[Federal Register Volume 65, Number 39 (Monday, February 28, 2000)]
[Proposed Rules]
[Pages 10620-10665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-4426]



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Part III





Department of Education





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34 CFR Part 361



The State Vocational Rehabilitation Services Program; Proposed Rule

  Federal Register / Vol. 65, No. 39 / Monday, February 28, 2000 / 
Proposed Rules  

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DEPARTMENT OF EDUCATION

34 CFR Part 361

RIN 1820-AB50


The State Vocational Rehabilitation Services Program

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

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the regulations governing the 
State Vocational Rehabilitation Services Program. These amendments are 
needed to implement changes to the Rehabilitation Act of 1973 made by 
the Rehabilitation Act Amendments of 1998, enacted on August 7, 1998, 
and as further amended in 1998 by technical amendments in the Reading 
Excellence Act and the Carl D. Perkins Vocational and Applied 
Technology Education Act Amendments of 1998 (hereinafter collectively 
referred to as the 1998 Amendments).

DATES: We must receive your comments on or before April 28, 2000.

ADDRESSES: Address all comments about these proposed regulations to 
Fredric K. Schroeder, U.S. Department of Education, 400 Maryland 
Avenue, SW., room 3028, Mary E. Switzer Building, Washington, DC 20202-
2531. If you prefer to send your comments through the Internet, use the 
following address: [email protected].
    You must include the term ``VR Regulations'' in the subject line of 
your electronic message.
    If you want to comment on the information collection requirements, 
you must send your comments to the Office of Management and Budget at 
the address listed in the Paperwork Reduction Act section of this 
preamble. You may also send a copy of these comments to the Department 
representative named in this section.

FOR FURTHER INFORMATION CONTACT: Beverlee Stafford, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 3014, Mary E. Switzer 
Building, Washington, DC. 20202-2531. Telephone (202) 205-8831. If you 
use a telecommunications device for the deaf (TDD), you may call (202) 
205-5538.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to Katie Mincey, Director, Alternate Formats 
Center, U.S. Department of Education, 400 Maryland Avenue, SW., room 
1000, Mary E. Switzer Building, Washington, DC. 20202-2531. Telephone 
(202) 260-9895. If you use a telecommunications device for the deaf 
(TDD), you may call the Federal Information Relay Service (FIRS) at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION:

Invitation To Comment

    We invite you to submit comments regarding these proposed 
regulations. To ensure that your comments have maximum effect in 
developing the final regulations, we urge you to identify clearly the 
specific section or sections of the proposed regulations that each of 
your comments addresses and to arrange your comments in the same order 
as the proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the program.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations in room 3014, Mary E. Switzer 
Building, 330 C Street, SW., Washington, DC, between the hours of 8:30 
a.m. and 4 p.m., Eastern time, Monday through Friday of each week 
except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, you may call (202) 205-
8113 or (202) 260-9895. If you use a TDD, you may call the Federal 
Information Relay Service at 1-800-877-8339.

Background

    The State Vocational Rehabilitation Services Program (VR program) 
is authorized by Title I of the Rehabilitation Act of 1973, as amended 
(Act) (29 U.S.C. 701-744). The VR program provides support to each 
State to assist it in operating a statewide comprehensive, coordinated, 
effective, efficient, and accountable State program, as an integral 
part of a statewide workforce investment system, to assess, plan, 
develop, and provide vocational rehabilitation (VR) services for 
individuals with disabilities so that those individuals may prepare for 
and engage in gainful employment consistent with their strengths, 
priorities, concerns, abilities, capabilities, interests, and informed 
choice.
    The 1998 Amendments made substantial changes to Title I of the Act, 
such as expanding options for individual choice, streamlining 
administrative procedures, facilitating the development of State goals 
and strategies to accomplish those goals, modifying due process 
provisions, requiring trial work experiences as part of the eligibility 
assessment for certain individuals with significant disabilities, and 
linking the VR program to a State's workforce investment system under 
Title I of the Workforce Investment Act of 1998 (WIA). This notice of 
proposed rulemaking (NPRM) proposes regulatory changes that would 
implement these and all other provisions in Title I, Parts A and B, of 
the Act as adopted in the 1998 Amendments, with the exception of the 
client assistance program (CAP) described in section 112 of the Act. 
Changes to the CAP regulations (34 CFR part 370) are being implemented 
through a separate rulemaking document.
    In addition, the proposed regulations were developed in light of 
new requirements related to the VR program under WIA. A designated 
State unit (DSU or State unit) operating a VR program is a required 
partner in the State One-Stop service delivery system (One-Stop system) 
established under Title I of WIA. As a required partner, the State unit 
must fulfill certain responsibilities related to that system. Those 
responsibilities, as well as the requirements for coordination between 
the VR program and other One-Stop system partners, are addressed in 
Sec. 361.23 of the proposed regulations.
    In general, the establishment of a One-Stop system is a cornerstone 
of reforms to Federal education and training programs. This delivery 
system streamlines access to numerous workforce investment and 
educational and other human resource services, activities, and 
programs. Rather than requiring individuals and employers to seek 
workforce development information and services at several different 
locations, which is often costly, discouraging, and confusing, WIA 
requires States and communities to coordinate multiple workforce 
development programs and resources for individuals at the ``street 
level'' through a user-friendly One-Stop system. This system will 
simplify and

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expand access to services for job seekers, including those with 
disabilities, and for employers.
    In particular, participation in the One-Stop system by State units 
administering VR programs will result in enhancing the range and 
quality of services accessible to program participants. The 
collaboration of the DSU with other partners through the One-Stop 
system is intended to produce better information, more comprehensive 
services, easier access to services, and improved long-term employment 
outcomes. The effective participation of the VR program in the One-Stop 
system, therefore, is critical to enhancing the VR program itself, as 
well as the workforce investment system in each State and local area.
    Given this close relationship between the partners of the One-Stop 
service delivery system contemplated under WIA, as well as the non-
discrimination requirements in the Americans with Disabilities Act 
(ADA), section 504 of the Rehabilitation Act (section 504), and section 
188 of WIA, we emphasize that all partner programs, not just the VR 
program, have a legal responsibility to serve persons with 
disabilities. To receive services under the VR program, individuals 
must meet specific program eligibility criteria, including a narrower 
definition of ``individual with a disability'' (see Sec. 361.5(b)(28) 
and Sec. 361.42(a) of the proposed regulations) than the more general 
definition of that term found in the ADA, section 504, and the 
regulations implementing section 188 of WIA (29 CFR part 37). The 
broader definition, which is also specified in Sec. 361.5(b)(29) of the 
proposed regulations, covers those with an impairment that 
substantially limits one or more major life activities, those with a 
record of such an impairment, or those regarded as having such an 
impairment. It is this broader population of individuals with 
disabilities that the workforce system has a legal obligation to serve, 
meaning that some individuals may receive the full scope of needed 
services through the One-Stop system without accessing the VR program 
at all, while others may be referred to the State unit for a program of 
VR services or receive a combination of services from the VR program 
and other One-Stop system partners. In addition, some individuals who 
are eligible for VR services may choose not to participate in the VR 
program and, therefore, also may be served exclusively by other partner 
programs of the One-stop system. The broader definition in 
Sec. 361.5(b)(29) of the proposed regulations, which is the same as 
that in the ADA, section 504, and 29 CFR part 37, applies to certain 
areas of the VR program that are unrelated to eligibility (e.g., 
membership on the State Rehabilitation Council under Sec. 361.17 and 
organizational requirements in Sec. 361.13).

Changes to Current Regulations

    Each of the substantive changes to the current VR program 
regulations proposed in this NPRM are based on statutory changes or are 
otherwise considered necessary to the effective administration of the 
VR program. The remaining changes to the current regulations are 
technical in nature, meaning that they are needed to conform to 
language used in the Act (e.g., substituting the term ``individual with 
a significant disability'' for the previously used term ``individual 
with a severe disability''), remove requirements that were eliminated 
in the 1998 Amendments, or add provisions that were included as part of 
the statutory amendments. The following sections of the current 
regulations either would be unchanged by this NPRM or would include 
only technical changes and, therefore, are not discussed in the 
following section-by-section analysis: Sec. 361.1, Sec. 361.2, 
Sec. 361.3, Sec. 361.4, Sec. 361.11, Sec. 361.12, Sec. 361.14, 
Sec. 361.16, Sec. 361.17, Sec. 361.19, Sec. 361.20, Sec. 361.21, 
Sec. 361.25, Sec. 361.32, Sec. 361.34, Sec. 361.40, Sec. 361.55, 
Sec. 361.61, Sec. 361.63, Sec. 361.64, and Sec. 361.65.
    Additionally, in an effort to reduce the paperwork burden 
associated with developing the State plan for the VR program, the NPRM 
would significantly reduce the number of descriptions or assurances 
that must be submitted as part of the State plan. The following 
sections (which are not otherwise discussed in the section-by-section 
analysis), in addition to including technical changes as previously 
explained, also include requirements that would be removed from the 
State plan under this NPRM: Sec. 361.13, Sec. 361.15, Sec. 361.27, 
Sec. 361.28, Sec. 361.38, Sec. 361.39, Sec. 361.41, Sec. 361.43, 
Sec. 361.44, Sec. 361.49, Sec. 361.50, Sec. 361.51, and Sec. 361.62. 
Because the underlying requirements in these sections are considered 
essential to the proper and efficient administration of the VR program, 
however, they would be retained in the NPRM as requirements of the 
program even though they would no longer be components of the State 
plan.
    In addition, some of the sections of the current regulations that 
would be substantively amended by the NPRM also would be removed from 
the content of the State plan. Substantive changes to those sections, 
as well as the removal of State plan requirements (where applicable), 
are outlined in the section-by-section analysis.
    The State plan content requirements that remain in the NPRM are 
those that are required by statute. The same reduced State plan 
requirements would apply both to VR State plans submitted as part of a 
State unified plan under section 501 of the Workforce Investment Act 
and to VR plans submitted separately under Title I of the Act and 34 
CFR part 361. In either instance, we believe that the reduced number of 
State plan requirements will enable State VR agencies to better focus 
on the needs of its consumers and its program without expending an 
inordinate amount of time in compiling its State plan.

Section-by-Section Summary

Section 361.4  Applicable Regulations

    This proposed section identifies the same list of regulations 
applicable to the VR program found in the current regulations, with two 
significant additions--the regulations in 20 CFR part 662 (which 
implements the One-Stop system requirements under Title I of WIA) and 
29 CFR part 37 (which implements the civil rights requirements under 
section 188 of WIA and applies to activities of the VR program that are 
conducted as part of the One-Stop system). Thus, in addition to 
following the proposed regulations and those regulations in the 
Education Department General Administrative Regulations listed in 
proposed Sec. 361.4, individuals should consult the WIA implementing 
regulations, including the nondiscrimination requirements in 29 CFR 
37.5 (which, for example, prohibits discrimination on the basis of 
participation in an activity receiving funds under Title I of WIA), 
when conducting VR program activities as part of the One-Stop system.

Section 361.5  Applicable Definitions

Fair Hearing Board
    The proposed regulations include a new definition of the term 
``fair hearing board'' that is based on the longstanding authority in 
the Act for State fair hearing boards to review disputes between State 
units and individual VR consumers. Specifically, section 102(c)(6)(A) 
of the Act allows a State fair hearing board established prior to 1985 
to carry out the responsibilities of an impartial hearing officer in 
conducting due process hearings under the VR program. The proposed 
regulatory definition, coupled with the requirements that apply to fair 
hearing boards under Sec. 361.57(i), is intended to

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clarify confusion about the scope of the fair hearing board exception 
to the due process requirements in section 102(c)(6)(A) of the Act.
    The term ``fair hearing board'' would be defined as ``a committee, 
body, or group of persons'' that is authorized by State law to review 
VR service-related determinations made by designated State unit 
personnel and that carries out the hearing officer's responsibilities 
in accordance with Sec. 361.57. The requirement in the definition and, 
more specifically, in Sec. 361.57(i) that the fair hearing board act as 
a collective body of persons is designed to address the 
misunderstanding that a single individual can issue final hearing 
decisions on behalf of a fair hearing board. The ``fair hearing board 
exception'' in section 102(c)(6) of the Act exempts the limited number 
of States from the statutory due process hearing procedures if a board 
or group of reviewing officials takes the place of an individual 
hearing officer.
    Some fair hearing boards fulfill their role by appointing an 
individual board member or other official to conduct due process 
hearings, reviewing the hearing officer's recommended decision, and 
issuing the final decision in a given case (subject to review by a 
civil court). Those arrangements would continue to be appropriate under 
the proposed regulations. On the other hand, in States in which a sole 
administrative law judge or other hearing official conducts due process 
hearings under the VR program, each of the procedural safeguards that 
apply to due process hearings under the Act must be implemented since a 
single reviewing official does not constitute a ``fair hearing board.''
Physical or Mental Impairment
    The term ``physical or mental impairment'' as defined in the 
current regulations has been revised to track the definition of that 
same term in the ADA and in the regulations implementing section 504 
(see 34 CFR 104.3). The revised definition is intended not to alter the 
scope of physical or mental impairments that are covered under the 
current regulatory definition, but rather to clarify that an individual 
who is found to have an impairment for purposes of ADA or section 504 
would be considered to have an impairment for purposes of the VR 
program. We note, however, that this change does not have an impact on 
the employment-related eligibility criteria under the VR program. For 
example, the requirement that the individual's impairment constitute or 
result in a substantial impediment to employment, as well as the rest 
of the criteria in Sec. 361.42(a), still must be met for an individual 
to be found eligible for VR services.
Qualified and Impartial Mediator
    The proposed regulations also include a new definition of the term 
``qualified and impartial mediator.'' This proposed definition 
identifies the qualifications that we believe are essential for an 
individual to mediate disputes between applicants or eligible 
individuals and the designated State unit. The Act requires that 
mediation, which State units must make available consistent with the 
procedural requirements in proposed Sec. 361.57(c) of the proposed 
regulations, be conducted by ``qualified and impartial'' mediators who 
are trained in effective mediation techniques. In addition to the 
statute, the proposed definition draws a number of elements from the 
current regulatory definition of ``impartial hearing officer.'' The 
proposed regulations would also require, however, that mediators be 
trained in effective mediation techniques consistent with any 
applicable State certification, license, registration, or other 
requirements in light of the fact that some States have established 
certification or other criteria for individuals who mediate disputes 
involving public agencies.
Workforce Definitions
    The proposed regulations also include several new statutory 
definitions from WIA. The defined terms--``local workforce investment 
board,'' ``State workforce investment board,'' and ``Statewide 
workforce investment system''--are used elsewhere in the proposed 
regulations to address required coordination between the VR program and 
other components of the workforce investment system established under 
WIA.

Section 361.10  Submission, Approval, and Disapproval of the State Plan

    This section of the proposed regulations makes mostly technical 
changes to the current regulations in order to conform to the statutory 
amendments. In addition, the proposed regulations would require each 
State to submit its State plan for the VR program on the same date that 
it submits either a State plan under section 112 of WIA or a State 
unified plan under section 501 of that Act. Essentially, a State would 
have three options for submitting its VR State plan: (1) Submit a 
separate VR State plan on the same date as the State submits its State 
plan under section 112 of WIA (see section 101(a)(1)(A)). (2) Include 
the VR program as part of the State unified plan submitted under 
section 501 of WIA. (3) Submit a separate VR State plan on the same 
date as it submits its State unified plan (that does not include the VR 
program) under section 501 of WIA.
    Those States that choose to submit a State unified plan under 
section 501 of WIA should consult the ``State Unified Plan--Planning 
Guidance'' issued by the U.S. Department of Labor and published in the 
Federal Register on January 14, 2000 (65 FR 2463 through 2489). As 
stated previously, the State plan content requirements in the proposed 
regulations are those that are required by statute. The State unified 
plan guidance also identifies these same State plan requirements for 
inclusion in a State unified plan. Thus, the State plan for the VR 
program, whether submitted as part of a State unified plan in an effort 
to coordinate across programs or submitted as a separate State plan as 
has been done in the past, would be required to address the same State 
plan requirements as specified in the proposed regulations. In 
addition, those States submitting a State plan for the VR program apart 
from other programs still must coordinate closely with the other 
partners of the One-Stop service delivery system established under WIA. 
The interagency coordination requirements throughout the proposed 
regulations, including those in Sec. 361.23, serve as important 
standards for improving services to individuals with disabilities 
across the State's One-Stop system.

Section 361.13  State Agency for Administration

    This section of the proposed regulations is the same as that in the 
current regulations except for technical changes to conform to the Act 
and an addition to the list of activities that are the responsibility 
of the designated State unit. Specifically, Sec. 361.13(c) of the 
proposed regulations would require that the State unit be responsible 
for participating as a partner in the One-Stop system under Title I of 
WIA in accordance with the WIA implementing regulations issued by the 
U.S. Department of Labor.

Section 361.18(c)  Comprehensive System of Personnel Development--
Personnel Standards

    Proposed Sec. 361.18(c), which contains the requirements governing 
DSU personnel standards, includes the sole substantive changes to the 
comprehensive system of personnel development under the current 
regulations.
    The Act requires the DSU to establish standards to ensure that all 
State rehabilitation professionals and

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paraprofessionals needed to carry out the VR program are qualified 
consistent with applicable certification, licensing, or registration 
requirements. The Act also requires that the standards implemented by 
the DSU be based on ``the highest requirements in the State,'' a term 
defined in both the current and proposed regulations to refer to the 
highest entry-level academic degree needed for any national or State 
certification, licensing, or registration applicable to a given 
profession. Thus, DSUs must develop personnel standards requiring VR 
program professionals and paraprofessionals to meet the degree 
criterion of the certification, license, or registration requirements 
appropriate to their profession. To the extent that the DSU's current 
personnel do not meet the degree criterion, or a higher entry-level 
degree criterion is applied to the same category of personnel by 
another State agency, section 101(a)(7)(B)(ii) of the Act requires the 
DSU to take steps to ensure that its personnel meet the highest degree 
requirement in the State. In an effort to foster State progress in this 
area, proposed Sec. 361.18(c) would modify the current regulations by 
requiring the DSU to describe in a written plan its retraining, 
recruitment, and hiring strategies, timeframes for DSU personnel to 
meet applicable standards, procedures for evaluating the DSU's progress 
in employing a staff that is qualified within the meaning of the Act, 
and other plan components. We believe the written plan is critical to 
the ability of DSUs to ensure the high quality of its VR staff and, 
consequently, the high quality of the program that the staff 
administers. Nevertheless, we are interested in receiving public 
comment on whether the proposed requirements of the written plan should 
be reduced, expanded, or modified in any way.
    Additionally, the Rehabilitation Services Administration (RSA) has 
received a number of inquiries from DSUs in States that have 
established multi-tier certification systems for rehabilitation 
counselors employed by State Workers' Compensation or other programs. 
These certification systems include different academic degree 
requirements depending upon the extent of the individual's experience 
in the rehabilitation counseling field. For example, State 
rehabilitation counselor certification may be available to individuals 
who have a Bachelor's degree and a certain number of years of 
applicable experience or have a Master's degree and fewer years of 
experience. If the job functions carried out by counselors employed by 
the VR and Workers' Compensation programs are similar, it is 
permissible for the DSU to base its personnel standards for VR 
counselors on the multi-tiered certification used by the Workers' 
Compensation program. However, both research findings and the widely 
held opinion in the disability community support the position that an 
advanced degree (e.g., a Master's degree in Rehabilitation Counseling) 
is important to a VR counselor's capability to assess the specialized 
needs of individuals with disabilities and to assist those individuals 
in developing an appropriate program of services to address those 
needs. Thus, we strongly encourage States not to employ minimally 
qualified individuals, i.e., those with Bachelor's degrees, by 
routinely substituting ``equivalent experience'' for higher-level 
degree criteria.
    We continue to recognize the need 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. As RSA has previously stated, 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 Americans with 
Disabilities Act (ADA). Nevertheless, we remain aware of the particular 
difficulty experienced by blind individuals who, historically, have 
been excluded on the basis of their disability from becoming certified 
orientation and mobility instructors. The proposed regulations, like 
the current regulations, would not inhibit DSUs or other VR service 
providers from hiring blind individuals as orientation and mobility 
instructors, 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 detailed plan under paragraph (c)(1)(ii) of this proposed 
section would identify the State's strategies, timeframe, and 
evaluation procedures related to the retraining of these employees to 
meet the highest requirements. In addition, the Secretary will continue 
to support the development of 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 proposed section.
    Finally, RSA has received inquiries concerning whether DSUs should 
focus their efforts on developing personnel standards for certain 
professions rather than others. We interpret the Act to require that 
the DSU establish and implement appropriate, certification-based 
standards for all categories of professionals and paraprofessionals 
needed to conduct the VR program. Nevertheless, in light of the 
difficulty States may experience in developing numerous standards at 
the same time, we would expect DSUs to give priority to those 
professions that are generally considered most critical to the success 
of the VR program. Accordingly, RSA encourages DSUs to give highest 
priority to establishing standards for vocational rehabilitation 
counselors. Priority should also be given to vocational evaluators, job 
coaches for individuals in supported employment or transitional 
employment, job development and job placement specialists, and 
personnel who provide medical or psychological services to individuals 
with disabilities.

Section 361.22  Coordination With Education Officials

    We have amended this section of the current regulations to conform 
to the revised statutory requirements governing coordination between 
vocational rehabilitation and education agencies in the State. As in 
the past, the proposed regulatory requirements are intended to assist 
in the timely and efficient transition of students with disabilities 
from the receipt of educational services in school to the receipt of 
vocational rehabilitation services from the designated State agency. 
This intent is clearly reflected in the Conference Report (No. 105-659) 
to the 1998 Amendments, as is the expectation that the transition 
services provisions in the Act not be used to shift the responsibility 
of service delivery from education to rehabilitation during the 
transition years. Rather, those provisions are intended to define the 
role of the rehabilitation system as primarily one of planning for the 
student's years after leaving school. To that end, the proposed 
regulations would require State VR agencies to develop an 
individualized plan for employment (IPE) for a student determined to be 
eligible for VR services before the student leaves the school setting.
    However, the proposed regulations also incorporate the new 
statutory components of the interagency agreement, including those 
under which

[[Page 10624]]

the State VR agency assists in transition planning and in the 
development of the student's individualized education program (IEP) 
under the Individuals with Disabilities Education Act. The VR agency is 
authorized to assist educational agencies in these areas, and is 
encouraged to do so in Conference Report No. 105-659, without 
determining whether the student is eligible under the VR program or 
developing an IPE under section 102(b) of the Rehabilitation Act.

Section 361.23  Requirements Related to the Statewide Workforce 
Investment System

    This section of the current regulations has been revised 
significantly to reflect both the VR program's responsibilities as a 
partner of the One-Stop system under WIA and the requirements in the 
1998 Amendments related to interagency coordination between the VR 
program and other components of the statewide workforce investment 
system under WIA (i.e., other partners of the One-Stop system).
    Specifically, Sec. 361.23(a) would restate the requirements in 20 
CFR 662.230 (which, along with the other provisions of part 662, 
implements the statutory requirements under Title I of WIA related to 
partners of the One-Stop system) by specifying the specific 
responsibilities that the VR program must fulfill as a partner in that 
system. Restating these requirements from the WIA implementing 
regulations in these proposed regulations is intended to inform State 
units of their WIA-related responsibilities that are in addition to the 
responsibilities that apply solely to VR programs. As indicated in the 
Background section of this preamble, we expect the State unit's 
participation in the One-Stop system to lead to improved access to 
better quality and more comprehensive services, including services 
provided by other entities, and to improved long-term employment 
outcomes for individuals with disabilities. We note that the VR 
program's participation in the One-Stop system signifies an important 
step in improving services overall for individuals with disabilities. 
We also note, however, that in meeting their One-Stop system 
responsibilities, State units, like all partners of the One-Stop 
system, must comply with the requirements of the law authorizing their 
program, meaning that the requirements of the Act and the proposed 
regulations must be met in the course of participating in One-stop 
system activities.
    Aside from the other issues that individuals might address in their 
comments on the proposed regulations, we recognize that commenters may 
request additional policy or interpretative guidance on these new One-
Stop system responsibilities of the State unit that are specified in 
Title I of WIA, the WIA implementing regulations (20 CFR 662), and now 
in 361.23(a) of the proposed regulations. Accordingly, we ask that 
commenters on the proposed regulations identify specific questions that 
they consider most pertinent to the State unit's ability to operate an 
effective VR program as part of the statewide workforce investment 
system, including questions related to the list of One-Stop system 
responsibilities. We intend to help inform VR agencies and other One-
Stop system partners about the required role of the VR program by 
responding to appropriate questions in a subsequent policy issuance, 
possibly an appendix to the final regulations that follow these 
proposed regulations.
    Section 361.23(b) of the proposed regulations largely track the 
statutory requirements related to cooperative agreements between the 
designated State agency and other entities that are components of the 
statewide workforce investment system under Title I of WIA (i.e., other 
One-Stop system partners). Coupled with the responsibilities in 
paragraph (a) of this proposed section, proposed paragraph (b) is 
intended to enhance coordination throughout the One-Stop service 
delivery system and ensure that interagency coordination between the 
State unit and other partners of the One-Stop system will enable 
individuals with disabilities to receive needed services provided by 
multiple sources. To that end, both the Act and proposed regulations 
require State units to enter into cooperative agreements with other 
partners of the One-Stop system and work toward increasing the capacity 
of those partners, and the One-Stop service delivery system as a whole, 
to better address the needs of individuals with disabilities.
    It also should be noted that proposed Sec. 361.23(b) differs from 
the current regulations since it follows the Act's emphasis on 
coordination between employment training programs across the State's 
One-Stop service delivery and workforce systems. Those Federal, State, 
and local programs that are not part of the workforce system but, 
nevertheless, are appropriate parties with which the VR agency should 
partner are addressed in Sec. 361.24 of the proposed regulations.

Section 361.24  Cooperation and Coordination With Other Entities

    In following the framework of section 101(a)(11) of the Act, 
Sec. 361.24 of the proposed regulations does not specify, to the extent 
done in Sec. 361.23 of the current regulations, the programs with which 
the designated State agency must cooperate. Rather, the proposed 
regulations, which largely track the revised Act, rely on the State 
agency to partner with, and use the facilities and services of, 
appropriate agencies and programs that it identifies.

Section 361.26  Waiver of Statewideness

    This section of the proposed regulations is largely unchanged from 
the current regulations. The chief substantive change, which concerns 
the authority of States to use geographically earmarked funds (State 
funds only) without requesting a waiver of statewideness, is more fully 
discussed in Sec. 361.60 of this section-by-section analysis.

Section 361.29  Statewide Assessment; Annual Estimates; Annual State 
Goals and Priorities; Strategies; and Progress Reports

    This section, which closely tracks section 101(a)(15) of the Act, 
is intended to guide States in developing a comprehensive, forward-
thinking plan for administering and improving their VR programs. The 
logical, systemic framework of this section--the statewide needs 
assessment, followed by the annual service and cost estimates, the 
DSU's goals and priorities for the program, its strategies for 
achieving those goals, and its reports of progress--would replace 
several sections of the current regulations that address some of the 
same requirements. This section also takes the place of the strategic 
plan provisions of the current regulations since those provisions were 
removed from the Act as part of the 1998 Amendments.

Section 361.30  Services to American Indians

    Proposed Sec. 361.30 is a newly titled section that tracks section 
101(a)(13) of the Act in requiring that DSUs provide vocational 
rehabilitation services to American Indians who are eligible under the 
VR program to the same extent that it provides services to other 
significant populations of individuals with disabilities. Because the 
American Indian population is the sole ``special group'' listed in 
Sec. 361.30 of the current regulations (i.e., American Indians, U.S. 
civil employees, and public safety officers) that is specified in the 
1998

[[Page 10625]]

Amendments, we have changed the title and scope of this proposed 
section.

Section 361.31  Cooperative Agreements With Private Nonprofit 
Organizations

    Proposed Sec. 361.31 would revise the current regulations to 
implement section 101(a)(24)(B) of the Act, which requires a 
description in the State plan of the manner in which the DSU will 
establish cooperative agreements with private nonprofit vocational 
rehabilitation service providers. This section of the current 
regulations addresses the use of community resources in providing 
vocational rehabilitation services, a requirement that was removed from 
the Act and, therefore, this proposed section.

Section 361.33  [Reserved]

    We propose to remove Sec. 361.33 of the current regulations and 
reserve that section for future use. The requirements in the current 
regulatory section regarding the use, assessment, and support of 
community rehabilitation programs are fully addressed in other 
reorganized sections of the proposed regulations. For example, the 
requirement that DSUs assess the need to establish, develop, and 
improve community rehabilitation programs in the State, and the DSUs' 
strategies for addressing those needs, are contained in the 
comprehensive assessment and strategy provisions in proposed 
Sec. 361.29(a)(1)(i) and (d)(3), respectively. Moreover, proposed 
Sec. 361.31 requires the DSU to establish cooperative agreements with 
private nonprofit vocational rehabilitation service providers, such as 
community rehabilitation programs. Consequently, Sec. 361.33 of the 
current regulations is considered redundant and, therefore, no longer 
necessary.

Section 361.35  Innovation and Expansion Activities

    Although the separate funding authority and other provisions 
related to the strategic plan have been removed from the Act, section 
101(a)(18) of the Act, in part, retains a requirement that the State 
reserve a portion of its allotment under section 110 of the Act to 
further innovation and expansion of its VR program. Proposed 
Sec. 361.35 would revise the current regulations to track this 
statutory requirement.

Section 361.36  Ability To Serve All Eligible Individuals; Order of 
Selection for Services

    This proposed section largely tracks Sec. 361.36 of the current 
regulations, except that the proposed State plan content requirements 
that remain from this section of the current regulations are those that 
are specified in the Act. The proposed regulations also would 
incorporate additional requirements adopted as part of the 1998 
Amendments, including the requirement that individuals who do not meet 
the State's order of selection criteria for receiving services be 
provided access to the DSU's information and referral system under 
Sec. 361.37.

Section 361.37  Information and Referral Services

    Proposed Sec. 361.37 would implement the requirements in sections 
101(a)(5) and (20) of the Act regarding information and referral 
systems. The Act applies several new criteria for information and 
referral programs under the VR program, including procedures for 
referring individuals to those components of the statewide workforce 
investment system best suited to meet the individual's employment needs 
and informational requirements that specify the type of information 
individuals must receive as part of their referrals (e.g., notice to 
the agency receiving the referral, a contact person in the receiving 
agency, etc.). These requirements are addressed in paragraph (b) of 
this proposed section.
    Section 361.37(c) of the current regulations authorized the State 
unit to establish an expanded information and referral services program 
for providing counseling, guidance, and referral for job placement to 
eligible individuals who do not meet the priority category or 
categories for receiving vocational rehabilitation services under the 
order of selection established by a State. This authority, which was 
discretionary under the current regulations, has been modified in the 
1998 Amendments to require the DSU to provide access to the information 
and referral services that it establishes under this section to those 
eligible individuals who do not meet the State's order of selection 
criteria. Thus, a DSU operating under an order of selection must assist 
eligible individuals who otherwise would not receive services from the 
State unit to secure needed employment assistance from other entities, 
particularly other program components of the statewide workforce 
investment system.

Section 361.42  Assessment for Determining Eligibility and Priority for 
Services

    We propose to modify Sec. 361.42 to implement new provisions in the 
Act regarding presumptive eligibility for Social Security recipients 
and beneficiaries (section 102(a)(3) of the Act) and the use of trial 
work experiences as part of the assessment for determining eligibility 
(sections 7(2)(D) and 102(a)(2)(B) of the Act). In addition, we propose 
to revise the requirements in Sec. 361.42(d) of the current regulations 
concerning extended evaluation and to clarify the current regulatory 
requirement in Sec. 361.42(a)(1) by identifying the type of personnel 
that must conduct eligibility determinations. We also propose to remove 
from the State plan several assurances from the current regulations 
related to the eligibility criteria and procedures.
    Section 361.42 specifies the requirements related to assessments 
for determining eligibility for vocational rehabilitation services and 
priority for services under an order of selection. As in current 
regulations, proposed Sec. 361.42(a) specifies the criteria for 
determining eligibility under the VR program. Specifically, this 
section would require, as it has in the past, that an individual's 
eligibility be based on the following determinations: (1) The 
individual has a physical or mental impairment. (2) The impairment 
results in a substantial impediment to employment. (3) The individual 
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. The Act requires that assessments for determining 
eligibility be conducted both by qualified personnel (section 103(a)(1) 
of the Act) and by the DSU (section 102(a)(6) of the Act). Consistent 
with these statutory emphases (and RSA policy that key programmatic 
decisions, including those related to eligibility determinations, be 
made by qualified personnel employed by the State), the proposed 
regulations would specify that qualified personnel must determine the 
existence of an impairment and whether the impairment results in a 
substantial impediment to employment, and that qualified vocational 
rehabilitation counselors employed by the DSU must determine whether 
the individual requires vocational rehabilitation services.
    Section 361.42(a)(3) of the proposed regulations would implement 
the new statutory requirement in section 102(a)(3) of the Act 
concerning presumptive eligibility for Supplemental Security Income 
(SSI) recipients and Social Security Disability Insurance (SSDI) 
beneficiaries. Prior to the 1998 Amendments, disabled SSI recipients 
and SSDI beneficiaries were

[[Page 10626]]

statutorily presumed to have both a physical or mental impairment that 
constituted a substantial impediment to employment (i.e., that these 
individuals satisfy the first two of the three eligibility criteria) 
and a severe disability. Section 102(a)(3) of the Act expanded the 
first of these two presumptions by requiring that disabled SSI 
recipients and SSDI beneficiaries be presumed eligible for vocational 
rehabilitation services. These individuals satisfy all of the 
previously mentioned three eligibility criteria, including the 
criterion that the individual requires VR services; i.e., that the 
individual requires VR services in order to prepare for, enter into, or 
retain employment consistent with the individual's unique strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice. This change was intended to streamline eligibility 
for a specific population of individuals who have already satisfied 
stringent disability-related assessments under the Social Security Act. 
The proposed regulations reflect the statutory changes.
    The Act states that individuals with disabilities receiving SSI or 
SSDI benefits are presumed eligible under the VR program provided they 
intend to achieve an employment outcome consistent with their unique 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice. The Conference Report for the 1998 
Amendments (Conference Report 105-659, pp. 354-355) interprets this 
language to mean that SSI- or SSDI-eligible individuals must 
demonstrate their desire to work in order to receive vocational 
rehabilitation services. Because we believe all applicants for VR 
services must intend to work to receive services, the proposed 
regulations would implement the Conference Report language by requiring 
DSUs to inform individuals, through the application process for VR 
services, that individuals receiving VR services must intend to achieve 
an employment outcome. Consequently, an individual's completion of the 
application process would demonstrate the individual's desire to 
achieve an employment outcome.
    We believe that these proposed regulatory requirements strike an 
appropriate balance between ensuring that applicants are fully aware of 
the employment-related purpose of the VR program (as opposed to 
entitlement programs like SSI and SSDI) and fulfilling the statutory 
mandate that SSI recipients and SSDI beneficiaries be considered 
presumptively eligible for the VR program. We note that the expectation 
that an applicant receiving SSI or SSDI support, like any applicant, 
intends to become employed or maintain employment by receiving VR 
services does not constitute a new or additional criterion of 
eligibility. The eligibility criteria for the VR program specified in 
section 102(a)(1) of the Act were unchanged by the 1998 Amendments. The 
proposed regulations give meaning to congressional intent that SSI 
recipients and SSDI beneficiaries, in particular, be given ready access 
to services necessary for the achievement of an appropriate employment 
outcome by avoiding unnecessary and duplicative assessments.
    Proposed Sec. 361.42(b) would expressly authorize States to provide 
VR services to individuals with disabilities through more immediate 
determinations of eligibility. Specifically, this proposed provision 
would allow DSUs to make interim determinations of eligibility for 
individuals who the DSU reasonably believes will be eligible for VR 
services at the end of the statutory 60-day period for making 
eligibility decisions. If a DSU elects to implement this option, the 
proposed regulations would require the DSU to make a final 
determination of eligibility within 60 days from the time the 
individual applies for VR services, as required under Sec. 361.41(b)(1) 
of the current regulations. In addition, the DSU must establish 
criteria for using interim eligibility determinations (e.g., interim 
eligibility given if the DSU is awaiting documentation from another 
agency), develop procedures for making those determinations, and 
determine the scope of services that would be available pending final 
eligibility determinations. States may find this authority particularly 
useful with regard to SSI or SSDI recipients who, by virtue of section 
102(a)(3) of the Act, are presumed eligible under the VR program and 
may begin to receive VR services prior to the end of the 60-day period 
while the DSU awaits documentation from the Social Security 
Administration.
    Section 101(a)(12) of the Act, which would be implemented in 
Sec. 361.42(c) of the proposed regulations, states that the State plan 
must include an assurance that the State will not impose a residence 
requirement that excludes from services any individual who is present 
in the State. This provision preexisted, and was left unchanged by, the 
1998 Amendments. However, we believe it is important to clarify, as 
explained in the Senate Committee Report on the Rehabilitation Act 
Amendments of 1998, that the requirement for an individual to be 
present in the State in order to be eligible to receive services should 
not be interpreted in any way to circumvent an individual's choice of 
an out-of-State provider (Senate Report 105-166, p.13). The committee 
further stated that, with regard to out-of-State placements, the 
requirement that an individual be present in the State must be imposed 
at the time of the eligibility determination and may not be used as a 
means of denying the continuation of services that are being provided 
in an out-of-State setting.
    Paragraph (d) of this proposed section would clarify the extent to 
which DSUs can rely on determinations made by other agencies as a basis 
for eligibility determinations under the VR program. Section 
101(a)(4)(B) of the Act specifies that determinations made by officials 
of other agencies regarding whether an applicant is an individual with 
a disability or an individual with a significant disability are to be 
used, to the extent appropriate and consistent with applicable 
statutory requirements, to assist the DSU in making determinations 
related to eligibility for VR services. In order to implement this 
provision in a manner that is consistent with the specific statutory 
mandate in section 102(a)(3)(A)(ii) of the Act that SSI recipients and 
SSDI beneficiaries be presumed eligible under the VR program, 
Sec. 361.42(d)(2) of the proposed regulations would expand upon section 
104(a)(4)(B) of the Act as it applies to determinations made by 
officials of the Social Security Administration. Specifically, 
paragraph (d)(2) would require that the DSU use determinations made by 
the Social Security Administration as evidence that an individual is 
receiving SSI or SSDI benefits and, therefore, is presumed to meet each 
criterion of eligibility under the VR program. We note that this 
proposed paragraph would constitute an exception to the general 
requirement in proposed Sec. 361.42(a) that a VR counselor employed by 
the DSU determine that an individual requires VR services. This 
interpretation is essential, we believe, to ensure that SSI and SSDI 
recipients be considered presumptively eligible for VR services and 
receive VR services in a timely manner.
    Section 7(2) of the Act revised the definition of ``assessment for 
determining eligibility and vocational rehabilitation needs'' by 
changing the statutory emphasis on ``extended evaluation'' to a new 
approach referred to as an exploration of the individual's abilities, 
capabilities, and capacity to perform in work situations, through the 
use of trial work experiences. If a DSU

[[Page 10627]]

believes that an applicant for VR services is incapable of benefiting 
in terms of an employment outcome from VR services due to the severity 
of the individual's disability (and, therefore, would be ineligible 
under section 102(a)(2)(A) of the Act), the DSU must, in most 
instances, assess whether the individual can work by placing the 
individual in a trial work setting with appropriate supports. The Act 
requires that trial work experiences be of sufficient variety and over 
a sufficient period of time to determine the eligibility of the 
individual or to determine the existence of clear and convincing 
evidence that the individual is incapable of benefiting in terms of an 
employment outcome from VR services due to the severity of the 
individual's disability (section 102(a)(2)(B) of the Act). The Senate 
Committee Report accompanying S. 1579, from which the requirements 
came, notes that the trial work experiences may include supported 
employment, on-the-job training, and other experiences using realistic 
work settings (Senate Report 105-166, p. 9).
    Proposed Sec. 361.42(e) would implement the requirements for trial 
work experiences by requiring the DSU to develop a written plan for 
assessing an individual's ability to perform in a real work setting and 
requiring that trial placements for assessment purposes be as realistic 
as possible, meaning that the trial work must occur in the most 
integrated setting possible, consistent with the informed choice and 
rehabilitation needs of the individual. We are particularly interested 
in public comments identifying other types of trial work experiences, 
in addition to supported employment and on-the-job training, that may 
be appropriate. We consider the requirement for trial work experiences 
a critical element in determining eligibility in instances in which the 
DSU is concerned that the severity of an individual's disability 
indicates that the individual may be unable to benefit in terms of an 
employment outcome from VR services.
    We emphasize that an individual may not be determined to be 
ineligible for VR services due to the unavailability of trial work 
settings since an inability to find suitable trial work would not 
constitute clear and convincing evidence that the individual cannot 
benefit from VR services in terms of an employment outcome. In these 
limited circumstances, the DSU may conduct an extended evaluation to 
determine the individual's eligibility for services. Though the Act 
emphasizes the use of trial work experiences for assessment purposes, 
the Congress recognized the need to allow extended evaluation as an 
alternative if a real work test is impossible or if the State VR agency 
has exhausted other options without reaching a determination of 
eligibility (See Senate Report 105-166, pp. 9-10). Accordingly, 
proposed Sec. 361.42(f) would retain limited requirements for an 
extended evaluation that would be based on a written plan for 
determining eligibility and would provide for VR services in the most 
integrated setting possible, consistent with the informed choice and 
rehabilitation needs of the individual.
    Finally, we recognize that this section of the current regulations 
includes a note explaining how to interpret the term ``clear and 
convincing evidence.'' The information in that note--e.g., that clear 
and convincing evidence be determined on a case-by-case basis, 
constitutes the highest standard used in our civil system of law, and 
requires that the designated State unit have a high degree of certainty 
before concluding that an individual is incapable of benefiting from 
services in terms of an employment outcome--still includes useful 
guidance material for purposes of satisfying the clear and convincing 
evidentiary standard. Thus, as specified in the note, the review of 
existing information still would not provide clear and convincing 
evidence, meaning that, for example, the use of an intelligence test 
result alone would not constitute clear and convincing evidence. On the 
other hand, clear and convincing evidence could 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. Also, under the proposed regulations, a 
demonstration of clear and convincing evidence requires that the 
designated State unit explore the applicant's abilities, capabilities, 
and capacity to perform in work situations and provide appropriate 
supports. Nevertheless, the note in the current regulations has been 
removed from the proposed regulations, and the content of the note has 
been discussed here in this preamble in order to distinguish between 
regulatory requirements and guidance material. We are interested in 
commenters' views on whether this information should be reinserted into 
the final regulations.

Section 361.45  Development of the Individualized Plan for Employment

    We propose to revise Sec. 361.45 to implement new provisions in 
section 102(b)(1) of the Act. Like the statute, the proposed 
regulations expand an eligible individual's options for developing the 
IPE, enable individuals to receive technical assistance in developing 
their IPEs, and specify the information that the DSU must provide to 
the eligible individual during IPE development. This proposed section 
tracks section 102(b)(2) of the Act by prescribing procedural 
requirements related to the development of IPEs, including the 
requirement that the IPE and any amendments to the IPE be approved and 
signed by a qualified vocational rehabilitation counselor employed by 
the DSU. In addition, several portions of this proposed section (as 
well as other proposed sections) have been removed from the State plan 
in an effort to both streamline the State plan and reduce paperwork 
burden on State agencies.
    Proposed Sec. 361.45(b)(1) reflects the new statutory requirement 
in section 102(b)(1) of the Act authorizing an eligible individual or, 
as appropriate, an individual's representative to develop all or part 
of the IPE without any assistance, with assistance from a qualified VR 
counselor (who may or may not be employed by the DSU), or with 
technical assistance from additional resources outside of the DSU. 
Additional resources may include independent living centers, community 
rehabilitation programs, family members, friends, or other programs and 
individuals.
    The statutory options for developing the IPE were adopted from the 
changes proposed by the Senate in S. 1579. In the report accompanying 
S. 1579, the Senate committee stated that these changes enable eligible 
individuals to determine the extent to which the State VR agency would 
assist in the development of their IPEs (Senate Report 105-166, pp. 22-
23). The committee noted that, although the plan's effect is 
conditioned on the approval and signature of both the eligible 
individual and a qualified VR counselor employed by the DSU, the new 
requirements were intended to empower individuals with disabilities to 
have greater control in developing their IPEs to address their unique 
needs. In addition, the committee noted its intent that, in many 
instances, rehabilitation counselors are likely to serve more as 
facilitators of plan development than they did in the past.
    Consistent with the language in the Senate Report, the proposed 
regulations place the responsibility on the eligible individual or, as 
appropriate, the individual's representative to decide whether, and to 
what extent, the DSU or other entity will assist in the development of 
the individual's IPE.

[[Page 10628]]

Regardless of the option chosen, however, the DSU counselor does retain 
approval (and signature) authority. In addition, it should be noted 
that the DSU is responsible for ensuring that each IPE is reviewed 
annually by the individual and a qualified VR counselor who, at the 
individual's request, may or may not be employed by the DSU. This 
responsibility is reflected in Sec. 361.45(d)(5).
    Proposed Sec. 361.45(b)(2) describes other information that the DSU 
must provide to an eligible individual or, as appropriate, the 
individual's representative, including descriptions of the full range 
of components that must be included in an IPE, the rights and remedies 
available to the individual, the availability of a client assistance 
program, and information on how to contact that program. The DSU must 
also provide, as appropriate, an explanation of agency guidelines and 
criteria associated with financial commitments concerning an IPE, 
information on the availability of assistance in completing DSU forms 
required as part of the IPE, and any additional information that the 
eligible individual requests or the DSU determines to be necessary.
    As in section 102(b)(2)(B) of the Act, proposed Sec. 361.45(c) 
requires that the IPE be developed in a manner that gives the 
individual the opportunity to exercise informed choice in selecting the 
employment outcome, the specific VR services needed to achieve the 
employment outcome, the entity or entities that will provide the 
services, and the methods available for procuring the services. We note 
that informed choice also applies to the selection of both the 
employment setting and the setting in which VR services are provided as 
part of the selection of the employment outcome and services 
respectively. Several of the remaining provisions in this proposed 
section simply track statutory requirements. In addition, proposed 
Sec. 361.45(c)(8)--requiring that an IPE for a student with a 
disability who is receiving special education services be developed in 
consideration of the student's IEP and in accordance with the plans, 
policies, procedures, and interagency agreement required in proposed 
Sec. 361.22--is retained from the current regulations as a necessary 
safeguard.
    The terms ``long-term vocational goal,'' ``intermediate 
rehabilitation objectives,'' and ``individualized written 
rehabilitation program'' would be removed from this section of the 
current regulations since these terms are no longer used in the Act.

Section 361.46  Content of the Individualized Plan for Employment

    Proposed Sec. 361.46 identifies the mandatory content components of 
the IPE, as specified in section 102(b)(3) of the Act. These components 
must be included in each IPE regardless of the approach that the 
individual selects under proposed Sec. 361.45(b)(1) for developing the 
IPE.
    Because proposed Sec. 361.46 simply amends current regulations by 
tracking statutory changes, the proposed changes to this section, other 
than the burden-reducing step of removing the requirements of this 
section from the State plan, are purely technical. Also, as in proposed 
Sec. 361.45, the terms ``long-term vocational goal,'' ``intermediate 
rehabilitation objectives,'' and ``individualized written 
rehabilitation program'' would be removed from this section of the 
current regulations since these terms are no longer used in the Act.

Section 361.47  Record of Services

    We propose to modify the regulatory requirements related to the 
record of services by requiring States to determine, with input from 
the State Rehabilitation Councils, the type of documentation that they 
will maintain for each applicant and eligible individual to meet the 
content items that must be included in each individual's record of 
services. The proposed regulations also add limited content items that 
are related to an individual's participation in the VR program.
    We believe that States should be given the discretion to determine 
which sources of documentation to use to meet the record of services 
requirements (RSA typically examines records of services as part of its 
periodic monitoring of a State's administration of the VR program). We 
further believe that consultation with the State Rehabilitation Council 
(if the State has a Council) is warranted since deciding which type of 
documentation is sufficient to support determinations affecting an 
individual's participation in the VR program (e.g., eligibility 
determinations that must be documented under paragraph (a)(1) of this 
proposed section) would constitute a policy of general applicability.
    The proposed regulations would also move certain content 
requirements from Sec. 361.46 of the current regulations to the record 
of services section of the regulations. Documentation requirements 
specified in proposed Sec. 361.47(a)(2) (ineligibility determinations), 
(a)(13) (referrals), and (a)(14) (achievement of an employment 
outcome), we believe, are more likely to be viewed as components of the 
individual's record rather than the individual's program of services.
    The proposed regulations also incorporate new statutory 
requirements (e.g., Sec. 361.47(a)(10) related to the annual reviews of 
individuals in extended employment).
    The remaining documentation requirements in proposed 
Sec. 361.47(a)(4) (level of significance of the disability), (a)(6) 
(IPE), (a)(9) (verification of competitive employment), and (a)(11) 
(results of mediation or due process hearing) represent documentation 
requirements that we consider necessary to ensure that important 
program requirements are met with respect to each individual 
participating in the VR program.
    Finally, this proposed section would amend the current regulations 
by no longer requiring that the record of services requirements be 
addressed in the list of assurances of the State plan.

Section 361.52 Informed Choice

    Proposed Sec. 361.52 would implement the expanded authority in 
section 102(d) the Act requiring that applicants and eligible 
individuals be able to exercise informed choice throughout the 
rehabilitation process. This proposed section would largely track the 
statutory requirements provisions and also would retain the current 
regulatory provisions that specify types of information that could 
assist eligible individuals to exercise informed choice in the 
selection of VR services and service providers.

Section 361.53 Comparable Services and Benefits

    Section 101(a)(8) of the Act expands the longstanding provisions 
regarding comparable services and benefits to require interagency 
agreements between the designated State agency and other appropriate 
public entities (including the State agency administering the State's 
medicaid program, public institutions of higher education, and other 
components of the statewide workforce investment system) to ensure that 
eligible individuals with disabilities receive, in a timely manner, 
necessary services to which each party to the agreement has an 
obligation, or the authority, to contribute. The statutory requirements 
related to this enhanced interagency coordination would be implemented 
in paragraph (d) of this proposed section.

[[Page 10629]]

Section 361.54 Participation of Individuals in Cost of Services Based 
on Financial Need

    This section of the proposed regulations largely tracks the 
requirements in the current regulations related to financial needs 
tests with two primary changes.
    First, the list of VR services that are currently exempted from 
State financial needs tests (e.g., assessment and counseling and 
guidance), meaning that a State unit cannot require an individual to 
contribute to the cost of those services, has been expanded to include 
interpreter services for individuals who are the deaf or hard of 
hearing, reader services for individuals who are blind, and personal 
assistance services. We are proposing to exempt these services from 
financial need assessments since each service is provided to enable an 
individual to access the VR program or participate in a program of 
vocational rehabilitation services. Individuals do not apply, nor are 
they eligible, under the VR program solely to receive these types of 
support services. Rather, these services allow persons to communicate 
or perform daily living functions in the course of receiving other VR 
services that are necessary to their training for employment.
    We are interested in commenters' views on this proposed change and 
request public comment on whether this list of access services that 
would be exempted from financial needs tests under this section should 
be modified in any way. We also would like to point out that exempting 
these additional services from financial needs tests would not affect a 
State unit's or other service provider's responsibility to comply with 
section 504 of the Act, the Americans with Disabilities Act, or other 
Federal statutes and regulations regarding individuals with 
disabilities. To the extent an entity is obligated under Federal law to 
provide an accommodation or an auxiliary aid to a VR program 
participant at no cost to the individual, that entity must provide the 
necessary service and fulfill those requirements that apply to it.
    The proposed regulations also would prohibit State units from 
applying financial needs tests to individuals receiving SSI or SSDI. As 
with the requirement that SSI recipients and SSDI beneficiaries be 
presumed eligible under the VR program, this proposed change is 
intended to increase efficiency in the way State agencies serve those 
with disabilities who receive Social Security.
    Typically SSI recipients (based on limited income and resources) 
and SSDI beneficiaries (based on an inability to engage in substantial 
gainful activity without assistance such as VR services) have limited 
ability to contribute to the cost of VR services and, thus, are 
unlikely to meet the State criteria for contributing to service costs. 
SSI recipients, in fact, have already been determined by the Social 
Security Administration (SSA) to fall below federally established 
income and resource standards. The proposed regulations would ensure 
that those receiving Social Security disability benefits receive timely 
VR services without being subject to a largely duplicative (at least 
with regard to SSI recipients), and unnecessary, financial need test as 
a condition of receiving needed services.
    More importantly, exempting SSI recipients and SSDI beneficiaries 
from financial needs assessments would support the chief goal behind 
the practice of referring these individuals to the VR program: Enabling 
individuals to become gainfully employed and to no longer require 
Social Security benefits. Requiring Social Security recipients, who 
typically have very limited resources, to contribute to the cost of VR 
services serves as a disincentive for these individuals to pursue 
gainful employment through the VR program. Instead, the proposed 
regulations would support individuals' efforts to pursue employment and 
avoid Social Security disability benefits. Moreover, the proposed 
regulations would not overly burden State units since SSA reimburses 
State units for the cost of VR services provided to eligible 
individuals receiving SSI and SSDI after the individual has engaged in 
substantial gainful activity consistent with SSA criteria.
    Finally, we believe that the benefits afforded by the changes to 
this section--e.g., streamlining the process for accessing VR services 
and reducing disincentives for remaining on public assistance--outweigh 
any costs to States since many States use financial needs tests only in 
very limited circumstances.

Section 361.56 Requirements for Closing the Record of Services of an 
Individual Who Has Achieved an Employment Outcome

    We propose to modify Sec. 361.56 of the current regulations to 
better reflect the requirement that the components of that section must 
be met before the DSU can close the record of services for an 
individual who has achieved an employment outcome. Accordingly, the 
title of Sec. 361.56 of the current regulations (``Individuals 
determined to have achieved an employment outcome'') would be changed 
in the proposed regulations to ``Requirements for closing the record of 
services of an individual who has achieved an employment outcome.'' 
Proposed Sec. 361.56 would also be removed from the State plan list of 
assurances.
    In order to close the individual's record of services, this 
proposed section would require that the individual achieve the 
employment described in the individual's IPE and maintain the 
employment outcome for an appropriate period of time, but not for less 
than 90 days. Also, the individual and the qualified VR counselor 
employed by the DSU must consider the employment outcome to be 
satisfactory and agree that the individual is performing well in the 
employment. Each of the proposed provisions is based on criteria 
specified in Sec. 361.56 of the current regulations. In addition, the 
proposed regulations would require DSUs to inform individuals of the 
availability of post-employment services that may be provided after the 
record of services is closed. We consider each of the proposed 
provisions to be important protection for individuals by ensuring that 
the individual's employment outcome is sufficiently stable and that the 
individual no longer requires VR services to maintain the employment.

Section 361.57 Review of the Designated State Unit Personnel 
Determinations

    Section 361.57 of the proposed regulations would implement section 
102(c) of the Act by describing the procedural requirements for 
resolving disputes between individual applicants or eligible 
individuals in the VR program and the DSU. The proposed regulations 
would largely track current regulatory requirements related to informal 
resolution procedures, due process hearings, selection of impartial 
hearing officers, and other items. In addition, the proposed 
regulations would establish requirements for implementing two new 
procedures that were adopted in the 1998 Amendments to the Act--
mediation and administrative review of hearing officer decisions. 
Finally, under this proposed section, the DSU would no longer be 
required to include its due process procedures as part of its State 
plan submission.
    Designated State units are required by statute to establish 
mediation procedures in an effort to resolve disputes in a more timely 
and less confrontational manner and to reduce the number of formal, 
adversarial hearings. We note, however, that the Act prohibits DSUs 
from using mediation as

[[Page 10630]]

a means of denying or delaying an individual's right to a hearing. 
Consequently, the proposed regulations would clarify that an applicant 
or eligible individual must be given a hearing within 45 days from the 
individual's request for review if, by that time, the dispute has not 
been resolved informally or through mediation. Additionally, mediation 
sessions must be conducted by ``qualified and impartial mediators,'' a 
term that is defined in Sec. 361.5(b)(38) of the proposed regulations.
    States also have the option of developing administrative review 
procedures through which parties can seek review of hearing officer 
decisions by the designated State agency (that oversees the DSU) or the 
Office of the Governor. The 1998 Amendments provides for this 
administrative review process in place of the prior authority for DSU 
directors to review hearing decisions, an authority that has been 
removed from the Act.
    The proposed regulations also track the statute by explicitly 
informing parties to disputes concerning the provision of VR services 
that they may challenge final agency decisions in civil court.
    We also propose to clarify one point related to representation 
during mediation sessions and hearings. Paragraph (a)(3)(ii) of this 
proposed section, which, consistent with section 102(c)(3)(B) of the 
Act, gives individuals the opportunity to be represented in mediation 
sessions or formal hearings by counsel or another advocate that they 
select, is to be interpreted broadly. In other words, the individual, 
as the party to the dispute, has full discretion to choose an attorney, 
a guardian, family member, a friend, or other person to serve as his or 
her advocate during mediation or a hearing.

Section 361.60   Matching Requirements

    Proposed Sec. 361.60 would revise current regulatory matching 
requirements for the VR program to reflect a number of statutory 
changes made by the 1998 Amendments. Specifically, this proposed 
section would omit the current provisions related to the innovation and 
expansion grant program since the authority for that program has been 
removed from the Act. In addition, the regulatory requirements 
governing sources of State matching funds (i.e., the State's non-
Federal share) would be revised to reflect the new statutory provisions 
governing the use of geographically limited earmarked funds as part of 
a State's non-Federal share.
    Section 361.60(b)(3)(ii) of the proposed regulations would 
implement section 101(a)(4)(B) of the Act. Section 101(a)(4)(B) of the 
Act authorizes a State to use funds that are earmarked for a particular 
geographic area within the State as part of its non-Federal share 
without obtaining a waiver of statewideness. In these instances, the 
State must first determine and inform the RSA Commissioner that it 
cannot provide the full amount of its non-Federal share without using 
the earmarked funds.
    Although section 101(a)(4)(B) of the Act is intended to assist some 
States in meeting their matching obligations, we emphasize that the Act 
does not permit States to restrict the use of any Federal funds 
received under the VR program to certain geographic areas unless the 
State obtains a waiver of statewideness from the Commissioner of RSA. 
In the absence of RSA approval, VR services are to be made generally 
available to individuals with disabilities across the State. The 
statewideness requirements also apply to the Federal VR program funds 
that the State receives in return for contributing geographically 
limited earmarked funds to its non-Federal share. In other words, 
without a waiver, Federal funds that are matched by privately donated 
funds must be used on a statewide basis and cannot flow entirely back 
to the particular geographic area for which the privately donated funds 
were earmarked.

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 proposed regulations would address the National Education 
Goal that, by the year 2000, 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

1. Potential Costs and Benefits

    Under Executive Order 12866, we have assessed the potential costs 
and benefits of this regulatory action. The potential costs associated 
with the proposed regulations are those resulting from statutory 
requirements and those we have determined as necessary for 
administering this program effectively and efficiently. Elsewhere in 
this SUPPLEMENTARY INFORMATION section we identify and explain burdens 
specifically associated with information collection requirements. See 
the heading Paperwork Reduction Act of 1995.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these proposed regulations, we have determined that 
the benefits would justify the costs.
    We have also determined that this regulatory action would not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
Summary of Potential Costs and Benefits
    We believe that the NPRM would substantially improve the State VR 
Services Program and would yield substantial benefits in terms of 
program management, efficiency, and effectiveness. We also believe that 
the proposed regulations represent the least burdensome way to 
implement the 1998 Amendments to Title I of the Act and fulfill 
important policy objectives that we consider to be essential to the 
success of the program. The NPRM would further reduce paperwork or 
process requirements that currently apply to DSUs and enhance the 
flexibility of DSUs to meet non-statutory requirements. Increased 
flexibility of DSUs and other benefits resulting from the proposed 
regulations are discussed in the following paragraphs of this section 
and throughout the section-by-section summary of the preamble.

Definitions and Examples

    The proposed regulations would incorporate certain definitions 
under the Workforce Investment Act to give a complete listing of 
defined terms that apply to the VR program. For purposes of further 
clarification, the NPRM also includes definitions of two terms that are 
used in the program but are not defined in the Act--``fair hearing 
board'' and ``qualified and impartial mediator.''
    We have also provided additional clarifying information in the 
proposed regulations through the limited use of examples. In the past, 
many in the vocational rehabilitation community have stated that they 
find this information more accessible and more useful if it is included 
in the regulations rather than issued separately by RSA as 
subregulatory guidance. Nevertheless, we emphasize that the examples in 
the proposed regulations are purely

[[Page 10631]]

illustrative and are not intended to restrict State flexibility.

Reduction of Grantee Burden

    Non-statutory paperwork requirements have been eliminated or 
consolidated throughout the NPRM in an effort to reduce regulatory 
burden on States. In particular, as noted earlier in this preamble, the 
NPRM would significantly reduce the number of requirements that apply 
to the DSU's State plan submission. A list of the sections of the 
current regulations that have been removed from content of the State 
plan is provided in the Background section of this preamble. Additional 
burden-reducing steps taken in the NPRM are explained in the section-
by-section summary. Those paperwork requirements that would remain in 
the proposed regulations are considered essential to the proper 
administration of the program.

Enhanced Protections for Individuals With Disabilities

    The proposed regulations include several provisions that are 
intended to ensure that individuals with disabilities are more readily 
provided VR services without unnecessary delay. For example, 
Sec. 361.42 (Assessment for determining eligibility and priority for 
services) would provide several safeguards for individuals receiving 
SSI or SSDI benefits (who, therefore, are presumed eligible under the 
VR program) to ensure that an individual's SSI or SSDI status is 
verified quickly and that these individuals receive VR services in a 
timely manner as the statute intends.
    As a second example, Sec. 361.57 (Review of State unit personnel 
decisions) would clarify that the use of mediation or informal means to 
resolve disputes between VR agencies and consumers must not serve to 
delay an individual's right to a due process hearing within 45 days of 
a request for review. Proposed Sec. 361.57 as a whole is designed to 
expedite resolution of disputes and avoid disruptions in services.

Additional Benefits

    Aside from establishing certain regulatory safeguards to address 
specific issues that arise under the VR program, the NPRM generally 
follows the statutory framework of giving States significant 
flexibility in operating their VR programs and assisting individuals 
with disabilities to achieve high-quality employment. Also, the NPRM 
closely links the VR program to the State workforce investment system 
as is required by the Act. Several sections of the NPRM--e.g., 
Sec. 361.23 (Requirements related to the statewide workforce investment 
system) and Sec. 361.37 (Information and referral services)--foster 
increased coordination between VR and the other employment training 
programs in the workforce system to ensure that individuals with 
disabilities receive necessary rehabilitation and other services 
enabling them to achieve an appropriate employment outcome.

2. Clarity of the Regulations

    Executive Order 12866 and the President's Memorandum of June 1, 
1998 on ``Plain Language in Government Writing'' require each agency to 
write regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
     Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec. '' and a numbered heading; for example, 
Sec. 361.42 Assessment for determining eligibility and priority for 
services.)
     Could the description of the proposed regulations in the 
SUPPLEMENTARY INFORMATION section of this preamble be more helpful in 
making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulations 
easier to understand?
    Send any comments that concern how the Department could make these 
proposed regulations easier to understand to the person listed in the 
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. These regulations would impact some public institutions of 
higher education (IHEs) by requiring States to develop formal 
agreements between State VR agencies and public IHEs for purposes of 
providing necessary VR services to eligible individuals attending those 
IHEs. However, because these proposed regulations impose only minimal 
requirements on IHEs and otherwise would affect only States and State 
agencies, the regulations would not have a significant impact on small 
entities. States and State agencies are not defined as ``small 
entities'' in the Regulatory Flexibility Act.

Paperwork Reduction Act of 1995

    Sections 361.10, 361.12, 361.13, 361.15, 361.16, 361.17, 361.18, 
361.19, 361.20, 361.21, 361.22, 361.23, 361.24, 361.25, 361.29, 361.30, 
361.31, 361.32, 361.34, 361.35, 361.36; 361.37, 361.40, 361.46, 361.51, 
361.52, 361.53, and 361.55 contain information collection requirements. 
Information collection requirements that pertain to State 
recordkeeping, but are not associated with the State plan, are 
contained in Secs. 361.14, 361.26, 361.27, 361.28, 361.38, 361.41, 
361.47, 361.48, 361.49, 361.50, 361.54, 361.57, 361.60 and 361.62.
    Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the 
Department of Education has submitted a copy of these sections to the 
Office of Management and Budget (OMB) for its review.

Collection of Information: The State Vocational Rehabilitation 
Services Program

    States are eligible to apply for grants under these proposed 
regulations. The information to be collected includes State plan 
assurances and descriptions to meet statutory requirements and other 
required information that the Department considers important to the 
efficient and effective administration of the program. Required 
information that is unrelated to the State plan is necessary for 
purposes of Department monitoring of program performance and 
compliance.
    The Department needs and uses the information related to the State 
plan for the VR program in order to ensure compliance with Federal 
requirements. An approved State plan is necessary for a State to 
receive a grant under the VR program. All State plan information is to 
be collected and reported once unless the State has submitted the 
information previously or determines that modifications are necessary, 
or the Secretary requires modifications due to changes in State policy, 
Federal law (including regulations), interpretation of the Act by a 
Federal court or the highest court in the State, or a finding by the 
Secretary of State noncompliance with the requirements of the Act. 
However, consistent with statutory requirements, the following State 
plan information must be submitted annually: Information relating to 
the comprehensive system of personnel development under Sec. 361.18; 
reports

[[Page 10632]]

relating to assessments, estimates, goals and priorities, and reports 
of progress under Sec. 361.29; reports on the use of funds reserved for 
innovation and expansion activities under Sec. 361.35; input provided 
by the State Rehabilitation Council on State plan revisions in 
accordance with Sec. 361.16; and other State plan updates of 
information required under the proposed regulations that are requested 
by the Secretary.
    Annual reporting and recordkeeping burden for this collection of 
information is estimated to average 12,220 hours for each response for 
82 respondents, including the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information. 
Thus, we estimate the total annual reporting and recordkeeping burden 
for this collection to be 1,002,050 hours.
    If you want to comment on the information collection requirements, 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, Room 10235, New Executive Office Building, Washington, DC 
20503; Attention: Desk Officer for U.S. Department of Education. You 
may also send a copy of these comments to the Department representative 
named in the ADDRESSES section of this preamble.
    We consider your comments on this proposed collections of 
information in--
     Deciding whether the proposed collection is necessary for 
the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collection, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed regulations.

Intergovernmental Review

    This program is subject to Executive Order 12372 and the 
regulations in 34 CFR part 79. One of the objectives of the Executive 
order is to foster an intergovernmental partnership and a strengthening 
federalism. The Executive order relies on processes developed by State 
and local governments for coordination and review of proposed Federal 
financial assistance.
    This document provides early notification of our specific plans and 
actions for this program.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether these 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 
available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in the text or 
Adobe Portable Document Format (PDF) on the Internet at either of the 
following sites:

http://ocfo.ed.gov/fedreg.htm
http://www.ed.gov/news.html

To use the PDF you must have the Adobe Acrobat Reader Program with 
Search, which is available free at either of the previous sites. If you 
have questions about using the PDF, call the U.S. Government Printing 
Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, 
area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance Number: 84.126 State 
Vocational Rehabilitation Services Program)

List of Subjects in 34 CFR Part 361

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

    Dated: February 22, 2000.
Richard W. Riley,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary proposes 
to amend title 34 of the Code of Federal Regulations by revising part 
361 to read as follows:

PART 361--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.

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 Council.
361.17   Requirements for a State Rehabilitation Council.
361.18   Comprehensive system of personnel development.
361.19   Affirmative action for individuals with disabilities.
361.20   Public participation requirements.
361.21   Consultations regarding the administration of the State 
plan.
361.22   Coordination with education officials.
361.23   Requirements related to the statewide workforce investment 
system.
361.24   Cooperation and coordination with other entities.
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 assessment; annual estimates; annual State goals 
and priorities; strategies; and progress reports.
361.30   Services to American Indians.
361.31   Cooperative agreements with private nonprofit 
organizations.
361.32   Use of profitmaking organizations for on-the-job training 
in connection with selected projects.
361.33   [Reserved]
361.34   Supported employment State plan supplement.
361.35   Innovation and expansion activities.
361.36   Ability to serve all eligible individuals; order of 
selection for services.
361.37   Information and referral services.
361.38   Protection, use, and release of personal information.
361.39   State-imposed requirements.
361.40   Reports.

Provision and Scope of Services

361.41   Processing referrals and applications.
361.42   Assessment for determining eligibility and priority for 
services.

[[Page 10633]]

361.43   Procedures for ineligibility determination.
361.44   Closure without eligibility determination.
361.45   Development of the individualized plan for employment.
361.46   Content of the individualized plan for employment.
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   Standards for facilities and providers of services.
361.52   Informed choice.
361.53   Comparable services and benefits.
361.54   Participation of individuals in cost of services based on 
financial need.
361.55   Annual review of individuals in extended employment or 
other employment under special certificate provisions of the Fair 
Labor Standards Act.
361.56   Requirements for closing the record of services of an 
individual who has achieved an employment outcome.
361.57   Review of State unit personnel 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.

    Authority: 29 U.S.C. 709(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 
statewide comprehensive, coordinated, effective, efficient, and 
accountable programs, each of which is--
    (a) An integral part of a statewide workforce investment system; 
and
    (b) Designed to assess, plan, develop, and provide vocational 
rehabilitation services for individuals with disabilities, consistent 
with their strengths, resources, priorities, concerns, abilities, 
capabilities, interests, and informed choice, so that they may prepare 
for and engage in gainful employment.

(Authority: Section 100(a)(2) of the Act; 29 U.S.C. 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: Section 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; and
    (b) Administrative costs under the State plan.

(Authority: Section 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 and Agreements with 
Institutions of Higher Education, Hospitals, and other Non-profit 
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 and Alcohol Abuse Prevention).
    (b) The regulations in this part 361.
    (c) 20 CFR part 662 (Description of One-Stop Service Delivery 
System under Title I of the Workforce Investment Act of 1998).
    (d) 29 CFR part 37, to the extent programs and activities are being 
conducted as part of the One-Stop service delivery system under section 
121(b) of the Workforce Investment Act of 1998.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))


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, as amended (29 U.S.C. 
701 et seq.).
    (2) Administrative costs under the State plan means expenditures 
incurred in the performance of administrative functions under the 
vocational rehabilitation program carried out under this part, 
including expenses related to program planning, development, 
monitoring, and evaluation, including expenses for--
    (i) Quality assurance;
    (ii) Budgeting, accounting, financial management, information 
systems, and related data processing;
    (iii) Providing information about the program to the public;
    (iv) Technical assistance and support services 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);
    (v) The State Rehabilitation Council and other advisory committees;
    (vi) Professional organization membership dues for designated State 
unit employees;
    (vii) The removal of architectural barriers in State vocational 
rehabilitation agency offices and State-operated rehabilitation 
facilities;
    (viii) Operating and maintaining designated State unit facilities, 
equipment, and grounds;
    (ix) Supplies;
    (x) Administration of the comprehensive system of personnel 
development described in Sec. 361.18, including personnel 
administration, administration of affirmative action plans, and 
training and staff development;
    (xi) Administrative salaries, including clerical and other support 
staff salaries, in support of these administrative functions;
    (xii) Travel costs related to carrying out the program, other than 
travel costs related to the provision of services;
    (xiii) Costs incurred in conducting reviews of determinations made 
by personnel of the designated State unit, including costs associated 
with

[[Page 10634]]

mediation and impartial due process hearings under Sec. 361.57; and
    (xiv) Legal expenses required in the administration of the program.

(Authority: Section 7(1) of the Act; 29 U.S.C. 705(1))

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

(Authority: Section 7(19)(A) of the Act; 29 U.S.C. 705(19)(A))

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

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(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: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (6) Assessment for determining eligibility and vocational 
rehabilitation needs means, as appropriate in each case--
    (i)(A) A review of existing data--
    (1) To determine if an individual is eligible for vocational 
rehabilitation services; and
    (2) To assign priority for an order of selection described in 
Sec. 361.36 in the States that use an order of selection; and
    (B) To the extent necessary, the provision of appropriate 
assessment activities to obtain necessary additional data to make the 
eligibility determination and assignment;
    (ii) To the extent additional data are necessary to make a 
determination of the employment outcomes and the nature and scope of 
vocational rehabilitation services to be included in the individualized 
plan for employment of an eligible individual, a comprehensive 
assessment to determine the unique strengths, resources, priorities, 
concerns, abilities, capabilities, interests, and informed choice, 
including the need for supported employment, of the eligible 
individual. This comprehensive assessment--
    (A) Is limited to information that is necessary to identify the 
rehabilitation needs of the individual and to develop the 
individualized plan of employment of the eligible individual;
    (B) Uses as a primary source of information, to the maximum extent 
possible and appropriate and in accordance with confidentiality 
requirements--
    (1) Existing information obtained for the purposes of determining 
the eligibility of the individual and assigning priority for an order 
of selection described in Sec. 361.36 for the individual; and
    (2) Information that can be provided by the individual and, if 
appropriate, by the family of the individual;
    (C) May include, to the degree needed to make such a determination, 
an assessment of the personality, interests, interpersonal skills, 
intelligence and related functional capacities, educational 
achievements, work experience, vocational aptitudes, personal and 
social adjustments, and employment opportunities of the individual and 
the medical, psychiatric, psychological, and other pertinent 
vocational, educational, cultural, social, recreational, and 
environmental factors that affect the employment and rehabilitation 
needs of the individual; and
    (D) May include, to the degree needed, an appraisal of the patterns 
of work behavior of the individual and services needed for the 
individual to acquire occupational skills and to develop work 
attitudes, work habits, work tolerance, and social and behavior 
patterns necessary for successful job performance, including the use of 
work in real job situations to assess and develop the capacities of the 
individual to perform adequately in a work environment;
    (iii) Referral, for the provision of rehabilitation technology 
services to the individual, to assess and develop the capacities of the 
individual to perform in a work environment; and
    (iv) An exploration of the individual's abilities, capabilities, 
and capacity to perform in work situations, which must be assessed 
periodically during trial work experiences, including experiences in 
which the individual is provided appropriate supports and training.

(Authority: Section 7(2) of the Act; 29 U.S.C. 705(2))

    (7) 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: Section 7(3) of the Act; 29 U.S.C. 705(3))

    (8) 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: Sections 7(4) and 12(c) of the Act; 29 U.S.C. 705(4) and 
709(c))

    (9) 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.

[[Page 10635]]

    (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.
    (10) Comparable services and benefits means--
    (i) Services and benefits that are--
    (A) Provided or paid for, in whole or in part, by other Federal, 
State, or local public agencies, by health insurance, or by employee 
benefits;
    (B) Available to the individual at the time needed to ensure the 
progress of the individual toward achieving the employment outcome in 
the individual's individualized plan for employment in accordance with 
Sec. 361.53; and
    (C) Commensurate to the services that the individual would 
otherwise receive from the designated State vocational rehabilitation 
agency.
    (ii) For the purposes of this definition, comparable benefits do 
not include awards and scholarships based on merit.

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

    (11) 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: Sections 7(11) and 12(c) of the Act; 29 U.S.C. 
705(11) and 709(c))

    (12) 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 construction of new buildings;
    (iii) The acquisition of existing buildings;
    (iv) The expansion, remodeling, alteration, or renovation 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: Sections 7(6) and 12(c) of the Act; 29 U.S.C. 705(6) and 
709(c))

    (13) Designated State agency or State agency means the sole State 
agency, designated in accordance with Sec. 361.13(a), to administer, or 
supervise the 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: Sections 7(8)(A) and 101(a)(2)(A) of the Act; 29 U.S.C. 
705(8)(A) and 721(a)(2)(A))

    (14) Designated State unit or State unit means either--
    (i) The State 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: Sections 7(8)(B) and 101(a)(2)(B) of the Act; 29 U.S.C. 
705(8)(B) and 721(a)(2)(B))

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

(Authority: Sections 7(20)(A) and 102(a)(1) of the Act; 29 U.S.C. 
705(20)(A) and 722(a)(1))

    (16) 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, including self-employment, telecommuting, or business 
ownership, that is consistent with an individual's strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice.

(Authority: Sections 7(11), 12(c), 100(a)(2), and 102(b)(3)(A) of 
the Act; 29 U.S.C. 705(11), 709(c), 720(a)(2), and 722(b)(3)(A))

    (17) 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)(18) 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 4 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: Sections 7(12) and 12(c) of the Act; 29 U.S.C. 705(12) 
and 709(c))

    (18) 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

[[Page 10636]]

connection with the acquisition, if the building has been completed in 
all respects for at least 1 year prior to the date of acquisition and 
the Federal share of the cost of 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: Sections 7(12) and 12(c) of the Act; 29 U.S.C. 705(12) 
and 709(c))

    (19) Extended employment means work in a non-integrated or 
sheltered setting for a public or private nonprofit 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: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (20) Extended services means ongoing support services and other 
appropriate services that are needed to support and maintain an 
individual with a most significant 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 and 34 CFR part 363 after an 
individual with a most significant disability has made the transition 
from support provided by the designated State unit.

(Authority: Sections 7(13) and 623 of the Act; 29 U.S.C. 705(13) and 
795i)

    (21) 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: Sections 12(c) and 101(a)(8)(A)(i)(III) of the Act; 29 
U.S.C. 709(c) and 721(a)(8)(A)(i)(III))

    (22) Fair hearing board means a committee, body, or group of 
persons established by a State prior to January 1, 1985 that--
    (i) Is authorized under State law to review determinations made by 
personnel of the designated State unit that affect the provision of 
vocational rehabilitation services; and
    (ii) Carries out the responsibilities of the impartial hearing 
officer in accordance with the requirements in Sec. 361.57(i).

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (23) Family member, for purposes of receiving vocational 
rehabilitation services in accordance with Sec. 361.48(i), 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: Sections 12(c) and 103(a)(17) of the Act; 29 U.S.C. 
709(c) and 723(a)(17))

    (24) Governor means a chief executive officer of a State.

Authority: Section 7(15) of the Act; 29 U.S.C. 705(15))

    (25) 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 Council for the 
designated State unit;
    (C) Has not been involved previously in 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 is not 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: Section 7(16) of the Act; 29 U.S.C. 705(16))

    (26) 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: Section 7(19)(B) of the Act; 29 U.S.C. 705(19)(B))

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

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (28) Individual with a disability, except as provided in 
Sec. 361.5(b)(29), 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: Section 7(20)(A) of the Act; 29 U.S.C. 705(20)(A))

    (29) Individual with a disability, for purposes of 
Secs. 361.5(b)(14), 361.13(a), 361.13(b)(1), 361.17(a), (b), (c), and 
(j), 361.18(b), 361.19, 361.20, 361.23(b)(2), 361.29(a) and (d)(5), and 
361.51(b), 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: Section 7(20)(B) of the Act; 29 U.S.C. 705(20)(B))

    (30) Individual with a most significant disability means an 
individual with a significant disability who meets the designated State 
unit's criteria for an individual with a most significant disability. 
These criteria must be consistent with the requirements in 
Sec. 361.36(d)(1) and (2).


[[Page 10637]]


(Authority: Sections 7(21)(E)(i) and 101(a)(5)(C) of the Act; 29 
U.S.C. 705(21)(E)(i) and 721(a)(5)(C))

    (31) Individual with a significant 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: Section 7(21)(A) of the Act; 29 U.S.C. 705(21)(A))

    (32) Individual's representative means any representative chosen by 
an applicant or eligible individual, as appropriate, 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: Sections 7(22) and 12(c) of the Act; 29 U.S.C. 705(22) 
and 709(c))

    (33) 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;
    (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: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (34) Local workforce investment board means a local workforce 
investment board established under section 117 of the Workforce 
Investment Act of 1998.

(Authority: Section 7(25) of the Act; 29 U.S.C. 705(25))

    (35) Maintenance means monetary support provided to an individual 
for 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 an assessment for determining 
eligibility and vocational rehabilitation needs or the individual's 
receipt of vocational rehabilitation services under an individualized 
plan for employment.

(Authority: Sections 12(c) and 103(a)(7) of the Act; 29 U.S.C. 
709(c) and 723(a)(7))

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

Example 1:

    The cost of a uniform or other suitable clothing that is 
required for an individual's job placement or job-seeking 
activities.

Example 2:

    The cost of short-term shelter that is required in order for an 
individual to participate in assessment activities or vocational 
training at a site that is not within commuting distance of an 
individual's home.

Example 3:

    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 4:

    The costs of an individual's participation in enrichment 
activities related to that individual's training program.

    (36) 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 1986.

(Authority: Section 7(26) of the Act; 29 U.S.C. 705(26))

    (37) 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 
significant disability in supported employment;
    (B) Identified based on a determination by the designated State 
unit of the individual's need as specified in an individualized plan 
for employment; 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 specific circumstances, especially at the request of 
the individual, the individualized plan for employment 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 paragraph 
(b)(6)(ii) of this section;
    (B) The provision of skilled job trainers who accompany the 
individual for intensive job skill training at the work site;
    (C) Job development and training;
    (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: Sections 7(27) and 12(c) of the Act; 29 U.S.C. 705(27) 
and 709(c))


[[Page 10638]]


    (38) 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: Sections 7(28), 102(b)(3)(B)(i)(I), and 103(a)(9) of the 
Act; 29 U.S.C. 705(28), 722(b)(3)(B)(i)(I), and 723(a)(9))

    (39) 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 and orthotic devices;
    (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.

(Authority: Sections 12(c) and 103(a)(6) of the Act; 29 U.S.C. 
709(c) and 723(a)(6))

    (40) Physical or mental impairment means--
    (i) Any physiological disorder or condition, cosmetic 
disfigurement, or anatomical loss affecting one or more of the 
following body systems: neurological, musculo-skeletal, special sense 
organs, respiratory (including speech organs), cardiovascular, 
reproductive, digestive, genitourinary, hemic and lymphatic, skin, and 
endocrine; or
    (ii) Any mental or psychological disorder such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities.

(Authority: Sections 7(20)(A) and 12(c) of the Act; 29 U.S.C. 
705(20)(A) and 709(c))

    (41) 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, interests, and informed choice.

(Authority: Sections 12(c) and 103(a)(18) of the Act; 29 U.S.C. 
709(c)) and 723(a)(18))


    Note: Post-employment services are intended to ensure that the 
employment outcome remains consistent with the individual's 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice. 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 plan for 
employment; 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, 
interests, and informed choice.


    (42) Qualified and impartial mediator.
    (i) Qualified and impartial mediator 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 Council for the 
designated State unit;
    (C) Has not been involved previously in the vocational 
rehabilitation of the applicant or eligible individual;
    (D) Is knowledgeable of the vocational rehabilitation program and 
the applicable Federal and State laws, regulations, and policies 
governing the provision of vocational rehabilitation services;
    (E) Has been trained in effective mediation techniques consistent 
with any State-approved or -recognized certification, licensing, 
registration, or other requirements; and
    (F) Has no personal, professional, or financial interest that would 
be in conflict with the objectivity of the individual during the 
mediation proceedings.
    (ii) An individual serving as a mediator is not considered to be an 
employee of the designated State agency or designated State unit for 
the purposes of this definition solely because the individual is paid 
by the designated State agency or designated State unit to serve as a 
mediator.

(Authority: Sections 12(c) and 102(c)(4) of the Act; 29 U.S.C. 
709(c) and 722(c)(4))

    (43) 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: Section 7(30) of the Act; 29 U.S.C. 705(30))

    (44) 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: Section 121(c) of the Act; 29 U.S.C. 741(c))


[[Page 10639]]


    (45) 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: Section 7(24) of the Act; 29 U.S.C. 705(24))

    (46) 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: Section 7(32) of the Act; 29 U.S.C. 705(32))

    (47) State workforce investment board means a State workforce 
investment board established under section 111 of the Workforce 
Investment Act of 1998.

(Authority: Section 7(33) of the Act; 29 U.S.C. 705(33))

    (48) Statewide workforce investment system means a system described 
in section 111(d)(2) of the Workforce Investment Act of 1998.

(Authority: Section 7(34) of the Act; 29 U.S.C. 705(34))

    (49) State plan means the State plan for vocational rehabilitation 
services submitted under Sec. 361.10.

(Authority: Sections 12(c) and 101 of the Act; 29 U.S.C. 709(c) and 
721)

    (50) 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: Sections 7(20)(A) and 12(c) of the Act; 29 U.S.C. 
705(20)(A) and 709(c))

    (51) Supported employment means--
    (i) Competitive employment in an integrated setting, or employment 
in integrated work settings in which individuals are working toward 
competitive employment, consistent with the strengths, resources, 
priorities, concerns, abilities, capabilities, interests, and informed 
choice of the individuals with ongoing support services for individuals 
with the most significant 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 significant 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 as described in paragraph 
(b)(20) of this section to perform this work; or
    (ii) Transitional employment, as defined in paragraph (b)(54) of 
this section, for individuals with the most significant disabilities 
due to mental illness.

(Authority: Section 7(35) of the Act; 29 U.S.C. 705(35))

    (52) Supported employment services means ongoing support services 
and other appropriate services needed to support and maintain an 
individual with a most significant 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 to achieve 
the employment outcome identified in the individualized plan for 
employment; 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: Sections 7(36) and 12(c) of the Act; 29 U.S.C. 705(36) 
and 709(c))

    (53) 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 promote or facilitate the 
achievement of the employment outcome identified in the student's 
individualized plan for employment.

(Authority: Section 7(37) and 103(a)(15) of the Act; 29 U.S.C. 
705(37) and 723(a)(15))

    (54) 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 significant 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: Sections 7(35)(B) and 12(c) of the Act; 29 U.S.C. 
705(35)(B) and 709(c))

    (55) Transportation means travel and related expenses that are 
necessary to enable an applicant or eligible individual to participate 
in a vocational rehabilitation service, including expenses for training 
in the use of public transportation vehicles and systems.

(Authority: 103(a)(8) of the Act; 29 U.S.C. 723(a)(8))

    Examples: 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 judgment.

Example 1:

    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 2:

    The purchase and repair of vehicles, including vans, but not the 
modification of these vehicles, as modification would be considered 
a rehabilitation technology service.

Example 3:

    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.

    (56) 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: Sections 7(38) and 103(a) and (b) of the Act; 29 U.S.C. 
705(38), 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. For a State to receive a grant under this part, the 
designated State agency must submit to the Secretary, and obtain 
approval of, a State plan that contains a description of

[[Page 10640]]

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 the vocational 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 vocational 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) State unified plan. The State may choose to submit the State 
plan for vocational rehabilitation services as part of the State 
unified plan under section 501 of the Workforce Investment Act of 1998. 
The portion of the State unified plan that includes the State plan for 
vocational rehabilitation services must meet the State plan 
requirements in this part.
    (d) Public participation. Prior to the adoption of any substantive 
policies or procedures governing the provision of vocational 
rehabilitation services under the State plan, including making any 
substantive amendment to those policies and procedures, the designated 
State agency must conduct public meetings throughout the State, in 
accordance with the requirements of Sec. 361.20.
    (e) Duration. The State plan remains in effect subject to the 
submission of modifications the State determines to be necessary or the 
Secretary may require based on a change in State policy, a change in 
Federal law, including regulations, an interpretation of the Act by a 
Federal court or the highest court of the State, or a finding by the 
Secretary of State noncompliance with the requirements of the Act or 
this part.
    (f) Submission of the State plan. The State must submit the State 
plan for approval--
    (1) To the Secretary on the same date that the State submits a 
State plan relating to the statewide workforce investment system under 
section 112 of the Workforce Investment Act of 1998;
    (2) As part of the State unified plan submitted under section 501 
of that Act; or
    (3) To the Secretary on the same date that the State submits a 
State unified plan under section 501 of that Act that does not include 
the State plan under this part.
    (g) Annual submission. (1) The State must submit to the Secretary 
for approval revisions to the State plan in accordance with paragraph 
(e) of this section and 34 CFR 76.140.
    (2) The State must submit to the Secretary reports containing 
annual updates of the information required under Secs. 361.18, 361.29, 
and 361.35 and any other updates of the information required under this 
part that are requested by the Secretary.
    (3) The State is not required to submit policies, procedures, or 
descriptions required under this part that have been previously 
submitted to the Secretary and that demonstrate that the State meets 
the requirements of this part, including any policies, procedures, or 
descriptions submitted under this part that are in effect on August 6, 
1998.
    (h) Approval. The Secretary approves any State plan and any 
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 any 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 any 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. (Authority: 
Sections 101(a) and (b), and 107(d) of the Act; 20 U.S.C. 1231g(a); and 
29 U.S.C. 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 section 111 or 622(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
    (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 
(b)(2) 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: Sections 101(b), 107(c), and 107(d) of the Act; 29 
U.S.C. 721(b), 727(c)(1) and (2), and 727(d))

[[Page 10641]]

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: Sections 101(a)(6) and (a)(10)(A) of the Act; 29 U.S.C. 
721(a)(6) and (a)(10)(A))


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 is primarily concerned with vocational 
rehabilitation or vocational and other rehabilitation of individuals 
with disabilities; or
    (ii) A State agency that includes a vocational rehabilitation unit 
as provided in paragraph (b) of this section.
    (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 not of the type specified in 
paragraph (a)(1)(i) 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;
    (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.
    (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) 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 to close the record of services of an 
individual who has achieved an employment outcome in accordance with 
Sec. 361.56.
    (iii) Policy formulation and implementation.
    (iv) The allocation and expenditure of vocational rehabilitation 
funds.
    (v) Participation as a partner in the One-Stop service delivery 
system under Title I of the Workforce Investment Act of 1998, in 
accordance with 20 CFR part 662.
    (2) The responsibility for the functions described in paragraph 
(c)(1) of this section may not be delegated to any other agency or 
individual.

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


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 must 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.

(Authority: Section 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 the administration of the plan 
by a local agency, the designated State agency must--
    (1) Ensure 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)(45) that is responsible for the administration of the 
program within the political subdivision that it serves; and
    (2) Develop methods that 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.

(Authority: Sections 7(24) and 101(a)(2)(A) of the Act; 29 U.S.C. 
705(24) and 721(a)(2)(A))


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

    (a) General requirement. Except as provided in paragraph (b) of 
this section, the State plan must contain one of the following two 
assurances:

[[Page 10642]]

    (1) An assurance that the designated State agency is an independent 
State commission that--
    (i) Is responsible under State law for operating, or overseeing the 
operation of, the vocational rehabilitation program in the State and 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 family members, advocates, or other representatives 
of individuals with mental impairments; and
    (iv) Conducts the functions identified in Sec. 361.17(h)(4).
    (2) An assurance that--
    (i) The State has established a State Rehabilitation Council 
(Council) that meets the requirements of Sec. 361.17;
    (ii) The designated State unit, in accordance with Sec. 361.29, 
jointly develops, agrees to, and reviews annually State goals and 
priorities and jointly submits to the Secretary annual reports of 
progress with the Council;
    (iii) The designated State unit regularly consults with the Council 
regarding the development, implementation, and revision of State 
policies and procedures of general applicability pertaining to the 
provision of vocational rehabilitation services;
    (iv) The designated State unit transmits to the Council--
    (A) All plans, reports, and other information required under this 
part to be submitted to the Secretary;
    (B) All policies and information on all practices and procedures of 
general applicability provided to or used by rehabilitation personnel 
providing vocational rehabilitation services under this part; and
    (C) Copies of due process hearing decisions issued under this part 
and transmitted in a manner to ensure that the identity of the 
participants in the hearings is kept confidential; and
    (v) The State plan, and any revision to the State plan, includes a 
summary of input provided by the Council, including recommendations 
from the annual report of the Council, the review and analysis of 
consumer satisfaction described in Sec. 361.17(h)(4), and other reports 
prepared by the Council, and the designated State unit's response to 
the input and recommendations, including explanations of reasons for 
rejecting any input or recommendation of the Council.
    (b) Exception for separate State agency for individuals who are 
blind. In the case 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 must either establish a separate State 
Rehabilitation Council for each agency that does not meet the 
requirements in paragraph (a)(1) of this section or establish one State 
Rehabilitation Council for both agencies if neither agency meets the 
requirements of paragraph (a)(1) of this section.

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


Sec. 361.17  Requirements for a State Rehabilitation Council.

    If the State has established a Council under Sec. 361.16(a)(2) or 
(b), the Council must meet the following requirements:
    (a) Appointment. (1) The members of the Council must be appointed 
by the Governor or, in the case of a State that, under State law, vests 
authority for the administration of the activities carried out under 
this part in an entity other than the Governor (such as one or more 
houses of the State legislature or an independent board), the chief 
officer of that entity.
    (2) The appointing authority must 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. In selecting 
members, the appointing authority must consider, to the greatest extent 
practicable, the extent to which minority populations are represented 
on the Council.
    (b) Composition.--(1) General. Except as provided in paragraph 
(b)(3) of this section, the Council must be composed of at least 15 
members, including--
    (i) At least one representative of the Statewide Independent Living 
Council, who must be the chairperson or other designee of the Statewide 
Independent Living Council;
    (ii) At least one representative of a parent training and 
information center established pursuant to section 682(a) of the 
Individuals with Disabilities Education Act;
    (iii) At least one representative of the Client Assistance Program 
established under 34 CFR part 370, who must be the director of or other 
individual recommended by the Client Assistance Program;
    (iv) At least one qualified vocational rehabilitation counselor 
with knowledge of and experience with vocational rehabilitation 
programs who serves as an ex officio, nonvoting member of the Council 
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) Representatives of individuals with disabilities who have 
difficulty representing themselves or are unable due to their 
disabilities to represent themselves;
    (viii) Current or former applicants for, or recipients of, 
vocational rehabilitation services;
    (ix) In a State in which one or more projects are carried out under 
section 121 of the Act (American Indian Vocational Rehabilitation 
Services), at least one representative of the directors of the 
projects;
    (x) At least one representative of the State educational agency 
responsible for the public education of students with disabilities who 
are eligible to receive services under this part and part B of the 
Individuals with Disabilities Education Act;
    (xi) At least one representative of the State workforce investment 
board; and
    (xii) The director of the designated State unit as an ex officio, 
nonvoting member of the Council.
    (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 
must--
    (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 representative of an individual who is blind, has 
multiple disabilities, and has difficulty

[[Page 10643]]

representing himself or herself or is unable due to disabilities to 
represent himself or herself.
    (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 15 members, the separate Council is 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 must be individuals 
with disabilities who meet the requirements of Sec. 361.5(b)(29) and 
are not employed by the designated State unit.
    (d) Chairperson. The chairperson must 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) In States in which the Governor does not have veto power 
pursuant to State law, the appointing authority described in paragraph 
(a)(1) of this section must designate a member of the Council to serve 
as the chairperson of the Council or must require the Council to 
designate a member to serve as chairperson.
    (e) Terms of appointment.--(1) Each member of the Council must be 
appointed for a term of no more than 3 years, and each member of the 
Council, other than a representative identified in paragraph 
(b)(1)(iii) or (ix) of this section, 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 must be appointed 
for the remainder of the predecessor's term.
    (3) The terms of service of the members initially appointed must 
be, as specified by the appointing authority as described in paragraph 
(a)(1) of this section, 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, except the 
appointing authority as described in paragraph (a)(1) of this section 
may delegate the authority to fill that vacancy to the remaining 
members of the Council after making 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 must, after consulting with the State 
workforce investment board--
    (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 in 
achieving employment outcomes under this part;
    (2) In partnership with the designated State unit--
    (i) Develop, agree to, and review State goals and priorities in 
accordance with Sec. 361.29(c); and
    (ii) Evaluate the effectiveness of the vocational rehabilitation 
program and submit reports of progress to the Secretary in accordance 
with Sec. 361.29(e);
    (3) Advise the designated State agency and the designated State 
unit regarding activities carried out under this part and assist in the 
preparation of the State plan and amendments to the plan, applications, 
reports, needs assessments, and evaluations required by this part;
    (4) To the extent feasible, conduct a review and analysis of the 
effectiveness of, and consumer satisfaction with--
    (i) The functions performed by the designated State agency;
    (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 under the Act; and
    (iii) The employment outcomes achieved by eligible individuals 
receiving services under this part, including the availability of 
health and other employment benefits in connection with those 
employment outcomes;
    (5) Prepare and submit to the Governor 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;
    (6) To avoid duplication of efforts and enhance the number of 
individuals served, coordinate activities with the activities of other 
councils within the State, including the Statewide Independent Living 
Council established under 34 CFR part 364, the advisory panel 
established under section 612(a)(21) of the Individuals with 
Disabilities Education Act, the State Developmental Disabilities 
Planning Council described in section 124 of the Developmental 
Disabilities Assistance and Bill of Rights Act, the State mental health 
planning council established under section 1914(a) of the Public Health 
Service Act, and the State workforce investment board;
    (7) 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
    (8) Perform other comparable functions, consistent with the purpose 
of this part, as the Council determines to be appropriate, that are 
comparable to the other functions performed by the Council.
    (i) Resources. (1) The Council, in conjunction with the designated 
State unit, must prepare a plan for the provision of resources, 
including staff and other personnel, that may be necessary and 
sufficient for the Council to carry out its functions under this part.
    (2) The resource plan must, to the maximum extent possible, rely on 
the use of resources in existence during the period of implementation 
of the plan.
    (3) Any disagreements between the designated State unit and the 
Council regarding the amount of resources necessary to carry out the 
functions of the Council must be resolved by the Governor, consistent 
with paragraphs (i)(1) and (2) of this section.
    (4) The Council must, 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 must--
    (1) Convene at least four meetings a year in locations determined 
by the Council to be necessary to conduct Council business. The 
meetings must be publicly announced, open, and accessible to the 
general 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.

[[Page 10644]]

    (k) Compensation. Funds appropriated under Title I of the Act, 
except funds to carry out sections 112 and 121 of the Act, may be used 
to compensate and reimburse the expenses of Council members in 
accordance with section 105(g) of the Act.

(Authority: Section 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 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) 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 5 years based on 
projections of the number of individuals to be served, including 
individuals with significant 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 all 
professional and paraprofessional personnel needed within the 
designated 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 
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. The steps taken by the State unit under 
this paragraph must be described in a written plan that includes--
    (A) Specific strategies for retraining, recruiting, and hiring 
personnel;
    (B) The specific time period by which all State unit personnel will 
meet the standards described in paragraph (c)(1)(i) of this section;
    (C) Procedures for evaluating the State unit's progress in hiring 
or retraining personnel to meet applicable personnel standards within 
the time period established under paragraph (c)(1)(ii)(B) of this 
section; and
    (D) In instances in which the State unit is unable to immediately 
hire new personnel who meet the requirements in paragraph (c)(1)(i) of 
this section, the initial minimum qualifications that the designated 
State unit will require of newly hired personnel and a plan for 
training those individuals to meet applicable requirements within the 
time period established under paragraph (c)(1)(ii)(B) of this section.
    (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, in the absence of these requirements, 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 unit; 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 assessment, vocational counseling, job placement, and rehabilitation 
technology; and

[[Page 10645]]

    (ii) Procedures for acquiring and disseminating to rehabilitation 
professionals and paraprofessionals within the designated State unit 
significant knowledge from research and other sources.
    (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--
    (i) Training regarding the Workforce Investment Act of 1998 and the 
amendments to the Rehabilitation Act of 1973 made by the Rehabilitation 
Act Amendments of 1998;
    (ii) Training with respect to the requirements of the Americans 
with Disabilities Act, the Individuals with Disabilities Education Act, 
and Social Security work incentive programs, including programs under 
the Ticket to Work and Work Incentives Improvement Act of 1999, 
training to facilitate informed choice under this program, and training 
to improve the provision of services to culturally diverse populations; 
and
    (iii) Activities related to--
    (A) Recruitment and retention of qualified rehabilitation 
personnel;
    (B) Succession planning; and
    (C) Leadership development and capacity building.
    (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) Coordination with personnel development under the Individuals 
with Disabilities Education Act. 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 the Individuals with Disabilities Education 
Act.

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


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 covered under and on the same terms and conditions as 
stated in section 503 of the Act.

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


Sec. 361.20  Public participation requirements.

    (a) Conduct of public meetings. The State plan must assure that 
prior to the adoption of any substantive policies or procedures 
governing the provision of vocational rehabilitation services under the 
State plan, including making any substantive amendments to the policies 
and procedures, the designated State agency conducts public meetings 
throughout the State to provide the public, including individuals with 
disabilities, an opportunity to comment on the policies or procedures.
    (b) Notice requirements. The State plan must assure that the 
designated State agency, prior to conducting the public meetings, 
provides appropriate and sufficient notice throughout the State of the 
meetings in accordance with--
    (1) State law governing public meetings; or
    (2) In the absence of State law governing public meetings, 
procedures developed by the designated State agency in consultation 
with the State Rehabilitation Council.
    (c) Summary of input of the State Rehabilitation Council. The State 
plan must provide a summary of the input of the State Rehabilitation 
Council, if the State agency has a Council, into the State plan and any 
amendment to the plan, in accordance with Sec. 361.16(a)(2)(v).
    (d) Special consultation requirements. The State plan must assure 
that the State agency actively consults with the director of the Client 
Assistance Program, the State Rehabilitation Council, if the State 
agency has a Council, and, as appropriate, Indian tribes, tribal 
organizations, and native Hawaiian organizations on its policies and 
procedures governing the provision of vocational rehabilitation 
services under the State plan.
    (e) Appropriate modes of communication. The State unit must provide 
to the public, through appropriate modes of communication, notices of 
the public meetings, any materials furnished prior to or during the 
public meetings, and the policies and procedures governing the 
provision of vocational rehabilitation services under the State plan.

(Authority: Sections 101(a)(16)(A) and 105(c)(3) of the Act; 29 
U.S.C. 721(a)(16)(A), and 725(c)(3))


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

    The State plan must assure that, in connection with matters of 
general policy arising in the administration of the State plan, the 
designated State agency takes into account the views of--
    (a) Individuals and groups of individuals who are recipients of 
vocational rehabilitation services or, as appropriate, the individuals' 
representatives;
    (b) Personnel working in programs that provide vocational 
rehabilitation services to individuals with disabilities;
    (c) Providers of vocational rehabilitation services to individuals 
with disabilities;
    (d) The director of the Client Assistance Program; and
    (e) The State Rehabilitation Council, if the State has a Council.

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


Sec. 361.22  Coordination with education officials.

    (a) Plans, policies, and procedures. The State plan must contain 
plans, policies, and procedures for coordination between the designated 
State agency and education officials responsible for the public 
education of students with disabilities that are designed to facilitate 
the transition of students with disabilities from the receipt of 
educational services in school to the receipt of vocational 
rehabilitation services under the responsibility of the designated 
State agency. These plans, policies, and procedures must provide for 
the development and completion of an individualized plan for employment 
in accordance with Sec. 361.45 before each student determined to be 
eligible for vocational rehabilitation services leaves the school 
setting or, if the designated State unit is operating under an order of 
selection, before each eligible student able to be served under the 
order leaves the school setting.
    (b) Formal interagency agreement. The State plan must include 
information on a formal interagency agreement with the State 
educational agency that, at a minimum, provides for--
    (1) Consultation and technical assistance to assist educational 
agencies in planning for the transition of students with disabilities 
from school to post-school activities, including vocational 
rehabilitation services;
    (2) Transition planning by personnel of the designated State agency 
and educational agency personnel for students with disabilities that 
facilitates the development and completion of

[[Page 10646]]

their individualized education programs (IEPs) under section 614(d) of 
the Individuals with Disabilities Education Act;
    (3) The roles and responsibilities, including financial 
responsibilities, of each agency, including provisions for determining 
State lead agencies and qualified personnel responsible for transition 
services; and
    (4) Procedures for outreach to and identification of students with 
disabilities who are in need of transition services.

(Authority: Section 101(a)(11)(D) of the Act; 29 U.S.C. 721 
(a)(11)(D)).


Sec. 361.23  Requirements related to the statewide workforce investment 
system.

    (a) Responsibilities as a partner of the One-Stop service delivery 
system. As a required partner in the One-Stop service delivery system 
(which is part of the statewide workforce investment system under Title 
I of the Workforce Investment Act of 1998), the designated State unit 
must carry out the following functions consistent with the Act, this 
part, Title I of the Workforce Investment Act of 1998, and the 
regulations in 20 CFR part 662:
    (1) Make available to participants through the One-Stop service 
delivery system the core services (as described in 20 CFR 662.240) that 
are applicable to the Program administered by the designated State unit 
under this part.
    (2) Use a portion of funds made available to the Program 
administered by the designated State unit under this part, consistent 
with the Act and this part, to--
    (i) Create and maintain the One-Stop service delivery system; and
    (ii) Provide core services (as described in 20 CFR 662.240).
    (3) Enter into a memorandum of understanding (MOU) with the Local 
Workforce Investment Board under section 117 of the Workforce 
Investment Act of 1998 relating to the operation of the One-Stop 
service delivery system that meets the requirements of section 121(c) 
of the Workforce Investment Act and 20 CFR 662.300, including a 
description of services, how the cost of the identified services and 
operating costs of the system will be funded, and methods for 
referrals.
    (4) Participate in the operation of the One-Stop service delivery 
system consistent with the terms of the MOU and the requirements of the 
Act and this part.
    (5) Serve as a representative on the Local Workforce Investment 
Board under section 117 of the Workforce Investment Act of 1998.
    (b) Cooperative agreements with One-Stop partners. (1) The State 
plan must assure that the designated State unit or the designated State 
agency enters into cooperative agreements with the other entities that 
are partners under the One-Stop service delivery system under Title I 
of the Workforce Investment Act of 1998 and replicates those agreements 
at the local level between individual offices of the designated State 
unit and local entities carrying out the One-Stop service delivery 
system or other activities through the statewide workforce investment 
system.
    (2) Cooperative agreements developed under paragraph (b)(1) of this 
section may provide for--
    (i) Intercomponent training and technical assistance regarding--
    (A) The availability and benefits of, and information on 
eligibility standards for, vocational rehabilitation services; and
    (B) The promotion of equal, effective and meaningful participation 
by individuals with disabilities in the One-Stop service delivery 
system and other workforce investment activities through the promotion 
of program accessibility consistent with the requirements of the 
Americans with Disabilities Act of 1990 and section 504 of the Act, the 
use of nondiscriminatory policies and procedures, and the provision of 
reasonable accommodations, auxiliary aids and services, and 
rehabilitation technology for individuals with disabilities;
    (ii) The use of information and financial management systems that 
link all of the partners of the One-Stop service delivery system to one 
another and to other electronic networks, including nonvisual 
electronic networks, and that relate to subjects such as employment 
statistics, job vacancies, career planning, and workforce investment 
activities;
    (iii) The use of customer service features such as common intake 
and referral procedures, customer databases, resource information, and 
human services hotlines;
    (iv) The establishment of cooperative efforts with employers to 
facilitate job placement and carry out other activities that the 
designated State unit and the employers determine to be appropriate;
    (v) The identification of staff roles, responsibilities, and 
available resources and specification of the financial responsibility 
of each partner of the One-Stop service delivery system with respect to 
providing and paying for necessary services, consistent with the 
requirements of the Act, this part, other Federal requirements, and 
State law; and
    (vi) The specification of procedures for resolving disputes among 
partners of the One-Stop service delivery system.

(Authority: Section 101(a)(11)(A) of the Act; 29 U.S.C. 
721(a)(11)(A); Sections 121 and 134 of the Workforce Investment Act 
of 1998; 29 U.S.C. 2841 and 2864)


Sec. 361.24  Cooperation and coordination with other entities

    (a) Interagency cooperation. The State plan must describe the 
designated State agency's cooperation with and use of the services and 
facilities of Federal, State, and local agencies and programs, 
including programs carried out by the Under Secretary for Rural 
Development of the Department of Agriculture and State use contracting 
programs, to the extent that those agencies and programs are not 
carrying out activities through the statewide workforce investment 
system.
    (b) Coordination with the Statewide Independent Living Council and 
independent living centers. The State plan must assure that the 
designated State unit, the Statewide Independent Living Council 
established under 34 CFR part 364, and the independent living centers 
established under 34 CFR part 366 have developed working relationships 
and coordinate their activities.
    (c) Cooperative agreement with recipients of grants for services to 
American Indians.
    (1) General. In applicable cases, the State plan must assure that 
the designated State agency has entered into a formal cooperative 
agreement with each grant recipient in the State that receives funds 
under part C of the Act (American Indian Vocational Rehabilitation 
Services).
    (2) Contents of formal cooperative agreement. The agreement 
required under paragraph (a)(1) of this section must describe 
strategies for collaboration and coordination in providing vocational 
rehabilitation services to American Indians who are individuals with 
disabilities, including--
    (i) Strategies for interagency referral and information sharing 
that will assist in eligibility determinations and the development of 
individualized plans for employment;
    (ii) Procedures for ensuring that American Indians who are 
individuals with disabilities and are living near a reservation or 
tribal service area are provided vocational rehabilitation services; 
and
    (iii) Provisions for sharing resources in cooperative studies and 
assessments, joint training activities, and other collaborative 
activities designed to

[[Page 10647]]

improve the provision of services to American Indians who are 
individuals with disabilities.
    (d) Reciprocal referral services between two designated State units 
in the same State. If there is a separate designated State unit for 
individuals who are blind, the two designated State units must 
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: Sections 12(c) and 101(a)(11) (C), (E), and (F) of the 
Act; 29 U.S.C. 709(c) and 721(a)(11) (C), (E), and (F))


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) For purposes other than those specified in Sec. 361.60(b)(3)(i) 
and consistent with the requirements in Sec. 361.60(b)(3)(ii), the 
State includes in its State plan, and the Secretary approves, 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.

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


Sec. 361.27  Shared funding and administration of joint programs.

    (a) The designated State agency may share funding and 
administrative responsibility with another State agency or local public 
agency to carry out a joint program to provide services to individuals 
with disabilities, if the State submits to the Secretary, and the 
Secretary approves, a plan describing its shared funding and 
administrative arrangement.
    (b) The plan under paragraph (a) of this section must include--
    (1) A description of the nature and scope of the joint program;
    (2) The services to be provided under the joint program;
    (3) The respective roles of each participating agency in the 
administration and provision of services; and
    (4) The share of the costs to be assumed by each agency.
    (c) If a proposed joint program does not comply with the 
statewideness requirement in Sec. 361.25, the State unit must obtain a 
waiver of statewideness, in accordance with Sec. 361.26.

(Authority: Section 101(a)(2)(A) of the Act; 29 U.S.C. 721(a)(2)(A))


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

    (a) The designated State unit may enter 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, if the 
designated State unit ensures 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 must obtain a 
waiver of statewideness, in accordance with Sec. 361.26.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))


Sec. 361.29  Statewide assessment; annual estimates; annual State goals 
and priorities; strategies; and progress reports.

    (a) Comprehensive statewide assessment. (1) The State plan must 
include--
    (i) The results of a comprehensive, statewide assessment, jointly 
conducted by the designated State unit and the State Rehabilitation 
Council (if the State unit has a Council) every 3 years describing the 
rehabilitation needs of individuals with disabilities residing within 
the State, particularly the vocational rehabilitation services needs 
of--
    (A) Individuals with the most significant disabilities, including 
their need for supported employment services;
    (B) Individuals with disabilities who are minorities and 
individuals with disabilities who have been unserved or underserved by 
the vocational rehabilitation program carried out under this part; and
    (C) Individuals with disabilities served through other components 
of the statewide workforce investment system as identified by those 
individuals and personnel assisting those individuals through the 
components of the system; and
    (ii) An assessment of the need to establish, develop, or improve 
community rehabilitation programs within the State.
    (2) The State plan must assure that the State will submit to the 
Secretary a report containing information regarding updates to the 
assessments under paragraph (a) of this section for any year in which 
the State updates the assessments.
    (b) Annual estimates. The State plan must include, and must assure 
that the State will annually submit a report to the Secretary that 
includes, State estimates of--
    (1) The number of individuals in the State who are eligible for 
services under this part;

[[Page 10648]]

    (2) The number of eligible individuals who will receive services 
provided with funds provided under part B of Title I of the Act and 
under part B of Title VI of the Act, including, if the designated State 
agency uses an order of selection in accordance with Sec. 361.36, 
estimates of the number of individuals to be served under each priority 
category within the order; and
    (3) The costs of the services described in paragraph (b)(1) of this 
section, including, if the designated State agency uses an order of 
selection, the service costs for each priority category within the 
order.
    (c) Goals and priorities.--(1) In general. The State plan must 
identify the goals and priorities of the State in carrying out the 
program.
    (2) Council. The goals and priorities must be jointly developed, 
agreed to, reviewed annually, and, as necessary, revised by the 
designated State unit and the State Rehabilitation Council, if the 
State unit has a Council.
    (3) Submission. The State plan must assure that the State will 
submit to the Secretary a report containing information regarding 
revisions in the goals and priorities for any year in which the State 
revises the goals and priorities.
    (4) Basis for goals and priorities. The State goals and priorities 
must be based on an analysis of--
    (i) The comprehensive statewide assessment described in paragraph 
(a) of this section, including any updates to the assessment;
    (ii) The performance of the State on the standards and indicators 
established under section 106 of the Act; and
    (iii) Other available information on the operation and the 
effectiveness of the vocational rehabilitation program carried out in 
the State, including any reports received from the State Rehabilitation 
Council under Sec. 361.17(h) and the findings and recommendations from 
monitoring activities conducted under section 107 of the Act.
    (5) Service and outcome goals for categories in order of selection. 
If the designated State agency uses an order of selection in accordance 
with Sec. 361.36, the State plan must identify the State's service and 
outcome goals and the time within which these goals may be achieved for 
individuals in each priority category within the order.
    (d) Strategies.
    The State plan must describe the strategies the State will use to 
address the needs identified in the assessment conducted under 
paragraph (a) of this section and achieve the goals and priorities 
identified in paragraph (c) of this section, including--
    (1) The methods to be used to expand and improve services to 
individuals with disabilities, including how a broad range of assistive 
technology services and assistive technology devices will be provided 
to those individuals at each stage of the rehabilitation process and 
how those services and devices will be provided to individuals with 
disabilities on a statewide basis;
    (2) Outreach procedures to identify and serve individuals with 
disabilities who are minorities and individuals with disabilities who 
have been unserved or underserved by the vocational rehabilitation 
program;
    (3) As applicable, the plan of the State for establishing, 
developing, or improving community rehabilitation programs;
    (4) Strategies to improve the performance of the State with respect 
to the evaluation standards and performance indicators established 
pursuant to section 106 of the Act; and
    (5) Strategies for assisting other components of the statewide 
workforce investment system in assisting individuals with disabilities.
    (e) Evaluation and reports of progress. (1) The State plan must 
include--
    (i) The results of an evaluation of the effectiveness of the 
vocational rehabilitation program; and
    (ii) A joint report by the designated State unit and the State 
Rehabilitation Council, if the State unit has a Council, to the 
Secretary on the progress made in improving the effectiveness of the 
program from the previous year. This evaluation and joint report must 
include--
    (A) An evaluation of the extent to which the goals and priorities 
identified in paragraph (c) of this section were achieved;
    (B) A description of the strategies that contributed to the 
achievement of the goals and priorities;
    (C) To the extent to which the goals and priorities were not 
achieved, a description of the factors that impeded that achievement; 
and
    (D) An assessment of the performance of the State on the standards 
and indicators established pursuant to section 106 of the Act.
    (2) The State plan must assure that the designated State unit and 
the State Rehabilitation Council, if the State unit has a Council, will 
jointly submit to the Secretary an annual report that contains the 
information described in paragraph (e)(1) of this section.

(Authority: Section 101(a)(15) of the Act; 29 U.S.C. 721(a)(15))


Sec. 361.30  Services to American Indians.

    The State plan must assure that the designated State agency 
provides vocational rehabilitation services to American Indians who are 
individuals with disabilities residing in the State to the same extent 
as the designated State agency provides vocational rehabilitation 
services to other significant populations of individuals with 
disabilities residing in the State.

(Authority: Sections 101(a)(13) and 121(b)(3) of the Act; 29 U.S.C. 
721(a)(13) and 741(b)(3))


Sec. 361.31  Cooperative agreements with private nonprofit 
organizations.

    The State plan must describe the manner in which cooperative 
agreements with private nonprofit vocational rehabilitation service 
providers will be established.

(Authority: Sections 101(a)(24)(B); 29 U.S.C. 721(a)(24)(B))


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

    The State plan must assure that the designated State agency has the 
authority to enter into contracts with for-profit organizations for the 
purpose of providing, as vocational rehabilitation services, on-the-job 
training and related programs for individuals with disabilities under 
the Projects With Industry program, 34 CFR part 379, if the designated 
State agency has determined that for-profit agencies are better 
qualified to provide needed vocational rehabilitation services than 
nonprofit agencies and organizations.

(Authority: Section 101(a)(24)(A) of the Act; 29 U.S.C. 
721(a)(24)(A))


Sec. 361.33  [Reserved]


Sec. 361.34  Supported employment State plan supplement.

    (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 
submitted under this part.

(Authority: Sections 101(a)(22) and 625(a) of the Act; 29 U.S.C. 
721(a)(22) and 795(k))


Sec. 361.35  Innovation and expansion activities.

    (a) The State plan must assure that the State will reserve and use 
a portion of the funds allotted to the State under section 110 of the 
Act--
    (1) For the development and implementation of innovative

[[Page 10649]]

approaches to expand and improve the provision of vocational 
rehabilitation services to individuals with disabilities, particularly 
individuals with the most significant disabilities, consistent with the 
findings of the comprehensive, statewide assessment of the 
rehabilitation needs of individuals with disabilities under 
Sec. 361.29(a) and the State's goals and priorities under 
Sec. 361.29(c); and
    (2) To support the funding of--
    (i) The State Rehabilitation Council, if the State has a Council, 
consistent with the resource plan identified in Sec. 361.17(i); and
    (ii) The Statewide Independent Living Council, consistent with the 
plan prepared under 34 CFR 364.21(i).
    (b) The State plan must--
    (1) Describe how the reserved funds will be used; and
    (2) Include, on an annual basis, a report describing how the 
reserved funds were used during the preceding year.

(Authority: Section 101(a)(18) of the Act; 29 U.S.C. 721(a)(18))


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

    (a) General provisions. (1) The designated State unit either must 
be able to provide the full range of services listed in section 103(a) 
of the Act and Sec. 361.48, as appropriate, to all eligible individuals 
or, in the event that vocational rehabilitation services cannot be 
provided to all eligible individuals in the State who apply for the 
services, include in the State plan the order to be followed in 
selecting eligible individuals to be provided vocational rehabilitation 
services.
    (2) The ability of the designated State unit to provide the full 
range of vocational rehabilitation services to all eligible individuals 
must be supported by a determination that satisfies the requirements of 
paragraph (b) or (c) of this section and a determination that, on the 
basis of the designated State unit's projected fiscal and personnel 
resources and its assessment of the rehabilitation needs of individuals 
with significant disabilities within the State, it can--
    (i) Continue to provide services to all individuals currently 
receiving services;
    (ii) Provide assessment services to all individuals expected to 
apply for services in the next fiscal year;
    (iii) Provide services to all individuals who are expected to be 
determined eligible in the next fiscal year; and
    (iv) Meet all program requirements.
    (3) If the designated State unit is unable to provide the full 
range vocational rehabilitation services to all eligible individuals in 
the State who apply for the services, the State plan must--
    (i) Show the order to be followed in selecting eligible individuals 
to be provided vocational rehabilitation services;
    (ii) Provide a justification for the order of selection;
    (iii) Identify service and outcome goals and the time within which 
the goals may be achieved for individuals in each priority category 
within the order, as required under Sec. 361.29(c)(5); and
    (iv) Assure that--
    (A) In accordance with criteria established by the State for the 
order of selection, individuals with the most significant disabilities 
will be selected first for the provision of vocational rehabilitation 
services; and
    (B) Individuals who do not meet the order of selection criteria 
will have access to services provided through the information and 
referral system established under Sec. 361.37.
    (b) Basis for assurance that services can be provided to all 
eligible individuals.
    (1) For a designated State unit that determined, for the current 
fiscal year and the preceding fiscal year, that it is able to provide 
the full range of services, as appropriate, to all eligible 
individuals, the State unit, during the current fiscal and preceding 
fiscal year, must have 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 plans 
for employment for individuals determined eligible for vocational 
rehabilitation services, or the provision of services for eligible 
individuals for whom individualized plans for employment have been 
developed.
    (2) For a designated State unit that was unable to provide the full 
range of services to all eligible individuals during the current or 
preceding fiscal year or that has not met the requirements in paragraph 
(b)(1) of this section, the determination that the designated State 
unit is able to provide the full range of vocational rehabilitation 
services to all eligible individuals in the next fiscal year must be 
based on--
    (i) Circumstances that have changed that will allow the designated 
State unit to meet the requirements of paragraph (a)(2) of this section 
in the next fiscal year, including--
    (A) An estimate of the number of and projected costs of serving, in 
the next fiscal year, individuals with existing individualized plans 
for employment;
    (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 paragraphs 
(b)(2)(i)(A) through (C) of this section and the resources identified 
in paragraph (b)(2)(i)(D) of this section and an explanation of any 
projected increases or decreases in these costs and resources; and
    (iii) A determination 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 (b)(2)(i)(A) 
through (C) of this section to ensure the provision of the full range 
of services, as appropriate, to all eligible individuals.
    (c) Time for determining need for an order of selection.
    (1) The designated State unit must 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 must 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.
    (d) 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 significant 
disability'' in section 7(21)(A) of the Act and Sec. 361.5(b)(31).
    (2) Factors that cannot be used in determining order of selection 
of eligible

[[Page 10650]]

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, 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.
    (e) Administrative requirements. In administering the order of 
selection, the designated State unit must--
    (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 individualized 
plan for employment prior to the effective date of the order of 
selection, irrespective of the severity of the individual's disability; 
and
    (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 must renegotiate these funding 
arrangements so that they are consistent with the order of selection.
    (f) State Rehabilitation Council. The designated State unit must 
consult with the State Rehabilitation Council, if the State unit has a 
Council, regarding the--
    (1) Need to establish an order of selection, including any 
reevaluation of the need under paragraph (c)(2) of this section;
    (2) Priority categories of the particular order of selection;
    (3) Criteria for determining individuals with the most significant 
disabilities; and
    (4) Administration of the order of selection.

(Authority: Sections 12(d); 101(a)(5); 101(a)(12); 101(a)(15)(A), 
(B) and (C); 101(a)(21)(A)(ii); and 504(a) of the Act; 29 U.S.C. 
709(d), 721(a)(5), 721(a)(12), 721(a)(15)(A), (B) and (C); 
721(a)(21)(A)(ii), and 794(a))


Sec. 361.37  Information and referral services.

    (a) General provisions. The State plan must assure that--
    (1) The designated State agency will implement an information and 
referral system adequate to ensure that individuals with disabilities, 
including eligible individuals who do not meet the agency's order of 
selection criteria for receiving vocational rehabilitation services if 
the agency is operating on an order of selection, are provided accurate 
vocational rehabilitation information and guidance (which may include 
counseling and referral for job placement) using appropriate modes of 
communication to assist them in preparing for, securing, retaining, or 
regaining employment; and
    (2) The designated State agency will refer individuals with 
disabilities to other appropriate Federal and State programs, including 
other components of the statewide workforce investment system.
    (b) Criteria for appropriate referrals. In making the referrals 
identified in paragraph (a)(2) of this section, the designated State 
unit must--
    (1) Refer the individual to Federal or State programs, including 
programs carried out by other components of the statewide workforce 
investment system, best suited to address the specific employment needs 
of an individual with a disability; and
    (2) Provide the individual who is being referred--
    (i) A notice of the referral by the designated State agency to the 
agency carrying out the program;
    (ii) Information identifying a specific point of contact within the 
agency to which the individual is being referred; and
    (iii) Information and advice regarding the most suitable services 
to assist the individual to prepare for, secure, retain, or regain 
employment.
    (c) Order of selection. In providing the information and referral 
services under this section to eligible individuals who are not in the 
priority category or categories to receive vocational rehabilitation 
services under the State's order of selection, the State unit must 
identify, as part of its reporting under section 101(a)(10) of the Act 
and Sec. 361.40, the number of eligible individuals who did not meet 
the agency's order of selection criteria for receiving vocational 
rehabilitation services and did receive information and referral 
services under this section.

(Authority: Sections 101(a)(5)(D) and (20) and 101(a)(10)(C)(ii) of 
the Act; 29 U.S.C. 721(a)(5)(D) and (20) and (a)(10)(C)(ii))

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

    (a) General provisions. (1) The State agency and the State unit 
must adopt and implement written policies and procedures to safeguard 
the confidentiality of all personal information, including photographs 
and lists of names. These policies and procedures must ensure that--
    (i) Specific safeguards are established to 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's 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 must 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

[[Page 10651]]

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 must make all requested information in that 
individual's record of services accessible to and must 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, consistent with 
Sec. 361.47(a)(12).
    (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 must release personal information if required by 
Federal law or regulations.
    (4) The State unit must 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: Sections 12(c) and 101(a)(6)(A) of the Act; 29 U.S.C. 
709(c) and 721(a)(6)(A))


Sec. 361.39  State-imposed requirements.

    The designated State unit must, upon request, identify 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: Section 17 of the Act; 29 U.S.C. 714)


Sec. 361.40  Reports.

    (a) The State plan must assure that the designated State agency 
will submit reports, including reports required under sections 13, 14, 
and 101(a)(10) of the Act--
    (1) In the form and level of detail and at the time required by the 
Secretary regarding applicants for and eligible individuals receiving 
services under this part; and
    (2) In a manner that provides a complete count (other than the 
information obtained through sampling consistent with section 
101(a)(10)(E) of the Act) of the applicants and eligible individuals 
to--
    (i) Permit the greatest possible cross-classification of data; and
    (ii) Protect the confidentiality of the identity of each 
individual.
    (b) The designated State agency must comply with any requirements 
necessary to ensure the accuracy and verification of those reports.

(Authority: Section 101(a)(10)(A) and (F) of the Act; 29 U.S.C. 
721(a)(10)(A) and (F))

Provision and Scope of Services


Sec. 361.41  Processing referrals and applications.

    (a) Referrals. The designated State unit must establish and 
implement standards for the prompt and equitable handling of referrals 
of individuals for vocational rehabilitation services, including 
referrals of individuals made through the One-Stop service delivery 
systems established under section 121 of the Workforce Investment Act 
of 1998. 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) Once an individual has submitted an 
application for vocational rehabilitation services, including 
applications made through common intake procedures in One-Stop centers 
established under section 121 of the Workforce Investment Act of 1998, 
an eligibility determination must be made within 60 days, unless--
    (i) Exceptional and unforeseen circumstances beyond the control of 
the designated State unit preclude making an eligibility determination 
within 60 days and the designated State unit and the individual agree 
to a specific extension of time; or
    (ii) An exploration of the individual's abilities, capabilities, 
and capacity to perform in work situations is carried out in accordance 
with Sec. 361.42(e) or, if appropriate, an extended evaluation is

[[Page 10652]]

carried out in accordance with Sec. 361.42(f).
    (2) An individual is considered to have submitted an application 
when the individual or the individual's representative, as 
appropriate--
    (i)(A) Has completed and signed an agency application form;
    (B) Has completed a common intake application form in a One-Stop 
center requesting vocational rehabilitation services; or
    (C) Has otherwise requested services from the designated State 
unit;
    (ii) Has provided to the designated State unit 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 must ensure that its application 
forms are widely available throughout the State, particularly in the 
One-Stop centers established under section 121 of the Workforce 
Investment Act of 1998.

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


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

    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 must 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 
designated State unit's determination of an applicant's eligibility for 
vocational rehabilitation services must be based only on the following 
requirements:
    (i) A determination by qualified personnel that the applicant has a 
physical or mental impairment.
    (ii) A determination by qualified personnel that the applicant's 
physical or mental impairment constitutes or results in a substantial 
impediment to employment for the applicant.
    (iii) A determination by a qualified vocational rehabilitation 
counselor employed by the designated State unit that the applicant 
requires vocational rehabilitation services to prepare for, secure, 
retain, or regain employment consistent with the applicant's unique 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice.
    (iv) 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.
    (2) Presumption of benefit. The designated State unit must 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 benefiting in 
terms of an employment outcome from vocational rehabilitation services 
due to the severity of the applicant's disability.
    (3) Presumption of eligibility for Social Security recipients and 
beneficiaries.
    (i) Any applicant who has been determined eligible for Social 
Security benefits under Title II or Title XVI of the Social Security 
Act is--
    (A) Presumed eligible for vocational rehabilitation services under 
paragraphs (a)(1) and (2) of this section; and
    (B) Considered an individual with a significant disability as 
defined in Sec. 361.5(b)(31).
    (ii) If an applicant for vocational rehabilitation services asserts 
that he or she is eligible for Social Security benefits under Title II 
or Title XVI of the Social Security Act (and, therefore, is presumed 
eligible for vocational rehabilitation services under paragraph 
(a)(3)(i)(A) of this section), but is unable to provide appropriate 
evidence, such as an award letter, to support that assertion, the State 
unit must verify the applicant's eligibility under Title II or Title 
XVI of the Social Security Act by contacting the Social Security 
Administration. This verification must be made within a reasonable 
period of time that enables the State unit to determine the applicant's 
eligibility for vocational rehabilitation services within 60 days of 
the individual submitting an application for services in accordance 
with Sec. 361.41(b)(2).
    (4) Achievement of an employment outcome. Any eligible individual, 
including an individual whose eligibility for vocational rehabilitation 
services is based on the individual being eligible for Social Security 
benefits under Title II or Title XVI of the Social Security Act, must 
intend to achieve an employment outcome that is consistent with the 
applicant's unique strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and informed choice.
    (i) The State unit is responsible for informing individuals, 
through its application process for vocational rehabilitation services, 
that individuals who receive services under the program must intend to 
achieve an employment outcome.
    (ii) The applicant's completion of the application process for 
vocational rehabilitation services is sufficient evidence of the 
individual's intent to achieve an employment outcome, and no additional 
demonstration on the part of the applicant is required for purposes of 
satisfying paragraph (a)(4) of this section.
    (5) Interpretation. Nothing in this section, including paragraph 
(a)(3)(i), is to be construed to create an entitlement to any 
vocational rehabilitation service.
    (b) Interim determination of eligibility.
    (1) The designated State unit may initiate the provision of 
vocational rehabilitation services for an applicant on the basis of an 
interim determination of eligibility prior to the 60-day period 
described in Sec. 361.41(b)(2).
    (2) If a State chooses to make interim determinations of 
eligibility, the designated State unit must--
    (i) Establish criteria and conditions for making those 
determinations;
    (ii) Develop and implement procedures for making the 
determinations; and
    (iii) Determine the scope of services that may be provided pending 
the final determination of eligibility.
    (3) If a State elects to use an interim eligibility determination, 
the designated State unit must make a final determination of 
eligibility within 60 days of the individual submitting an application 
for services in accordance with Sec. 361.41(b)(2).
    (c) Prohibited factors.
    (1) The State plan must assure that the State unit will not impose, 
as part of determining eligibility under this section, a duration of 
residence requirement that excludes from services any applicant who is 
present in the State.
    (2) In making a determination of eligibility under this section, 
the designated State unit also must ensure that--
    (i) No applicant or group of applicants is excluded or found 
ineligible solely on the basis of the type of disability; and
    (ii) The eligibility requirements are applied without regard to 
the--
    (A) Age, gender, race, color, or national origin of the applicant;
    (B) Type of expected employment outcome;
    (C) Source of referral for vocational rehabilitation services; and
    (D) Particular service needs or anticipated cost of services 
required by

[[Page 10653]]

an applicant or the income level of an applicant or applicant's family.
    (d) Review and assessment of data for eligibility determination. 
Except as provided in paragraph (e) of this section, the designated 
State unit--
    (1) Must base its determination of each of the basic eligibility 
requirements in paragraph (a) of this section on--
    (i) A review and assessment of existing data, including counselor 
observations, education records, information provided by the individual 
or the individual's family, particularly information used by education 
officials, and determinations made by officials of other agencies; and
    (ii) 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 trial work experiences, assistive 
technology devices and services, personal assistance services, and any 
other support services that are necessary to determine whether an 
individual is eligible; and
    (2) Must base its presumption under paragraph (a)(3)(i) of this 
section that an applicant who has been determined eligible for Social 
Security benefits under Title II or Title XVI of the Social Security 
Act satisfies each of the basic eligibility requirements in paragraph 
(a) of this section on determinations made by the Social Security 
Administration.
    (e) Trial work experiences for individuals with significant 
disabilities.
    (1) Prior to any determination that an individual with a 
significant disability is incapable of benefiting from vocational 
rehabilitation services in terms of an employment outcome because of 
the severity of that individual's disability, the designated State unit 
must conduct an exploration of the individual's abilities, 
capabilities, and capacity to perform in realistic work situations to 
determine whether or not there is clear and convincing evidence to 
support such a determination.
    (2)(i) The designated State unit must develop a written plan to 
assess periodically the individual's abilities, capabilities, and 
capacity to perform in work situations through the use of trial work 
experiences, which must be provided in the most integrated setting 
possible, consistent with the informed choice and rehabilitation needs 
of the individual.
    (ii) Trial work experiences include supported employment, on-the-
job training, and other experiences using realistic work settings.
    (iii) Trial work experiences must be of sufficient variety and over 
a sufficient period of time for the designated State unit to determine 
that--
    (A) 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
    (B) There is clear and convincing evidence that the individual is 
incapable of benefiting from vocational rehabilitation services in 
terms of an employment outcome due to the severity of the individual's 
disability.
    (iv) The designated State unit must provide appropriate supports, 
including assistive technology devices and services and personal 
assistance services, to accommodate the rehabilitation needs of the 
individual during the trial work experiences.
    (f) Extended evaluation for certain individuals with significant 
disabilities.
    (1) Under limited circumstances if an individual cannot take 
advantage of trial work experiences or if options for trial work 
experiences have been exhausted before the State unit is able to make 
the determinations described in paragraph (e)(2)(iii) of this section, 
the designated State unit must conduct an extended evaluation to make 
these determinations.
    (2) During the extended evaluation period, vocational 
rehabilitation services must be provided in the most integrated setting 
possible, consistent with the informed choice and rehabilitation needs 
of the individual.
    (3) During the extended evaluation period, the designated State 
unit must develop a written plan for providing services necessary to 
make a determination under paragraph (e)(2)(iii) of this section.
    (4) During the extended evaluation period, the designated State 
unit provides only those services that are necessary to make the 
determinations described in paragraph (e)(2)(iii) of this section and 
terminates extended evaluation services when the State unit is able to 
make the determinations.
    (g) Data for determination of priority for services under an order 
of selection. If the designated State unit is operating under an order 
of selection for services, as provided in Sec. 361.36, the State unit 
must base its priority assignments on--
    (1) A review of the data that was developed under paragraphs (d) 
and (e) of this section to make the eligibility determination; and
    (2) An assessment of additional data, to the extent necessary.

(Authority: Sections 7(2)(A), 7(2)(B)(ii)(I), 7(2)(C), 7(2)(D), 
101(a)(12), 102(a)(1), 102(a)(2), 102(a)(3), 102(a)(4)(A), 
102(a)(4)(B), 102(a)(4)(C), 103(a)(1), 103(a)(9), 103(a)(10) and 
103(a)(14) of the Act; 29 U.S.C. 705(2)(A), 705(2)(B)(ii)(I), 
705(2)(C), 705(2)(D), 721(a)(12), 722(a)(1), 722(a)(2), 722(a)(3), 
722(a)(4)(A), 722(a)(4)(B), 722(a)(4)(C), 723(a)(1), 723(a)(9), 
723(a)(10) and 723(a)(14))


Sec. 361.43  Procedures for ineligibility determination.

    If the State unit determines that an applicant is ineligible for 
vocational rehabilitation services or determines that an individual 
receiving services under an individualized plan for employment is no 
longer eligible for services, the State unit must--
    (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 
State unit personnel determinations 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;
    (d) Refer the individual to other training or employment-related 
programs that are part of the One-Stop service delivery system under 
the Workforce Investment Act; and
    (e) 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: Sections 102(a)(5) and 102(c) of the Act; 29 U.S.C. 
722(a)(5) and 722(c))


Sec. 361.44  Closure without eligibility determination.

    The designated State unit may not close an applicant's record of 
services prior to making an eligibility

[[Page 10654]]

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: Section 12(c) of the Act; 29 U.S.C. 709(c))


Sec. 361.45  Development of the individualized plan for employment.

    (a) General requirements. The State plan must assure that--
    (1) An individualized plan for employment (IPE) meeting the 
requirements of this section and Sec. 361.46 is developed and 
implemented in a timely manner for each individual determined to be 
eligible for vocational rehabilitation services or, if the designated 
State unit is operating under an order of selection in accordance with 
Sec. 361.36, for each eligible individual to whom the State unit is 
able to provide services; and
    (2) Services will be provided in accordance with the provisions of 
the IPE.
    (b) Purpose. (1) The designated State unit must conduct an 
assessment for determining vocational rehabilitation needs, if 
appropriate, 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 employment outcome, and the nature and scope of 
vocational rehabilitation services to be included in the IPE.
    (2) The IPE must--
    (i) Be designed to achieve the specific employment outcome that is 
selected by the individual consistent with the individual's unique 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice; and
    (ii) To the maximum extent appropriate, result in employment in an 
integrated setting.
    (c) Required information. The State unit must provide the following 
information to each eligible individual or, as appropriate, the 
individual's representative, in writing and, if appropriate, in the 
native language or mode of communication of the individual or the 
individual's representative:
    (1) Options for developing an IPE. Information on the available 
options for developing the IPE, including the option that an eligible 
individual or, as appropriate, the individual's representative may 
develop all or part of the IPE--
    (i) Without assistance from the State unit or other entity; or
    (ii) With assistance from--
    (A) A qualified vocational rehabilitation counselor employed by the 
State unit;
    (B) A qualified vocational rehabilitation counselor who is not 
employed by the State unit; or
    (C) Other resources outside of the designated State unit.
    (2) Additional information. Additional information to assist the 
eligible individual or, as appropriate, the individual's representative 
in developing the IPE, including--
    (i) Information describing the full range of components that must 
be included in an IPE;
    (ii) As appropriate to each eligible individual--
    (A) An explanation of agency guidelines and criteria for 
determining an eligible individual's financial commitments under an 
IPE;
    (B) Information on the availability of assistance in completing 
State unit forms required as part of the IPE; and
    (C) Additional information that the eligible individual requests or 
the State unit determines to be necessary to the development of the 
IPE;
    (iii) A description of the rights and remedies available to the 
individual, including, if appropriate, recourse to the processes 
described in Sec. 361.57; and
    (iv) A description of the availability of a client assistance 
program established under 34 CFR part 370 and information on how to 
contact the client assistance program.
    (d) Mandatory procedures. The designated State unit must ensure 
that--
    (1) The IPE is a written document prepared on forms provided by the 
State unit;
    (2) The IPE is developed and implemented in a manner that gives 
eligible individuals the opportunity to exercise informed choice, 
consistent with Sec. 361.52, in selecting--
    (i) The employment outcome, including the employment setting;
    (ii) The specific vocational rehabilitation services needed to 
achieve the employment outcome, including the settings in which 
services will be provided;
    (iii) The entity or entities that will provide the vocational 
rehabilitation services; and
    (iv) The methods available for procuring the services;
    (3) The IPE is--
    (i) Agreed to and signed by the eligible individual or, as 
appropriate, the individual's representative; and
    (ii) Approved and signed by a qualified vocational rehabilitation 
counselor employed by the designated State unit;
    (4) A copy of the IPE and a copy of any amendments to the IPE are 
provided to the eligible individual or, as appropriate, to the 
individual's representative, in writing and, if appropriate, in the 
native language or mode of communication of the individual or, as 
appropriate, the individual's representative;
    (5) The IPE is reviewed at least annually by a qualified vocational 
rehabilitation counselor and the eligible individual or, as 
appropriate, the individual's representative to assess the eligible 
individual's progress in achieving the identified employment outcome;
    (6) The IPE is amended, as necessary, by the individual or, as 
appropriate, the individual's representative, in collaboration with a 
representative of the State unit or a qualified vocational 
rehabilitation counselor (to the extent determined to be appropriate by 
the individual), if there are substantive changes in the employment 
outcome, the vocational rehabilitation services to be provided, or the 
providers of the vocational rehabilitation services;
    (7) Amendments to the IPE do not take effect until agreed to and 
signed by the eligible individual or, as appropriate, the individual's 
representative and by a qualified vocational rehabilitation counselor 
employed by the designated State unit; and
    (8) An IPE for a student with a disability receiving special 
education services is developed--
    (i) In consideration of the student's IEP; and
    (ii) In accordance with the plans, policies, procedures, and terms 
of the interagency agreement required under Sec. 361.22.
    (e) Standards for developing the IPE. The designated State unit 
must establish and implement standards for the prompt development of 
IPEs for the individuals identified under paragraph (a) of this 
section, including timelines that take into consideration the needs of 
the individuals.
    (f) Data for preparing the IPE.--(1) Preparation without 
comprehensive assessment. To the extent possible, the employment 
outcome and the nature and scope of rehabilitation services to be 
included in the individual's IPE must be determined based on the data 
used for the assessment of eligibility and priority for services under 
Sec. 361.42.
    (2) Preparation based on comprehensive assessment.

[[Page 10655]]

    (i) If additional data are necessary to determine the employment 
outcome and the nature and scope of services to be included in the IPE 
of an eligible individual, the State unit must conduct a comprehensive 
assessment of the unique strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and informed choice, including the 
need for supported employment services, of the eligible individual, in 
the most integrated setting possible, consistent with the informed 
choice of the individual in accordance with the provisions of 
Sec. 361.5(b)(6)(ii).
    (ii) In preparing the comprehensive assessment, the State unit must 
use, to the maximum extent possible and appropriate and in accordance 
with confidentiality requirements, existing information that is current 
as of the date of the development of the IPE, including--
    (A) Information available from other programs and providers, 
particularly information used by education officials and the Social 
Security Administration;
    (B) Information provided by the individual and the individual's 
family; and
    (C) Information obtained under the assessment for determining the 
individual's eligibility and vocational rehabilitation needs.

(Authority: Sections 7(2)(B),101(a)(9), 102(b)(1), 102(b)(2), 102(c) 
and 103(a)(1); 29 U.S.C. 705(2)(B), 721(a)(9), 722(b)(1), 722(b)(2), 
722(c) and 723(a)(1))


Sec. 361.46  Content of the individualized plan for employment.

    (a) Mandatory components. Regardless of the approach in 
Sec. 361.45(c)(1) that an eligible individual selects for purposes of 
developing the IPE, each IPE must include--
    (1) A description of the specific employment outcome that is chosen 
by the eligible individual that--
    (i) Is consistent with the individual's unique strengths, 
resources, priorities, concerns, abilities, capabilities, career 
interests, and informed choice; and
    (ii) To the maximum extent appropriate, results in employment in an 
integrated setting;
    (2) A description of the specific rehabilitation services under 
Sec. 361.48 that are--
    (i) Needed to achieve the employment outcome, including, as 
appropriate, the provision of assistive technology devices, assistive 
technology services, and personal assistance services, including 
training in the management of those services; and
    (ii) Provided in the most integrated setting that is appropriate 
for the services involved and is consistent with the informed choice of 
the eligible individual;
    (3) Timelines for the achievement of the employment outcome and for 
the initiation of services;
    (4) A description of the entity or entities chosen by the eligible 
individual or, as appropriate, the individual's representative that 
will provide the vocational rehabilitation services and the methods 
used to procure those services;
    (5) A description of the criteria that will be used to evaluate 
progress toward achievement of the employment outcome; and
    (6) The terms and conditions of the IPE, including, as appropriate, 
information describing--
    (i) The responsibilities of the designated State unit;
    (ii) The responsibilities of the eligible individual, including--
    (A) The responsibilities the individual will assume in relation to 
achieving the employment outcome;
    (B) If applicable, the extent of the individual's participation in 
paying for the cost of services; and
    (C) The responsibility of the individual with regard to applying 
for and securing comparable services and benefits as described in 
Sec. 361.53; and
    (iii) The responsibilities of other entities as the result of 
arrangements made pursuant to the comparable services or benefits 
requirements in Sec. 361.53.
    (b) Supported employment requirements. An IPE for an individual 
with a most significant disability for whom an employment outcome in a 
supported employment setting has been determined to be appropriate 
must--
    (1) Specify the supported employment services to be provided by the 
designated State unit;
    (2) Specify the expected extended services needed, which may 
include natural supports;
    (3) Identify the source of extended services or, to the extent that 
it is not possible to identify the source of extended services at the 
time the IPE is developed, include a description of the basis for 
concluding that there is a reasonable expectation that those sources 
will become available;
    (4) Provide for periodic monitoring to ensure that the individual 
is making satisfactory progress toward meeting the weekly work 
requirement established in the IPE by the time of transition to 
extended services;
    (5) Provide for the coordination of services provided under an IPE 
with services provided under other individualized plans established 
under other Federal or State programs;
    (6) To the extent that job skills training is provided, identify 
that the training will be provided on site; and
    (7) Include placement in an integrated setting for the maximum 
number of hours possible based on the unique strengths, resources, 
priorities, concerns, abilities, capabilities, interests, and informed 
choice of individuals with the most significant disabilities.
    (c) Post-employment services. The IPE for each individual must 
contain, as determined to be necessary, statements concerning--
    (1) The expected need for post-employment services prior to closing 
the record of services of an individual who has achieved an employment 
outcome;
    (2) A description of the terms and conditions for the provision of 
any post-employment services; and
    (3) If appropriate, a statement of how post-employment services 
will be provided or arranged through other entities as the result of 
arrangements made pursuant to the comparable services or benefits 
requirements in Sec. 361.53.
    (d) Coordination of services for students with disabilities who are 
receiving special education services. The IPE for a student with a 
disability who is receiving special education services must be 
coordinated with the IEP for that individual in terms of the goals, 
objectives, and services identified in the IEP.

(Authority: Sections 101(a)(8), 101(a)(9), 102(b)(3), and 625(b)(6) 
of the Act; 29 U.S.C. 721(a)(8), 721(a)(9), 722(b)(3), and 795(k))


Sec. 361.47  Record of services.

    (a) The designated State unit must maintain for each applicant and 
eligible individual a record of services that includes, to the extent 
pertinent, the following documentation:
    (1) If an applicant has been determined to be an eligible 
individual, documentation supporting that determination in accordance 
with the requirements under Sec. 361.42.
    (2) If an applicant or eligible individual receiving services under 
an IPE has been determined to be ineligible, documentation supporting 
that determination in accordance with the requirements under 
Sec. 361.43.
    (3) Documentation that describes the justification for closing an 
applicant's or eligible individual's record of services if that closure 
is based on reasons other than ineligibility, including, as 
appropriate, documentation indicating that the State unit has satisfied 
the requirements in Sec. 361.44.

[[Page 10656]]

    (4) If an individual has been determined to be an individual with a 
significant disability or an individual with a most significant 
disability, documentation supporting that determination.
    (5) If an individual with a significant disability requires an 
exploration of abilities, capabilities, and capacity to perform in 
realistic work situations through the use of trial work experiences or, 
as appropriate, an extended evaluation to determine whether the 
individual is an eligible individual, documentation supporting the need 
for, and the plan relating to, that exploration or, as appropriate, 
extended evaluation and documentation regarding the periodic 
assessments carried out during the trial work experiences or, as 
appropriate, the extended evaluation, in accordance with the 
requirements under Sec. 361.42(e) and (f).
    (6) The IPE, and any amendments to the IPE, consistent with the 
requirements under Sec. 361.46.
    (7) Documentation describing the extent to which the applicant or 
eligible individual exercised informed choice regarding the provision 
of assessment services and the extent to which the eligible individual 
exercised informed choice in the development of the IPE with respect to 
the selection of the specific employment outcome, the specific 
vocational rehabilitation services needed to achieve the employment 
outcome, the entity to provide the services, the employment setting, 
the settings in which the services will be provided, and the methods to 
procure the services.
    (8) In the event that the IPE provides for services or an 
employment outcome in a non-integrated setting, a justification to 
support the non-integrated setting.
    (9) 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)(11)(ii).
    (10) In the event that an individual obtains an employment outcome 
in an extended employment setting in a community rehabilitation program 
or any other employment under section 14(c) of the Fair Labor Standards 
Act, documentation of the results of the annual reviews required under 
Sec. 361.55, the individual's input into those reviews, and the 
individual's or, if appropriate, the individual's representative's 
acknowledgement that those reviews were conducted.
    (11) Documentation concerning any action or decision resulting from 
a request by an individual under Sec. 361.57 for a review of 
determinations made by designated State unit personnel.
    (12) In the event that an applicant or eligible individual requests 
under Sec. 361.38(c)(4) that documentation in the record of services be 
amended and the documentation is not amended, documentation of the 
request.
    (13) In the event an individual is referred to another program 
through the State unit's information and referral system under 
Sec. 361.37, including other components of the statewide workforce 
investment system, documentation on the nature and scope of services 
provided by the designated State unit to the individual and on the 
referral itself, consistent with the requirements of Sec. 361.37.
    (14) In the event an individual's record of service is closed under 
Sec. 361.56, documentation that demonstrates the services provided 
under the individual's IPE contributed to the achievement of the 
employment outcome.
    (15) In the event an individual's record of service is closed under 
Sec. 361.56, documentation verifying that the provisions of Sec. 361.56 
have been satisfied.
    (b) The State unit, in consultation with the State Rehabilitation 
Council if the State has a Council, must determine the type of 
documentation that the State unit must maintain for each applicant and 
eligible individual in order to meet the requirements in paragraph (a) 
of this section.

(Authority: Sections 101(a)(6), (9), (14), (20) and 102(a), (b), and 
(d) of the Act; 29 U.S.C. 721(a)(6), (9), (14), (20) and 722(a), 
(b), and (d))


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

    As appropriate to the vocational rehabilitation needs of each 
individual and consistent with each individual's informed choice, the 
designated State unit must ensure that the following vocational 
rehabilitation services are available to assist the individual with a 
disability in preparing for, securing, retaining, or regaining an 
employment outcome that is consistent with the individual's strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice:
    (a) Assessment for determining eligibility and priority for 
services by qualified personnel, including, if appropriate, an 
assessment by personnel skilled in rehabilitation technology, in 
accordance with Sec. 361.42.
    (b) Assessment for determining vocational rehabilitation needs by 
qualified personnel, including, if appropriate, an assessment by 
personnel skilled in rehabilitation technology, in accordance with 
Sec. 361.45.
    (c) Vocational rehabilitation counseling and guidance, including 
information and support services to assist an individual in exercising 
informed choice in accordance with Sec. 361.52.
    (d) Referral and other services necessary to assist applicants and 
eligible individuals to secure needed services from other agencies, 
including other components of the statewide workforce investment 
system, in accordance with Secs. 361.23 and 361.24, and to advise those 
individuals about client assistance programs established under 34 CFR 
part 370.
    (e) In accordance with the definition in Sec. 361.5(b)(39), 
physical and mental restoration services, to the extent that financial 
support is not readily available from a source other than the 
designated State unit (such as through health insurance or a comparable 
service or benefit as defined in Sec. 361.5(b)(10)).
    (f) 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.
    (g) Maintenance, in accordance with the definition of that term in 
Sec. 361.5(b)(35).
    (h) 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)(55).
    (i) Vocational rehabilitation services to family members, as 
defined in Sec. 361.5(b)(23), of an applicant or eligible individual if 
necessary to enable the applicant or eligible individual to achieve an 
employment outcome.
    (j) Interpreter services for individuals who are deaf or hard of 
hearing and tactile interpreting services for individuals who are deaf-
blind provided by qualified personnel.
    (k) Reader services, rehabilitation teaching services, and 
orientation and

[[Page 10657]]

mobility services for individuals who are blind.
    (l) Job-related services, including job search and placement 
assistance, job retention services, follow-up services, and follow-
along services.
    (m) Supported employment services in accordance with the definition 
of that term in Sec. 361.5(b)(52).
    (n) Personal assistance services in accordance with the definition 
of that term in Sec. 361.5(b)(38).
    (o) Post-employment services in accordance with the definition of 
that term in Sec. 361.5(b)(41).
    (p) Occupational licenses, tools, equipment, initial stocks, and 
supplies.
    (q) Rehabilitation technology in accordance with the definition of 
that term in Sec. 361.5(b)(43), including vehicular modification, 
telecommunications, sensory, and other technological aids and devices.
    (r) Transition services in accordance with the definition of that 
term in Sec. 361.5(b)(53).
    (s) Technical assistance and other consultation services to conduct 
market analyses, develop business plans, and otherwise provide 
resources, to the extent those resources are authorized to be provided 
through the statewide workforce investment system, to eligible 
individuals who are pursuing self-employment or telecommuting or 
establishing a small business operation as an employment outcome.
    (t) Other goods and services determined necessary for the 
individual with a disability to achieve an employment outcome.

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


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

    (a) The designated State unit 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 vocational rehabilitation 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 vocational rehabilitation 
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 nonvisual access to information for 
individuals who are blind, including the use of telecommunications, 
Braille, sound recordings, or other appropriate media; captioned 
television, films, or video cassettes for individuals who are deaf or 
hard of hearing; 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 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 any small business enterprise operated by 
individuals with significant disabilities under the supervision of the 
designated State unit, including enterprises established under the 
Randolph-Sheppard program, management services and supervision provided 
by the State unit along with the acquisition by the State unit of 
vending facilities or other 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 significant 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 6 months.
    (iii) Costs of establishing a small business enterprise may include 
operational costs during the initial establishment period, which may 
not exceed 6 months.
    (iv) If the designated State unit provides for these services, it 
must ensure that only individuals with significant disabilities will be 
selected to participate in this supervised program.
    (v) If the designated State unit provides for these services and 
chooses to set aside funds from the proceeds of the operation of the 
small business enterprises, the State unit must maintain 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 individualized plan for employment 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.
    (7) Consultative and technical assistance services to assist 
educational agencies in planning for the transition of students with 
disabilities from school to post-school activities, including 
employment.
    (b) If the designated State unit provides for vocational 
rehabilitation services for groups of individuals, it must--
    (1) Develop and maintain 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) Maintain 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 benefiting from those services.

(Authority: Sections 12(c), 101(a)(6)(A), and 103(b) of the Act; 29 
U.S.C. 709(c), 721(a)(6), and 723(b))

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

    (a) Policies. The State unit must develop and maintain 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

[[Page 10658]]

rehabilitation needs of each individual as identified in that 
individual's IPE 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:
    (b) 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.
    (c) Payment for services. (1) The State unit must establish and 
maintain written policies to govern the rates of payment for all 
purchased vocational rehabilitation services.
    (2) The State unit may establish a fee schedule designed to ensure 
a reasonable cost to the program for each service, if 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.
    (d) 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 
individualized plan for employment.
    (e) Authorization of services. The State unit must establish 
policies related to the timely authorization of services, including any 
conditions under which verbal authorization can be given.

(Authority: Sections 12(c) and 101(a)(6) of the Act and 29 U.S.C. 
709(c) and 721(a)(6))


Sec. 361.51  Standards for facilities and providers of services.

    (a) Accessibility of facilities. The State plan must assure that 
any facility used in connection with the delivery of vocational 
rehabilitation services under this part meets program accessibility 
requirements consistent with the requirements, as applicable, of the 
Architectural Barriers Act of 1968, the Americans with Disabilities Act 
of 1990, section 504 of the Act, and the regulations implementing these 
laws.
    (b) Affirmative action. The State plan must assure that community 
rehabilitation programs that receive assistance under part B of Title I 
of the Act take affirmative action to employ and advance in employment 
qualified individuals with disabilities covered under and on the same 
terms and conditions as in section 503 of the Act.
    (c) Special communication needs personnel. The designated State 
unit must ensure that providers of vocational rehabilitation services 
are able to communicate--
    (1) In the native language of applicants and eligible individuals 
who have limited English speaking ability; and
    (2) By using appropriate modes of communication used by applicants 
and eligible individuals.

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


Sec. 361.52  Informed choice.

    (a) General provision. The State plan must assure that applicants 
and eligible individuals or, as appropriate, their representatives are 
provided information and support services to assist applicants and 
eligible individuals in exercising informed choice throughout the 
rehabilitation process consistent with the provisions of section 102(d) 
of the Act and the requirements of this section.
    (b) Written policies and procedures. The designated State unit, in 
consultation with its State Rehabilitation Council, if it has a 
Council, must develop and implement written policies and procedures 
that enable an applicant or eligible individual to exercise informed 
choice throughout the vocational rehabilitation process. These policies 
and procedures must provide for--
    (1) Informing each applicant and eligible individual (including 
students with disabilities who are making the transition from programs 
under the responsibility of an educational agency to programs under the 
responsibility of the designated State unit), through appropriate modes 
of communication, about the availability of and opportunities to 
exercise informed choice, including the availability of support 
services for individuals with cognitive or other disabilities who 
require assistance in exercising informed choice throughout the 
vocational rehabilitation process;
    (2) Assisting applicants and eligible individuals in exercising 
informed choice in decisions related to the provision of assessment 
services;
    (3) Developing and implementing flexible procurement policies and 
methods that facilitate the provision of vocational rehabilitation 
services and that afford eligible individuals meaningful choices among 
the methods used to procure vocational rehabilitation services;
    (4) Assisting eligible individuals or, as appropriate, the 
individuals' representatives in acquiring information that enables them 
to exercise informed choice in the development of their IPEs with 
respect to the selection of the--
    (i) Employment outcome;
    (ii) Specific vocational rehabilitation services needed to achieve 
the employment outcome;
    (iii) Entity that will provide the services;
    (iv) Employment setting and the settings in which the services will 
be provided; and
    (v) Methods available for procuring the services; and
    (5) Ensuring that the availability and scope of informed choice is 
consistent with the obligations of the designated State agency under 
this part.
    (c) Information and assistance in the selection of vocational 
rehabilitation services and service providers. In developing an 
individual's IPE, the designated State unit must provide the individual 
or the individual's representative, or assist the individual or the 
individual's representative in acquiring, information necessary to make 
an informed choice about the specific vocational rehabilitation 
services, including the providers of those services, that are needed to 
achieve the individual's employment outcome. This information must 
include, at a minimum, information relating to the--
    (1) Cost, accessibility, and duration of potential services;
    (2) Consumer satisfaction with those services to the extent that 
information relating to consumer satisfaction is available;
    (3) Qualifications of potential service providers;
    (4) Types of services offered by the potential providers; and
    (5) Degree to which services are provided in integrated settings.

[[Page 10659]]

    (d) Methods or sources of information. In providing or assisting 
the individual or the individual's representative in acquiring the 
information required under paragraph (c) 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.

(Authority: Sections 12(c), 101(a)(19); 102(b)(2)(B) and 102(d) of 
the Act; 29 U.S.C. 709(c), 721(a)(19); 722(b)(2)(B) and 722(d))


Sec. 361.53  Comparable services and benefits.

    (a) Determination of availability. The State plan must assure that 
prior to providing any vocational rehabilitation services, except those 
services listed in paragraph (b) of this section, to an eligible 
individual, or to members of the individual's family, the State unit 
must determine whether comparable services and benefits, as defined in 
Sec. 361.5(b)(10), exist under any other program and whether those 
services and benefits are available to the individual unless such a 
determination would interrupt or delay--
    (1) The progress of the individual toward achieving the employment 
outcome identified in the individualized plan for employment;
    (2) An immediate job placement; or
    (3) 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.
    (b) Exempt services. The following vocational rehabilitation 
services described in Sec. 361.48(a) 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 vocational 
rehabilitation needs.
    (2) Counseling and guidance, including information and support 
services to assist an individual in exercising informed choice.
    (3) Referral and other services to secure needed services from 
other agencies, including other components of the statewide workforce 
investment system, if those services are not available under this part.
    (4) Job-related services, including job search and placement 
assistance, job retention services, follow-up services, and follow-
along services.
    (5) Rehabilitation technology, including telecommunications, 
sensory, and other technological aids and devices.
    (6) Post-employment services consisting of the services listed 
under paragraphs (b)(1) through (5) of this section.
    (c) Provision of services. (1) If comparable services or benefits 
exist under any other program and are available to the individual at 
the time needed to ensure the progress of the individual toward 
achieving the employment outcome in the individual's IPE, the 
designated State unit must use those comparable services or benefits to 
meet, in whole or part, the costs of the vocational rehabilitation 
services.
    (2) If comparable services or benefits exist under any other 
program, but are not available to the individual at the time needed to 
ensure the progress of the individual toward achieving the employment 
outcome in the individual's IPE, the designated State unit must provide 
vocational rehabilitation services until those comparable services and 
benefits become available.
    (d) Interagency coordination. (1) The State plan must assure that 
the Governor, in consultation with the entity in the State responsible 
for the vocational rehabilitation program and other appropriate 
agencies, will ensure that an interagency agreement or other mechanism 
for interagency coordination takes effect between the designated State 
vocational rehabilitation unit and any appropriate public entity, 
including the State entity responsible for administering the State 
medicaid program, a public institution of higher education, and a 
component of the statewide workforce investment system, to ensure the 
provision of vocational rehabilitation services (other than those 
services listed in paragraph (b) of this section) that are included in 
the IPE, including the provision of those vocational rehabilitation 
services during the pendency of any interagency dispute in accordance 
with the provisions of paragraph (d)(3)(iii) of this section.
    (2) The Governor may meet the requirements of paragraph (d)(1) of 
this section through--
    (i) A State statute or regulation;
    (ii) A signed agreement between the respective officials of the 
public entities that clearly identifies the responsibilities of each 
public entity for the provision of the services; or
    (iii) Another appropriate mechanism as determined by the designated 
State vocational rehabilitation unit.
    (3) The interagency agreement or other mechanism for interagency 
coordination must include the following:
    (i) Agency financial responsibility. An identification of, or 
description of a method for defining, the financial responsibility of 
the public entity for providing the vocational rehabilitation services 
other than those listed in paragraph (b) of this section and a 
provision stating the financial responsibility of the public entity for 
providing those services.
    (ii) Conditions, terms, and procedures of reimbursement. 
Information specifying the conditions, terms, and procedures under 
which the designated State unit must be reimbursed by the other public 
entities for providing vocational rehabilitation services based on the 
terms of the interagency agreement or other mechanism for interagency 
coordination.
    (iii) Interagency disputes. Information specifying procedures for 
resolving interagency disputes under the interagency agreement or other 
mechanism for interagency coordination, including procedures under 
which the designated State unit may initiate proceedings to secure 
reimbursement from other public entities or otherwise implement the 
provisions of the agreement or mechanism.
    (iv) Procedures for coordination of services. Information 
specifying policies and procedures for public entities to determine and 
identify interagency coordination responsibilities of each public 
entity to promote the coordination and timely delivery of vocational 
rehabilitation services other than those listed in paragraph (b) of 
this section.
    (e) Responsibilities under other law. (1) If a public entity (other 
than the designated State unit) is obligated under Federal law (such as 
the Americans with Disabilities Act, section 504 of the Act, or section 
188 of the Workforce Investment Act) or State law, or assigned 
responsibility under State policy or an interagency agreement 
established under this section, to provide or pay for any services 
considered to be vocational rehabilitation services (e.g., interpreter 
services under Sec. 361.48(j)), other than those services listed in 
paragraph (b) of this section, the public entity must fulfill that 
obligation or responsibility through--

[[Page 10660]]

    (i) The terms of the interagency agreement or other requirements of 
this section;
    (ii) Providing or paying for the service directly or by contract; 
or
    (iii) other arrangement.
    (2) If a public entity other than the designated State unit fails 
to provide or pay for vocational rehabilitation services for an 
eligible individual as established under this section, the designated 
State unit must provide or pay for those services to the individual and 
may claim reimbursement for the services from the public entity that 
failed to provide or pay for those services. The public entity must 
reimburse the designated State unit pursuant to the terms of the 
interagency agreement or other mechanism described in paragraph (d) of 
this section in accordance with the procedures established in the 
agreement or mechanism pursuant to paragraph (d)(3)(ii) of this 
section.

(Authority: Sections 12(c) and 101(a)(8) of the Act; 29 U.S.C. 
709(c) and 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 through trial work experiences under 
Sec. 361.42(e) or during an extended evaluation under Sec. 361.42(f) 
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 must maintain written policies--
    (A) Explaining the method for determining the financial need of an 
eligible individual; and
    (B) Specifying the types of vocational rehabilitation services for 
which the unit has established a financial needs test;
    (ii) The policies must be applied uniformly to all individuals in 
similar circumstances;
    (iii) 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
    (iv) 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 designated State unit may not apply a financial needs test, 
or require the financial participation of the individual--
    (i) As a condition for furnishing the following vocational 
rehabilitation services:
    (A) Assessment for determining eligibility and priority for 
services under Sec. 361.48(a), except those non-assessment services 
that are provided to an individual with a significant disability during 
either an exploration of the individual's abilities, capabilities, and 
capacity to perform in work situations through the use of trial work 
experiences under Sec. 361.42(e) or an extended evaluation under 
Sec. 361.42(f).
    (B) Assessment for determining vocational rehabilitation needs 
under Sec. 361.48(b).
    (C) Vocational rehabilitation counseling and guidance under 
Sec. 361.48(c).
    (D) Referral and other services under Sec. 361.48(d).
    (E) Interpreter services under Sec. 361.48(j).
    (F) Reader services under Sec. 361.48(k).
    (G) Job-related services under Sec. 361.48(l).
    (H) Personal assistance services under Sec. 361.48(n); or
    (ii) As a condition for furnishing any vocational rehabilitation 
service if the individual in need of the service has been determined 
eligible for Social Security benefits under Title II or Title XVI of 
the Social Security Act.

    (Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))


Sec. 361.55  Annual review of individuals in extended employment or 
other employment under special certificate provisions of the Fair Labor 
Standards Act.

    The State plan must assure that the designated State unit--
    (a) Annually reviews and reevaluates the status of each individual 
with a disability served under the vocational rehabilitation program 
who has achieved an employment outcome either in an extended employment 
setting in a community rehabilitation program or in any other 
employment setting in which the individual is compensated in accordance 
with section 14(c) of the Fair Labor Standards Act for 2 years after 
the individual achieves the employment outcome (and thereafter if 
requested by the individual or, if appropriate, the individual's 
representative) to determine the interests, priorities, and needs of 
the individual with respect to competitive employment or training for 
competitive employment;
    (b) Enables the individual or, if appropriate, the individual's 
representative to provide input into the review and reevaluation and 
documents that input in the record of services, consistent with 
Sec. 361.47(a)(10), with the individual's or, as appropriate, the 
individual's representative's signed acknowledgment that the review and 
reevaluation have been conducted; and
    (c) Makes maximum efforts, including identifying and providing 
vocational rehabilitation services, reasonable accommodations, and 
other necessary support services, to assist the individuals identified 
in paragraph (a) of this section in engaging in competitive employment 
as defined in Sec. 361.5(b)(11).

(Authority: Section 101(a)(14) of the Act; 29 U.S.C. 721(a)(14))


Sec. 361.56  Requirements for closing the record of services of an 
individual who has achieved an employment outcome.

    The record of services of an individual who has achieved an 
employment outcome may be closed only if all of the following 
requirements are met:
    (a) Employment outcome achieved. The individual has achieved the 
employment outcome that is described in the individual's IPE in 
accordance with Sec. 361.46(a)(1) and is--
    (1) Consistent with the individual's strengths, resources, 
priorities, concerns, abilities, capabilities, interests, and informed 
choice; and
    (2) In the most integrated setting possible, consistent with the 
individual's informed choice.
    (b) Employment outcome maintained. The individual has maintained 
the employment outcome for an appropriate period of time, but not less 
than 90 days, necessary to ensure the stability of the employment 
outcome, and the individual no longer needs vocational rehabilitation 
services.
    (c) Satisfactory outcome. At the end of the appropriate period 
under paragraph (b) of this section, the individual and the qualified 
rehabilitation counselor employed by the designated State unit consider 
the employment outcome to be satisfactory and agree that the individual 
is performing well in the employment.
    (d) Post-employment services. The individual is informed through 
appropriate modes of communication of

[[Page 10661]]

the availability of post-employment services.

(Authority: Sections 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 State unit personnel determinations.

    (a) Procedures. The designated State unit must develop and 
implement procedures to ensure that an applicant or eligible individual 
who is dissatisfied with any determination made by personnel of the 
designated State unit that affects the provision of vocational 
rehabilitation services may request, or, if appropriate, may request 
through the individual's representative, a timely review of that 
determination. The procedures must be in accordance with paragraphs (b) 
through (k) of this section:
    (b) General requirements.--(1) Notification. Procedures established 
by the State unit under this section must provide an applicant or 
eligible individual or, as appropriate, the individual's representative 
notice of--
    (i) The right to obtain review of State unit determinations that 
affect the provision of vocational rehabilitation services through an 
impartial due process hearing under paragraph (e) of this section;
    (ii) The right to pursue mediation under paragraph (d) of this 
section with respect to determinations made by designated State unit 
personnel that affect the provision of vocational rehabilitation 
services to an applicant or eligible individual;
    (iii) The names and addresses of individuals with whom requests for 
mediation or due process hearings may be filed;
    (iv) The manner in which a mediator or impartial hearing officer 
may be selected consistent with the requirements of paragraphs (d) and 
(f) of this section; and
    (v) The availability of the client assistance program, established 
under 34 CFR part 370, to assist the applicant or eligible individual 
during mediation sessions or impartial due process hearings.
    (2) Timing. Notice described in paragraph (b)(1) of this section 
must be provided in writing--
    (i) At the time the individual applies for vocational 
rehabilitation services under this part;
    (ii) At the time the individual is assigned to a category in the 
State's order of selection, if the State has established an order of 
selection under Sec. 361.36;
    (iii) At the time the IPE is developed; and
    (iv) Whenever vocational rehabilitation services for an individual 
are reduced, suspended, or terminated.
    (3) Evidence and representation. Procedures established under this 
section must--
    (i) Provide an applicant or eligible individual or, as appropriate, 
the individual's representative with an opportunity to submit during 
mediation sessions or due process hearings evidence and other 
information that supports the applicant's or eligible individual's 
position; and
    (ii) Enable an applicant or eligible individual to be represented 
during mediation sessions or due process hearings by counsel or other 
advocate selected by the applicant or eligible individual.
    (4) Impact on provision of services. The State unit may not 
institute a suspension, reduction, or termination of vocational 
rehabilitation services being provided to an applicant or eligible 
individual, including evaluation and assessment services and IPE 
development, pending a decision by a mediator, hearing officer, or 
reviewing official or pending informal resolution under this section 
unless--
    (i) The individual or, in appropriate cases, the individual's 
representative requests a suspension, reduction, or termination of 
services; or
    (ii) The State agency has evidence that the services have been 
obtained through misrepresentation, fraud, collusion, or criminal 
conduct on the part of the individual or the individual's 
representative.
    (5) Ineligibility. Applicants who are found ineligible for 
vocational rehabilitation services and previously eligible individuals 
who are determined to be no longer eligible for vocational 
rehabilitation services pursuant to Sec. 361.43 are permitted to 
challenge the determinations of ineligibility under the procedures 
described in this section.
    (c) Informal dispute resolution. The State unit may develop an 
informal process for resolving a request for review without conducting 
mediation or a formal hearing. A State's informal process must not be 
used to deny the right of an applicant or eligible individual to a 
hearing under paragraph (e) of this section or any other right provided 
under this part, including the right to pursue mediation under 
paragraph (d) of this section. If informal resolution under this 
paragraph or mediation under paragraph (d) of this section is not 
successful in resolving the dispute within the time period established 
under paragraph (e)(1) of this section, a formal hearing must be 
conducted within that same time period, unless the parties agree to a 
specific extension of time.
    (d) Mediation. (1) The State must establish and implement 
procedures, as required under paragraph (b)(1)(ii) of this section, to 
allow an applicant or eligible individual and the State unit to resolve 
disputes involving State unit determinations that affect the provision 
of vocational rehabilitation services through a mediation process that 
must be made available, at a minimum, whenever an applicant or eligible 
individual or, as appropriate, the individual's representative requests 
an impartial due process hearing under this section.
    (2) Mediation procedures established by the State unit under 
paragraph (d) must ensure that--
    (i) Participation in the mediation process is voluntary on the part 
of the applicant or eligible individual, as appropriate, and on the 
part of the State unit;
    (ii) Use of the mediation process is not used to deny or delay the 
applicant's or eligible individual's right to pursue resolution of the 
dispute through an impartial hearing held within the time period 
specified in paragraph (e)(1) of this section or any other rights 
provided under this part. At any point during the mediation process, 
either party may elect to terminate the mediation and pursue resolution 
through an impartial hearing;
    (iii) The mediation process is conducted by a qualified and 
impartial mediator, as defined in Sec. 361.5(b)(42), who must be 
selected from a list of qualified and impartial mediators maintained by 
the State--
    (A) On a random basis; or
    (B) By agreement between the director of the designated State unit 
and the applicant or eligible individual or, as appropriate, the 
individual's representative; and
    (iv) Mediation sessions are scheduled and conducted in a timely 
manner and are held in a location and manner that is convenient to the 
parties to the dispute.
    (3) Discussions that occur during the mediation process must be 
kept confidential and may not be used as evidence in any subsequent due 
process hearings or civil proceedings, and the parties to the mediation 
process may be required to sign a confidentiality pledge prior to the 
commencement of the process.
    (4) An agreement reached by the parties to the dispute in the 
mediation process must be described in a written mediation agreement 
that is issued by the impartial and qualified mediator

[[Page 10662]]

and signed by both parties. Copies of the agreement must be sent to 
both parties.
    (5) The costs of the mediation process must be paid by the State. 
The State is not required to pay for any costs related to the 
representation of an applicant or eligible individual authorized under 
paragraph (b)(3)(ii) of this section.
    (e) Impartial due process hearings. The State unit must establish 
and implement formal review procedures, as required under paragraph 
(b)(1)(i) of this section, that provide that--
    (1) A hearing conducted by an impartial hearing officer, selected 
in accordance with paragraph (f) of this section, must be held within 
45 days of an applicant's or eligible individual's request for review 
of a determination made by personnel of the State unit that affects the 
provision of vocational rehabilitation services to the individual, 
unless informal resolution or a mediation agreement is achieved prior 
to the 45th day or the parties agree to a specific extension of time;
    (2) In addition to the rights described in paragraph (b)(3) of this 
section, the applicant or eligible individual or, if appropriate, the 
individual's representative must be given the opportunity to present 
witnesses during the hearing and to examine all witnesses and other 
relevant sources of information and evidence;
    (3) The impartial hearing officer must--
    (i) 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
    (ii) Provide to the individual or, if appropriate, the individual's 
representative and to the State unit a full written report of the 
findings and grounds for the decision within 30 days of the completion 
of the hearing; and
    (4) The hearing officer's decision is final, except that a party 
may request an impartial review under paragraph (g)(1) of this section 
if the State has established procedures for that review, and a party 
involved in a hearing may bring a civil action under paragraph (i) of 
this section.
    (f) Selection of impartial hearing officers. The impartial hearing 
officer for a particular case must be selected--
    (1) From a list of qualified impartial hearing officers maintained 
by the State unit. Impartial hearing officers included on the list must 
be--
    (i) Identified by the State unit if the State unit is an 
independent commission; or
    (ii) Jointly identified by the State unit and the State 
Rehabilitation Council 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 applicant or eligible individual or, as appropriate, the 
individual's representative.
    (g) Administrative review of hearing officer's decision. The State 
may establish procedures to enable a party who is dissatisfied with the 
decision of the impartial hearing officer to seek an impartial 
administrative review of the decision under paragraph (e)(3) of this 
section in accordance with the following requirements:
    (1) A request for administrative review under paragraph (g) of this 
section must be made within 20 days of the mailing of the impartial 
hearing officer's decision.
    (2) Administrative review of the hearing officer's decision must be 
conducted by--
    (i) The chief official of the designated State agency if the State 
has established both a designated State agency and a designated State 
unit under Sec. 361.13(b); or
    (ii) An official from the office of the Governor.
    (3) The reviewing official described in paragraph (g)(2)(i) of this 
section--
    (i) Provides both parties with an opportunity to submit additional 
evidence and information relevant to a final decision concerning the 
matter under review;
    (ii) May not overturn or modify the hearing officer's decision, or 
any part of that decision, that supports the position of the applicant 
or eligible individual unless the reviewing official concludes, based 
on clear and convincing evidence, that the decision of the impartial 
hearing officer is clearly erroneous on the basis of being contrary to 
the approved State plan, the Act, Federal vocational rehabilitation 
regulations, or State regulations and policies that are consistent with 
Federal requirements;
    (iii) Makes an independent, final decision following a review of 
the entire hearing record and provides the decision in writing, 
including a full report of the findings and the statutory, regulatory, 
or policy grounds for the decision, to the applicant or eligible 
individual or, as appropriate, the individual's representative and to 
the State unit within 30 days of the request for administrative review 
under paragraph (g)(1) of this section; and
    (iv) May not delegate the responsibility for making the final 
decision under paragraph (g) of this section to any officer or employee 
of the designated State unit.
    (4) The reviewing official's decision under paragraph (g) of this 
section is final unless either party brings a civil action under 
paragraph (i) of this section.
    (h) Implementation of final decisions. If a party brings a civil 
action under paragraph (h) of this section to challenge the final 
decision of a hearing officer under paragraph (e) of this section or to 
challenge the final decision of a State reviewing official under 
paragraph (g) of this section, the final decision of the hearing 
officer or State reviewing official must be implemented pending review 
by the court.
    (i) Civil action. (1) Any party who disagrees with the findings and 
decision of an impartial hearing officer under paragraph (e) of this 
section in a State that has not established administrative review 
procedures under paragraph (g) of this section and any party who 
disagrees with the findings and decision under paragraph (g)(3)(iii) of 
this section have a right to bring a civil action with respect to the 
matter in dispute. The action may be brought in any State court of 
competent jurisdiction or in a district court of the United States of 
competent jurisdiction without regard to the amount in controversy.
    (2) In any action brought under paragraph (i) of this section, the 
court--
    (i) Receives the records related to the impartial due process 
hearing and the records related to the administrative review process, 
if applicable;
    (ii) Hears additional evidence at the request of a party; and
    (iii) Basing its decision on the preponderance of the evidence, 
grants the relief that the court determines to be appropriate.
    (j) State fair hearing board. A fair hearing board as defined in 
Sec. 361.5(b)(22) is authorized to carry out the responsibilities of 
the impartial hearing officer under paragraph (e) of this section in 
accordance with the following criteria:
    (1) The fair hearing board may conduct due process hearings either 
collectively or by assigning responsibility for conducting the hearing 
to one or more members of the fair hearing board.
    (2) The final decision issued by the fair hearing board following a 
hearing under paragraph (j)(1) of this section must be made 
collectively by, or by a majority vote of, the fair hearing board.
    (3) The provisions of paragraphs (b) (1), (2), and (3) of this 
section that relate to due process hearings and of paragraphs (e), (f), 
(g), and (h) of this

[[Page 10663]]

section do not apply to fair hearing boards under this paragraph (j).
    (k) Data collection. (1) The director of the designated State unit 
must collect and submit, at a minimum, the following data to the 
Commissioner of the Rehabilitation Services Administration (RSA) for 
inclusion each year in the annual report to Congress under section 13 
of the Act:
    (i) A copy of the standards used by State reviewing officials for 
reviewing decisions made by impartial hearing officers under this 
section.
    (ii) The number of mediations held, including the number of 
mediation agreements reached.
    (iii) The number of hearings and reviews sought from impartial 
hearing officers and State reviewing officials, including the type of 
complaints and the issues involved.
    (iv) The number of hearing officer decisions that were not reviewed 
by administrative reviewing officials.
    (v) The number of hearing decisions that were reviewed by State 
reviewing officials and, based on these reviews, the number of hearing 
decisions that were--
    (A) Sustained in favor of an applicant or eligible individual;
    (B) Sustained in favor of the designated State unit;
    (C) Reversed in whole or in part in favor of the applicant or 
eligible individual; and
    (D) Reversed in whole or in part in favor of the State unit.
    (2) The State unit director also must collect and submit to the 
Commissioner of RSA copies of all final decisions issued by impartial 
hearing officers under paragraph (e) of this section and by State 
review officials under paragraph (g) of this section.
    (3) The confidentiality of records of applicants and eligible 
individuals maintained by the State unit may not preclude the access of 
the RSA Commissioner to those records for the purposes described in 
this section.

(Authority: Section 102(c) of the Act; 29 U.S.C. 722(c))

Subpart C--Financing of State Vocational Rehabilitation Programs


Sec. 361.60  Matching requirements.

    (a) Federal share.--(1) General. Except as provided in paragraph 
(a)(2) of this section, the Federal share for expenditures made by the 
State under the State plan, including expenditures for the provision of 
vocational rehabilitation services and the administration of the State 
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.
    (b) Non-Federal share.--(1) General. Except as provided in 
paragraph (b) (2) and (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 funds are earmarked for--
    (i) 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) Particular geographic areas within the State for any purpose 
under the State plan, other than those described in paragraph (b)(3)(i) 
of this section, in accordance with the following criteria:
    (A) Before funds that are earmarked for a particular geographic 
area may be used as part of the non-Federal share, the State must 
notify the Secretary that the State cannot provide the full non-Federal 
share without using these funds.
    (B) Funds that are earmarked for a particular geographic area may 
be used as part of the non-Federal share without requesting a waiver of 
statewideness under Sec. 361.26.
    (C) Except as provided in paragraph (b)(3)(i) of this section, all 
Federal funds must be used on a statewide basis consistent with 
Sec. 361.25, unless a waiver of statewideness is obtained under 
Sec. 361.26; and
    (iii) Any other purpose under the State plan, provided 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: Sections 7(14), 101(a)(3), 101(a)(4) and 104 of the Act; 
29 U.S.C. 706(14), 721(a)(3), 721(a)(4) and 724))

    Example: Contributions may be earmarked in accordance with 
Sec. 361.60(b)(3)(iii) 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 in 
accordance with the requirements in Sec. 361.60(b)(3)(ii).


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: Section 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 2 years prior to the previous fiscal 
year.

    Example: For fiscal year 2000, a State's maintenance of effort 
level is based on the amount of its expenditures from non-Federal 
sources for fiscal year 1998. Thus, if the State's non-Federal 
expenditures in 2000 are less than they were in 1998, the State has 
a maintenance of effort deficit, and the Secretary reduces the 
State's allotment in 2001 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 provides for the construction of a facility for community 
rehabilitation

[[Page 10664]]

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 2 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 that result in a general reduction of programs within the 
State; or
    (ii) Require the State to make 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 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: Sections 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. For purposes of this section, 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 assisting 
Social Security beneficiaries and recipients to achieve employment 
outcomes, 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 and the 
administration of the State plan. Program income is considered earned 
when it is received.
    (2) Payments provided to a State from the Social Security 
Administration for assisting Social Security beneficiaries and 
recipients to achieve employment outcomes may also be used to carry out 
programs under part B of Title I of the Act (client assistance), part B 
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 cannot be used to meet the non-Federal share 
requirement under Sec. 361.60.

(Authority: Section 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 by the beginning of the succeeding fiscal year 
and any program income received during a fiscal year that is not 
obligated by the State by the beginning of the succeeding fiscal year 
remain available for obligation by the State 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 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: Section 19 of the Act; 29 U.S.C. 716)

[[Page 10665]]

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

[FR Doc. 00-4426 Filed 2-25-00; 8:45 am]
BILLING CODE 4000-01-P