the 
IWRP for each individual contains statements concerning--
    (1) The expected need for post-employment services, based on an 
assessment during the development of the IWRP;
    (2) A reassessment of the need for post-employment services prior 
to the determination that the individual has achieved an employment 
outcome;
    (3) A description of the terms and conditions for the provision of 
any post-employment services, including the anticipated duration of 
those services, subsequent to the achievement of an employment outcome 
by the individual; and
    (4) If appropriate, a statement of how post-employment services 
will be provided or arranged through

[[Page 6355]]

cooperative agreements with other service providers.
    (d) Coordination of services for students with disabilities who are 
receiving special education services. The State plan must assure that 
the IWRP for a student with a disability who is receiving special 
education services is coordinated with the individualized education 
program (IEP) for that individual in terms of the goals, objectives, 
and services identified in the IEP.
    (e) Ineligibility. The State plan must assure that the decision 
that an individual is not capable of achieving an employment outcome 
and is no longer eligible to receive services under an IWRP is made in 
accordance with the requirements in Sec. 361.43. The decision, and the 
reasons on which the decision was based, must be included as an 
amendment to the IWRP.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 101(a)(9), 102(b)(1), 102(c), and 635(b)(6) of the 
Act; 29 U.S.C. 721(a)(9), 722, and 795n)


Sec. 361.47  Record of services.

    The State plan must assure that the designated State unit maintains 
for each applicant or eligible individual a record of services that 
includes, to the extent pertinent, the following documentation:
    (a) If an applicant has been determined to be an eligible 
individual, documentation supporting that determination in accordance 
with the requirements in Sec. 361.42.
    (b) If an applicant has been determined to be ineligible, 
documentation supporting that determination in accordance with the 
requirements of Sec. 361.43.
    (c) Documentation supporting the determination that an individual 
has a severe disability or a most severe disability.
    (d) If an individual with a severe disability requires an extended 
evaluation in order to determine whether the individual is an eligible 
individual, documentation supporting the need for an extended 
evaluation, documentation supporting the periodic assessments conducted 
during the extended evaluation, and the written plan developed during 
the extended evaluation, in accordance with the requirements in 
Sec. 361.42(d).
    (e) The IWRP, and any amendments to the IWRP, containing the 
information required under Sec. 361.46.
    (f) In accordance with Sec. 361.45(a), documentation supporting the 
development of the long-term vocational goal, intermediate 
rehabilitation objectives, and nature and scope of services included in 
the individual's IWRP and, for students with disabilities who are 
receiving special education services, in the student's IEP.
    (g) In the event that an individual's IWRP provides for services or 
a job placement in a non-integrated setting, a justification for that 
non-integrated setting.
    (h) Documentation of the periodic reviews and evaluations of 
progress toward achieving intermediate rehabilitation objectives 
conducted under Sec. 361.46(a)(5).
    (i) In the event that an individual obtains competitive employment, 
verification that the individual is compensated at or above the minimum 
wage and that the individual's wage and level of benefits are not less 
than that customarily paid by the employer for the same or similar work 
performed by non-disabled individuals in accordance with 
Sec. 361.5(b)(10)(ii).
    (j) Documentation concerning any action and decision resulting from 
a request by an individual for review of a rehabilitation counselor or 
coordinator determination under Sec. 361.57.

(Authority: Secs. 101(a)(6) and 101(a)(9) of the Act; 29 U.S.C. 
721(a)(6) and 721(a)(9))


Sec. 361.48  Scope of vocational rehabilitation services for 
individuals with disabilities.

    (a) The State plan must assure that, as appropriate to the 
vocational rehabilitation needs of each individual and consistent with 
each individual's informed choice, the following vocational 
rehabilitation services are available:
    (1) Assessment for determining eligibility and priority for 
services in accordance with Sec. 361.42.
    (2) Assessment for determining vocational rehabilitation needs in 
accordance with Sec. 361.45.
    (3) Vocational rehabilitation counseling and guidance.
    (4) Referral and other services necessary to help applicants and 
eligible individuals secure needed services from other agencies and to 
advise those individuals about client assistance programs established 
under 34 CFR part 370.
    (5) Physical and mental restoration services in accordance with the 
definition of that term in Sec. 361.5(b)(35).
    (6) Vocational and other training services, including personal and 
vocational adjustment training, books, tools, and other training 
materials, except that no training or training services in an 
institution of higher education (universities, colleges, community or 
junior colleges, vocational schools, technical institutes, or hospital 
schools of nursing) may be paid for with funds under this part unless 
maximum efforts have been made by the State unit and the individual to 
secure grant assistance in whole or in part from other sources to pay 
for that training.
    (7) Maintenance, in accordance with the definition of that term in 
Sec. 361.5(b)(31).
    (8) Transportation in connection with the rendering of any 
vocational rehabilitation service and in accordance with the definition 
of that term in Sec. 361.5(b)(49).
    (9) Vocational rehabilitation services to family members of an 
applicant or eligible individual if necessary to enable the applicant 
or eligible individual to achieve an employment outcome.
    (10) Interpreter services for individuals who are deaf and tactile 
interpreting services for individuals who are deaf-blind.
    (11) Reader services, rehabilitation teaching services, and 
orientation and mobility services for individuals who are blind.
    (12) Recruitment and training services to provide new employment 
opportunities in the fields of rehabilitation, health, welfare, public 
safety, law enforcement, and other appropriate public service 
employment.
    (13) Job search and placement assistance and job retention 
services.
    (14) Supported employment services in accordance with the 
definition of that term in Sec. 361.5(b)(46).
    (15) Personal assistance services in accordance with the definition 
of that term in Sec. 361.5(b)(34).
    (16) Post-employment services in accordance with the definition of 
that term in Sec. 361.5(b)(37).
    (17) Occupational licenses, tools, equipment, initial stocks, and 
supplies.
    (18) Rehabilitation technology in accordance with the definition of 
that term in Sec. 361.5(b)(39), including vehicular modification, 
telecommunications, sensory, and other technological aids and devices.
    (19) Transition services in accordance with the definition of that 
term in Sec. 361.5(b)(47).
    (20) Other goods and services determined necessary for the 
individual with a disability to achieve an employment outcome.
    (b) The State plan also must describe--
    (1) The manner in which a broad range of rehabilitation technology 
services will be provided at each stage of the rehabilitation process 
and on a statewide basis;
    (2) The training that will be provided to vocational rehabilitation 
counselors, client assistance personnel, and other

[[Page 6356]]

related services personnel on the provision of rehabilitation 
technology services;
    (3) The manner in which assistive technology devices and services 
will be provided or worksite assessments will be made as part of the 
assessment for determining eligibility and vocational rehabilitation 
needs of an individual; and
    (4) The manner in which on-the-job and other related personal 
assistance services will be provided to assist individuals while they 
are receiving vocational rehabilitation services.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 101(a)(5)(C), 101(a)(26), 101(a)(31), and 103(a) 
of the Act; 29 U.S.C. 721(a)(5)(C), 721(a)(26), 721(a)(31), and 
723(a))


Sec. 361.49  Scope of vocational rehabilitation services for groups of 
individuals with disabilities.

    (a) The State plan may also provide for the following vocational 
rehabilitation services for the benefit of groups of individuals with 
disabilities:
    (1) The establishment, development, or improvement of a public or 
other nonprofit community rehabilitation program that is used to 
provide services that promote integration and competitive employment, 
including under special circumstances, the construction of a facility 
for a public or nonprofit community rehabilitation program. Examples of 
``special circumstances'' include the destruction by natural disaster 
of the only available center serving an area or a State determination 
that construction is necessary in a rural area because no other public 
agencies or private nonprofit organizations are currently able to 
provide services to individuals.
    (2) Telecommunications systems that have the potential for 
substantially improving vocational rehabilitation service delivery 
methods and developing appropriate programming to meet the particular 
needs of individuals with disabilities, including telephone, 
television, video description services, satellite, tactile-vibratory 
devices, and similar systems, as appropriate.
    (3) Special services to provide recorded material or video 
description services for individuals who are blind, captioned 
television, films, or video cassettes for individuals who are deaf, 
tactile materials for individuals who are deaf-blind, and other special 
services that provide information through tactile, vibratory, auditory, 
and visual media.
    (4) Technical assistance and support services, such as job site 
modification and other reasonable accommodations, to businesses that 
are not subject to Title I of the Americans with Disabilities Act of 
1990 and that are seeking to employ individuals with disabilities.
    (5) In the case of small business enterprises operated by 
individuals with the most severe disabilities under the supervision of 
the State unit, including enterprises established under the Randolph-
Sheppard program, management services and supervision, acquisition of 
equipment, initial stocks and supplies, and initial operating expenses, 
in accordance with the following requirements:
    (i) ``Management services and supervision'' includes inspection, 
quality control, consultation, accounting, regulating, in-service 
training, and related services provided on a systematic basis to 
support and improve small business enterprises operated by individuals 
with the most severe disabilities. ``Management services and 
supervision'' may be provided throughout the operation of the small 
business enterprise.
    (ii) ``Initial stocks and supplies'' includes those items necessary 
to the establishment of a new business enterprise during the initial 
establishment period, which may not exceed six months.
    (iii) Costs of establishing a small business enterprise may include 
operational costs during the initial establishment period, which may 
not exceed six months.
    (iv) If the State plan provides for these services, it must contain 
an assurance that only individuals with the most severe disabilities 
will be selected to participate in this supervised program.
    (v) If the State plan provides for these services and the State 
unit chooses to set aside funds from the proceeds of the operation of 
the small business enterprises, the State plan also must assure that 
the State unit maintains a description of the methods used in setting 
aside funds and the purposes for which funds are set aside. Funds may 
be used only for small business enterprises purposes, and benefits that 
are provided to operators from set-aside funds must be provided on an 
equitable basis.
    (6) Other services that promise to contribute substantially to the 
rehabilitation of a group of individuals but that are not related 
directly to the IWRP of any one individual. Examples of those other 
services might include the purchase or lease of a bus to provide 
transportation to a group of applicants or eligible individuals or the 
purchase of equipment or instructional materials that would benefit a 
group of applicants or eligible individuals.
    (b) If the State plan provides for vocational rehabilitation 
services for groups of individuals, the State plan must assure that the 
designated State unit--
    (1) Develops and maintains written policies covering the nature and 
scope of each of the vocational rehabilitation services it provides and 
the criteria under which each service is provided; and
    (2) Maintains information to ensure the proper and efficient 
administration of those services in the form and detail and at the time 
required by the Secretary, including the types of services provided, 
the costs of those services, and, to the extent feasible, estimates of 
the numbers of individuals benefitting from those services.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 12(c), 101(a)(6), and 103(b) of the Act; 29 U.S.C. 
711(c), 721(a)(6), and 723(b))


Sec. 361.50  Written policies governing the provision of services for 
individuals with disabilities.

    The State plan must assure that the State unit develops and 
maintains written policies covering the nature and scope of each of the 
vocational rehabilitation services specified in Sec. 361.48 and the 
criteria under which each service is provided. The policies must ensure 
that the provision of services is based on the rehabilitation needs of 
each individual as identified in that individual's IWRP and is 
consistent with the individual's informed choice. The written policies 
may not establish any arbitrary limits on the nature and scope of 
vocational rehabilitation services to be provided to the individual to 
achieve an employment outcome. The policies must be developed in 
accordance with the following provisions:
    (a) Out-of-State services. (1) The State unit may establish a 
preference for in-State services, provided that the preference does not 
effectively deny an individual a necessary service. If the individual 
chooses an out-of-State service at a higher cost than an in-State 
service, if either service would meet the individual's rehabilitation 
needs, the designated State unit is not responsible for those costs in 
excess of the cost of the in-State service.
    (2) The State unit may not establish policies that effectively 
prohibit the provision of out-of-State services.
    (b) Payment for services. (1) The State unit shall establish and 
maintain written policies to govern the rates of payment for all 
purchased vocational rehabilitation services.

[[Page 6357]]

    (2) The State unit may establish a fee schedule designed to ensure 
a reasonable cost to the program for each service, provided that the 
schedule is--
    (i) Not so low as to effectively deny an individual a necessary 
service; and
    (ii) Not absolute and permits exceptions so that individual needs 
can be addressed.
    (3) The State unit may not place absolute dollar limits on specific 
service categories or on the total services provided to an individual.
    (c) Duration of services. (1) The State unit may establish 
reasonable time periods for the provision of services provided that the 
time periods are--
    (i) Not so short as to effectively deny an individual a necessary 
service; and
    (ii) Not absolute and permit exceptions so that individual needs 
can be addressed.
    (2) The State unit may not establish absolute time limits on the 
provision of specific services or on the provision of services to an 
individual. The duration of each service needed by an individual must 
be determined on an individual basis and reflected in that individual's 
IWRP.
    (d) Authorization of services. The State unit shall establish 
policies related to the timely authorization of services, including any 
conditions under which verbal authorization can be given.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 12(c), 12(e)(2)(A), and 101(a)(6) of the Act and 
29 U.S.C. 711(c), 711(e)(2)(A), and 721(a)(6))


Sec. 361.51  Written standards for facilities and providers of 
services.

    The State plan must assure that the designated State unit 
establishes, maintains, makes available to the public, and implements 
written minimum standards for the various types of facilities and 
providers of services used by the State unit in providing vocational 
rehabilitation services, in accordance with the following requirements:
    (a) Accessibility of facilities. Any facility in which vocational 
rehabilitation services are provided must be accessible to individuals 
receiving services and must comply with the requirements of the 
Architectural Barriers Act of 1968, the Uniform Accessibility Standards 
and their implementing regulations in 41 CFR part 101, subpart 101-
19.6, the Americans with Disabilities Act of 1990, and section 504 of 
the Act.
    (b) Personnel standards. (1) Qualified personnel. Providers of 
vocational rehabilitation services shall use qualified personnel, in 
accordance with any applicable 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.
    (2) Affirmative action. Providers of vocational rehabilitation 
services shall take affirmative action to employ and advance in 
employment qualified individuals with disabilities.
    (3) Special communication needs personnel. Providers of vocational 
rehabilitation services shall--
    (i) Include among their personnel, or obtain the services of, 
individuals able to communicate in the native languages of applicants 
and eligible individuals who have limited English speaking ability; and
    (ii) Ensure that appropriate modes of communication for all 
applicants and eligible individuals are used.
    (c) Fraud, waste, and abuse. Providers of vocational rehabilitation 
services shall have adequate and appropriate policies and procedures to 
prevent fraud, waste, and abuse.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 12(e)(2) (B), (D), and (E) and 101(a)(6)(B) of the 
Act; 29 U.S.C. 711(e) and 721(a)(6)(B))


Sec. 361.52  Opportunity to make informed choices.

    The State plan must describe the manner in which the State unit 
will provide each applicant, including individuals who are receiving 
services during an extended evaluation, and each eligible individual 
the opportunity to make informed choices throughout the vocational 
rehabilitation process in accordance with the following requirements:
    (a) Each State unit, in consultation with its State Rehabilitation 
Advisory Council, if it has one, shall develop and implement written 
policies and procedures that enable each individual to make an informed 
choice with regard to the selection of a long-term vocational goal, 
intermediate rehabilitation objectives, vocational rehabilitation 
services, including assessment services, and service providers. These 
policies and procedures must ensure that each individual receives, 
through appropriate modes of communication, information concerning the 
availability and scope of informed choice, the manner in which informed 
choice may be exercised, and the availability of support services for 
individuals with cognitive or other disabilities who require assistance 
in exercising informed choice.
    (b) In developing an individual's IWRP, the State unit shall 
provide the individual, or assist the individual in acquiring, 
information necessary to make an informed choice about the specific 
services, including the providers of those services, that are needed to 
achieve the individual's vocational goal. This information must 
include, at a minimum, information relating to the cost, accessibility, 
and duration of potential services, the consumer satisfaction with 
those services to the extent that information relating to consumer 
satisfaction is available, the qualifications of potential service 
providers, the types of services offered by those providers, and the 
degree to which services are provided in integrated settings.
    (c) In providing, or assisting the individual in acquiring, the 
information required under paragraph (b) of this section, the State 
unit may use, but is not limited to, the following methods or sources 
of information:
    (1) State or regional lists of services and service providers.
    (2) Periodic consumer satisfaction surveys and reports.
    (3) Referrals to other consumers, local consumer groups, or 
disability advisory councils qualified to discuss the services or 
service providers.
    (4) Relevant accreditation, certification, or other information 
relating to the qualifications of service providers.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 12(e)(1), 12(e)(2) (C) and (F), and 101(a)(29) of 
the Act; 29 U.S.C. 711(e) and 721(a)(29))


Sec. 361.53  Availability of comparable services and benefits.

    (a) The State plan must assure that--
    (1) Prior to providing any vocational rehabilitation services to an 
eligible individual, or to members of the individual's family, except 
those services listed in paragraph (b) of this section, the State unit 
shall determine whether comparable services and benefits exist under 
any other program and whether those services and benefits are available 
to the individual;
    (2) If comparable services or benefits exist under any other 
program and are available to the eligible individual at the time needed 
to achieve the rehabilitation objectives in the individual's IWRP, the 
State unit shall use those comparable services or benefits to meet, in 
whole or in part, the

[[Page 6358]]

cost of vocational rehabilitation services; and
    (3) If comparable services or benefits exist under any other 
program, but are not available to the individual at the time needed to 
satisfy the rehabilitation objectives in the individual's IWRP, the 
State unit shall provide vocational rehabilitation services until those 
comparable services and benefits become available.
    (b) The following services are exempt from a determination of the 
availability of comparable services and benefits under paragraph (a) of 
this section:
    (1) Assessment for determining eligibility and priority for 
services.
    (2) Assessment for determining vocational rehabilitation needs.
    (3) Vocational rehabilitation counseling, guidance, and referral 
services.
    (4) Vocational and other training services, such as personal and 
vocational adjustment training, books (including alternative format 
books accessible by computer and taped books), tools, and other 
training materials in accordance with Sec. 361.48(a)(6).
    (5) Placement services.
    (6) Rehabilitation technology.
    (7) Post-employment services consisting of the services listed 
under paragraphs (b) (1) through (6) of this section.
    (c) The requirements of paragraph (a) of this section also do not 
apply if--
    (1) The determination of the availability of comparable services 
and benefits under any other program would delay the provision of 
vocational rehabilitation services to any individual who is determined 
to be at extreme medical risk, based on medical evidence provided by an 
appropriate qualified medical professional; or
    (2) An immediate job placement would be lost due to a delay in the 
provision of comparable services and benefits.

(Authority: Sec. 101(a)(8) of the Act; 29 U.S.C. 721(a)(8))


Sec. 361.54  Participation of individuals in cost of services based on 
financial need.

    (a) No Federal requirement. There is no Federal requirement that 
the financial need of individuals be considered in the provision of 
vocational rehabilitation services.
    (b) State unit requirements. (1) The State unit may choose to 
consider the financial need of eligible individuals or individuals who 
are receiving services during an extended evaluation for purposes of 
determining the extent of their participation in the costs of 
vocational rehabilitation services, other than those services 
identified in paragraph (b)(3) of this section.
    (2) If the State unit chooses to consider financial need--
    (i) It shall maintain written policies covering the determination 
of financial need;
    (ii) The State plan must specify the types of vocational 
rehabilitation services for which the unit has established a financial 
needs test;
    (iii) The policies must be applied uniformly to all individuals in 
similar circumstances;
    (iv) The policies may require different levels of need for 
different geographic regions in the State, but must be applied 
uniformly to all individuals within each geographic region; and
    (v) The policies must ensure that the level of an individual's 
participation in the cost of vocational rehabilitation services is--
    (A) Reasonable;
    (B) Based on the individual's financial need, including 
consideration of any disability-related expenses paid by the 
individual; and
    (C) Not so high as to effectively deny the individual a necessary 
service.
    (3) The State plan must assure that no financial needs test is 
applied and no financial participation is required as a condition for 
furnishing the following vocational rehabilitation services:
    (i) Assessment for determining eligibility and priority for 
services, except those non-assessment services that are provided during 
an extended evaluation for an individual with a severe disability under 
Sec. 361.42(d).
    (ii) Assessment for determining vocational rehabilitation needs.
    (iii) Vocational rehabilitation counseling, guidance, and referral 
services.
    (iv) Placement services.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 12(c) of the Act; 29 U.S.C. 711(c))


Sec. 361.55  Review of extended employment in community rehabilitation 
programs or other employment under section 14(c) of the Fair Labor 
Standards Act.

    The State plan must assure that the State unit--
    (a) Reviews and re-evaluates at least annually the status of each 
individual determined by the State unit to have achieved an employment 
outcome in an extended employment setting in a community rehabilitation 
program or other employment setting in which the individual is 
compensated in accordance with section 14(c) of the Fair Labor 
Standards Act. This review or re-evaluation must include input from the 
individual or, in an appropriate case, the individual's representative 
to determine the interests, priorities, and needs of the individual for 
employment in, or training for, competitive employment in an integrated 
setting in the labor market;
    (b) Makes maximum effort, including the identification of 
vocational rehabilitation services, reasonable accommodations, and 
other support services, to enable the eligible individual to benefit 
from training in, or to be placed in employment in, an integrated 
setting; and
    (c) Provides services designed to promote movement from extended 
employment to integrated employment, including supported employment, 
independent living, and community participation.

(Authority: Sec. 101(a)(16) of the Act; 29 U.S.C. 721(a)(16))


Sec. 361.56  Individuals determined to have achieved an employment 
outcome.

    The State plan must assure that an individual is determined to have 
achieved an employment outcome only if the following requirements are 
met:
    (a) The provision of services under the individual's IWRP has 
contributed to the achievement of the employment outcome.
    (b) The employment outcome is consistent with the individual's 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice.
    (c) The employment outcome is in the most integrated setting 
possible, consistent with the individual's informed choice.
    (d) The individual has maintained the employment outcome for a 
period of at least 90 days.
    (e) At the end of the appropriate period under paragraph (d) of 
this section, the individual and the rehabilitation counselor or 
coordinator consider the employment outcome to be satisfactory and 
agree that the individual is performing well on the job.

(Authority: Secs. 12(c), 101(a)(6), and 106(a)(2) of the Act; 29 
U.S.C. 711(c), 721(a)(6), and 726(a)(2))


Sec. 361.57  Review of rehabilitation counselor or coordinator 
determinations.

    The State plan must contain procedures, including standards of 
review under paragraph (b)(7) of this section, established by the 
director of the designated State unit to ensure that any applicant or 
eligible individual who is dissatisfied with any determinations made by 
a rehabilitation counselor or coordinator concerning the furnishing or 
denial of services may request, or, if

[[Page 6359]]

appropriate, may request through the individual's representative, a 
timely review of those determinations. The procedures established by 
the director of the State unit must be in accordance with the following 
provisions:
    (a) Informal resolution. The State unit may establish an informal 
process to resolve a request for review without conducting a formal 
hearing. However, a State's informal process must be conducted and 
concluded within the time period established under paragraph (b)(1) of 
this section for holding a formal hearing. If informal resolution is 
not successful, a formal hearing must be conducted by the end of this 
same period, unless the parties agree to a specific extension of time.
    (b) Formal hearing procedures. Except as provided in paragraph (d) 
of this section, the State unit shall establish formal review 
procedures that provide that--
    (1) A hearing by an impartial hearing officer, selected in 
accordance with paragraph (c) of this section, must be held within 45 
days of an individual's request for review, unless informal resolution 
is achieved prior to the 45th day or the parties agree to a specific 
extension of time;
    (2) The State unit may not institute a suspension, reduction, or 
termination of services being provided under an IWRP pending a final 
determination of the formal hearing under this paragraph or informal 
resolution under paragraph (a) of this section, unless the individual 
or, in an appropriate case, the individual's representative so requests 
or the agency has evidence that the services have been obtained through 
misrepresentation, fraud, collusion, or criminal conduct on the part of 
the individual;
    (3) The individual or, if appropriate, the individual's 
representative must be afforded an opportunity to present additional 
evidence, information, and witnesses to the impartial hearing officer, 
to be represented by counsel or other appropriate advocate, and to 
examine all witnesses and other relevant sources of information and 
evidence;
    (4) The impartial hearing officer shall make a decision based on 
the provisions of the approved State plan, the Act, Federal vocational 
rehabilitation regulations, and State regulations and policies that are 
consistent with Federal requirements and shall provide to the 
individual or, if appropriate, the individual's representative and to 
the director of the designated State unit a full written report of the 
findings and grounds for the decision within 30 days of the completion 
of the hearing;
    (5) If the director of the designated State unit decides to review 
the decision of the impartial hearing officer, the director shall 
notify in writing the individual or, if appropriate, the individual's 
representative of that intent within 20 days of the mailing of the 
impartial hearing officer's decision;
    (6) If the director of the designated State unit fails to provide 
the notice required by paragraph (b)(5) of this section, the impartial 
hearing officer's decision becomes a final decision;
    (7) The decision of the director of the designated State unit to 
review any impartial hearing officer's decision must be based on 
standards of review contained in written State unit policy;
    (8) If the director of the designated State unit decides to review 
the decision of the impartial hearing officer, the director shall 
provide the individual or, if appropriate, the individual's 
representative an opportunity to submit additional evidence and 
information relevant to the final decision;
    (9) The director may not overturn or modify a decision, or part of 
a decision, of an impartial hearing officer that supports the position 
of the individual unless the director concludes, based on clear and 
convincing evidence, that the decision of the impartial hearing officer 
is clearly erroneous because it is contrary to the approved State plan, 
the Act, Federal vocational rehabilitation regulations, or State 
regulations or policies that are consistent with Federal requirements;
    (10) Within 30 days of providing notice of intent to review the 
impartial hearing officer's decision, the director of the designated 
State unit shall make a final decision and provide a full report in 
writing of the decision, including the findings and the statutory, 
regulatory, or policy grounds for the decision, to the individual or, 
if appropriate, the individual's representative;
    (11) The director of the designated State unit may not delegate 
responsibility to make any final decision to any other officer or 
employee of the designated State unit; and
    (12) Except for the time limitations established in paragraphs 
(b)(1) and (b)(5) of this section, each State's review procedures may 
provide for reasonable time extensions for good cause shown at the 
request of a party or at the request of both parties.
    (c) Selection of impartial hearing officers. Except as provided in 
paragraph (d) of this section, the impartial hearing officer for a 
particular case must be selected--
    (1) From among the pool of persons qualified to be an impartial 
hearing officer, as defined in Sec. 361.5(b)(22), who are identified by 
the State unit, if the State unit is an independent commission, or 
jointly by the designated State unit and those members of the State 
Rehabilitation Advisory Council designated in section 102(d)(2)(C) of 
the Act, if the State has a Council; and
    (2)(i) On a random basis; or
    (ii) By agreement between the director of the designated State unit 
and the individual or, if appropriate, the individual's representative.
    (d) State fair hearing board. The provisions of paragraphs (b) and 
(c) of this section are not applicable if the State has a fair hearing 
board that was established before January 1, 1985, that is authorized 
under State law to review rehabilitation counselor or coordinator 
determinations and to carry out the responsibilities of the director of 
the designated State unit under this section.
    (e) Informing affected individuals. The State unit shall inform, 
through appropriate modes of communication, all applicants and eligible 
individuals of--
    (1) Their right to review under this section, including the names 
and addresses of individuals with whom appeals may be filed; and
    (2) The manner in which an impartial hearing officer will be 
selected consistent with the requirements of paragraph (c) of this 
section.
    (f) Data collection. The director of the designated State unit 
shall collect and submit, at a minimum, the following data to the 
Secretary for inclusion each year in the annual report to Congress 
under section 13 of the Act:
    (1) The number of appeals to impartial hearing officers and the 
State director, including the type of complaints and the issues 
involved.
    (2) The number of decisions by the State director reversing in 
whole or in part a decision of the impartial hearing officer.
    (3) The number of decisions affirming the position of the 
dissatisfied individual assisted through the client assistance program, 
when that assistance is known to the State unit.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Secs. 102(b) and 102(d) of the Act; 29 U.S.C. 722(b) and 
722(d))

Subpart C--Financing of State Vocational Rehabilitation Programs


Sec. 361.60  Matching requirements.

    (a) Federal share--(1) General. Except as provided in paragraphs 
(a)(2) and (a)(3) of this section, the Federal share for expenditures 
made by the State unit under the State plan, including

[[Page 6360]]

expenditures for the provision of vocational rehabilitation services, 
administration of the State plan, and the development and 
implementation of the strategic plan, is 78.7 percent.
    (2) Construction projects. The Federal share for expenditures made 
for the construction of a facility for community rehabilitation program 
purposes may not be more than 50 percent of the total cost of the 
project.
    (3) Innovation and expansion grant activities. The Federal share 
for the cost of innovation and expansion grant activities funded by 
appropriations under Part C of Title I of the Act is 90 percent.
    (b) Non-Federal share--(1) General. Except as provided in 
paragraphs (b)(2) and (b)(3) of this section, expenditures made under 
the State plan to meet the non-Federal share under this section must be 
consistent with the provisions of 34 CFR 80.24.
    (2) Third party in-kind contributions. Third party in-kind 
contributions specified in 34 CFR 80.24(a)(2) may not be used to meet 
the non-Federal share under this section.
    (3) Contributions by private entities. Expenditures made from 
contributions by private organizations, agencies, or individuals that 
are deposited in the account of the State agency or sole local agency 
in accordance with State law and that are earmarked, under a condition 
imposed by the contributor, may be used as part of the non-Federal 
share under this section if the following requirements are met:
    (i) The funds are earmarked for meeting in whole or in part the 
State's share for establishing a community rehabilitation program or 
constructing a particular facility for community rehabilitation program 
purposes.
    (ii) If the funds are earmarked for any other purpose under the 
State plan, the expenditures do not benefit in any way the donor, an 
individual to whom the donor is related by blood or marriage or with 
whom the donor has a close personal relationship, or an individual, 
entity, or organization with whom the donor shares a financial 
interest. The Secretary does not consider a donor's receipt from the 
State unit of a grant, subgrant, or contract with funds allotted under 
this part to be a benefit for the purposes of this paragraph if the 
grant, subgrant, or contract is awarded under the State's regular 
competitive procedures.

(Authority: Secs. 7(7), 101(a)(3), and 104 of the Act; 29 U.S.C. 
706(7), 721(a)(3) and 724)

    Note: The Secretary notes that contributions may be earmarked in 
accordance with paragraph (b)(3)(ii) of this section for providing 
particular services (e.g., rehabilitation technology services); 
serving individuals with certain types of disabilities (e.g., 
individuals who are blind), consistent with the State's order of 
selection, if applicable; providing services to special groups that 
State or Federal law permits to be targeted for services (e.g., 
students with disabilities who are receiving special education 
services), consistent with the State's order of selection, if 
applicable; or carrying out particular types of administrative 
activities permissible under State law. Contributions also may be 
restricted to particular geographic areas to increase services or 
expand the scope of services that are available statewide under the 
State plan. However, if a contribution is earmarked for a restricted 
geographic area, expenditures from that contribution may be used to 
meet the non-Federal share requirement only if the State unit 
requests and the Secretary approves a waiver of statewideness, in 
accordance with Sec. 361.26.


Sec. 361.61  Limitation on use of funds for construction expenditures.

    No more than 10 percent of a State's allotment for any fiscal year 
under section 110 of the Act may be spent on the construction of 
facilities for community rehabilitation program purposes.

(Authority: Sec. 101(a)(17)(A) of the Act; 29 U.S.C. 721(a)(17)(A))


Sec. 361.62  Maintenance of effort requirements.

    (a) General requirements. (1) The Secretary reduces the amount 
otherwise payable to a State for a fiscal year by the amount by which 
the total expenditures from non-Federal sources under the State plan 
for the previous fiscal year were less than the total of those 
expenditures for the fiscal year two years prior to the previous fiscal 
year. For example, for fiscal year 1996, a State's maintenance of 
effort level is based on the amount of its expenditures from non-
Federal sources for fiscal year 1994. Thus, if the State's non-Federal 
expenditures in 1996 are less than they were in 1994, the State has a 
maintenance of effort deficit, and the Secretary reduces the State's 
allotment in 1997 by the amount of that deficit.
    (2) If, at the time the Secretary makes a determination that a 
State has failed to meet its maintenance of effort requirements, it is 
too late for the Secretary to make a reduction in accordance with 
paragraph (a)(1) of this section, then the Secretary recovers the 
amount of the maintenance of effort deficit through audit disallowance.
    (b) Specific requirements for construction of facilities. If the 
State plan provides for the construction of a facility for community 
rehabilitation program purposes, the amount of the State's share of 
expenditures for vocational rehabilitation services under the plan, 
other than for the construction of a facility for community 
rehabilitation program purposes or the establishment of a facility for 
community rehabilitation purposes, must be at least equal to the 
expenditures for those services for the second prior fiscal year. If a 
State fails to meet the requirements of this paragraph, the Secretary 
recovers the amount of the maintenance of effort deficit through audit 
disallowance.
    (c) Separate State agency for vocational rehabilitation services 
for individuals who are blind. If there is a separate part of the State 
plan administered by a separate State agency to provide vocational 
rehabilitation services for individuals who are blind--
    (1) Satisfaction of the maintenance of effort requirements under 
paragraphs (a) and (b) of this section are determined based on the 
total amount of a State's non-Federal expenditures under both parts of 
the State plan; and
    (2) If a State fails to meet any maintenance of effort requirement, 
the Secretary reduces the amount otherwise payable to the State for 
that fiscal year under each part of the plan in direct relation to the 
amount by which expenditures from non-Federal sources under each part 
of the plan in the previous fiscal year were less than they were for 
that part of the plan for the fiscal year two years prior to the 
previous fiscal year.
    (d) Waiver or modification. (1) The Secretary may waive or modify 
the maintenance of effort requirement in paragraph (a)(1) of this 
section if the Secretary determines that a waiver or modification is 
necessary to permit the State to respond to exceptional or 
uncontrollable circumstances, such as a major natural disaster or a 
serious economic downturn, that--
    (i) Cause significant unanticipated expenditures or reductions in 
revenue; and
    (ii) Result in--
    (A) A general reduction of programs within the State; or
    (B) The State making substantial expenditures in the vocational 
rehabilitation program for long-term purposes due to the one-time costs 
associated with the construction of a facility for community 
rehabilitation program purposes, the establishment of a facility for 
community rehabilitation program purposes, or the acquisition of 
equipment.
    (2) The Secretary may waive or modify the maintenance of effort 
requirement in paragraph (b) of this section or the 10 percent 
allotment limitation in Sec. 361.61 if the Secretary

[[Page 6361]]

determines that a waiver or modification is necessary to permit the 
State to respond to exceptional or uncontrollable circumstances, such 
as a major natural disaster, that result in significant destruction of 
existing facilities and require the State to make substantial 
expenditures for the construction of a facility for community 
rehabilitation program purposes or the establishment of a facility for 
community rehabilitation program purposes in order to provide 
vocational rehabilitation services.
    (3) A written request for waiver or modification, including 
supporting justification, must be submitted to the Secretary as soon as 
the State determines that an exceptional or uncontrollable circumstance 
will prevent it from making its required expenditures from non-Federal 
sources.

(Authority: Secs. 101(a)(17) and 111(a)(2) of the Act; 29 U.S.C. 
721(a)(17) and 731(a)(2))


Sec. 361.63  Program income.

    (a) Definition. Program income means gross income received by the 
State that is directly generated by an activity supported under this 
part.
    (b) Sources. Sources of program income include, but are not limited 
to, payments from the Social Security Administration for rehabilitating 
Social Security beneficiaries, payments received from workers' 
compensation funds, fees for services to defray part or all of the 
costs of services provided to particular individuals, and income 
generated by a State-operated community rehabilitation program.
    (c) Use of program income. (1) Except as provided in paragraph 
(c)(2) of this section, program income, whenever earned, must be used 
for the provision of vocational rehabilitation services, the 
administration of the State plan, and developing and implementing the 
strategic plan. Program income is considered earned when it is 
received.
    (2) Payments provided to a State from the Social Security 
Administration for rehabilitating Social Security beneficiaries may 
also be used to carry out programs under Part B of Title I of the Act 
(client assistance), Part C of Title I of the Act (innovation and 
expansion), Part C of Title VI of the Act (supported employment) and 
Title VII of the Act (independent living).
    (3) The State is authorized to treat program income as--
    (i) An addition to the grant funds to be used for additional 
allowable program expenditures, in accordance with 34 CFR 80.25(g)(2); 
or
    (ii) A deduction from total allowable costs, in accordance with 34 
CFR 80.25(g)(1).
    (4) Program income may not be used to meet the non-Federal share 
requirement under Sec. 361.60.

(Authority: Sec. 108 of the Act; 29 U.S.C. 728; 34 CFR 80.25)


Sec. 361.64  Obligation of Federal funds and program income.

    (a) Except as provided in paragraph (b) of this section, any 
Federal funds, including reallotted funds, that are appropriated for a 
fiscal year to carry out a program under this part that are not 
obligated by the State unit by the beginning of the succeeding fiscal 
year and any program income received during a fiscal year that is not 
obligated by the State unit by the beginning of the succeeding fiscal 
year must remain available for obligation by the State unit during that 
succeeding fiscal year.
    (b) Federal funds appropriated for a fiscal year remain available 
for obligation in the succeeding fiscal year only to the extent that 
the State unit met the matching requirement for those Federal funds by 
obligating, in accordance with 34 CFR 76.707, the non-Federal share in 
the fiscal year for which the funds were appropriated.

(Authority: Sec. 19 of the Act; 29 U.S.C. 718)


Sec. 361.65  Allotment and payment of Federal funds for vocational 
rehabilitation services.

    (a) Allotment. (1) The allotment of Federal funds for vocational 
rehabilitation services for each State is computed in accordance with 
the requirements of section 110 of the Act, and payments are made to 
the State on a quarterly basis, unless some other period is established 
by the Secretary.
    (2) If the State plan designates one State agency to administer, or 
supervise the administration of, the part of the plan under which 
vocational rehabilitation services are provided for individuals who are 
blind and another State agency to administer the rest of the plan, the 
division of the State's allotment is a matter for State determination.
    (b) Reallotment. (1) The Secretary determines not later than 45 
days before the end of a fiscal year which States, if any, will not use 
their full allotment.
    (2) As soon as possible, but not later than the end of the fiscal 
year, the Secretary reallots these funds to other States that can use 
those additional funds during the current or subsequent fiscal year, 
provided the State can meet the matching requirement by obligating the 
non-Federal share of any reallotted funds in the fiscal year for which 
the funds were appropriated.
    (3) Funds reallotted to another State are considered to be an 
increase in the recipient State's allotment for the fiscal year for 
which the funds were appropriated.

(Authority: Secs. 110 and 111 of the Act; 29 U.S.C. 730 and 731)

Subpart D--Strategic Plan for Innovation and Expansion of 
Vocational Rehabilitation Services


Sec. 361.70  Purpose of the strategic plan.

    The State shall prepare a statewide strategic plan, in accordance 
with Sec. 361.71, to develop and use innovative approaches for 
achieving long-term success in expanding and improving vocational 
rehabilitation services, including supported employment services, 
provided under the State plan, including the supported employment 
supplement to the State plan required under 34 CFR part 363.

(Authority: Sec. 120 of the Act; 29 U.S.C. 740)


Sec. 361.71  Procedures for developing the strategic plan.

    (a) Public input. (1) The State unit shall meet with and receive 
recommendations from members of the State Rehabilitation Advisory 
Council, if the State has a Council, and the Statewide Independent 
Living Council prior to developing the strategic plan.
    (2) The State unit shall solicit public input on the strategic plan 
prior to or at the public meetings on the State plan, in accordance 
with the requirements of Sec. 361.20.
    (3) The State unit shall consider the recommendations received 
under paragraphs (a)(1) and (a)(2) of this section and, if the State 
rejects any recommendations, shall include a written explanation of the 
reasons for those rejections in the strategic plan.
    (4) The State unit shall develop a procedure to ensure ongoing 
comment from the Council or Councils, if applicable, as the plan is 
being implemented.
    (b) Duration. The strategic plan must cover a three-year period.
    (c) Revisions. The State unit shall revise the strategic plan on an 
annual basis to reflect the unit's actual experience over the previous 
year and input from the State Rehabilitation Advisory Council, if the 
State has a Council, individuals with disabilities, and other 
interested parties.
    (d) Dissemination. The State unit shall disseminate widely the 
strategic plan to individuals with disabilities, disability 
organizations, rehabilitation professionals, and other interested 
persons and shall make the strategic plan available in accessible 
formats and appropriate modes of communication.


[[Page 6362]]


(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 122 of the Act; 29 U.S.C. 742)


Sec. 361.72  Content of the strategic plan.

    The strategic plan must include--
    (a) A statement of the mission, philosophy, values, and principles 
of the vocational rehabilitation program in the State;
    (b) Specific goals and objectives for expanding and improving the 
system for providing vocational rehabilitation services;
    (c) Specific multi-faceted and systemic approaches for 
accomplishing the objectives, including interagency coordination and 
cooperation, that build upon state-of-the-art practices and research 
findings and that implement the State plan and the supplement to the 
State plan submitted under 34 CFR Part 363;
    (d) A description of the specific programs, projects, and 
activities funded under this subpart, including how the programs, 
projects, and activities accomplish the objectives of the subpart, and 
the resource allocation and budget for the programs, projects, and 
activities; and
    (e) Specific criteria for determining whether the objectives have 
been achieved, including an assurance that the State will conduct an 
annual evaluation to determine the extent to which the objectives have 
been achieved and, if specific objectives have not been achieved, the 
reasons that the objectives have not been achieved and a description of 
alternative approaches that will be taken.

(Approved by the Office of Management and Budget under control 
number 1820-0500.)

(Authority: Sec. 121 of the Act; 29 U.S.C. 741)

Sec. 361.73  Use of funds.

    (a) A State unit shall use all grant funds received under Title I, 
Part C of the Act to carry out programs and activities that are 
identified under the State's strategic plan, including but not limited 
to those programs and activities that are identified in paragraph (b) 
of this section.
    (b) A State unit shall use at least 1.5 percent of the funds 
received under section 111 of the Act to carry out one or more of the 
following types of programs and activities that are identified in the 
State's strategic plan:
    (1) Programs to initiate or expand employment opportunities for 
individuals with severe disabilities in integrated settings that allow 
for the use of on-the-job training to promote the objectives of Title I 
of the Americans with Disabilities Act of 1990.
    (2) Programs or activities to improve or expand the provision of 
employment services in integrated settings to individuals with sensory, 
cognitive, physical, and mental impairments who traditionally have not 
been served by the State vocational rehabilitation agency.
    (3) Programs or activities to maximize the ability of individuals 
with disabilities to use rehabilitation technology in employment 
settings.
    (4) Programs or activities that assist employers in accommodating, 
evaluating, training, or placing individuals with disabilities in the 
workplace of the employer consistent with the provisions of the Act and 
Title I of the Americans with Disabilities Act of 1990. These programs 
or activities may include short-term technical assistance or other 
effective strategies.
    (5) Programs or activities that expand and improve the extent and 
type of an individual's involvement in the review and selection of his 
or her training and employment goals.
    (6) Programs or activities that expand and improve opportunities 
for career advancement for individuals with severe disabilities.
    (7) Programs, projects, or activities designed to initiate, expand, 
or improve working relationships between vocational rehabilitation 
services provided under Title I of the Act and independent living 
services provided under Title VII of the Act.
    (8) Programs, projects, or activities designed to improve 
functioning of the system for delivering vocational rehabilitation 
services and to improve coordination and working relationships with 
other State agencies and local public agencies, business, industry, 
labor, community rehabilitation programs, and centers for independent 
living, including projects designed to--
    (i) Increase the ease of access to, timeliness of, and quality of 
vocational rehabilitation services through the development and 
implementation of policies, procedures, systems, and interagency 
mechanisms for providing vocational rehabilitation services;
    (ii) Improve the working relationships between State vocational 
rehabilitation agencies and other State agencies, centers for 
independent living, community rehabilitation programs, educational 
agencies involved in higher education, adult basic education, and 
continuing education, and businesses, industry, and labor 
organizations, in order to create and facilitate cooperation in--
    (A) Planning and implementing services; and
    (B) Developing an integrated system of community-based vocational 
rehabilitation services that includes appropriate transitions between 
service systems; and
    (iii) Improve the ability of professionals, advocates, business, 
industry, labor, and individuals with disabilities to work in 
cooperative partnerships to improve the quality of vocational 
rehabilitation services and job and career opportunities for 
individuals with disabilities.
    (9) Projects or activities that ensure that the annual evaluation 
of the effectiveness of the program in meeting the goals and objectives 
in the State plan, including the system for evaluating the performance 
of rehabilitation counselors, coordinators, and other personnel used in 
the State, facilitates and does not impede the accomplishment of the 
purpose of this part, including serving individuals with the most 
severe disabilities.
    (10) Projects or activities to support the initiation, expansion, 
and improvement of a comprehensive system of personnel development.
    (11) Programs, projects, or activities to support the provision of 
training and technical assistance to individuals with disabilities, 
business, industry, labor, community rehabilitation programs, and 
others regarding the implementation of the Rehabilitation Act 
Amendments of 1992, of Title V of the Act, and of the Americans with 
Disabilities Act of 1990.
    (12) Projects or activities to support the funding of the State 
Rehabilitation Advisory Council and the Statewide Independent Living 
Council.

(Authority: Secs. 101(a)(34)(B) and 123 of the Act; 29 U.S.C. 
721(a)(34)(B) and 743)

Sec. 361.74  Allotment of Federal funds.

    (a) The allotment and any reallotment of Federal funds under Title 
I, Part C of the Act are computed in accordance with the requirements 
of section 124 of the Act.
    (b) If at any time the Secretary determines that any amount will 
not be expended by a State in carrying out the purpose of this subpart, 
the Secretary makes that amount available to one or more other States 
that the Secretary determines will be able to use additional amounts 
during the fiscal year. Any amount made available to any State under 
this paragraph of this section is regarded as an increase in the 
State's allotment for that fiscal year.

p(Authority: Sec. 124 of the Act; 29 U.S.C. 744)

[[Page 6363]]

PART 363--THE STATE SUPPORTED EMPLOYMENT SERVICES PROGRAM

    2. The authority citation for part 363 continues to read as 
follows:

    Authority: 29 U.S.C. 795j-q, unless otherwise noted.

    3. In Sec. 363.6, paragraphs (c)(1), (c)(2)(i), (c)(2)(ii), and the 
authority citation are revised to read as follows:


Sec. 363.6  What definitions apply?

* * * * *
    (c) * * *
    (1) Supported employment means--
    (i) Competitive employment in an integrated setting with ongoing 
support services for individuals with the most severe disabilities--
    (A) For whom competitive employment has not traditionally occurred 
or for whom competitive employment has been interrupted or intermittent 
as a result of a severe disability; and
    (B) Who, because of the nature and severity of their disabilities, 
need intensive supported employment services from the designated State 
unit and extended services after transition in order to perform this 
work; or
    (ii) Transitional employment for individuals with the most severe 
disabilities due to mental illness.
    (2) As used in the definition of ``Supported employment''--
    (i) Competitive employment means work--
    (A) In the competitive labor market that is performed on a full-
time or part-time basis in an integrated setting; and
    (B) For which an individual is compensated at or above the minimum 
wage, but not less than the customary or usual wage paid by the 
employer for the same or similar work performed by individuals who are 
not disabled.
    (ii) Integrated setting means a setting typically found in the 
community in which an individual with the most severe disabilities 
interacts with non-disabled individuals, other than non-disabled 
individuals who are providing services to that individual, to the same 
extent that non-disabled individuals in comparable positions interact 
with other persons.
* * * * *
(Authority: 29 U.S.C. 706(18), 711(c), and 795j)

PART 376--SPECIAL PROJECTS AND DEMONSTRATIONS FOR PROVIDING 
TRANSITIONAL REHABILITATION SERVICES TO YOUTH WITH DISABILITIES

    4. The authority citation for part 376 continues to read as 
follows:

    Authority: 29 U.S.C. 777a(b), unless otherwise noted.

    5. In Sec. 376.4, paragraph (c) and the authority citation are 
revised to read as follows:


Sec. 376.4  What definitions apply to this program?

* * * * *
    (c) The definitions of ``Competitive employment'', ``Integrated 
setting'', ``On-going support services'', ``Transitional employment'', 
and ``Time-limited services'' in 34 CFR part 380.
* * * * *
(Authority: 29 U.S.C. 711(c) and 777a(b))

PART 380--SPECIAL PROJECTS AND DEMONSTRATIONS FOR PROVIDING 
SUPPORTED EMPLOYMENT SERVICES TO INDIVIDUALS WITH THE MOST SEVERE 
DISABILITIES AND TECHNICAL ASSISTANCE PROJECTS

    6. The authority citation for part 380 continues to read as 
follows:

    Authority: 29 U.S.C. 711(c) and 777a(c), unless otherwise noted.

    7. In Sec. 380.9, paragraphs (c)(1)(i) and (c)(1)(ii) are revised 
to read as follows:


Sec. 380.9  What definitions apply?

* * * * *
    (c) * * *
    (1) * * *
    (i) Competitive employment means work--
    (A) In the competitive labor market that is performed on a full-
time or part-time basis in an integrated setting; and
    (B) For which an individual is compensated at or above the minimum 
wage, but not less than the customary or usual wage paid by the 
employer for the same or similar work performed by individuals who are 
not disabled.
    (ii) Integrated setting means a setting typically found in the 
community in which an individual with the most severe disabilities 
interacts with non-disabled individuals, other than non-disabled 
individuals who are providing services to that individual, to the same 
extent that non-disabled individuals in comparable positions interact 
with other persons.
* * * * *
[FR Doc. 97-3159 Filed 2-10- 97; 8:45 am]
BILLING CODE 4000-01-P