[Federal Register Volume 65, Number 67 (Thursday, April 6, 2000)]
[Rules and Regulations]
[Pages 18214-18220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8523]



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Part IX





Department of Education





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34 CFR Part 379



Projects With Industry; Final Rule

  Federal Register / Vol. 65, No. 67 / Thursday, April 6, 2000 / Rules 
and Regulations  

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DEPARTMENT OF EDUCATION

34 CFR Part 379

RIN 1820-AB45


Projects With Industry

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

ACTION: Final regulations.

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SUMMARY: The Secretary amends the regulations governing the Projects 
With Industry (PWI) program to clarify statutory intent and to enhance 
program accountability.

DATES: These regulations are effective May 8, 2000.

FOR FURTHER INFORMATION CONTACT: Thomas E. Finch, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 3315, Mary E. Switzer 
Building, Washington, DC 20202-2575. Telephone: (202) 205-8292. If you 
use a telecommunications device for the deaf (TDD), you may call the 
Federal Information Relay Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person named in the preceding 
paragraph.

SUPPLEMENTARY INFORMATION: On January 22, 1996, we published a notice 
of proposed rulemaking (NPRM) for the PWI program in the Federal 
Register (61 FR 1672) inviting comments on changes needed to improve 
the PWI program's compliance indicators. We used the comments received 
in response to that NPRM, comments provided by participants in focus 
group meetings held by the Rehabilitation Services Administration 
(RSA), a June 1994 report on the PWI program prepared for the 
Department by the Research Triangle Institute, and RSA's analysis of 
grantee performance on the current PWI compliance indicators to develop 
revisions to the PWI compliance indicators.
    On June 23, 1998, we published an NPRM for the PWI program in the 
Federal Register (63 FR 34218) proposing revisions to the PWI 
compliance indicators. On pages 34218 through 34221 of the June 23, 
1998, NPRM, we discussed the major changes proposed in that document to 
improve project performance, enhance project accountability, better 
reflect statutory intent, and reduce grantee burden. These proposed 
changes included the following:
     Amending Sec. 379.21(a)(4) to require an applicant to 
include in its application a description of the factors that justify 
the project's projected average cost per placement.
     Amending Sec. 379.50 to eliminate the minimum composite 
scoring system for all proposed compliance indicators and replace it 
with minimum performance levels on all proposed compliance indicators. 
We also proposed the requirement that grantees attain at least the 
minimum performance level on each of the compliance indicators to be 
eligible for continuation funding.
     Amending Sec. 379.51 and Sec. 379.52 to eliminate both the 
performance ranges within each proposed compliance indicator and the 
minimum composite scoring system for all proposed compliance 
indicators. We proposed replacing these with the requirement that 
grantees attain at least the minimum performance level on each of the 
compliance indicators.
     Amending Sec. 379.53 to replace the nine compliance 
indicators with five proposed compliance indicators.
     Amending Sec. 379.54 to reflect the change from composite 
scoring to a pass/fail system.
    In addition to the proposed changes, we also stated that we 
proposed to collect data from PWI projects on ``change in earnings'' 
and ``job retention'' for individuals who receive services. We stated 
our intention to use this data to determine the need for--(a) Any 
revision to the performance level for the ``Change in earnings'' 
compliance indicator or to the compliance indicator itself; and (b) 
developing a compliance indicator, and appropriate performance level to 
measure job retention for individuals who receive PWI services.
    In response to public comment, we have made several changes in 
these final regulations from what was proposed in the June 23, 1998, 
NPRM. The final regulations--(1) Require that each grant application 
include a projected average cost per placement for the project 
(Sec. 379.21(c)); (2) require a project to pass the two ``primary'' 
compliance indicators and any two of the three ``secondary'' compliance 
indicators to receive a continuation award (Sec. 379.50); (3) designate 
two compliance indicators as ``primary'' and three compliance 
indicators as ``secondary'' (Sec. 379.51(b) and (c)); and (4) change 
the minimum performance levels for three of the compliance indicators 
(Sec. 379.53(a)(1)--Placement rate; Sec. 379.53(a)(2)--Change in 
earnings; and Sec. 379.53(b)(3)--Average cost per placement). A more 
detailed description of these and other changes to the regulations is 
contained in the ``Analysis of Comments and Changes'' section of this 
preamble.

Analysis of Comments and Changes

    In response to our invitation in the June 23, 1998, NPRM, 108 
parties submitted comments on the proposed regulations. Most commenters 
addressed more than one issue regarding the proposed regulations. We 
reviewed all comments and carefully considered these comments in the 
development of the final regulations. Major issues raised by the 
commenters are discussed under the section of the final regulations to 
which they pertain. We do not specifically discuss in this preamble: 
(1) The technical changes to the PWI regulations (published in the 
Federal Register on September 1, 1999 (64 FR 48052)) to implement the 
1998 Amendments to the Rehabilitation Act of 1973 (1998 Amendments), 
which are in title IV of the Workforce Investment Act of 1998 (WIA), 
Pub. L. 105-220 (enacted August 7, 1998); (2) changes suggested by 
commenters but that the law does not authorize us to make under the 
applicable statutory authority; and (3) other minor changes. We also 
wish to point out that the technical changes we made to the PWI 
regulations to implement the 1998 Amendments included substantial 
changes to Sec. 379.21 from what we proposed in the June 23, 1998, 
NPRM. In these final regulations, we made several additional changes to 
Sec. 379.21 beyond the technical changes we made on September 1, 1999. 
However, only one of these additional changes, which we mentioned 
previously, was significant, and the others were very minor.
    An analysis of the comments and the changes in the regulations 
since publication of the June 23, 1998, NPRM follows.

Section 379.21(a)(7)--Grant Application Must Include a Description of 
the Factors That Justify the Applicant's Projected Average Cost Per 
Placement

    Comments: Four commenters supported the requirement in proposed 
Sec. 379.21(a)(4) that an application include a justification of the 
project's proposed cost per placement.
    Discussion: We have reviewed this section and wish to clarify that 
it is the project's projected average cost per placement that must be 
justified. This clarifying change makes the application requirement 
consistent with the actual compliance indicator, which refers to the 
project's ``actual average cost per placement.'' (Emphasis added.)
    Changes: We have revised Sec. 379.21(a)(7)(proposed 
Sec. 379.21(a)(4)) by changing the word ``proposed'' to ``projected'' 
and adding the word ``average'' to the phrase ``proposed cost

[[Page 18215]]

per placement'' so that the regulations now read ``projected average 
cost per placement.''

Section 379.21(c)--Grant Application Must Include the Project's 
Projected Average Cost Per Placement

    Comments: None.
    Discussion: Since publication of the June 23, 1998, NPRM, we have 
reviewed this section and realized that the requirement to include in 
an application the projected average cost per placement was only 
implicit. The NPRM required that the grant application include a 
description of the justification of the project's proposed cost per 
placement. In addition, the NPRM proposed a minimum performance level 
not to exceed 110 percent of the projected average cost per placement 
in the grantee's application. Although this language implied that the 
grantee's application should include the projected average cost per 
placement so that the difference between the actual average cost per 
placement and the projected average cost per placement could be 
calculated, this requirement was not explicit anywhere in the NPRM. As 
a result, we believed the language in the final regulations needed to 
be clear and explicit that the applicant must include the projected 
average cost per placement in its application. In addition, we believe 
an applicant should understand that it must use the same method to 
calculate the projected average cost per placement that we have always 
used, which is to divide the sum of the total project costs (i.e., 
Federal dollar amount of the grant plus the total non-Federal 
contributions) by the number of individuals the applicant projects in 
its application will be served by the project. This method is described 
in Instruction Number 8 of the ``Instructions for Completing the 
Reporting Form for Projects With Industry Compliance Indicators and 
Annual Evaluation Report'' that we mail to each recipient of a PWI 
grant.
    Changes: We have added a new paragraph (c) to Sec. 379.21 that 
explicitly requires the applicant to include in its application the 
projected average cost per placement for the proposed project, which 
must be calculated by dividing the sum of the total project costs 
(i.e., Federal dollar amount of the grant plus the total non-Federal 
contributions) by the number of individuals the applicant projects in 
its application will be served by the project.

Section 379.50--Requirements for Continuation Funding

    Comments: Fifteen commenters opposed the requirement that grantees 
meet minimum performance levels on all program compliance indicators to 
receive continuation funding. A majority of these commenters objected 
to the proposed requirement because they believed the composite scoring 
method allowed for more flexibility in how projects achieve their 
goals. Four of these commenters favored retaining the composite scoring 
method because it allowed a project that excelled in one or more areas 
to receive continuation funding even though it might be weak or unable 
to attain the minimum performance level in one or more other areas.
    Discussion: We agree with the comments favoring more flexibility 
and have made changes to achieve a combination of flexibility and 
accountability. Under the former composite scoring method, a PWI 
project could receive zero points on as many as five of the nine 
compliance indicators and still receive continuation funding. Because 
this did not ensure the high level of performance and accountability we 
expected of all PWI projects, we proposed the changes published in the 
June 23, 1998, NPRM.
    We have since reviewed available data to determine the effect on 
PWI projects if they had been required to meet all of the five proposed 
compliance indicators to receive continuation funding. The available 
data indicated that, although most projects could have met most of the 
minimum performance levels, a significant percentage of projects might 
not have met all five of the proposed compliance indicators. These 
projects would have failed to receive continuation funding under the 
system proposed in the June 23, 1998, NPRM. After reviewing the data, 
we believe the changes we have made combine the best features of the 
minimum performance level approach and the composite scoring method.
    The changes we have made are based on the belief that placing 
individuals in competitive employment and increasing their earnings are 
the two most important purposes of the PWI program. The newly 
designated ``primary'' compliance indicators will measure how well a 
PWI project achieves these dual goals. We believe that if a project is 
unable to meet the minimum performance level for both of these two 
compliance indicators, it should not receive a continuation award.
    We believe the newly designated ``secondary'' compliance indicators 
also are important for measuring the success of a PWI project. However, 
we do not believe that the failure to meet any one of the ``secondary'' 
compliance indicators should cause an otherwise successful project to 
lose its continuation funding. Therefore, we have determined that PWI 
projects must meet only two of the three ``secondary'' compliance 
indicators to receive continuation funding.
    We believe that requiring PWI projects to meet only two of the 
three ``secondary'' compliance indicators provides the necessary 
flexibility to ensure that individuals without a significant disability 
and individuals who were unemployed for shorter periods also will have 
access to PWI services. Finally, this added flexibility will benefit 
projects--(1) Designed to excel in meeting one ``secondary'' compliance 
indicator (e.g., projects serving a high percentage of individuals with 
significant disabilities) but which may have difficulty in meeting one 
or both of the other ``secondary'' indicators; and (2) projects facing 
a variety of economic and other factors that affect how much it costs 
to provide services to individuals.
    Changes: We have revised Sec. 379.50 to eliminate the proposed 
requirement that a project meet the minimum performance levels on all 
five compliance indicators to receive a continuation award. We also 
have divided the proposed five compliance indicators into ``primary'' 
and ``secondary'' compliance indicators. ``Placement rate'' and 
``Change in earnings'' are ``primary'' indicators. ``Percent placed who 
have significant disabilities,'' ``Percent placed who were previously 
unemployed,'' and ``Cost per placement'' are ``secondary'' indicators. 
We have revised Sec. 379.50 to require that a grantee meet the minimum 
performance levels of the two newly designated ``primary'' compliance 
indicators and any two of the three newly designated ``secondary'' 
compliance indicators to receive continuation funding. This last change 
makes proposed Sec. 379.52(c) incorrect. Therefore, we have deleted 
Sec. 379.52(c).
    Comments: Four commenters believed that eliminating the composite 
scoring method (on which continuation funding was based) in the middle 
of a grant period is unfair to existing grantees.
    Discussion: We are sensitive to the concerns of commenters that 
existing projects should not be unfairly penalized for grant proposals 
that were produced under the previous compliance indicators. We also 
recognize the need for a delay in the implementation of the indicators 
and the need to allow projects the opportunity to negotiate changes to 
their approved grant applications.

[[Page 18216]]

    Changes: We have determined that implementation of the new 
compliance indicators should begin on October 1, 2000. We also will 
provide an existing project a one-time opportunity to negotiate, prior 
to July 1, 2000, reasonable changes to the content of its approved 
grant application, consistent with these regulations.

Section 379.51--What Are the Program Compliance Indicators?

    Comments: One commenter recommended retaining two of the former 
compliance indicators (``Percent of persons served whose disabilities 
are significant'' and ``Percent of persons served who have been 
unemployed for at least 6 months at the time of project entry'') in 
addition to those we proposed.
    Discussion: We believe that these two former compliance indicators 
identified by the commenters should no longer be used to measure a 
project's performance for the reasons given in the preamble to the June 
23, 1998, NPRM. As we stated in that preamble, projects should be 
judged on the extent to which they are successful in assisting 
individuals to achieve competitive employment, including those with a 
significant disability and those who have been unemployed at least 6 
months prior to project entry. We believe that discontinuing the use of 
these two compliance indicators places more focus on a project's actual 
success in placing individuals in competitive employment, better 
reflects the goals of the PWI program, and reduces grantee information 
collection and reporting burden.
    Changes: None.
    Comments: One commenter proposed a new compliance indicator to 
measure the active involvement of the Business Advisory Council (BAC) 
in the structure and operation of a PWI project.
    Discussion: The 1998 Amendments strengthened the role of the BACs 
in PWI projects in the following ways: (1) The project's BAC must 
include a representative of the appropriate designated State unit. (2) 
The identification of job and career availability must be consistent 
with the current and projected local employment opportunities 
identified by the local workforce investment board for the community 
under section 118(b)(1)(B) of WIA. (3) The BAC has the option to 
prescribe either training programs or job placement programs in fields 
related to the job and career availability it has identified. We 
believe the most effective method of ensuring BAC involvement in a PWI 
project is to monitor the extent to which a BAC complies with the 
revised statutory requirements. The technical amendments to the PWI 
regulations, including those made to Sec. 379.21(a)(1), are designed to 
ensure BAC compliance with those statutory requirements.
    Change: None.

Section 379.52--How Is Grantee Performance Measured Using the 
Compliance Indicators?

    Comments: All but one of the commenters who addressed this section 
of the regulations opposed the proposed requirement that a grantee pass 
all of the proposed compliance indicators to qualify for continuation 
funding. Some commenters believed that a pass/fail approach would 
penalize projects that are unable, due to the individual 
characteristics of the project or for reasons beyond the project's 
control, to meet one or more of the proposed compliance indicators. 
Some commenters expressed concern that an entire project could fail by 
experiencing a temporary deficiency in one area even though the 
project's performance and achievements are outstanding in all other 
areas.
    Discussion: For the reasons stated in the discussion to 
Sec. 379.50, we believe the previous composite scoring system that 
allowed a project to fail five of the nine compliance indicators and 
yet receive continuation funding was detrimental both to the PWI 
program and individuals served by the PWI program. We believe 
deficiencies that would make a project ineligible to receive 
continuation funding are adequately addressed through the provisions of 
Sec. 379.54(c), which allow grantees to submit data from the first 6 
months of the current budget period to demonstrate that a project's 
performance has improved sufficiently to meet the minimum performance 
level or levels.
    Changes: None.

Section 379.53--What Are the Minimum Performance Levels for Each 
Compliance Indicator?

(a) Placement Rate
    Comments: Eleven commenters addressed the proposed requirement that 
a minimum of 55 percent of individuals served by the project be placed 
into competitive employment. Three of these commenters supported the 
proposed compliance indicator, citing the importance of this indicator 
in determining whether the overall purpose of the PWI program is being 
met. Three commenters expressed concern that the 55 percent level of 
compliance was too high and would adversely affect projects serving 
large percentages of individuals with significant disabilities or other 
individuals who are more difficult to place in employment. Two 
commenters believed that the proposed compliance indicator failed to 
consider local economic conditions and changes in those conditions that 
are beyond the control of the project.
    Discussion: As stated previously, we remain committed to 
implementing compliance indicators for the PWI program that ensure 
sufficiently high standards of performance and accountability in the 
use and expenditure of Federal funds. We realize that increasing the 
minimum performance on this indicator from 40 percent to 55 percent may 
cause some difficulty for some projects. Therefore, we have decided to 
phase in the new minimum performance level over a period of 5 years. 
The minimum performance level for this indicator will be 50 percent for 
fiscal year (FY) 2001, which is 5 percentage points lower than what we 
proposed in the NPRM. This minimum performance level will increase to 
55 percent by FY 2005. We believe that starting at a lower minimum 
level than what we proposed and phasing in the higher minimum 
performance level for the placement rate is warranted to help ensure 
that otherwise effective projects do not fail this compliance indicator 
because they serve individuals with significant disabilities or because 
of the location of the project (e.g., rural areas). The 5 years should 
be more than sufficient time to improve a project's performance, even 
for those projects that serve individuals with significant disabilities 
or that are in a location that makes it difficult to place individuals 
(e.g., rural areas).
    Changes: We have lowered the proposed minimum performance level for 
the ``Placement rate'' indicator in Sec. 379.53(a)(1) from 55 percent 
to 50 percent for FY 2001. However, we have established a phased-in 
increase in the performance level as follows: 51 percent for FY 2002; 
52 percent for FY 2003; 54 percent for FY 2004; and 55 percent for FY 
2005.
(b) Change in Earnings
    Comments: Sixty-six commenters expressed concern with the proposed 
``Change in earnings'' indicator. Thirty-nine of the commenters, all 
from the State of Maine, were opposed to the proposed compliance 
indicator because they believe the $150 per week minimum increase in 
earnings for an individual placed by the project is unfair to projects 
operating in rural or poor States because the job market

[[Page 18217]]

consists mainly of small businesses that provide primarily part-time 
employment. In addition, 17 of the commenters felt that the proposed 
compliance indicator fails to consider those individuals seeking career 
advancement who may not achieve an increase in earnings of $150.00 per 
week. Nine of the commenters felt that the proposed performance level 
discourages individuals from considering part-time work. One of the 
commenters believed that the proposed threshold of 75 percent for 
projects serving individuals in supported employment and projects 
serving students working fewer than 30 hours per week in the ``Change 
in earnings'' indicator is too high.
    Discussion: We agree that the proposed ``Change in earnings'' 
compliance indicator needs to be restructured. The proposed ``Change in 
earnings'' compliance indicator contained three categories of projects, 
each of which had different performance levels. These categories were 
projects in which at least 75 percent of individuals placed are placed 
into supported employment, projects in which 75 percent of individuals 
placed are students enrolled in secondary schools who work fewer than 
30 hours per week, and all other projects. Under the proposed 
regulations, the performance level for projects in the first two 
categories (i.e., supported employment and students) required an 
average increase in earnings of at least $100 per week. The proposed 
level for all other projects was $150 per week.
    Because many other projects (e.g., ``supported employment'' 
projects and those with secondary school students) may place a large 
percentage of persons who need or choose to obtain part-time 
employment, we believe combining the two proposed exceptions to this 
performance level in the final regulations will simplify this 
indicator. In addition, we believe lowering the proposed minimum level 
of increase in earnings will be more fair to projects operating in 
rural or poor States, make it easier for projects that serve 
individuals seeking career advancement, and eliminate any undue penalty 
to projects serving individuals who want to work part-time.
    Changes: We have lowered the proposed minimum ``Change in 
earnings'' performance level in Sec. 379.53(a)(2)(A) to $125 per week. 
In addition, we have combined the two proposed exceptions to this 
requirement into one exception now found in Sec. 379.53(a)(2)(B). The 
``Change in earnings'' indicator in the final regulations has two 
categories with different performance levels: (1) Projects in which at 
least 75 percent of individuals placed in competitive employment are 
working fewer than 30 hours per week (average increase in earnings of 
$100.00 per week). (2) All other projects (average increase in earnings 
of $125 per week). The revised compliance indicator requires that, if 
at least 75 percent of the individuals placed by a project work fewer 
than 30 hours per week, their minimum change in earnings must increase 
by an average of at least $100 per week over earnings at the time of 
project entry.
(c) Percent Placed Who Have Significant Disabilities
    Comments: The two commenters who specifically addressed the 
proposed ``Percent placed who have significant disabilities'' 
compliance indicator suggested that we consider increasing the 
performance level for this indicator. One of these commenters felt that 
PWI projects should move toward serving higher percentages of 
individuals with significant disabilities, as is currently the practice 
in State vocational rehabilitation (VR) programs.
    Discussion: We do not believe that the proposed performance level 
for the ``Percent placed who have significant disabilities'' compliance 
indicator should be modified at this time. Title I of the 
Rehabilitation Act requires a State VR agency to give priority to 
serving those individuals with the most significant disabilities if it 
cannot serve all eligible individuals. There is no similar requirement 
in the PWI program's authorizing language. Although we are committed to 
serving individuals with significant disabilities, we believe that 
flexibility is needed to ensure that persons who are not ``individuals 
with a significant disability'' also have access to PWI services.
    We also intend to review on a periodic basis each project's 
performance relative to the minimum performance level for all 
compliance indicators. If warranted, we will adjust the performance 
level for this compliance indicator, as well as all other compliance 
indicators.
    Changes: None.
(d) Percent Placed Who Were Previously Unemployed
    Comments: Seven commenters addressed the proposed ``Percent placed 
who were previously unemployed'' indicator. Six of the commenters 
raised concerns that some projects may have difficulty meeting this 
compliance indicator because they serve a number of individuals who are 
already employed or who have performed temporary or seasonal work 
within 6 months prior to entering the program. One of these commenters 
expressed concern that the steady decrease in the percentage of 
previously unemployed individuals who have entered this commenter's 
project over the past 2 years makes it more difficult to achieve 
compliance with this indicator.
    Discussion: We believe that the proposed performance level for this 
compliance indicator is already set at a level that will allow most 
projects to serve a considerable number of individuals who are already 
employed or who have performed temporary or seasonal work. In addition, 
available data show that a large majority of projects already exceed 
this compliance indicator by sizable margins. Therefore, we do not 
believe that the performance level for this compliance indicator 
requires modification.
    Changes: None.
(e) Average Cost Per Placement
    Comments: Fifty-seven commenters expressed concerns about the 
``Average cost per placement'' indicator. Thirty-four of these 
commenters were concerned that the proposed requirement will have an 
adverse effect on existing projects, and they believed it would be 
unfair to change rules in the middle of a project period. These 
commenters also questioned whether projects would be allowed to 
renegotiate the estimated ``cost per placement.'' Twenty-one commenters 
believed that it would not be possible to predict, within a 10 percent 
margin of error, the projected ``average cost per placement'' 6 years 
into the future, as required at the time of application. Two commenters 
stated that, because the cost of services varies significantly from 
individual to individual, it is difficult to project costs in advance. 
Another commenter noted that the unemployment rate, which fluctuated 
from a low of 5.8 percent to a high of 9.0 percent over a recent 5-year 
grant period, had a significant impact on the cost per placement, and 
that no one could have predicted these fluctuations. Three commenters 
believed that projects will deny needed costly services to individuals 
with significant disabilities to avoid exceeding the projections and 
failing this compliance indicator.
    Discussion: We agree with the commenters that the proposed 
performance level for this compliance indicator needed more flexibility 
and that the allowable difference between the projected and actual 
average cost per placement needed to be increased. We believe that 
allowing for a larger difference between the projected and

[[Page 18218]]

actual average cost per placement will provide for greater flexibility 
in the types of services PWI projects provide. The available data 
suggests that a substantially larger number of PWI projects will be 
able to meet the performance level for this compliance indicator if the 
allowable difference between the projected and actual average cost per 
placement is greater than what we had proposed.
    We also intend to review on a periodic basis each project's 
performance relative to the minimum performance level on this 
compliance indicator. If warranted, we will adjust the performance 
level for this compliance indicator, as well as for any other 
compliance indicator.
    Changes: We have raised the allowable change between projected and 
actual ``Average cost per placement'' in Sec. 379.53(b)(3) from 110 
percent to 115 percent.

Goals 2000: Educate America Act

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

Executive Order 12866

    We have reviewed these final regulations in accordance with 
Executive Order 12866. Under the terms of the order, we have assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
costs resulting from statutory requirements and those costs we have 
determined to be necessary for administering this program effectively 
and efficiently.
    In assessing the potential costs and benefits (both quantitative 
and qualitative) of these final regulations, we have determined that 
the benefits of the final regulations justify the costs.
    We also have determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.

Summary of Potential Costs and Benefits

    We summarized the potential costs and benefits of these final 
regulations in the preamble to the June 23, 1998, NPRM under the 
heading ``Summary of potential costs and benefits.'' (63 FR 34218, 
34221) We include additional discussion of potential costs and benefits 
in the section of this preamble titled ``Analysis of Comments and 
Changes.''

Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995 does not require you to respond 
to a collection of information unless it displays a valid Office of 
Management and Budget (OMB) control number. We display the valid OMB 
control number assigned to the collection of information in these final 
regulations at the end of the affected sections of the regulations.

Intergovernmental Review

    This program is subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. The objective of the 
Executive order is to foster an intergovernmental partnership and a 
strengthened federalism by relying on processes developed by State and 
local governments for coordination and review of proposed Federal 
financial assistance. The order and the regulations in 34 CFR part 79 
do not apply to federally recognized Indian tribes or tribal 
organizations.
    In accordance with the order, we intend this document to provide 
early notification of the Department's specific plans and actions for 
this program.

Assessment of Educational Impact

    In the June 23, 1998, NPRM, we requested comments on whether the 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 
available. Based on the response to the June 23, 1998, NPRM and on our 
review, we have determined that these final regulations do not 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 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 84.234 Projects With 
Industry)

List of Subjects in 34 CFR Part 379

    Education, Grant programs--education, Grant programs--social 
programs, Reporting and recordkeeping requirements, Vocational 
rehabilitation.

    Dated: January 27, 2000.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.

    For the reasons discussed in the preamble, the Secretary amends 
part 379 of title 34 of the Code of Federal Regulations as follows:

PART 379--PROJECTS WITH INDUSTRY

    1. The authority citation for part 379 continues to read as 
follows:

    Authority: Sections 12(c) and 621 of the Act; 29 U.S.C. 711(c) 
and 795(g), unless otherwise noted.


    2. Section 379.21 is revised to read as follows:


Sec. 379.21  What is the content of an application for an award?

    (a) The grant application must include a description of--
    (1) The responsibilities and membership of the BAC, consistent with 
section 611(a)(2)(A) of the Act, and how it will interact with the 
project in carrying out grant activities, including how the BAC will--
    (i) Identify job and career availability within the community, 
consistent with the current and projected local employment 
opportunities identified by the local workforce investment board for 
the community under section 118(b)(1)(B) of the Workforce Investment 
Act of 1998;
    (ii) Identify the skills necessary to perform the jobs and careers 
identified; and

[[Page 18219]]

    (iii) For individuals with disabilities in fields related to the 
job and career availability identified under paragraph (a)(1)(i) of 
this section, prescribe either--
    (A) Training programs designed to develop appropriate job and 
career skills; or
    (B) Job placement programs designed to identify and develop job 
placement and career advancement opportunities;
    (2) How the project will provide job development, job placement, 
and career advancement services to project participants;
    (3) To the extent appropriate, how the project will provide for--
    (i) Training in realistic work settings to prepare individuals with 
disabilities for employment and career advancement in the competitive 
market; and
    (ii) To the extent practicable, the modification of any facilities 
or equipment of the employer involved that are used primarily by 
individuals with disabilities, except that a project will not be 
required to provide for that modification if the modification is 
required as a reasonable accommodation under the Americans with 
Disabilities Act of 1990;
    (4) How the project will provide individuals with disabilities with 
support services that may be required to maintain the employment and 
career advancement for which the individuals have received training 
under this part;
    (5) How the project will involve private industry in the design of 
the proposed project and the manner in which the project will 
collaborate with private industry in planning, implementing, and 
evaluating job development, job placement, career advancement 
activities, and, to the extent included as part of the activities to be 
carried out by the project, job training activities;
    (6) A plan to annually conduct a review and evaluation of the 
operation of the proposed project in accordance with the program 
compliance indicators and evaluation standards in Subpart F of this 
part and, in conducting the review and evaluation, to collect data and 
information of the type described in subparagraphs (A) through (C) of 
section 101(a)(10) of the Act, as determined to be appropriate by the 
Secretary;
    (7) The factors that justify the applicant's projected average cost 
per placement, including factors such as the project's objectives, 
types of services, target population, and service area, and how these 
factors affect the projection;
    (8) The geographic area to be served by the project, including an 
explanation of how the area is currently unserved or underserved by the 
PWI program; and
    (9) How the project will address the needs of individuals with 
disabilities from minority backgrounds, as required by section 21(c) of 
the Act.
    (b) The grant application also must include assurances from the 
applicant that--
    (1) The project will carry out all activities required in 
Sec. 379.10;
    (2) Individuals with disabilities who are placed by the project 
will receive compensation at or above the minimum wage, but not less 
than the customary or usual wage paid by the employer for the same or 
similar work performed by individuals who are not disabled;
    (3) Individuals with disabilities who are placed by the project 
will--
    (i) Be given terms and benefits of employment equal to terms and 
benefits that are given to similarly situated nondisabled co-workers; 
and
    (ii) Not be segregated from their co-workers;
    (4) The project will maintain any records required by the Secretary 
and make those records available for monitoring and audit purposes;
    (5) The project will provide to the Secretary an annual evaluation 
report of project operations as required in Sec. 379.21(a)(6) and will 
submit reports in the form and detail and at the time required by the 
Secretary; and
    (6) The applicant will comply with any requirements necessary to 
ensure the correctness and verification of those reports.
    (c) The grant application also must include the projected average 
cost per placement for the project, which must be calculated by 
dividing the sum of the total project costs (i.e., Federal dollar 
amount of the grant plus the total non-Federal contributions) by the 
number of individuals the applicant projects in its application will be 
served by the project.

(Approved by the Office of Management and Budget under control 
number 1820-0631)
(Authority: Section 611 of the Act; 29 U.S.C. 795)


    3. Subpart F of part 379 is revised to read as follows:

Subpart F--What Compliance Indicator Requirements Must a Grantee 
Meet To Receive Continuation Funding?

379.50  What are the requirements for continuation funding?
379.51  What are the program compliance indicators?
379.52  How is grantee performance measured using the compliance 
indicators?
379.53  What are the minimum performance levels for each compliance 
indicator?
379.54  What are the reporting requirements for the compliance 
indicators?

Subpart F--What Compliance Indicator Requirements Must a Grantee 
Meet To Receive Continuation Funding?


Sec. 379.50  What are the requirements for continuation funding?

    To receive a continuation award for the third or subsequent year of 
the PWI grant, a grantee must--
    (a) Adhere to the provisions of its approved application; and
    (b) Meet the minimum performance levels on--
    (1) The two ``primary'' program compliance indicators identified in 
Sec. 379.51(b) and described in Sec. 379.53(a); and
    (2) Any two of the three ``secondary'' compliance indicators 
identified in Sec. 379.51(c) and described in Sec. 379.53(b).

(Authority: Section 611(f)(4) of the Act; 29 U.S.C. 795(f)(4))

Sec. 379.51  What are the program compliance indicators?

    (a) General. The program compliance indicators implement program 
evaluation standards, which are contained in an appendix to this part, 
by establishing minimum performance levels in essential project areas 
to measure the effectiveness of individual grantees.
    (b) Primary compliance indicators. ``Placement rate'' and ``Change 
in earnings'' are ``primary'' compliance indicators.
    (c) Secondary compliance indicators. ``Percent placed who have 
significant disabilities,'' ``Percent placed who were previously 
unemployed,'' and ``Average cost per placement'' are ``secondary'' 
compliance indicators.

(Authority: Sections 611(d)(1) and 611(f)(1) of the Act; 29 U.S.C. 
795(d)(1) and 795(f)(1))

Sec. 379.52  How is grantee performance measured using the compliance 
indicators?

    (a) Each compliance indicator establishes a minimum performance 
level.
    (b) If a grantee does not achieve the minimum performance level for 
a compliance indicator, the grantee does not pass the compliance 
indicator.

(Authority: Section 611(f)(1) of the Act; 26 U.S.C. 795(f)(1))

Sec. 379.53  What are the minimum performance levels for each 
compliance indicator?

    (a) Primary compliance indicators.
    (1) Placement rate. The project places individuals it serves into 
competitive employment as follows:

[[Page 18220]]

    (i) No less than 50 percent during fiscal year (FY) 2001.
    (ii) No less than 51 percent during FY 2002.
    (iii) No less than 52 percent during FY 2003.
    (iv) No less than 54 percent during FY 2004.
    (v) No less than 55 percent during FY 2005 and any year thereafter.
    (2) Change in earnings. (i) Except as provided in paragraph 
(a)(2)(ii) of this section, the average earnings of all individuals who 
are placed into competitive employment by the project increase by an 
average of at least $125.00 a week over the average earnings of all 
individuals at the time of project entry.
    (ii) For projects in which at least 75 percent of individuals 
placed into competitive employment are working fewer than 30 hours per 
week, the average earnings of all individuals placed by the project 
increase by an average of at least $100.00 a week over the average 
earnings of all individuals at the time of project entry.
    (b) Secondary compliance indicators.
    (1) Percent placed who have significant disabilities. At least 50 
percent of individuals who are placed into competitive employment are 
individuals with significant disabilities.
    (2) Percent placed who were previously unemployed. At least 50 
percent of individuals who are placed into competitive employment are 
individuals who were continuously unemployed for at least 6 months at 
the time of project entry.
    (3) Average cost per placement. The actual average cost per 
placement does not exceed 115 percent of the projected average cost per 
placement in the grantee's application.

(Authority: Section 611(f)(1) of the Act; 29 U.S.C. 795(f)(1))

Sec. 379.54  What are the reporting requirements for the compliance 
indicators?

    (a) To receive continuation funding for the third or any subsequent 
year of a PWI grant, each grantee must submit to the Secretary data for 
the most recent complete budget period no later than 60 days after the 
end of that budget period, unless the Secretary authorizes a later 
submission date. The Secretary uses this data to determine if the 
grantee has met the program compliance indicators in this subpart F.
    (b) A grantee may receive its second year of funding (or the first 
continuation award) under this program before data from the first 
complete budget period is available. However, to allow the Secretary to 
determine whether the grantee is eligible for the third year of funding 
(or the second continuation award), the grantee must submit data from 
the first budget period in accordance with paragraph (a) of this 
section.
    (c) If the data for the most recent complete budget period provided 
under paragraph (a) or (b) of this section show that a grantee has 
failed to achieve the minimum performance levels, as required by 
Sec. 379.50(b), the grantee may, at its option, submit data from the 
first 6 months of the current budget period. The grantee must submit 
this data no later than 60 days after the end of that 6-month period, 
unless the Secretary authorizes a later submission date. The data must 
demonstrate that the grantee's project performance has improved 
sufficiently to meet the minimum performance levels required in 
Sec. 379.50(b).

(Approved by the Office of Management and Budget under control 
number 1820-0631)

(Authority: Section 611(f)(2) and 611(f)(4) of the Act; 29 U.S.C. 
795(f)(2) and 795(f)(4))

[FR Doc. 00-8523 Filed 4-5-00; 8:45 am]
BILLING CODE 4000-01-P