[Federal Register Volume 68, Number 150 (Tuesday, August 5, 2003)]
[Notices]
[Pages 46412-46418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19844]



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Part IV





Department of Education





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National Institute on Disability and Rehabilitation Research; 
Alternative Financing Mechanism Program and Access to Telework Fund 
Program; Inviting Applications for New Awards for Fiscal Year (FY) 
2003; Notices

  Federal Register / Vol. 68, No. 150 / Tuesday, August 5, 2003 / 
Notices  

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DEPARTMENT OF EDUCATION

RIN 1820 ZA30


National Institute on Disability and Rehabilitation Research

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

ACTION: Notice of proposed priorities and change to the application 
process.

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SUMMARY: The Assistant Secretary for Special Education and 
Rehabilitative Services is providing notice of a proposed priority for 
the Alternative Financing Mechanisms Program (AFP) under title III of 
the Assistive Technology Act of 1998 (AT Act) that is administered by 
the National Institute on Disability and Rehabilitation Research 
(NIDRR). The Assistant Secretary is also providing notice of a proposed 
priority for the Access to Telework Fund Program (Telework) under 
section 303(b) of the Rehabilitation Act of 1973, as amended (Rehab 
Act), that is administered by the Rehabilitation Services 
Administration (RSA). In addition, the notice contains changes to the 
application process that NIDRR and RSA will use for these competitions.

DATES: We must receive your written comments on or before September 4, 
2003.

ADDRESSES: Address all comments about this priority to Carol Cohen, 
U.S. Department of Education, 400 Maryland Avenue, SW., room 3420, 
Switzer Building, Washington, DC 20202-2645. Fax: (202) 205-8515. If 
you prefer to send your comments through the Internet, use the 
following address: [email protected].

FOR FURTHER INFORMATION CONTACT: Carol Cohen. Telephone: (202) 205-
5666.
    If you use a telecommunications device for the deaf (TDD), you may 
call the TDD number at (202) 205-4475 or via the Internet: 
[email protected].
    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 listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: During and after the comment period, you may 
inspect all public comments about these priorities in room 3420, 
Switzer Building, 330 C Street, SW., Washington, DC, between the hours 
of 8:30 a.m. and 4 p.m., Eastern time, Monday through Friday of each 
week except Federal holidays.

Invitation to Comment

    We invite you to submit comments regarding these proposed 
priorities. To ensure that your comments have maximum effect in 
developing the notice of final absolute priorities, we urge you to be 
specific about any recommended changes.

Assistance to Individuals With Disabilities in Reviewing the Comments

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments. If you want to schedule an 
appointment for this type of aid, please contact the person listed 
under FOR FURTHER INFORMATION CONTACT.
    We will announce the final priorities in a notice in the Federal 
Register. We will determine the final priorities after considering 
responses to this notice and other information available to the 
Department. This notice does not preclude us from proposing or funding 
additional priorities, subject to meeting applicable rulemaking 
requirements.

    Note: This notice does not solicit applications. In any year in 
which we choose to use these proposed absolute priorities, we invite 
applications through a notice in the Federal Register.


SUPPLEMENTARY INFORMATION: The Assistant Secretary may use these 
priorities for competitions in fiscal year (FY) 2003 and later years.

Eligibility for an AFP Grant

    States that receive or have received grants under section 101 of 
the AT Act are eligible for an AFP grant. Under section 3(a)(13)(A) of 
the AT Act, State means each of the several States of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, the 
United States Virgin Islands, Guam, American Samoa, and the 
Commonwealth of the Northern Mariana Islands.

Eligibility for a Telework Grant

    States as defined in the AT Act and governing bodies of American 
Indian tribes located on Federal and State reservations consistent with 
section 7(19)(B) of the Rehab Act are eligible for a Telework grant. 
Consortia of States and American Indian tribes are also eligible for a 
Telework grant.

Joint Administration of Grants

    States may jointly apply for and administer an AFP grant and a 
Telework grant. States that submit one application for the two 
priorities must meet the requirements for each priority and will 
compete separately under each priority.

Proposed Priority 1: Alternative Financing Mechanism Program

    Note: Public comment is limited to those portions of the 
proposed AFP priority not specifically addressed by the AT Act. We 
have provided citations to the AT Act where appropriate.

Background

    The purpose of title III of the AT Act is to maximize independence 
and participation in society by individuals with disabilities through 
the establishment of the AFP. Title III authorizes a Federal program to 
pay a share of the cost of establishment or expansion, and 
administration of programs that fund alternatives to the traditional 
payment options of public assistance and self-financing so that 
individuals with disabilities can acquire assistive technology devices 
and services (hereinafter referred to as AT).
    Most individuals with disabilities do not have the private 
financial resources to purchase the AT they need. Currently, major 
service programs such as Medicaid, Medicare, and vocational 
rehabilitation cannot meet the growing demand for AT. The AFP offers 
individuals with disabilities attractive options that significantly 
enhance their access to AT in a way that underscores independence and 
inclusion.
    The Assistant Secretary may award one-year grants or cooperative 
agreements to States to establish or maintain an AFP to increase access 
to AT for individuals with disabilities. NIDRR made AFP grants to six 
States in FY 2000 and to 14 States in FY 2001. In addition, NIDRR 
funded one AFP Technical Assistance project to assist States to apply 
for AFP grants and to assist recipients to develop and implement the 
AFP program in their States.
    On August 13, 2002, NIDRR published a notice in the Federal 
Register inviting comments on the AFP (67 FR 52838). NIDRR received 17 
comments by the deadline. The proposed AFP priority contains provisions 
suggested by the commenters. In addition, in response to the comments, 
NIDRR is planning on making changes to its application process for AFP 
awards.
    An AFP grantee may implement one or more types of alternative 
financing mechanisms to allow individuals with disabilities and their 
family members, guardians, advocates, and authorized representatives to 
purchase AT devices and services. The statute requires

[[Page 46413]]

grantees to place all funds that support their AFP grant, including 
those repaid during the life of the program, in a permanent and 
separate account (Sec. 303(b)(5)(A)).
    The following is a discussion of important issues that an applicant 
for an AFP grant should consider in developing an application.
    (1) Nature of the Match: As established in the Fiscal Year 2002 
Appropriations bill that supercedes the AT Act's statutory requirement, 
the State:Federal match requirement ratio is 1:3 (Department of 
Education Appropriations Act, 2002, Public Law 107-116). Thus, the 
State match share is 25 percent.
    In the past, the biggest hurdle to States submitting a fundable 
application for an AFP grant has been meeting the requirement in 
section 303(b)(1) to match the Federal award with cash. NIDRR received 
comments on this issue urging that ``cash'' be defined as broadly as 
possible, including allowing ``in-kind'' contributions to qualify as a 
match of the Federal funds. NIDRR has concluded that the statute does 
not allow for this interpretation. The statutory language is clear: the 
State matching funds must be cash. Thus, the match cannot be ``in-
kind'' contributions such as personnel costs, rent, equipment or other 
program supports.
    State matching funds must come from State, local or private sources 
(Sec. 303(b)(1)). State matching funds may not be other Federal or 
previously obligated State funds, or funds made available by a 
financial or lending institution for direct loans that are not 
maintained in the required permanent separate account. The proposed 
priority includes a provision establishing that applicants must 
identify the source of their matching funds.
    The State matching funds cannot supplant funds that have been used 
to support AFP mechanisms (e.g., title I or existing title III 
funds)(Sec. 303(b)(4)). However, a State may use its AFP award to 
expand an existing AFP.
    (2) Permanence of the Program: The AFP awards have a 12-month 
funding period (Sec. 303(b)(2)). However, the project period for an AFP 
remains in effect for as long as the program originally funded by the 
AFP award is in operation. NIDRR received comments asking for 
clarification of the statutory language that refers to the permanence 
of the AFP. The proposed priority includes a provision that addresses 
what is meant by a State's obligation to implement its AFP grant on a 
permanent basis. This obligation goes well beyond a project's 12-month 
funding period.
    (3) Responsibilities of the Grantee During the First Budget Period: 
During the first 12-month budget period, the statute requires a grantee 
to submit policies and procedures to NIDRR that will be used to 
administer the AFP grant (Sec. 305). The proposed AFP priority includes 
provisions specifying when during the first 12-month budget period 
these policies and procedures must be submitted to NIDRR. In addition, 
the proposed AFP priority includes provisions requiring the grantee to 
undertake two additional statutory activities during the first 12-month 
budget period: (1) depositing its matching funds and its Federal award 
funds into a permanent separate account (Sec. 303(b)(5)), and (2) 
entering into a contract with a community-based organization (CBO), 
ensuring that the CBO has entered into a contract with commercial 
lending institutions or organizations or State financing agencies (Sec. 
304).
    (4) Closing out an AFP Grant with Funds Remaining: The proposed AFP 
priority includes a provision that establishes how much a State must 
return to NIDRR when it terminates its AFP grant and how to address 
outstanding loans in that calculation. When the AFP grant ceases, 
voluntarily or involuntarily, as part of the grant closeout process, 
the grantee has 90 days after the end of the funding year to return the 
Federal share of the remaining funds.
    (5) Use and Control of Funds: One of the assurances that applicants 
must submit involves the use and control of the AFP grant funds, 
including funds generated through interest-bearing accounts and 
investment income (Sec. 303(b)(6)). The proposed AFP priority includes 
a provision that clarifies that the assurance regarding the use and 
control of funds applies to all funds derived from the AFP grant 
including the original Federal award, the State matching funds, AFP 
funds generated by either interest bearing accounts or investments, and 
all principal and interest paid by AFP borrowers who are extended loans 
directly from the permanent separate account.
    (6) Contract with CBO: Grantees are required to contract with a 
community-based organization (CBO) to administer the AFP grant (Sec. 
304). NIDRR strongly encourages a State to identify this CBO in their 
application and include a letter of participation from the 
organization. Further, States are encouraged to take a competitive and 
inclusive approach to selecting the CBO.
    (7) Indirect Costs: The statute provides that the percentage of 
funds made available through the grant that is used for indirect costs 
may not exceed 10 percent (Sec. 303(b)(7)). The proposed AFP priority 
includes a provision that requires the grantee to recalculate annually 
the maximum allowable indirect cost rate, which may not exceed 10 
percent of the amount of funds in the permanent and separate account 
and the amount of loans outstanding from that account.
    (8) Eligibility of Employers: NIDRR received comments requesting 
clarification whether employers are eligible to assist individuals with 
disabilities through an AFP grant. The proposed AFP priority includes 
language stating that an employer is eligible to serve as an authorized 
representative of an individual with a disability.
    (9) Responsibilities of Employers under the Americans with 
Disabilities Act (ADA): NIDRR received comments on whether an AFP grant 
affects an employer's responsibility to provide reasonable 
accommodations to qualified employees with disabilities. An employer's 
obligations under the ADA are not affected by the existence of an AFP 
grant, which is a voluntary program for individuals with disabilities. 
However, there is nothing in the ADA or in the AT Act that would 
prohibit an individual with a disability from choosing to have an 
employer serve as an authorized representative to obtain AT on behalf 
of the employee by using AFP grant support even if the employer already 
has a responsibility under the ADA to provide the AT. At the same time, 
an employer may not require an employee to designate the employer as an 
authorized representative under the AFP grant nor may an employer 
require an employee to use the AFP grant to purchase AT.
    (10) Personal Grants: NIDRR received comments inquiring whether an 
AFP grantee could provide direct financial assistance to qualified 
individuals for AT. The statutory language of the AFP is unequivocal: 
AFP funds cannot be used as outright grants to eligible individuals. 
Individuals who participate in an AFP grant are expected to pay for the 
purchase of the AT.

Proposed Priority

    The purpose of these proposed requirements is to increase the 
funding for and provision of AT (Sec. 2(b)(1)(A)). The AFP will: (1) 
Achieve the program's short-term goal of purchasing AT through 
alternative financing mechanisms for individuals with disabilities, and 
other eligible parties;

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and (2) achieve the program's long-term goals of establishing a 
nationwide network of permanent State AFPs that promote independence 
and choice.
    States that receive or have received grants under section 101 of 
the AT Act are eligible to compete for an AFP (Section 303(a)). In its 
application, a State must identify and describe one or more of the 
following types of AFP programs that the State will implement:
    (1) A low-interest loan fund;
    (2) An interest buy-down program;
    (3) A revolving loan fund;
    (4) A loan guarantee or insurance program;
    (5) A program operated by a partnership among private entities for 
the purchase, lease, or other acquisition of AT devices or AT services; 
or
    (6) Another mechanism that meets the requirements of title III and 
is approved by the Secretary (Sec. 301(b)).
    According to section 301(a) of the AT Act, the AFP is designed to 
allow individuals with disabilities and their family members, 
guardians, advocates, and authorized representatives to purchase AT. 
The terms ``AT devices'' and ``AT services'' are defined in section 
3(a) of the AT Act. When family members, guardians, advocates, and 
authorized representatives (including employers who have been 
designated by an individual with a disability as an authorized 
representative) receive AFP support to purchase AT, the purchase must 
be on behalf of an individual with a disability, i.e., the AT that is 
purchased must be solely for the benefit of that individual.
    In addition, an applicant must submit the following assurances:
    (1) Nature of the Match: An assurance that the State will provide 
the non-Federal share (25 percent) of the cost of the AFP in cash, from 
State, local, or private sources (Sec. 303(b)(1)). An applicant must 
identify the amount of Federal funds the State is requesting and the 
amount of cash that the State is going to generate as a match as well 
as the source of the cash.
    (2) Permanence of the Program: An assurance that the AFP will 
continue on a permanent basis (Section 303(b)(2)).
    A State's obligation to implement the AFP program consistent with 
all of the requirements, including reporting requirements, continues 
throughout the project period until there are no longer any funds 
available to operate the AFP and all outstanding loans have been 
repaid.
    If a State decides to terminate its AFP while there are still funds 
available to operate the program, the State must return the Federal 
share of the funds remaining in the permanent separate account to NIDRR 
(e.g., 75 percent if the original State:Federal match was 1:3) except 
for funds being used for grant purposes, such as loan guarantees for 
outstanding loans. However, before closing out its grant, the State 
must also return the Federal share of any principal and interest 
remitted to it on outstanding loans and any other funds remaining in 
the permanent separate account, such as funds being used as loan 
guarantees for those loans.
    (3) Consumer Choice and Control: An assurance that, and information 
describing the manner in which, the AFP will expand and emphasize 
consumer choice and control (Section 303(b)(3)).
    (4) Supplement Not Supplant: An assurance that the funds made 
available through the grant to support the AFP will be used to 
supplement and not supplant other Federal, State, and local public 
funds expended to provide alternative financing mechanisms (Sec. 303 
(b)(4)).
    (5) Permanent Separate Account: An assurance that the State will 
ensure that (A) all funds that support the AFP, including funds repaid 
during the life of the program, will be placed in a permanent separate 
account and identified and accounted for separately from any other 
fund; (B) if the organization administering the program invests funds 
within this account, the organization will invest the funds in low-risk 
securities in which a regulated insurance company may invest under the 
law of the State; and (C) the organization will administer the funds 
with the same judgment and care that a person of prudence, discretion, 
and intelligence would exercise in the management of the financial 
affairs of such person (Section 303(b)(5)).
    During the first 12-month budget period, a grantee must deposit its 
matching funds and its Federal award funds in the permanent and 
separate account.
    (6) Use and Control of Funds: An assurance that (A) funds comprised 
of the principal and interest from the account described in paragraph 
(5) will be available to support the AFP; and (B) any interest or 
investment income that accrues on or derives from such funds after such 
funds have been placed under the control of the organization 
administering the AFP, but before such funds are distributed for 
purposes of supporting the program, will be the property of the 
organization administering the program (Section 303(b)(6)).
    This assurance regarding the use and control of funds applies to 
all funds derived from the AFP including the original Federal award, 
the State matching funds, AFP funds generated by either interest 
bearing accounts or investments, and all principal and interest paid by 
borrowers of the AFP who are extended loans from the permanent separate 
account.
    (7) Indirect Costs: An assurance that the percentage of the funds 
made available through the grant that is used for indirect costs will 
not exceed 10 percent (Section 303(b)(7)).
    For each 12-month budget period, grantees must recalculate their 
allowable indirect cost rate, which may not exceed 10 percent of the 
amount of funds in the permanent and separate account and any 
outstanding loans from that account.
    (8) Contract With a Community-Based Organization: An assurance that 
the State will enter into a contract with a community-based 
organization (including a group of such organizations) that has 
individuals with disabilities involved in organizational decision 
making at all organizational levels, to administer the AFP. The 
contract will: (1) Include a provision requiring that the program 
funds, including the Federal and non-Federal shares of the cost of the 
program, be administered in a manner consistent with the provisions of 
title III; (2) include any provision the Secretary requires concerning 
oversight and evaluation necessary to protect Federal financial 
interests; and (3) require the community-based organization to enter 
into a contract, to expand opportunities under title III and facilitate 
administration of the AFP, with commercial lending institutions or 
organizations or State financing agencies (Section 304 (a) and (b)).
    During the first 12-month budget period, a grantee must enter into 
the contract with a CBO and ensure that the CBO has entered into the 
contract with the commercial lending institutions or organizations or 
State financing agencies.
    (9) Administrative Policies and Procedures: An assurance that the 
State and any community-based organization that enters into a contract 
with the State under title III, will submit to the Secretary the 
following policies and procedures for administration of the AFP: (1) A 
procedure to review and process in a timely manner requests for 
financial assistance for immediate and potential technology needs, 
including consideration of methods to reduce paperwork and duplication 
of effort, particularly relating to need, eligibility, and 
determination of the specific AT device or service to be financed 
through the program; (2) A policy and procedure

[[Page 46415]]

to ensure that access to the AFP shall be given to consumers regardless 
of type of disability, age, income level, location of residence in the 
State, or type of AT device or AT service for which financing is 
requested through the program; and (3) A procedure to ensure consumer-
controlled oversight of the program (Section 305).
    Grantees must submit the administrative policies and procedures 
required in this assurance within six months of the start of the grant.
    (10) Data Collection: An assurance that the State will collect the 
following: (1) Information on the type of alternative financing 
mechanisms used by the State and the community-based organization with 
which each State entered into a contract, under the program (Section 
307); (2) the amount of assistance given to consumers through the 
program (who shall be classified by age, type of disability, type of AT 
device or AT service financed through the program, geographic 
distribution within the State, gender, and whether the consumers are 
part of an underrepresented population or rural population) (Section 
307); and (3) information on the program's short-term and long-term 
goals.
    Grantees must enter the data requested in this assurance, and other 
data the Secretary may require, in the system developed by the 
Secretary. The Technical Assistance provider has developed a 
(voluntary) web-based data collection instrument to assist the AFP 
grantees for this purpose. For more information on the data collection 
system, products, and reports, see http://www.resna.org/AFTAP/loan/index.html. Grantees must enter the data elements contained in this 
form as well as specific information (to be determined) pertaining to 
the short-term and long-terms goals.
    Through the analysis of data collected under the following 
reporting requirements, the Secretary will assess grantee success in 
meeting the program's overall goals of: (1) Increasing access to 
alternative financing programs for the purchases of AT for individuals 
with disabilities; and (2) establishing a nationwide network of 
permanent State AFPs that promote independence and choice.
    Performance measures used to determine whether the goals have been 
accomplished will include: (1) Number of loan applications; (2) number 
of loans; (3) amount and terms of each loan; (4) number of loan 
applications denied and the reasons for the denials; (5) number of 
individuals with disabilities who obtained AT; (6) purpose and type of 
the AT purchased; (7) default rate and net losses; (8) number of States 
that have established new loan program or expanded existing loan 
programs; and (9) State loan capacity.
    Grantee evaluation systems must be capable of collecting and 
analyzing this and any additional required information.

Proposed Priority 2: Access to Telework Fund

Eligibility for a Telework Grant

    State agencies from the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, 
American Samoa, and the Commonwealth of the Northern Mariana Islands, 
are eligible for a Telework grant. For the purposes of this document, 
these entities will be referred to as States.
    Governing bodies of American Indian tribes located on Federal and 
State reservations (and consortia of those governing bodies) consistent 
with section 7(19)(B) of the Rehab Act are also eligible for a Telework 
grant.
    More than one agency within a State or tribe may receive a Telework 
grant, but there must be coordination and communication between these 
grantees.

Background

    In February of 2001, the President introduced his New Freedom 
Initiative to help individuals with disabilities by increasing access 
to assistive technologies, expanding educational opportunities, 
increasing the ability of individuals with disabilities to integrate 
into the workforce, and promoting increased access into daily community 
life. In order to increase the participation of individuals with 
disabilities in the workforce, Telework was proposed as part of this 
initiative. Telework provides support for alternative financing 
mechanisms with the goal of expanding telework opportunities for 
individuals with disabilities.
    Through the availability of telework and other alternative work 
options, barriers to employment such as inadequate transportation, 
fatigue, inaccessible work environments, and the need for personal 
assistance experienced by individuals with disabilities can be reduced 
or eliminated. While Telework does not relieve covered employers from 
their obligations under the Americans with Disabilities Act (ADA), it 
will provide individuals with disabilities an alternative mechanism to 
access computers and other needed equipment not provided by an employer 
to enable them to establish telework and other alternative work 
environments. These work options will provide employment opportunities 
to many Americans who want or need a flexible work environment.
    While computer technology and the Internet have tremendous 
potential to broaden telework options, including home-based self-
employment, the computer and Internet revolution has not reached as 
many people with disabilities as the population without disabilities. 
Only 25 percent of individuals with disabilities own a computer, 
compared with 66 percent of U.S. adults without disabilities, and only 
20 percent of individuals with disabilities have access to the 
Internet, compared with 40 percent of U.S. adults. The primary barrier 
to wider access to computer equipment is cost.
    It is often very difficult for individuals with disabilities to 
save enough money to purchase computer and adaptive technology (e.g., 
screen readers, voice synthesizers, adaptive keyboards, and specialized 
software). Cash benefit programs do not provide sufficient funds for 
both living expenses and savings, and income support programs limit the 
amount of assets a person can accumulate. For a number of reasons, 
individuals with disabilities often find it difficult to access loans 
as a method to purchase necessary equipment. For example, they may have 
insufficient cash or collateral, lack an appropriate credit rating, or 
face attitudinal barriers. Telework addresses these barriers by 
assisting individuals with disabilities to obtain financing for 
computers and other equipment, so that they may work from home or other 
telework sites.
    For the purposes of the proposed Telework priority, the term 
``telework'' encompasses work that can be performed effectively from 
home or from other remote sites away from the office, such as work on 
the road or at a telework center. Successful applicants will develop 
programs that will enable individuals with disabilities to obtain 
computers and other equipment so that they can work as an employee or 
contractor or to become self-employed on a full-time or part-time basis 
from home or other remote sites.
    On December 26, 2002 RSA published a notice of proposed priority 
and proposed application requirements in the Federal Register for 
Telework (67 Fed. Reg. 78790). RSA received 24 comments by the 
deadline. Twelve of the 24 commenters suggested allowing State grantees 
to jointly administer AFP and Telework, and six other

[[Page 46416]]

commenters suggested that AFP and Telework grantees collaborate 
closely.
    We agree that it would be more efficient for AFP grantees that 
choose to apply for Telework to jointly apply for and administer the 
two grant programs. However, AFP grantees may also choose to separately 
apply for and administer a Telework grant.
    In order to enable joint administration of the two programs, the 
Assistant Secretary has revised the December 26, 2002 proposed Telework 
priority to parallel the AFP statutory requirements. The major revision 
is that the application and program requirements contained in the 
December 26, 2002 proposed Telework priority are now addressed through 
a number of required assurances with accompanying timeframes for 
implementing the assurances.
    Eligible State applicants for an AFP grant may apply for a Telework 
grant by submitting one application to jointly administer the two grant 
programs. These States must specify in their application the amount of 
their match that is devoted to each grant. However, section 
303(b)(5)(A) of the AT Act requires that AFP funds be placed in a 
permanent separate account. Thus, while State grantees may jointly 
administer the AFP and Telework, the funds must be kept in permanent 
separate accounts.
    There are two major differences between the AFP and the Telework. 
The match requirement for a Telework grant is 10 percent while the 
match requirement for an AFP grant is 25 percent.
    The second difference between the AFP and Telework is that the two 
programs have different short-term and long-term goals. Telework will 
provide support to individuals with disabilities for the purpose of 
purchasing computers and other equipment, including adaptive equipment. 
Telework will: (1) achieve the program's short-term goal of increasing 
access to technology for disabled individuals through alternative 
financing mechanisms that are used to purchase computers and other 
equipment, including adaptive equipment, so that individuals with 
disabilities can telework from home or other remote sites; and (2) 
achieve the program's long-term goal of increasing employment 
opportunities and competitive employment outcomes for individuals with 
disabilities. The proposed priority would implement the Access to 
Telework Fund proposed by the President in his New Freedom Initiative.
    Congress appropriated funds under section 303(b) of the Rehab Act 
to provide RSA the funds necessary to administer Telework. The proposed 
priority supports this section by furthering the purposes of the Rehab 
Act, specifically by empowering individuals with disabilities to 
maximize employment.

Proposed Priority

    In its application, a State or Indian tribe must identify and 
describe one or more of the following types of programs that the State 
will implement:
    (1) A low-interest loan fund;
    (2) An interest buy-down program;
    (3) A revolving loan fund;
    (4) A loan guarantee or insurance program;
    (5) A program operated by a partnership among private entities for 
the purchase, lease, or other acquisition of computers and other 
equipment, including adaptive equipment;
    (6) Another mechanism that meets the requirements and intent of 
this program and is approved by the Secretary.
    In addition, an applicant must submit the following assurances:
    (1) Nature of the Match: An assurance that the State or Indian 
tribe will provide the non-Federal share (10 percent) of the cost of 
Telework in cash, from State or Indian tribe, local, or private 
sources. An applicant must identify the amount of Federal funds it is 
requesting and the amount of cash that the State or Indian tribe is 
going to generate as a match as well as the source of the cash.
    (2) Permanence of the Program: An assurance that Telework will 
continue on a permanent basis.
    A State or Indian tribe's obligation to implement Telework 
consistent with all of the requirements, including reporting 
requirements, continues throughout the project period until there are 
no longer any funds available to operate Telework and all outstanding 
loans have been repaid.
    If a State or Indian tribe decides to terminate its Telework grant 
while there are still funds available to operate the program, the State 
or Indian tribe must immediately return the Federal share of the funds 
remaining in the permanent separate account to RSA (e.g., 90 percent if 
the original State or Indian tribe: Federal match was 1:9) except for 
funds being used for grant purposes, such as loan guarantees for 
outstanding loans. However, before closing out its grant, the State or 
Indian tribe must also return the Federal share of any principal and 
interest remitted to it on outstanding loans and any other funds 
remaining in the permanent separate account, such as funds being used 
as loan guarantees for those loans.
    (3) Consumer Choice and Control: an assurance that, and information 
describing the manner in which, Telework will expand and emphasize 
consumer choice and control.
    (4) Supplement Not Supplant: an assurance that the funds made 
available through the grant to support Telework will be used to 
supplement and not supplant other Federal, State or Indian tribe, and 
local public funds to support similar services to individuals with 
disabilities.
    (5) Permanent Separate Account: an assurance that the State or 
Indian tribe will ensure that (A) all funds that support Telework, 
including funds repaid during the life of the program, will be placed 
in a permanent separate account and identified and accounted for 
separately from any other fund; (B) if the organization administering 
the program invests funds within this account, the organization will 
invest the funds in low-risk securities in which a regulated insurance 
company may invest under the law of the State; and (C) the organization 
will administer the funds with the same judgment and care that a person 
of prudence, discretion, and intelligence would exercise in the 
management of the financial affairs of such person.
    During the first 12-month budget period, a grantee must deposit its 
matching funds and its Federal award funds in the permanent and 
separate account.
    (6) Use and Control of Funds: an assurance that (A) funds comprised 
of the principal and interest from the account described in paragraph 
(5) will be available to support Telework; and (B) any interest or 
investment income that accrues on or derives from such funds after such 
funds have been placed under the control of the organization 
administering Telework, but before such funds are distributed for 
purposes of supporting the program, will be the property of the 
organization administering the program.
    This assurance regarding the use and control of funds applies to 
all funds derived from Telework including the original Federal award, 
the State or Indian tribe matching funds, Telework funds generated by 
either interest bearing accounts or investments, and all principal and 
interest paid by borrowers of Telework who are extended loans from the 
permanent separate account.
    (7) Indirect Costs: An assurance that the percentage of the funds 
made available through the grant that is used for indirect costs will 
not exceed 10 percent.
    For each 12-month budget period, grantees must recalculate their

[[Page 46417]]

allowable indirect cost rate, which may not exceed 10 percent of the 
amount of funds in the permanent and separate account and any 
outstanding loans from that account.
    (8) Administrative Policies and Procedures: An assurance that the 
State or Indian tribe will submit to the Secretary the following 
policies and procedures for administration of Telework: (1) A procedure 
to review and process in a timely manner requests for financial 
assistance for immediate and potential needs, including consideration 
of methods to reduce paperwork and duplication of effort, particularly 
relating to need, eligibility, and determination of the specific device 
or service to be financed through the program; (2) A policy and 
procedure to ensure that access to Telework shall be given to consumers 
regardless of type of disability, age, income level, location of 
residence in the State or Indian tribe, or type of device or service 
for which financing is requested through the program; and (3) A 
procedure to ensure consumer-controlled oversight of the program.
    Grantees must submit the administrative policies and procedures 
required in this assurance within six months of the start of the grant.
    (9) Data Collection: An assurance that the State or Indian tribe 
will collect the following: (A) Information on whether the program is 
achieving its short-term goal of increasing access to technology for 
disabled individuals through the provision of loans that must be used 
to purchase computers and other equipment, including adaptive 
equipment, so that individuals with disabilities can telework from home 
and other remote sites; and (B) Information on whether the program is 
achieving its long-term goal of increasing employment opportunities and 
competitive employment outcomes for individuals with disabilities.
    Grantees must enter the data requested in this assurance, and other 
data the Secretary may require, in the system developed by the 
Secretary.
    Through the analysis of data collected under the following 
reporting requirements, the Secretary will assess grantee success in 
meeting the program's overall goals of: (1) Increasing access to 
technology for disabled individuals; and (2) Increasing employment 
opportunities and competitive employment outcomes for individuals with 
disabilities.
    Performance measures used to determine whether the goals have been 
accomplished will include: (1) Number of loan applications; (2) number 
of loans; (3) amount and terms of each loan; (4) number of loan 
applications denied and the reasons for the denials; (5) the types of 
equipment financed, including the total number of each type of 
equipment financed; (6) number of individuals who obtained telework 
employment as a result of Telework loans; (7) default rate and net 
losses; and (8) the total financial contribution to the project, 
including the Federal share and non-Federal matching contributions, and 
the source of the non-Federal share.
    Grantee evaluation systems must be capable of collecting and 
analyzing this and any additional information as required by the 
Secretary.
    In addition, each State applicant must provide the following 
assurance:

Contract with a Community-based Organization: an assurance that the 
State (note: Indian tribes are exempt from this requirement) will enter 
into a contract with a community-based organization (including a group 
of such organizations) that has individuals with disabilities involved 
in organizational decision making at all organizational levels, to 
administer Telework. The contract will: (1) Include a provision 
requiring that the program funds, including the Federal and non-Federal 
shares of the cost of the program, be administered in a manner 
consistent with the provisions of this priority; (2) include any 
provision the Secretary requires concerning oversight and evaluation 
necessary to protect Federal financial interests; and (3) require the 
community-based organization to enter into a contract, to expand 
opportunities under this priority and facilitate administration of 
Telework, with commercial lending institutions or organizations or 
State financing agencies.

    During the first 12-month budget period, a grantee must enter into 
the contract with a CBO and ensure that the CBO has entered into the 
contract with the commercial lending institutions or organizations or 
State financing agencies.

Applicability of Education Department General Administrative 
Regulations (EDGAR) to AFP and Telework

    In general, EDGAR applies to these two grants except to the extent 
it is inconsistent with the purpose and intent of title III of the AT 
Act, section 303(b) of the Rehab Act, or the requirements in this 
notice. Specifically, grantees are exempt from section 80.21(i) 
regarding interest earned on advances and the addition method in 
section 80.25(g)(2) applies to program income rather than the deduction 
method in section 80.25(g)(1). Also, sections 75.560-75.564 do not 
apply to the extent that these sections of EDGAR are inconsistent with 
the AFP and Telework requirement that indirect costs cannot exceed 10 
percent. Finally, section 75.125, which requires applicants to submit a 
separate application for each program, does not apply to this 
competition.

Changes in NIDRR's and RSA's Application Processes for AFP and Telework 
Awards

    Based upon public comments made in response to the earlier Federal 
Register notices for the AFP and Telework, NIDRR and RSA are planning 
on making changes to the application process for the grant awards. 
These revised application procedures will assist applicants to prepare 
fundable proposals, simplify the information that is required in the 
application, and streamline the application review process. NIDRR and 
RSA expect to fund all applications that meet the requirements set 
forth in the proposed priorities.
    In order to promote fundable applications, NIDRR and RSA will 
provide applicants with technical assistance on their proposals 
beginning with the publication of this notice and up until the deadline 
for submission of applications. Prior to the application deadline, 
NIDRR and RSA will answer questions, review draft proposals, and 
provide applicants with feedback in order to assist them to submit a 
fundable application. In addition, NIDRR's AFP Technical Assistance 
project will provide assistance to all entities that are interested in 
applying for an AFP or Telework award.
    The application process will be simplified by requiring applicants 
to submit a number of assurances, and a limited amount of information 
related to those assurances. NIDRR and RSA will not require applicants 
to provide details in their applications concerning the policies and 
procedures they will use to administer their AFP or Telework grant. 
These policies and procedures will be submitted by grantees to NIDRR or 
RSA within the first year of the grant.
    NIDRR and RSA will use an internal application review process to 
determine whether all the necessary assurances and required program 
information have been submitted. This will ensure that the same 
standards that are used to provide applicants with information and 
feedback during the application period will be applied to evaluate 
applications for funding.
    The Notice Inviting Applications that accompanies the final 
priorities will ask

[[Page 46418]]

each applicant to identify the amount of the Federal award for which it 
is applying and can qualify. That amount is based on the amount of 
matching funds to be provided by the applicant. The size of each award 
will depend on the total number of fundable applications that NIDRR and 
RSA receive and the requests for Federal funding that are included in 
those applications.

Electronic Access to This Document

    You may review 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 the following site: 
http://www.ed.gov/legislation/FedRegister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using 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 84.224C, Alternative 
Financing Program and 84.235T, Access to Telework Fund Program.)

    Program Authority: 29 U.S.C. 773(b) and 29 U.S.C. 3051-3056.

    Dated: July 31, 2003.
Robert H. Pasternack,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 03-19844 Filed 8-4-03; 8:45 am]
BILLING CODE 4000-01-P