[Federal Register Volume 65, Number 108 (Monday, June 5, 2000)]
[Rules and Regulations]
[Pages 35792-35801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13948]



[[Page 35791]]

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Part IV





Department of Education





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34 CFR Part 361



The State Vocational Rehabilitation Services Program; Final Rule

  Federal Register / Vol. 65, No. 108 / Monday, June 5, 2000 / Rules 
and Regulations  

[[Page 35792]]


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DEPARTMENT OF EDUCATION

34 CFR Part 361

RIN 1820-AB14


The State Vocational Rehabilitation Services Program

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

ACTION: Final regulations.

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SUMMARY: The Secretary amends the regulations governing The State 
Vocational Rehabilitation Services Program (VR program). These 
amendments are needed to implement changes in the Rehabilitation Act of 
1973, as amended (Act). These changes establish evaluation standards 
and performance indicators for the VR program.

DATES: These regulations are effective July 5, 2000.

FOR FURTHER INFORMATION CONTACT: Beverlee Stafford, Policy, Planning 
and Evaluation Service, Rehabilitation Services Administration, U.S. 
Department of Education, 400 Maryland Avenue, SW., room 3014 Mary E. 
Switzer Building, Washington, DC 20202-2550. Telephone: (202) 205-8831.
    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 of the Alternate Format 
Center, at (202) 205-8113.
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-800-877-8339 to 
reach either Beverlee Stafford or Katie Mincey.

SUPPLEMENTARY INFORMATION: The VR program is authorized by Title I of 
the Act (29 U.S.C. 701-751). This program provides support to assist 
States in operating a comprehensive, coordinated, effective, efficient, 
and accountable program to assess, plan, develop, and provide 
vocational rehabilitation (VR) services to individuals with 
disabilities to enable them to prepare for and engage in gainful 
employment, consistent with their strengths, resources, priorities, 
concerns, abilities, capabilities, and informed choice. Section 106 of 
the Act requires that the Secretary establish and publish evaluation 
standards and performance indicators for the program. These final 
regulations implement that requirement.
    Pursuant to section 106(a)(3) of the Act and Executive Order 12866, 
which encourages Federal agencies to facilitate meaningful 
participation in the regulatory development process, the Secretary, 
through the Rehabilitation Services Administration (RSA) of the U.S. 
Department of Education (Department)--(1) consulted with the 
rehabilitation community during the development of the evaluation 
standards and performance indicators; (2) published a ``notice of 
intent to regulate'' to solicit comments on the development of the 
proposed evaluation standards and performance indicators; (3) held a 
public meeting to discuss several issues related to the development of 
proposed evaluation standards and performance indicators; (4) discussed 
the development of the proposed indicators on numerous occasions with 
various members of the rehabilitation community; and (5) published for 
review and comment a notice of proposed rulemaking (NPRM) for this 
program in the Federal Register, 63 FR 55292 (October 14, 1998). In 
response to the NPRM, we received 62 comments, each of which we 
reviewed and considered in the development of the final regulations. 
These final regulations reflect the input received through these 
efforts.
    These final regulations amend 34 CFR part 361, which contains the 
VR program regulations, by adding a Subpart E entitled ``Evaluation 
Standards and Performance Indicators.'' These final regulations 
implement certain requirements of the Rehabilitation Act Amendments of 
1992 (1992 Amendments), Pub. L. 102-569 (October 29, 1992), and the 
Rehabilitation Act Amendments of 1998 (1998 Amendments), which are in 
Title IV of the Workforce Investment Act of 1998 (WIA), Pub. L. 105-220 
(August 7, 1998). The 1992 Amendments added section 106 to part A of 
Title I of the Act, which requires the Secretary to establish and 
publish evaluation standards and performance indicators. The 1998 
Amendments modified section 106 of the Act to require that, to the 
maximum extent practicable, the VR standards and indicators be 
consistent with the core indicators of performance (Core Indicators) 
established under section 136(b) of WIA.
    Section 106 of the Act also includes, among other things, the 
following requirements: (1) The Secretary establishes and publishes in 
the Federal Register evaluation standards and performance indicators 
for the VR program. (2) The evaluation standards and performance 
indicators must include outcome and related measures of program 
performance that facilitate the accomplishment of the purpose and 
policy of the VR program. (3) The Secretary develops the evaluation 
standards and performance indicators with input from State VR agencies 
(or the designated State unit), related professional and consumer 
organizations, recipients of VR services, and other interested parties. 
(4) Each designated State unit (DSU) must report to the Secretary after 
the end of each fiscal year the extent to which it is in compliance 
with the evaluation standards and performance indicators. (5) The 
Secretary provides technical assistance to any DSU that performs below 
the established evaluation standards and develops jointly with the DSU 
a program improvement plan outlining the specific actions to be taken 
by the DSU to improve program performance. (6) If a DSU that performs 
below the established evaluation standards fails to enter into a 
program improvement plan, or is not complying substantially with the 
terms and conditions of such a program improvement plan, the Secretary 
reduces or makes no further payments under the VR program to the DSU 
until the DSU has entered into an approved program improvement plan or 
is complying substantially with the terms and conditions of such a 
program improvement plan. (7) The Secretary provides an annual report 
to Congress containing an analysis of program performance, including 
relative State performance, based on the evaluation standards and 
performance indicators.
    The NPRM contained two evaluation standards, each of which had at 
least two or more implementing performance indicators by which to 
measure DSU performance. The NPRM also contained specific proposed 
performance levels for each indicator that identified the minimum level 
of performance that a DSU would need to achieve to pass a given 
indicator. Under the NPRM, a DSU would have had to pass a minimum of 
five of the seven proposed performance indicators, including at least 
two of the three proposed primary indicators, for Evaluation Standard 1 
and both proposed performance indicators for Evaluation Standard 2.
    These final regulations contain a limited number of significant 
changes to what we proposed in the NPRM. These changes are based on 
both public comment and interdepartmental review. A detailed 
description of these changes is contained in the ``Analysis of Comments 
and Changes'' section. In addition, we reviewed and revised the final 
regulations in accordance with the Department's ``Principles for

[[Page 35793]]

Regulating,'' which were developed as part of the Administration's 
regulatory reinvention initiative under the ``National Performance 
Review II.'' The principles are designed to ensure that we regulate in 
the most flexible, most equitable, and least burdensome way possible.

Analysis of Comments and Changes

    In response to our invitation in the NPRM, we received 62 comments 
on the proposed regulations. Our analysis of the comments and of the 
changes in the regulations since publication of the NPRM follows.
    We group major issues according to subject under appropriate 
sections of the regulations. We discuss other substantive issues under 
the sections of the regulations to which they pertain. Generally, we do 
not address technical and other minor changes--and suggested changes 
the law does not authorize the Secretary to make. Please note also 
that, in the NPRM, we requested comments on several issues regarding 
performance standards and indicators that are currently under 
consideration for regulatory development, including draft proposed 
Evaluation Standard 3 (Consumer Satisfaction), draft proposed 
Evaluation Standard 4 (Retention of Employment and Earnings), and draft 
proposed Evaluation Standard 5 (Adequate Use of Resources). We received 
many comments on these draft proposed evaluation standards and will 
give each comment serious consideration during the development of 
additional standards and indicators. We thank all individuals and 
organizations for their input.

Section 361.81  Applicable Definitions

Definition of ``Full-time Employment''
    Comments: Five commenters stated that requiring a minimum of 35 
hours per week for a position to be considered ``full time'' is not 
realistic and recommended that the number of hours be lowered to 30 or 
32 hours as a more accurate reflection of existing workplace 
conditions. Other commenters objected to any minimum for the number of 
hours worked per week required to constitute ``full-time employment'' 
and stated that the determination of whether the work is ``full time'' 
should be consistent with the implementation of the individual's 
Individualized Plan for Employment (IPE).
    Discussion: The proposed definition of ``full-time employment'' 
applied only to proposed Performance Indicator 1.7, which would have 
measured the percentage of individuals in ``full-time,'' competitive 
employment who would have been eligible to enroll in a medical 
insurance program. Because we have deleted proposed Performance 
Indicator 1.7 (for reasons discussed later in this preamble), a 
definition of the term ``full-time employment'' is no longer necessary.
    Changes: We have deleted the proposed definition.
Definition of ``Individuals From a Minority Background''
    Comments: None.
    Discussion: We have adopted the designations mandated by the Office 
of Management and Budget (OMB) for reporting and recording race and 
ethnicity, as mandated in the ``Revisions to the Standards for the 
Classification of Federal Data on Race and Ethnicity'' (Revisions), 62 
FR 58, 781-85, and 790 (October 30, 1997). These designations are 
mandatory for all new and revised recordkeeping or reporting 
requirements that include racial or ethnic information after the 
publication date of the ``Revisions.''
    Changes: Because OMB designates ``individuals from a minority 
background'' differently from the definition included in the NPRM, we 
have changed the proposed regulatory definition to conform to OMB's 
designation.
Definition of ``Non-minority Individual''
    Comments: Eight commenters disagreed with the proposed definition 
of ``non-minority individual'' and recommended that the term be defined 
as those individuals whose ethnicity or race is reported as White who 
are non-Hispanic.
    Discussion: As we previously discussed, we have adopted the race 
and ethnicity designations mandated by OMB for recording and reporting 
race and ethnicity. The NPRM proposed to identify as ``non-minority 
individuals'' those individuals who designate themselves as both non-
Hispanic and White using the OMB-mandated designations.
    The ``Revisions'' mentioned previously-- (a) require the data 
collector to request that the individual identify himself or herself; 
and (b) explicitly allow the individual to identify as many race or 
ethnicity designations as the individual believes apply. The data 
collector is to accept the individual's designation or designations and 
may not make any independent judgment regarding the individual's 
choice.
    Changes: We have revised the definition of ``non-minority 
individuals'' to be consistent with OMB's definition.
Definition of ``Service Rate''
    Comments: Two commenters requested clarification of this term. 
These commenters stated that it was not clear whether the computation 
would be based on the rate services are accessed or the rate employment 
outcomes are achieved.
    Discussion: The term ``service rate'' reflects the rate at which 
services were received by individuals who exited the VR program and is 
not based on the rate at which the individuals achieve employment. (The 
response to comments regarding Performance Indicator 2.1 includes an 
expanded discussion of this issue.)
    The numerator for the service rate calculation is the number of 
individuals whose records are closed after they have received services 
under an IPE, whether or not they achieved an employment outcome. The 
denominator of the ratio is the number of all individuals whose records 
are closed after they had applied for services, whether or not they had 
an IPE. The denominator includes those individuals who-- (1) applied 
for VR services but were not accepted into the program for any reason 
(including failure to cooperate, moved, etc.); (2) had been accepted 
for VR services but did not receive services for any reason (including 
those individuals who withdrew from the program while on a waiting list 
where the DSU is under an order of selection for services); (3) 
received services under an IPE but did not achieve an employment 
outcome; and (4) received services under an IPE and achieved an 
employment outcome. RSA will calculate the service rate for both 
minority and non-minority VR consumers.
    Changes: None.

Section 361.82  Evaluation Standards

    Comments: Two commenters expressed concern that the evaluation 
standards and performance indicators do not assess whether the 
employment outcome is consistent with the individual's informed 
vocational choice.
    Discussion: While these final regulations do not contain a 
performance indicator for measuring informed choice, we want to 
emphasize our commitment to ensuring that each individual applicant and 
eligible individual is able to exercise informed choice throughout the 
VR process. We also want to emphasize that we expect to develop an 
indicator to measure the extent to which informed choice is part of the 
provision of services. As discussed in the preamble to the NPRM, we 
have proposed development of an evaluation standard for consumer

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satisfaction (draft proposed Evaluation Standard 3 (Consumer 
Satisfaction)) that, in part, would measure the level of informed 
choice given to consumers during the VR process. We are in the process 
of reviewing the comments received on draft proposed Evaluation 
Standard 3. However, until an evaluation standard for measuring 
informed choice is formally proposed through the regulatory process, 
the requirement for informed choice will continue to be enforced 
through the monitoring and review process mandated in section 107 of 
the Act.
    Changes: None.

Section 361.84(c)  Performance Indicators

Section 361.84(c)(1)(i)  Performance Indicator 1.1

    Comments: One commenter suggested that Performance Indicator 1.1 be 
changed to measure the number of people who ``enter employment'' to 
make this indicator consistent with Core Indicator I under section 
136(b) of WIA. The commenter notes that Core Indicator I measures the 
extent to which individuals ``enter unsubsidized employment,'' while 
Performance Indicator 1.1 will measure the extent to which individuals 
``exiting the VR program * * * achieved an employment outcome.'' The 
commenter questioned the need for the differences between the two 
measures and also questioned whether Performance Indicator 1.1--under 
which individuals with disabilities must maintain employment for at 
least 90 days to be considered to have ``achieved an employment 
outcome''--establishes a more restrictive standard for the VR program 
than that which applies to programs under Title I of WIA.
    Discussion: As the commenter correctly points out, the Act requires 
that the standards and indicators for the VR program be consistent, to 
the maximum extent practicable, with the four Core Indicators 
established under section 136(b) of WIA. To that end, Performance 
Indicator 1.1 is consistent with the general objective of the WIA Core 
Indicators, which is to examine the success in achieving employment 
outcomes for individuals receiving services, but also accounts for the 
range of employment outcomes available under the VR program. 
``Employment outcomes'' under the VR program include the full scope of 
employment options available to persons receiving VR services (e.g., 
competitive employment, employment in non-integrated settings, 
homemaker, and unpaid family worker), whether those ``employment 
outcomes'' are ``subsidized'' or ``unsubsidized.'' Thus, in assessing 
success in achieving employment outcomes under the VR program, it is 
necessary to consider the full range of outcomes contemplated by the 
Act.
    Performance Indicator 1.1 also reflects other requirements that are 
specific to the VR program. In addition to making VR services available 
to individuals with disabilities entering the job market, the VR 
program authorizes VR services for eligible individuals who need those 
services to retain their current job. Thus, measuring only the number 
of individuals ``entering'' employment under the VR program, as done 
under WIA Core Indicator I, would not account for those individuals who 
receive VR services to maintain or continue their employment.
    More generally, determining whether a VR program participant has 
successfully achieved an employment outcome depends on many factors in 
addition to the individual's ability to start or enter a job. For 
example, under the VR program regulations, the individual's employment 
must be consistent with the individual's strengths, resources, 
priorities, concerns, abilities, capabilities, and informed choice, and 
the individual must be performing well on the job. Success in meeting 
these requirements cannot be accurately measured at the time the 
individual enters employment. Therefore, the determination of whether a 
VR program participant has successfully achieved an employment outcome 
is best made at a later point. The 90-day retention period from the 
time the individual begins working or no longer receives VR services is 
designed to ensure that the particular job is appropriate to the 
individual and has at least some measure of stability. We believe that 
using this and the other requirements for achieving an employment 
outcome under 34 CFR 361.56 to measure whether an individual's 
participation in the VR program was successful is much more accurate 
than focusing solely on the ability of an individual to enter 
employment. Thus, the differences between proposed Performance 
Indicator 1.1 and WIA Core Indicator I are necessary, and further 
alignment of the two measures would not result in an accurate measure 
of the extent to which States are successful in assisting people with 
disabilities achieve employment outcomes under the VR program.
    Nevertheless, we recognize that the WIA Core indicators represent 
important measures for all programs, including the VR program, that are 
part of the One-Stop service delivery system established under Title I 
of WIA. Section 136(b)(2)(A)(i)(II) and (III) of WIA (WIA Core 
Indicators II and III) measure retention of unsubsidized employment 6 
months after entry into employment and earnings 6 months after entry 
into employment, respectively. Consequently, we developed Draft 
Proposed Evaluation Standard 4 and its attendant draft performance 
indicators and presented those draft measures for public comment in the 
preamble to the proposed regulations, in an effort to ensure that 
future measures for the VR program reflect Core Indicators II and III. 
Since the proposed regulations were published, however, we have been 
working with the Department of Labor to further modify that draft 
Standard and its Indicators to better align those measures with each of 
the first three Core Indicators under Title I of WIA (the fourth WIA 
core indicator--attainment of a recognized credential--is not reflected 
in our drafts since the success of the VR program is judged solely on 
the basis of achievement of employment outcomes, particularly high-
quality outcomes).
    The new draft Standard, which we would implement through a separate 
rulemaking effort (i.e., an NPRM seeking public comment and final 
regulations) would measure the extent to which participants in the VR 
program: (1) achieve an employment outcome with wages after receiving 
VR services (analogous to WIA Core Indicator I--entry into unsubsidized 
employment), (2) retain their employment 6 months after exiting the VR 
program with a job (WIA Core Indicator II), and (3) increase their 
earnings from the time they enter the VR program to the point 6 months 
after they exit the program with a job (WIA Core Indicator III). We are 
also working closely with the Department of Labor to adopt a common 
data base, specifically, the Unemployment Insurance (UI) Wage Data 
system maintained by State Employment Security Agencies, for purposes 
of measuring performance under the new draft Standard.
    Consequently, this new measure under the VR program would be very 
closely aligned with the performance measures under WIA on key 
performance items that are common to all employment programs, i.e., 
helping unemployed persons become employed, working to ensure that 
participants are able to retain their jobs, and assisting persons to 
obtain or maintain employment in which their earnings increase over 
time. We expect to publish this new Standard and supporting

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indicators for public comment once we have completed our assessment of 
the extent to which State VR units can obtain and use UI wage record 
information in support of the draft Standard and have determined the 
types of assistance State VR units might need to complete those tasks. 
We are giving a high priority to these efforts in order to better 
streamline the systems for measuring performance across partner 
programs of the One-Stop delivery system.
    Available data collection methods and instruments enable us to 
implement only Standards 1 and 2 of the final regulations at this time. 
However, once we have confirmed that State VR agencies are able to 
report on the draft standard, we will determine what combination of 
evaluation standards and performance indicators (e.g., adding the draft 
Standard and indicators to the performance measures in these final 
regulations, using the draft Standard as a substitute for one or more 
of the final regulatory measures, or implementing some other 
combination of measures) should be implemented in the future. 
Therefore, the future performance system for the program will include 
that combination of measures that best accounts for the uniqueness of 
the VR program and the need for a universal system for measuring 
performance of the State One-Stop system.
    Changes: None.

Section 361.84(c)(1)(ii)  Performance Indicator 1.2

    Comments: Twelve commenters recommended that Performance Indicator 
1.2 should measure only the percentage of individuals who obtain 
employment after the individual is determined eligible and an IPE has 
been established. These commenters further recommended that Performance 
Indicator 1.2 should not measure the percentage of individuals whose 
cases were closed (either as ineligible or after an eligibility 
determination was made) before any services were received.
    Discussion: We agree with the comments and want to clarify that 
those individuals whose cases were closed (either as ineligible or 
after an eligibility determination) before any services were received 
will not be included in the percentage of individuals measured by 
Performance Indicator 1.2. As recommended by the commenters, 
Performance Indicator 1.2 will measure only the percentage of 
individuals who exit the VR program after they have been determined 
eligible and an IPE has been implemented.
    Changes: None.

Section 361.84(c)(1)(iii)  Performance Indicator 1.3

    Comments: Five commenters recommended that those individuals who 
achieve an employment outcome of ``self-employment'' be eliminated from 
consideration under Performance Indicator 1.3 until a means to measure 
the true wages of self-employed individuals is developed. These 
commenters believe that the concept of ``wages'' is not applicable to 
self-employed individuals because wages apply to what one person must 
pay another and not what someone may be willing to earn if they are 
self-employed.
    Discussion: Performance Indicator 1.3 is not dependent on measuring 
``wages'' per se. The measure is of an individual's ``earnings'' and 
whether those ``earnings'' are equivalent to at least the minimum wage. 
Although self-employed individuals may not earn ``wages'' per se, they 
do have ``earnings,'' and their ``earnings'' can be calculated on an 
hourly basis.
    In addition, ``self-employment'' is specifically included within 
the definition of ``employment outcome'' in section 7(11) of the Act. 
Congress has recognized the importance of including all possible 
employment outcomes for individuals with disabilities. The VR program 
regulations and these indicators should be consistent with the Act and 
congressional intent. Therefore, we believe that self-employment 
outcomes for individuals with earnings comparable to at least the 
minimum wage should be included in the percentage of individuals who 
exit the VR program with earnings comparable to at least the minimum 
wage.
    Changes: None.

Section 361.84(c)(1)(v)  Performance Indicator 1.5

    Comments: Some commenters were concerned about comparing the 
earnings of VR consumers exiting the VR program to the State's average 
hourly earnings. Their concern was based on their belief that most VR 
consumers achieve employment outcomes that are at the level of workers 
newly entering the work force while the State's average hourly wage is 
computed for all workers in the State, including workers with years of 
employment. These commenters believed that a more appropriate 
comparison would be to the average entry level worker in the State's 
work force.
    Discussion: The assumption that most VR consumers achieve only 
employment comparable to that of new workers is inconsistent with the 
available data. The ``Third Interim Report'' of the ``Longitudinal 
Study of the Vocational Rehabilitation Service Program,'' published in 
August 1998 (``Third Interim Report''), reported that over 96 percent 
of VR consumers who achieved employment outcomes had prior work 
experience. Specifically, the report stated the following: 36.9 percent 
of VR consumers were working at the time they applied for VR services; 
37.8 percent of VR consumers had worked in the 2 years prior to 
applying for VR services; and 21.7 percent of VR consumers had worked 
previously, but not in the 2 years prior to applying for VR services. 
Additionally, the performance indicator includes only those individuals 
earning at least the minimum wage (necessarily excluding those 
individuals who earn less than the minimum wage at placement and whose 
inclusion would lower the ratio), and the minimum performance level is 
set at a ratio of less than .6 (an earnings level for VR consumers of 
less than 60 percent of the ``State Average Annual Pay''). We believe 
the performance level for Performance Indicator 1.5 is consistent with 
the Act's emphasis on high-quality employment outcomes. Therefore, we 
do not believe a change is needed in this performance indicator.
    Changes: None.

Section 361.84(c)(1)(vii)  Performance Indicator 1.7

    Comments: Fourteen commenters expressed concern that proposed 
Performance Indicator 1.7 was not a fair measure of DSU performance 
because the provision of medical insurance by the employer is outside 
the DSU's control. In addition, they felt that this proposed measure 
does not account for variability among States with regard to the 
availability of insurance programs and the changing nature of the labor 
market where employment-related benefits are less available. Three 
commenters were concerned that this proposed indicator would negatively 
impact VR consumers obtaining jobs with small employers who are less 
likely to provide medical insurance as a benefit option.
    Discussion: Performance Indicator 1.7 would have addressed what 
research indicates is a major impediment to individuals with 
disabilities entering the workforce--the unavailability of adequate 
health insurance. The growing number of employers that do not provide 
health insurance worsens this problem. If this trend continues, DSUs 
will have reduced opportunities to place individuals with disabilities 
into jobs that provide health insurance. This would cause their 
performance on Indicator 1.7 to erode.

[[Page 35796]]

    However, many individuals are covered by Medicaid, Medicare, and 
private insurance provided by their spouses, families, or other means. 
Also, all employees are covered by workers' compensation for injuries 
and illnesses that occur while on the job. In addition, the ``Ticket-
to-Work and Work Incentives Improvement Act of 1999,'' Pub. L. 106-170 
(December 17, 1999), allows Medicaid recipients to keep their coverage 
even if they find employment. Because approximately one quarter of all 
individuals served by the VR program receive Supplemental Security 
Income (SSI) and Social Security Disability Insurance (SSDI), we expect 
that a growing number of individuals served by the DSUs will be 
eligible to retain Medicaid after they find employment. This will 
reduce the need for employer-provided health insurance for individuals 
served by DSUs.
    Despite this limited availability of health insurance for some 
individuals served by DSUs, the problem persists. Of the nearly 34.67 
million poor people in the U.S., only approximately 14 million are 
covered by Medicaid. Of the remaining 20.67 million poor, only 
approximately 9.47 million have health insurance. The remaining 11.2 
million poor do not have health insurance and will not be helped by the 
new law.
    In proposing this indicator, we assumed that health insurance was 
evenly distributed across the income spectrum and was reasonably 
available at all levels of income. However, further examination of the 
data provided in the ``Third Interim Report'' indicates the difficulty 
in finding jobs that offer health insurance at the wages earned by the 
majority of individuals with disabilities who are served by VR 
agencies.
    For example, nearly 31.5 percent of individuals who are placed in 
competitive employment by a VR agency make $5 or less per hour. 
However, only 13 percent of jobs that pay $5 or less per hour offer 
health insurance.
    In addition, nearly 31 percent of individuals who are placed in 
competitive employment by a VR agency make more than $5 but less than 
$7 per hour. However, only 35 percent of jobs that pay more than $5 but 
less than $7 per hour offer health insurance.
    For slightly higher paying jobs, the percentage that offer health 
insurance increases significantly, although the percentage is still 
barely more than 50 percent. For example, 52.1 percent of jobs that pay 
more than $7 but less than $9 per hour offer health insurance. However, 
only 16.6 percent of individuals who are placed in competitive 
employment by a VR agency make more than $7 but less than $9 per hour.
    The increase in jobs that offer health insurance is not as dramatic 
as wages increase. Only 54.9 percent of jobs that pay more than $9 but 
less than $11 per hour offer health insurance. However, only 8.8 
percent of individuals who are placed in competitive employment by a VR 
agency make more than $9 but less than $11 per hour.
    Finally, at the highest wage level for which we have data, 65 
percent of jobs that pay more than $11 per hour offer health insurance. 
However, only 12.1 percent of individuals who are placed in competitive 
employment make more than $11 per hour.
    The data show that nearly 62.5 percent of individuals who achieve 
competitive employment earn $7 or less per hour and that only a small 
percentage of jobs at these low wage levels offer health insurance. 
Therefore, we believe that the burden associated with satisfying this 
proposed indicator does not justify the extra resources, time, and 
effort DSUs would have to devote to finding those few jobs that offer 
health insurance for the majority of individuals served by DSUs.
    In addition, even if we did believe finding the few jobs with 
health insurance was worth the extra burden, we believe that this 
proposed indicator would not have encouraged DSUs to assist individuals 
with disabilities to acquire health insurance from other sources, even 
though those other sources may be more appropriate for many individuals 
with disabilities. This proposed indicator also would have served as a 
disincentive to recruiting and accepting individuals with little or no 
education or work experience. Instead, this proposed indicator would 
have provided an incentive for recruiting and accepting those 
individuals with disabilities who already are well-educated, have 
extensive job experience, or are more likely to be candidates for 
community college or university training. We do not believe this would 
be a desirable result.
    The data from the ``Third Interim Report'' also indicate that part-
time workers, who are a significant percentage of individuals with 
disabilities who are employed, are less likely to find jobs that offer 
health insurance. Finally, the data indicate that firms with fewer than 
25 employees are least likely to offer health insurance. These data 
show the difficulty in finding jobs that offer health insurance for 
individuals with disabilities, who are more likely to end up in low-
paying, part-time jobs with smaller employers.
    We believe DSUs should make every reasonable effort to find those 
employers who will provide health insurance to their employees who are 
not covered by Medicaid or some other health insurance. However, we 
recognize the difficulty in finding those employers. For this reason we 
believe this proposed indicator is not appropriate at this time.
    Changes: We have deleted proposed Performance Indicator 1.7.

Section 361.84(c)(2)(i)  Performance Indicator 2.1

    Comments: One commenter suggested that Performance Indicator 2.1 
does not include enough variables to adequately assess DSU services to 
individuals from minority backgrounds. This commenter suggested that 
comparing minority versus non-minority numbers by type of closure would 
be more statistically significant. Another commenter suggested that a 
better measurement than service rate would be to compare the employment 
outcome rate of individuals from minority backgrounds to the employment 
outcome rate of non-minority individuals. Still another commenter 
suggested that this indicator should compare the employment outcome 
rate, the average hourly wages, and availability of medical insurance 
benefits of individuals from minority backgrounds to those of non-
minority individuals. One commenter questioned the need for this 
indicator if it can be satisfied through an examination of the DSU's 
policies and procedures.
    Discussion: At this time, we do not have any data on which to 
compare the employment outcome rates, the average hourly wages, types 
of closures, or availability of medical insurance benefits of 
individuals from minority backgrounds to those of non-minority 
individuals. We believe that the comparison of service rates between 
individuals from minority backgrounds and individuals from non-minority 
backgrounds as the performance indicator for this evaluation standard 
is the appropriate starting point to determine whether individuals with 
disabilities from minority backgrounds have equal access to VR 
services. As we continue to collect additional data, we may determine 
in the future that comparing minorities and non-minorities by the type 
of closure, rate of employment outcomes, average hourly wages, or 
availability of medical insurance benefits is also necessary. Until we 
collect that additional data, we will not be able to develop an 
indicator to measure these factors.
    We believe that requiring a DSU to describe the policies it has 
adopted and

[[Page 35797]]

the steps it has taken to ensure that individuals with disabilities 
from minority backgrounds have equal access to VR services is the best 
performance indicator for this evaluation standard. The two-step 
approach in Sec. 361.86(b)(2)(i) and (ii) for measuring compliance with 
Performance Indicator 2.1 ensures that DSUs will make appropriate 
efforts to ensure equal access to services for minority individuals.
    Changes: None.

Section 361.84(c)(2)(ii)  Performance Indicator 2.2

    Comments: Nine commenters suggested that proposed Performance 
Indicator 2.2 should be eliminated because it is invalid to compare 
individuals with significant disabilities who self-report to the Census 
a disability that prevents them from working to individuals with 
significant disabilities who are eligible to receive VR services. Four 
commenters recommended deleting this proposed indicator if the 2000 
Census does not include the data necessary to measure how to comply 
with it. Three commenters suggested that comparing the percentage of 
DSU consumers who are from minority backgrounds to the percentage of 
minority individuals in the general population is a more valid and 
reliable indicator. One commenter suggested that data on SSDI 
beneficiaries and SSI recipients may be used as an alternative to 
Census data.
    Discussion: In addition to the comments opposed to this proposed 
indicator, the Bureau of the Census has decided not to continue to 
collect the data necessary to perform the proposed comparison. We will 
give serious consideration to the comments on the proposed indicator in 
the development of a new indicator.
    Changes: We have deleted proposed Performance Indicator 2.2.

Section 361.86  Performance Levels

    Comments: Three commenters stated that establishing different 
performance levels for agencies that serve only blind or visually 
impaired individuals implied incorrectly that those individuals were 
more significantly disabled than individuals served by general or 
combined DSUs. Two commenters were concerned that the lower performance 
levels for agencies serving only blind or visually impaired individuals 
were in conflict with the Act's commitment to competitive employment 
outcomes above the minimum wage. These two commenters recommended 
raising the level of performance for these agencies over a reasonable 
period of time so that they are eventually at the same performance 
level as general and combined DSUs.
    One commenter suggested that we create a separate performance level 
for combined DSUs because many States are considering creating a 
separate agency serving blind and visually impaired individuals. The 
commenter also suggested that the transition for those combined DSUs 
will be easier if different performance levels are in effect when the 
transition occurs.
    Discussion: We believe that agencies serving only individuals who 
are blind or visually impaired should continue to have different levels 
of performance from combined DSUs (those agencies that serve 
individuals who are blind or visually impaired and individuals with 
other disabilities) and general DSUs (those agencies that do not serve 
individuals who are blind or visually impaired). Individuals served by 
agencies for the blind are, in many (if not most) cases, totally blind. 
Total blindness is a significant disability that often places more 
limitations on an individual than other types of disabilities. As a 
result, the services provided by agencies that serve individuals who 
are blind or visually impaired are generally more comprehensive and 
take longer to provide than the services provided to many individuals 
who receive VR services from a general or combined DSU. In addition, 
because of the significance of their disability, a much smaller number 
of individuals who are blind or visually impaired achieve a competitive 
employment outcome. The greater significance of their disability also 
results in generally lower wage levels for the majority of individuals 
served by agencies that serve individuals who are blind or visually 
impaired. These factors and the challenges faced by individuals who are 
blind or have visual impairments require that we establish different 
performance levels for agencies serving these individuals.
    The performance levels established in these final regulations are 
only the first step in ensuring improved DSU performance. The Act 
requires that the standards and indicators be reviewed every 3 years. 
Section 361.86(a)(2) of these final regulations allows us to establish 
new performance levels through the regulatory process, which includes 
the opportunity for public comment. We intend to adjust performance 
levels in the future to ensure that all agencies--general DSUs, 
combined DSUs, and agencies serving individuals who are blind and 
visually impaired--provide the highest quality of services to eligible 
individuals.
    Changes: None.
    Comments: Five commenters recommended that the availability of 
resources and whether a DSU is operating under an order of selection 
for services under section 101(a)(5) of the Act be included as factors 
in determining minimally acceptable levels of performance.
    Discussion: We agree that the availability of resources belongs in 
the performance equation. However, we do not agree that the 
availability of resources should be included in measuring whether a DSU 
has achieved a minimally acceptable level of performance. Given that 
DSUs with the same amount of resources may perform quite differently, 
the proper criterion for measuring performance under an outcome-based 
standards and indicators system is whether a DSU is successfully 
assisting individuals with disabilities to achieve employment outcomes. 
If a DSU fails to meet the indicator for achieving a minimally 
acceptable level of performance (e.g., achieving employment outcomes), 
the Act and the regulations require that the Secretary and DSU jointly 
develop a program improvement plan that outlines the specific actions 
the DSU will take to improve program performance. In developing the 
program improvement plan, we will consider, pursuant to the Act and 
these final regulations, all available and relevant data and 
information related to the DSU's performance. Because the availability 
of resources greatly affects what actions may be taken to improve 
performance, we believe that the time to properly consider the 
availability of resources will be during the development of the program 
improvement plan.
    In reviewing data concerning the past performance of all DSUs, we 
found that the performance of DSUs operating under an order of 
selection did not, overall, vary significantly from the performance of 
DSUs not operating under an order of selection. Thus, whether or not a 
DSU is operating under an order of selection should not be a factor in 
determining a minimally acceptable level of performance. However, the 
yearly analysis of program performance based on the standards and 
indicators (to be included in the Annual Report to Congress) will 
indicate whether a DSU is operating under an order of selection.
    Changes: None.
    Comments: Two commenters were concerned that meeting the 
performance level for Performance Indicator 2.1 may

[[Page 35798]]

result in quotas because the level is set too high.
    Discussion: We disagree that Performance Indicator 2.1 requires a 
DSU to impose quotas. If the service rate for minority individuals is 
less than 80 percent of the service rate for non-minority individuals 
or if fewer than 100 individuals from a minority population have exited 
the VR program during the reporting period, the DSU only needs to 
describe the policies it has adopted or will adopt and the steps it has 
taken or will take to ensure that individuals with disabilities from 
minority backgrounds have equal access to VR services. In these 
instances, RSA will examine a DSU's existing or proposed policies and 
the steps it has taken or proposes to take to determine their 
effectiveness in achieving equal access for minority individuals with 
disabilities.
    A greater than 20 percent racial disparity in service rates will 
trigger a review of a DSU's seemingly neutral practices to determine 
whether they are having the effect of racial discrimination. This 
approach is well-established within the Department and in desegregation 
case law. Its use in the education context dates to the early 1970's 
when the Department of Health, Education, and Welfare, the predecessor 
to the Department of Education, was actively involved in the 
desegregation of public school districts pursuant to the Supreme 
Court's decision in Swann v. Charlotte-Mecklenburg Board of Education, 
91 S.Ct. 1267 (1971). In that case, the Court held that a ``substantial 
disproportion'' in the racial composition of schools warranted an 
examination of the school district's policies and practices to 
determine if remedial action was necessary. In adopting this measure of 
performance, and in response to the commenters' concern that the 
measure may require quotas, we are guided by the Federal case-law 
established pursuant to Swann. Courts have held that the law does not 
require a racial balance reflecting the composition of the community. 
However, courts have ruled that limited use of mathematical ratios may 
serve as a starting point in identifying whether a racial imbalance is 
the result of racial discrimination that requires remedial action.
    Changes: None.

Section 361.88  Reporting Requirements

    Comments: None.
    Discussion: Our decision to delete proposed Performance Indicators 
1.7 and 2.2 (discussed previously) eliminates a DSU's need to report 
data measuring its performance on those indicators.
    Changes: We have deleted the requirements to report the number of 
individuals exiting the VR program in full-time, competitive employment 
(proposed Sec. 361.88(a)(7)); health insurance data (proposed 
Sec. 361.88(a)(8)); and the number of individuals from minority 
backgrounds with significant disabilities who exit the program after 
receiving VR services under an IPE (proposed Sec. 361.88(a)(13)).
    Therefore, we have correspondingly renumbered the remaining 
reporting requirements (numbered (9), (10), (11) and (12) in the NPRM) 
as Secs. 361.88(a)(7) through (10), respectively.

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 our capacities for 
helping to exchange ideas and obtain information needed to achieve the 
goals.
    These final 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 this order, we have assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
resulting from statutory requirements and those we have determined to 
be necessary for administering this program effectively and 
efficiently. This preamble identifies and explains any burdens that may 
be specifically associated with information collection requirements.
    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 NPRM under the following headings: 
Executive Order 12866 (1. Potential Costs and Benefits) and Paperwork 
Reduction Act of 1995. (63 FR 55292 and 55301) We include additional 
discussion of potential costs and benefits in the section of this 
preamble titled Analysis of Comments and Changes.
    We believe the changes in these final regulations will improve the 
VR program and will yield substantial benefits in terms of improved 
accountability and performance. We also believe the final regulations 
will improve accountability by focusing on the most critical areas of 
DSU performance. Therefore, we have determined that the potential 
benefits of these changes justify the potential costs.

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 OMB control 
number. We display the valid OMB control number assigned to the 
collections 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.
    In accordance with the order, we intend this document to provide 
early notification of our specific plans and actions for this program.

Assessment of Educational Impact

    In the 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 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

[[Page 35799]]

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.acess.gpo.gov/nara/index.html


(Catalog of Federal Domestic Assistance Number: 84.126 The 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: March 6, 2000.
Richard W. Riley,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary amends 
Title 34, Chapter III, part 361, of the Code of Federal Regulations as 
follows:
    1. The authority citation for Part 361 continues to read as 
follows:

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

    2. Subpart E, consisting of Secs. 361.80 through 361.89, is added 
to read as follows:

PART 361--THE STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

Subpart E--Evaluation Standards and Performance Indicators
Sec.
361.80   Purpose.
361.81   Applicable definitions.
361.82   Evaluation standards.
361.84   Performance indicators.
361.86   Performance levels.
361.88   Reporting requirements.
361.89   Enforcement procedures.

Subpart E--Evaluation Standards and Performance Indicators


Sec. 361.80  Purpose.

    The purpose of this subpart is to establish evaluation standards 
and performance indicators for the Program.

(Authority: 29 U.S.C. 726(a))


Sec. 361.81  Applicable definitions.

    In addition to those definitions in Sec. 361.5(b), the following 
definitions apply to this subpart:
    Average hourly earnings means the average per hour earnings in the 
week prior to exiting the vocational rehabilitation (VR) program of an 
eligible individual who has achieved a competitive employment outcome.
    Business Enterprise Program (BEP) means an employment outcome in 
which an individual with a significant disability operates a vending 
facility or other small business under the management and supervision 
of a designated State unit (DSU). This term includes home industry, 
farming, and other enterprises.
    Exit the VR program means that a DSU has closed the individual's 
record of VR services in one of the following categories:
    (1) Ineligible for VR services.
    (2) Received services under an individualized plan for employment 
(IPE) and achieved an employment outcome.
    (3) Received services under an IPE but did not achieve an 
employment outcome.
    (4) Eligible for VR services but did not receive services under an 
IPE.
    General or combined DSU means a DSU that does not serve exclusively 
individuals with visual impairments or blindness.
    Individuals from a minority background means individuals who report 
their race and ethnicity in any of the following categories: American 
Indian or Alaska Native, Asian, Black or African American, Native 
Hawaiian or Other Pacific Islander, or Hispanic or Latino.
    Minimum wage means the higher of the rate specified in section 
6(a)(1) of the Fair Labor Standards Act of 1938, 29 U.S.C. 206(a)(1), 
(i.e., the Federal minimum wage) or applicable State minimum wage law.
    Non-minority individuals means individuals who report themselves 
exclusively as White, non-Hispanic.
    Performance period is the reporting period during which a DSU's 
performance is measured. For Evaluation Standards 1 and 2, performance 
data must be aggregated and reported for each fiscal year beginning 
with fiscal year 1999. However, DSUs that exclusively serve individuals 
with visual impairments or blindness must report each year the 
aggregated data for the 2 previous years for Performance Indicators 1.1 
through 1.6; the second year must coincide with the performance period 
for general or combined DSUs.
    Primary indicators means Performance Indicators 1.3, 1.4, and 1.5, 
which are specifically designed to measure--
    (1) The achievement of competitive, self-, or BEP employment with 
earnings equivalent to the minimum wage or higher, particularly by 
individuals with significant disabilities; and
    (2) The ratio between the average hourly earnings of individuals 
who exit the VR program in competitive, self-, or BEP employment with 
earnings equivalent to the minimum wage or higher and the State's 
average hourly earnings for all employed individuals.
    RSA-911 means the Case Service Report that is submitted annually by 
a DSU as approved by the Office of Management and Budget (OMB).
    Self-employment means an employment outcome in which the individual 
works for profit or fee in his or her own business, farm, shop, or 
office, including sharecroppers.
    Service rate means the result obtained by dividing the number of 
individuals who exit the VR program after receiving one or more 
services under an IPE during any reporting period by the total number 
of individuals who exit the VR program (as defined in this section) 
during that reporting period.
    State's average hourly earnings means the average hourly earnings 
of all persons in the State in which the DSU is located.

(Authority: 29 U.S.C. 726(a))


Sec. 361.82  Evaluation standards.

    (a) The Secretary establishes two evaluation standards to evaluate 
the performance of each DSU that receives funds under this part. The 
evaluation standards assist the Secretary and each DSU to evaluate a 
DSU's performance in serving individuals with disabilities under the VR 
program.
    (b) A DSU must achieve successful performance on both evaluation 
standards during each performance period.
    (c) The evaluation standards for the VR program are--
    (1) Evaluation Standard 1--Employment outcomes. A DSU must assist 
any eligible individual, including an individual with a significant 
disability, to obtain, maintain, or regain high-quality employment.

[[Page 35800]]

    (2) Evaluation Standard 2--Equal access to services. A DSU must 
ensure that individuals from minority backgrounds have equal access to 
VR services.

(Approved by the Office of Management and Budget under control 
number 1820-0508.)

(Authority: 29 U.S.C. 726(a))


Sec. 361.84  Performance indicators.

    (a) The performance indicators establish what constitutes minimum 
compliance with the evaluation standards.
    (b) The performance indicators require a DSU to provide information 
on a variety of factors to enable the Secretary to measure compliance 
with the evaluation standards.
    (c) The performance indicators are as follows:
    (1) Employment outcomes.
    (i) Performance Indicator 1.1. The number of individuals exiting 
the VR program who achieved an employment outcome during the current 
performance period compared to the number of individuals who exit the 
VR program after achieving an employment outcome during the previous 
performance period.
    (ii) Performance Indicator 1.2. Of all individuals who exit the VR 
program after receiving services, the percentage who are determined to 
have achieved an employment outcome.
    (iii) Performance Indicator 1.3. Of all individuals determined to 
have achieved an employment outcome, the percentage who exit the VR 
program in competitive, self-, or BEP employment with earnings 
equivalent to at least the minimum wage.
    (iv) Performance Indicator 1.4. Of all individuals who exit the VR 
program in competitive, self-, or BEP employment with earnings 
equivalent to at least the minimum wage, the percentage who are 
individuals with significant disabilities.
    (v) Performance Indicator 1.5. The average hourly earnings of all 
individuals who exit the VR program in competitive, self-, or BEP 
employment with earnings levels equivalent to at least the minimum wage 
as a ratio to the State's average hourly earnings for all individuals 
in the State who are employed (as derived from the Bureau of Labor 
Statistics report ``State Average Annual Pay'' for the most recent 
available year).
    (vi) Performance Indicator 1.6. Of all individuals who exit the VR 
program in competitive, self-, or BEP employment with earnings 
equivalent to at least the minimum wage, the difference between the 
percentage who report their own income as the largest single source of 
economic support at the time they exit the VR program and the 
percentage who report their own income as the largest single source of 
support at the time they apply for VR services.
    (2) Equal access to services.
    (i) Performance Indicator 2.1. The service rate for all individuals 
with disabilities from minority backgrounds as a ratio to the service 
rate for all non-minority individuals with disabilities.

(Approved by the Office of Management and Budget under control 
number 1820-0508.)

(Authority: 29 U.S.C. 726(a))


Sec. 361.86  Performance levels.

    (a) General.
    (1) Paragraph (b) of this section establishes performance levels 
for--
    (i) General or combined DSUs; and
    (ii) DSUs serving exclusively individuals who are visually impaired 
or blind.
    (2) The Secretary may establish, by regulations, new performance 
levels.
    (b) Performance levels for each performance indicator.
    (1)(i) The performance levels for Performance Indicators 1.1 
through 1.6 are--

------------------------------------------------------------------------
                                    Performance level by type of DSU
     Performance indicator     -----------------------------------------
                                   General/combined          Blind
------------------------------------------------------------------------
1.1...........................  Equal or exceed        Same.
                                 previous performance
                                 period.
1.2...........................  55.8%................  68.9%
1.3...........................  72.6%................  35.4%
1.4...........................  62.4%................  89.0%
1.5...........................  .52 (Ratio)..........  .59
1.6...........................  53.0 (Math.            30.4
                                 Difference).
------------------------------------------------------------------------

    (ii) To achieve successful performance on Evaluation Standard 1 
(Employment outcomes), a DSU must meet or exceed the performance levels 
established for four of the six performance indicators in the 
evaluation standard, including meeting or exceeding the performance 
levels for two of the three primary indicators (Performance Indicators 
1.3, 1.4, and 1.5).
    (2)(i) The performance level for Performance Indicator 2.1 is--

------------------------------------------------------------------------
         Performance indicator                  Performance levels
------------------------------------------------------------------------
2.1....................................  .80 (Ratio)
------------------------------------------------------------------------

    (ii) To achieve successful performance on Evaluation Standard 2 
(Equal access), DSUs must meet or exceed the performance level 
established for Performance Indicator 2.1 or meet the performance 
requirement in paragraph (2)(iii) of this section.
    (iii) If a DSU's performance does not meet or exceed the 
performance level required for Performance Indicator 2.1, or if fewer 
than 100 individuals from a minority population have exited the VR 
program during the reporting period, the DSU must describe the policies 
it has adopted or will adopt and the steps it has taken or will take to 
ensure that individuals with disabilities from minority backgrounds 
have equal access to VR services.

(Authority: 29 U.S.C. 726(a))


Sec. 361.88  Reporting requirements.

    (a) The Secretary requires that each DSU report within 60 days 
after the end of each fiscal year the extent to which the State is in 
compliance with the evaluation standards and performance indicators and 
include in this report the following RSA-911 data:
    (1) The number of individuals who exited the VR program in each 
closure category as specified in the definition of ``Exit the VR 
program'' under Sec. 361.81.
    (2) The number of individuals who exited the VR program in 
competitive, self-, or BEP employment with earnings at or above the 
minimum wage.
    (3) The number of individuals with significant disabilities who 
exited the VR program in competitive, self-, or BEP employment with 
earnings at or above the minimum wage.
    (4) The weekly earnings and hours worked of individuals who exited 
the VR program in competitive, self-, or BEP employment with earnings 
at or above the minimum wage.
    (5) The number of individuals who exited the VR program in 
competitive, self-, or BEP employment with earnings at or above the 
minimum wage whose primary source of support at the time

[[Page 35801]]

they applied for VR services was ``personal income.''
    (6) The number of individuals who exited the VR program in 
competitive, self-, or BEP employment with earnings at or above the 
minimum wage whose primary source of support at closure was ``personal 
income.''
    (7) The number of individuals exiting the VR program who are 
individuals from a minority background.
    (8) The number of non-minority individuals exiting the VR program.
    (9) The number of individuals from a minority background exiting 
the VR program after receiving services under an IPE.
    (10) The number of non-minority individuals exiting the VR program 
after receiving services under an IPE.
    (b) In lieu of the report required in paragraph (a) of this 
section, a DSU may submit its RSA-911 data on tape, diskette, or any 
alternative electronic format that is compatible with RSA's capability 
to process such an alternative, as long as the tape, diskette, or 
alternative electronic format includes the data that--
    (1) Are required by paragraph (a)(1) through (10) of this section; 
and
    (2) Meet the requirements of paragraph (c) of this section.
    (c) Data reported by a DSU must be valid, accurate, and in a 
consistent format. If a DSU fails to submit data that are valid, 
accurate, and in a consistent format within the 60-day period, the DSU 
must develop a program improvement plan pursuant to Sec. 361.89(a).

(Approved by the Office of Management and Budget under control 
number 1820-0508.)

(Authority: 29 U.S.C. 726(b))


Sec. 361.89  Enforcement procedures.

    (a) If a DSU fails to meet the established performance levels on 
both evaluation standards as required by Sec. 361.82(b), the Secretary 
and the DSU must jointly develop a program improvement plan that 
outlines the specific actions to be taken by the DSU to improve program 
performance.
    (b) In developing the program improvement plan, the Secretary 
considers all available data and information related to the DSU's 
performance.
    (c) When a program improvement plan is in effect, review of the 
plan is conducted on a biannual basis. If necessary, the Secretary may 
request that a DSU make further revisions to the plan to improve 
performance. If the Secretary establishes new performance levels under 
Sec. 361.86(a)(2), the Secretary and the DSU must jointly modify the 
program improvement plan based on the new performance levels. The 
Secretary continues reviews and requests revisions until the DSU 
sustains satisfactory performance based on the current performance 
levels over a period of more than 1 year.
    (d) If the Secretary determines that a DSU with less than 
satisfactory performance has failed to enter into a program improvement 
plan or comply substantially with the terms and conditions of the 
program improvement plan, the Secretary, consistent with the procedures 
specified in Sec. 361.11, reduces or makes no further payments to the 
DSU under this program until the DSU has met one of these two 
requirements or raised its subsequent performance to meet the current 
overall minimum satisfactory level on the compliance indicators.

(Approved by the Office of Management and Budget under control 
number 1820-0508.)

(Authority: 29 U.S.C. 726(b) and (c))

[FR Doc. 00-13948 Filed 6-2-00; 8:45 am]
BILLING CODE 4000-01-U