[Federal Register Volume 69, Number 156 (Friday, August 13, 2004)]
[Proposed Rules]
[Pages 50122-50141]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18594]


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CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

45 CFR Parts 2510, 2520, 2521, 2522, 2540 and 2550

RIN 3045-AA41


AmeriCorps National Service Program

ACTION: Proposed rule with request for comments.

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SUMMARY: The Corporation for National and Community Service 
(hereinafter the ``Corporation'') proposes to amend several provisions 
relating to the AmeriCorps national service program, and to add rules 
to clarify the Corporation's requirements for program sustainability, 
performance measures and evaluation, capacity-building activities by 
AmeriCorps members, qualifications for tutors, and other requirements.

DATES: To be sure your comments are considered, they must reach the 
Corporation on or before October 12, 2004.

ADDRESSES: You may mail or deliver your comments to Kim Mansaray, 
Corporation for National and Community Service, 1201 New York Avenue 
NW., Washington, DC 20525. You may also send your comments by facsimile 
transmission to (202) 565-2767, or send them electronically to 
[email protected] or through the Federal government's one-stop 
rulemaking Web site at http://www.regulations.gov. Members of the 
public may review copies of all communications received on this 
rulemaking at the Corporation's Washington DC headquarters.

FOR FURTHER INFORMATION CONTACT: Kim Mansaray, Docket Manager, 
Corporation for National and Community Service, (202) 606-5000, ext. 
236. TDD (202) 565-2799. Persons with visual impairments may request 
this proposed rule in an alternative format.

SUPPLEMENTARY INFORMATION:

I. Invitation To Comment

    We invite you to submit comments about these proposed regulations. 
To ensure that your comments have maximum value in helping us develop 
the final regulations, we urge you to identify clearly the specific 
section or sections of the proposed regulations that each comment 
addresses and to arrange your comments in the same order as the 
proposed regulations. During and after the comment period, you may 
inspect all public comments about these proposed regulations in room 
8417, 1201 New York Avenue, NW., Washington, DC, between the hours of 9 
a.m. and 4:30 p.m., eastern time, Monday through Friday of each week 
except Federal holidays.
    In addition, the Corporation is planning five public meetings and 
three conference calls during August and September for purposes of 
soliciting input on this proposed rule. Please visit our Web site at 
http://www.americorps.org/rulemaking for information on the dates, 
places, and times of these meetings and calls.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking 
Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, please contact the person 
listed under FOR FURTHER INFORMATION CONTACT.

II. Background

    Under the National and Community Service Act of 1990, as amended 
(hereinafter ``NCSA, or the Act,'' 42 U.S.C. 12501 et seq.), the 
Corporation makes grants to support community service through the 
AmeriCorps program. In addition, the Corporation, through the National 
Service Trust, provides education awards to and certain interest 
payments on behalf of AmeriCorps participants who successfully complete 
a term of service in an approved national service position.
    On February 27, 2004, President Bush issued Executive Order (E.O.) 
13331 aimed at making national and community service programs better 
able to engage Americans in volunteering, more responsive to State and 
local needs, more accountable and effective, and more accessible to 
faith-based and grassroots organizations. The E.O. directed the 
Corporation to review and modify its policies as necessary to 
accomplish the goals of the E.O.
    In the Consolidated Appropriations Act for 2004, Congress required 
the Corporation to reduce the Federal cost per participant in the 
AmeriCorps program and to increase the level of matching funds and in-
kind contributions provided by the private sector. The Conference 
Report accompanying the 2004 Consolidated Appropriations Act directed 
the Corporation to engage in notice and comment rulemaking around the 
issue of ``sustainability.''
    On September 23, 2003, the Corporation's Board of Directors (the 
Board) directed the Corporation to ``undertake rulemaking to establish 
regulations on significant issues, such as sustainability and the 
limitation on the Federal share of program costs, consistent with any 
applicable directives from Congress.'' On June 21, 2004, the Board 
approved draft specifications for the proposed rule, and directed the 
Corporation to develop and submit a proposed rule based on those 
specifications.
    The Corporation is initiating two separate rulemaking processes in 
2004. This first one will address significant and time-sensitive issues 
with the goal of incorporating them, to the extent practicable, into 
the AmeriCorps 2005 program year. The second process grows out of a 
recommendation by the Board's Taskforce on Grant-making and is largely 
an effort to streamline and improve our current grant making processes. 
That streamlining effort is already underway, and we plan to issue a 
Notice of Proposed Rulemaking for that purpose later in the year. These 
two rulemakings address distinct and separate issues.

III. Preliminary Public Input

    On March 4, 2004, the Corporation published a notice in the Federal 
Register inviting informal preliminary public input in advance of 
rulemaking. The notice outlined the general topics the Corporation was 
interested in addressing through rulemaking and posed questions for the 
public to consider in providing input. Following the notice, the 
Corporation held four conference calls and five public meetings across 
the country in Columbus, Ohio, Seattle, Washington, Boston, 
Massachusetts, Washington, DC, and Fort Worth, Texas, to frame the 
issues and hear public input. Through the hearings, conference calls, 
and e-mail and paper submissions, the Corporation received responses 
from nearly 600 individuals, and has used

[[Page 50123]]

this input to inform the drafting of this proposed rule.

IV. Proposed Rule

    This proposed rule includes a targeted series of reforms designed 
to strengthen the impact, efficiency, and reach of the AmeriCorps 
program, our AmeriCorps grantees, and the Corporation. Our primary 
objectives are to:
     Create a framework for long-term growth and sustainability 
of the AmeriCorps program as a public-private partnership;
     Provide consistency, reliability, and predictability for 
AmeriCorps grantees and State commissions;
     Enhance the demonstrable positive impact of the AmeriCorps 
program on:
    [ctrcir] Communities and beneficiaries that receive service;
    [ctrcir] Non-profit organizations and community infrastructures 
that host service; and
    [ctrcir] AmeriCorps members who serve;
     Resolve longstanding issues relating to Federal share, 
cost per full-time-equivalent member, and sustainability of AmeriCorps 
projects in a way that minimizes annual uncertainty about grantee 
funding levels and restrictions; and
     Assure fiscal and programmatic accountability and 
performance measurement for the Corporation, the AmeriCorps program, 
and grantees.
    In addition, wherever possible, this rule reflects the 
Corporation's determination to:
     Decrease the bureaucratic and paperwork burdens on 
Corporation grantees;
     Strengthen the program's ability to respond to State and 
local needs;
     Engage more community volunteers;
     Include faith-based and grassroots community organizations 
in all Corporation programs; and
     Invigorate the competitive grant-making process.
    Existing and potential AmeriCorps grantees constitute a rich and 
diverse group of talented and innovative forces for change, with 
different needs, circumstances, and abilities. Therefore, the 
Corporation has endeavored, throughout these regulations, to:
     Use competitive criteria to encourage, rather than 
require, desired actions or activities, wherever possible; and
     Calibrate implementation of the regulatory requirements 
based on the unique goals, circumstances, and limitations of grantees, 
including waivers where appropriate.
    As announced in the March 4, 2004, Federal Register notice, the 
Corporation is focusing these reforms on five main areas: (1) 
Sustainability of AmeriCorps programs, including decreasing grantee 
reliance on Federal funds and decreasing Federal costs per full-time 
equivalent; (2) Selection criteria; (3) Performance measures and 
evaluation; (4) Tutor qualifications and requirements for tutoring 
programs; and (5) Streamlining continuation applications and grant 
cycles. The following discussion addresses the issues of sustainability 
and intermediaries generally, and then addresses the specifics of the 
proposed rule in more detail. Section V of this preamble addresses 
implementation of the proposed rule, and section VI addresses several 
policy issues we have considered in light of the public input we 
received.

Sustainability

    The issues about which we received the most input were those 
relating to sustainability, Federal share, and cost per full-time-
equivalent (FTE). Much of the input sought to define sustainability in 
broad terms, and included many elements, other than finances, as part 
of the definition. While the Corporation agrees that there are many 
measures and elements of sustainability, the most recent discussion has 
focused on the monetary aspects of sustainability--Federal share and 
cost per FTE.
    The Corporation understands that other forms of sustainability are 
important; they are reflected in the proposed changes to the selection 
criteria so that an organization achieving sustainability through any 
or all of those measures will be more competitive when applying for an 
AmeriCorps grant. But ultimately, we believe that the focus of Congress 
in this discussion of sustainability is at the organizational or 
program level--specifically on the financial resources of the 
organization or program. In other words, how can organizations that the 
Corporation supports better leverage Federal dollars by expanding and 
diversifying their non-Federal funding? To the extent that this is a 
broader question, we would frame it as: how much more national service 
can AmeriCorps provide across the country with the Federal dollars 
available to it?
    The Corporation's annual appropriations and its authorizing 
legislation, as well as E.O. 13331, support this approach. In our 
annual appropriations act each year dating back to fiscal year 1996, 
Congress directed the Corporation to ``increase significantly the level 
of matching funds and in-kind contribution provided by the private 
sector,'' and ``reduce the total Federal costs per participant in all 
programs.'' Section 130(b)(3) of the Act, as amended, authorizes the 
Corporation to ask an organization ``re-competing'' for funding after a 
three-year initial grant period to include a ``description of the 
success of the programs in reducing their reliance on Federal funds.'' 
In addition, E.O. 13331 directs that ``national and community service 
programs should leverage Federal resources to maximize support from the 
private sector and from State and local governments.''
    While the Corporation is committed to meeting these goals, they do 
not require imposing limitations on the number of years an organization 
may receive funds, particularly given the many organizations providing 
valuable infrastructure and experience that enable national and 
community service to continue to thrive across the country. At the 
national level, we do not think it necessary to disqualify an 
organization from receiving Federal funding based on the number of 
years that organization has received funding. To do so would result, in 
future years, in a loss of some of the strongest organizations with the 
capacity, infrastructure, and experience to provide high-quality 
service and deliver results that contribute to the strengthening and 
growth of national and community service. We do believe, however, that 
most, if not all, organizations that receive Corporation funds can and 
should contribute a higher share of program costs over time.
    The Corporation's objectives in the proposed rule relating to 
sustainability are to make more resources available in order to 
increase national service activities and opportunities. In addition, we 
seek to strengthen existing national and community service programs by 
encouraging grantees to expand and diversify their non-Federal funding 
sources while strengthening the competitive framework. At the same 
time, we want to strengthen the independence, operating flexibility, 
and autonomy of grantees, and treat grantees fairly and equitably.
    The Corporation's strategy to increase organizational 
sustainability and expand national and community service has six main 
elements:
    1. Incorporates the broad spectrum of sustainability criteria 
throughout the Corporation's grant selection criteria.
    2. Makes an applicant's budgeted Corporation cost per full-time-
equivalent (FTE) a more meaningful factor in the selection process. All 
else being equal, the lower a program's cost per FTE, the better chance 
it will have to receive Corporation funding. At the

[[Page 50124]]

same time, the Corporation will explicitly take into account the goals, 
performance outcomes, and the individual circumstances of programs and 
the communities in which they operate, thereby considering both costs 
and benefits.
    3. Increases, based on a predictable and incremental schedule, the 
grantee share of program costs to a 50 percent aggregate level by the 
10th year in which an organization receives an AmeriCorps grant for the 
same program.
    4. Expects State commissions to develop and implement a 
sustainability approach as part of their oversight function.
    5. Reserves a percentage of non-continuation AmeriCorps State and 
national grant funds each year for applicants that have not received 
AmeriCorps competitive funding from the Corporation for at least five 
years.
    6. Builds meaningful tools, including limited exceptions, for 
accommodating organizations that have demonstrated hardship in meeting 
the increasing match requirements.
    With the exception of the fourth element--reserving a percentage of 
non-continuation funds each year for applicants new to the 
Corporation--we address each of the elements in more detail in the 
individual section discussions that follow. On the issue of reserving a 
percentage of funds for applicants new to the Corporation, we 
anticipate reserving annually a percentage of AmeriCorps funds for 
grants to new applicants--i.e., applicants who have not received an 
AmeriCorps State or national competitive grant for at least five years. 
The Corporation will determine this percentage annually based on the 
availability of appropriations and the projected number of recompeting 
applications, and publish this information, including posting it on the 
Web site at http://www.nationalservice.org, in advance of the selection 
process.
    The Corporation believes that its sustainability approach 
represents a fair, equitable, and authoritative resolution of the issue 
of organizational financial sustainability. The proposed rules are 
authorized by, and consistent with, our enabling legislation, and 
strike a reasonable balance between our objectives of supporting and 
strengthening high-quality programs while leveraging Federal resources 
to achieve the greatest benefit possible for our nation's communities. 
Predictability and consistency are crucial elements of this rulemaking. 
Thus, we seek to provide clear guidance to our grantees on our long-
term expectations for sustainability, which we believe decisively 
resolves the ongoing discussion on the issue.

Intermediaries

    The Corporation received a substantial amount of input regarding 
intermediaries and, in particular, the potential effect of efforts to 
promote sustainability on those entities. We believe that there is and 
should continue to be a prominent place for intermediaries in the 
national and community service portfolio, particularly given their 
important role in reaching faith-based and small community-based 
organizations. The Corporation understands that many intermediary 
models include a regular infusion of new sites, which, as with any 
start-up, may have higher costs initially. In designing the selection 
criteria, we have explicitly included that feature of intermediaries as 
a possible factor in considering several of the cost-effectiveness 
competitive factors.
    We note, however, that we have set matching requirements at the 
grantee level, rather than at the placement or operating site level, 
and we have not adjusted the matching requirements based on the 
proportion of new sites in any given year. We believe that establishing 
the matching requirements at the grantee level gives greater 
flexibility to intermediaries to manage and achieve a mix of new and 
older sites.

Specifics of the Proposed Rule

    As discussed in more detail below, the proposed rule:
    1. Defines the term ``target community'' as the geographic 
community for which an AmeriCorps grant applicant identifies an unmet 
need to be addressed.
    2. Clarifies the types of service activities in which AmeriCorps 
members may engage and explains the parameters for grantees and members 
to engage in capacity-building service activities, including volunteer 
recruitment and support.
    3. Increases, in an incremental and predictable fashion, the 
grantee's share of program costs to a 50 percent aggregate plateau over 
10 years.
    4. Codifies that the amount of childcare payments the Corporation 
makes on behalf of an AmeriCorps member may not exceed the amount 
provided under the Child Care and Development Block Grant Act of 1990 
(P.L. 101-508).
    5. Codifies the grant selection process and criteria, and aligns 
the criteria with indicators of high-quality and sustainable programs.
    6. Clarifies how grantees will calculate their budgeted Corporation 
cost per FTE.
    7. Codifies the Corporation's requirements for grantees to 
establish performance measures and to evaluate program outcomes, and 
establishes grant size threshold for evaluations.
    8. Establishes qualifications for members serving as tutors and 
requirements for tutoring programs.
    9. Prohibits displacement of volunteers.
    10. Removes obsolete references to ``transitional entities'' 
serving as State commissions on national and community service.
    11. Broadens State commission flexibility to directly operate 
national service programs, except to the extent prohibited by statute.
    12. Modifies State commission State plan requirements to include a 
description of their program sustainability approach.
Member Service Activities on Behalf of the Organization (Sec. Sec.  
2520.20 Through 2520.65)
    Except for those member activities specifically prohibited in 
sections 132 and 174 of the Act, as amended, the Corporation has broad 
authority to determine appropriate service activities for AmeriCorps 
members. The proposed regulation largely codifies and clarifies the 
Corporation's current guidelines and grant provisions on this issue. 
Specifically, this regulation clarifies that AmeriCorps members may: 
(1) Perform direct service activities, and (2) engage in other 
activities that build the organizational and financial capacity of 
nonprofit organizations and communities, including volunteer 
recruitment and certain fundraising activities.

Volunteer Recruitment

    One focus of Executive Order 13331 is leveraging of Federal 
resources ``to enable the recruitment and effective management of a 
larger number of volunteers than is currently possible.'' The proposed 
regulations more clearly direct that some component of an AmeriCorps 
grant must help build the long-term capacity of nonprofit organizations 
and the community by recruiting and supporting volunteers. While this 
has implicitly been a requirement over the past two years, clarifying 
and reinforcing this requirement is expected to encourage more 
Americans to engage in service and volunteer activities, and advance 
President Bush's call to service.

[[Page 50125]]

    The Corporation does not, however, intend for this requirement to 
distract from an organization's mission, nor is our goal to replace 
direct service with volunteer generation and other capacity-building 
activities. In most cases, direct service and volunteer leveraging can 
complement each other to strengthen programs and communities. When 
considering how an AmeriCorps program can promote the effective 
involvement of volunteers, applicants have the flexibility to determine 
the best way to enhance or build upon the direct service goals of the 
program in which the AmeriCorps members are serving and to propose 
capacity-building activities accordingly.
    The Corporation recognizes, however, that some program models, such 
as certain professional corps, youth corps, and programs in some rural 
locations with a limited volunteer pool, may not be able to include 
volunteer recruitment and support in their program model, and the 
Corporation will take these factors into account in considering 
requests to waive the volunteer leveraging requirement.

Fundraising

    The proposed regulation also clarifies that AmeriCorps members may 
help organizations raise funds directly in support of service 
activities that meet local environmental, educational, public safety, 
homeland security, or other human needs. Members may participate in a 
wide range of fundraising activities if these activities make up only a 
relatively small amount of any individual member's overall service 
hours. Members may write grant applications excepting those for 
AmeriCorps or any other Federal funding.
    The rule's provisions governing fundraising are more flexible for 
AmeriCorps members than those for grantee staff, which are subject to 
Federal cost principles described in the Office of Management and 
Budget Circulars that generally disallow costs incurred in organized 
fundraising. The Corporation believes that these activities will 
enhance the use of AmeriCorps members to build the capacity of 
nonprofit organizations, as well as advance the professional 
development of the members themselves.
    Finally, the rule codifies the Corporation's existing so-called 
``80/20'' rule, which limits a program's aggregate number of hours for 
education and training activities to not more than 20 percent of its 
members' total service hours. The rule also clarifies that capacity-
building activities count towards the 80 percent and not the 20 percent 
education and training hours.
Increase in Grantee Share of Program Costs (Sec. Sec.  2521.40 Through 
2521.60)
    Sections 121 and 140 of the Act, as amended, establish a ceiling on 
the Corporation share for program operating costs and the Federal share 
for member support costs of 75 percent and 85 percent, respectively. In 
other words, at a minimum, the statute requires an AmeriCorps grantee 
to provide not less than 25 percent of operating costs, and 15 percent 
of member support costs. While the Act does not allow the Corporation 
to decrease the grantee share requirements below the statutory minimum, 
the Corporation has the discretion under the statute to increase the 
grantee share of costs, and did so in 1996, when we increased the 
grantee share of operating costs from 25 percent to 33 percent.
    As discussed earlier, the Corporation believes that the essence of 
the current public discussions of sustainability relates to the 
financial resources of our grantee organizations. Section 130 of the 
Act, as amended, explicitly authorizes the Corporation to ask an 
organization applying for renewal of assistance (``recompete'' funding) 
after an initial three-year grant period to describe how it has 
decreased its reliance on Federal funding. In addition, in our annual 
appropriations act each year dating back to fiscal year 1996, Congress 
has directed the Corporation to ``increase significantly the level of 
matching funds and in-kind contribution provided by the private 
sector,'' and to ``reduce the total Federal costs per participant in 
all programs.'' Finally, E.O. 13331 directs that ``national and 
community service programs should leverage Federal resources to 
maximize support from the private sector and from State and local 
governments.''
    Consequently, this proposed rulemaking would increase, in a 
predictable and incremental fashion, the grantee share of program costs 
to a 50 percent aggregate level in the 10th year that an organization 
receives an AmeriCorps grant. Each grantee will be required to meet the 
current minimum requirements of 33 percent match (cash or in-kind) for 
operating costs and 15 percent match (non-Federal cash only) for member 
support costs. After meeting those minimum requirements, the grantee 
may meet the balance of its aggregate share of costs through any 
combination of operating or member support matching funds. The grantee 
aggregate share will apply beginning in the fourth year and increase in 
each year thereafter in which an organization receives a program grant 
as follows:

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                                              Year 1     Year 2     Year 3     Year 4     Year 5     Year 6     Year 7     Year 8     Year 9    Year 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum Aggregate Share...................        N/A        N/A        N/A        26%        30%        34%        38%        42%        46%        50%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed rule establishes that a current grantee who has 
received an AmeriCorps grant for 4 years or more, must begin meeting 
the match requirements at the year three-level. For the first two 
years, that organization will be required to meet current, or 
marginally higher, match requirements, before its required share begins 
to increase more systematically.
    The Corporation intends to provide training and technical 
assistance to grantees to assist them in achieving their matching 
goals. For example, we may provide training on documenting in-kind 
match to enable grantees to maximize their ability to use in-kind 
towards their overall matching requirements. We will consult with 
grantees to determine the most useful and appropriate training and 
technical assistance.
    We believe, based on our research into current grantee match 
levels, that it is reasonable to expect all grantees, even those 
operating in remote or impoverished communities, to achieve this level 
of matching, and we expect State commissions to continue managing their 
portfolios to achieve even higher match levels. However, to the extent 
that an organization is unable to achieve or increase its share of 
costs, we intend to consider targeting the following assistance to 
organizations that are demonstrably at risk of not meeting the matching 
requirements:
    1. Providing additional training and technical assistance: The 
Corporation plans to provide training and technical assistance to help 
grantees identify new strategies to raise matching funds and community 
support.
    2. Redirecting Corporation assets: The Corporation will consider 
using, on a

[[Page 50126]]

short-term basis, other program assets to help an organization 
struggling to meet its match requirements. For example, we might 
temporarily allocate a VISTA member to help build the capacity and 
broaden the community support of a VISTA-eligible organization.
    3. Conducting Corporation outreach to the regional and national 
philanthropic community: The Corporation will seek to broaden its 
outreach to the philanthropic community to promote those national and 
community service programs that are potentially at risk and explain the 
impact of the changes we are implementing.
    4. Allowing State commission portfolio flexibility: If a subgrantee 
of a State commission is not meeting its minimum matching requirements, 
we are providing the State commissions the ability to make up for the 
short-fall in a low-matching grantee's matching funds by pairing that 
grantee up with one or more grantees that are meeting more than the 
required level of matching funds. This will provide some flexibility to 
State commissions to manage their formula and, to some extent, 
competitive portfolios, while effectively reducing Federal share.
    5. Allowing a waiver: On a limited basis, the Corporation will use 
its current statutory waiver authority for those satisfactorily 
performing and otherwise compliant programs that demonstrate an 
inability, in spite of reasonable efforts, to achieve sufficient 
financial support to meet the increased matching requirements. This 
waiver would be granted on an annual basis and subject to revision or 
revocation based on grantee performance and resources.
    The Corporation believes the increased match requirements, together 
with the measures described above that are designed to assist grantees 
in meeting the new requirements, represent a fair, equitable, and 
authoritative resolution of the issue of organizational financial 
sustainability, such that additional measures in annual appropriations 
bills, or through rulemaking, are not necessary. We intend to make 
public information on an annual basis reporting the progress that 
grantees are making in leveraging Federal resources.
Codifying the Cap on Child-Care Payments (Sec.  2522.250)
    Section 140(e) of the Act, as amended, authorizes the Corporation 
to establish guidelines on the availability and value of child-care 
assistance. By current regulation, child-care payments for AmeriCorps 
State and National members are ``based on'' amounts authorized under 
the Child Care and Development Block Grant of 1990. The Corporation is 
proposing to eliminate any ambiguity in the current language by 
explicitly capping the amount of child-care benefits for any individual 
AmeriCorps member at the level established by each State under the 
Child Care and Development Block Grant.
AmeriCorps Grants Selection Process and Criteria (Sec. Sec.  2522.400 
Through 2522.470)
    In addition to establishing specific AmeriCorps grant application 
requirements, section 130 of the Act, as amended, gives the Corporation 
broad authority to set additional application requirements and to 
establish the selection process. We are proposing adjustments to our 
grant selection criteria to meet three objectives: (1) To better align 
the selection criteria with elements that predict program success; (2) 
To incorporate into the selection criteria greater emphasis on 
sustainability; and (3) To provide transparency, predictability, and 
consistency for organizations applying for AmeriCorps funds.
    The proposed rule describes the Corporation's processes and 
criteria for selecting grantees. In selecting AmeriCorps programs, the 
Corporation generally needs to know four things: (1) An organization's 
plan and its expected outcomes; (2) Whether the organization has the 
capability to manage Federal funds, and operate and support the 
proposed program; (3) The cost implications of the proposed program; 
and (4) For an existing program, whether the organization has 
implemented a sound program, including achieving strong outputs and 
outcomes, organizational capability, and cost-effectiveness.
    To address these issues, the proposed rule modifies the current 
structure of three overall categories of criteria--Program Design, 
Organizational Capability (formerly Organization Capacity), and Cost-
Effectiveness (formerly Budget/Cost-Effectiveness). We have adjusted 
the weights of the three categories to better balance program design 
against organizational strength, which is reflected through 
organizational capability, and cost-effectiveness. Consequently,
     Program Design is 50 percent of the score (as opposed to 
60 percent currently),
     Organizational Capability remains at its current 25 
percent weight, and
     Cost-Effectiveness is 25 percent (as opposed to 15 percent 
currently).
    The Corporation's focus within Program Design is now on the 
relationship between an applicant's rationale and approach, and the 
outputs and outcomes to be achieved for members and the community. Most 
of the criteria from the Corporation's current AmeriCorps 2004 
guidelines remain part of the revised selection criteria, although they 
may now appear under a different category. (Please visit our Web site 
at http://www.nationalservice.org to view the AmeriCorps 2004 
guidelines). We have also added criteria across all three categories to 
better reflect our focus on outcomes and sustainability. With respect 
to financial sustainability, we have included a specific criterion on 
Corporation cost per FTE, so that, all things being equal, an applicant 
proposing a lower cost per FTE will be more advantaged in the selection 
process, in the context of fully weighing the benefits, contributions 
and circumstances of each program.
    In applying the selection criteria, the Corporation intends to 
ensure, to the maximum extent possible, that similar program models are 
evaluated together. This will help to ensure equity and fairness. The 
proposed rule would allow the Corporation to also consider relevant 
information it has received or that is otherwise available during the 
grant review process--the proposed rule sets out in detail the type of 
information that the Corporation may choose to consider.
    After the Corporation applies the basic selection criteria, we may 
then apply one or more of the Corporation's selection priorities, as 
described in this proposed rule. The Corporation may also announce 
additional priorities in the Notice of Funding Availability, or other 
notice to the public. Our intent, however, in codifying the selection 
priorities in these regulations is to provide transparency and baseline 
consistency for current and prospective grantees. This list of 
selection priorities reflects several long-standing Board priorities as 
well as new priorities that we believe are appropriate as a matter of 
policy--and for the Programs Supporting Distressed Communities, as a 
matter of law.
    The proposed rule reaffirms that the Corporation will seek to 
ensure innovation and diversity across its portfolio of AmeriCorps 
programs. In addition, we are requiring State commissions to prioritize 
their State competitive proposals in rank order to help inform our 
selection process. While the Corporation will not be bound by the 
commissions' rankings, we may consider them when making

[[Page 50127]]

funding decisions. We may, in the future, choose to limit the number of 
proposals any one State may submit for State competitive funding to 
streamline the selection process and make optimal use of outside peer 
review panels. If so, we will announce the limitation in the 
appropriate Notice of Funding Availability.
    The input we received raised some questions over State commission 
peer review requirements and why the Corporation conducts peer reviews 
of proposals that State commissions may have already peer reviewed. 
While the regulatory language does not specify this, we wish to clarify 
that the Corporation does not require State commissions to peer review 
AmeriCorps State competitive proposals. The Corporation conducts peer 
reviews of those proposals at the national level to ensure equitable 
consideration of all applications. However, a State commission may be 
required, under State law, to peer review proposals, or it may choose 
to do so on its own.
Cost Per Full-Time-Equivalent (FTE) (Sec.  2522.485)
    As discussed earlier, the proposed rule strengthens the 
Corporation's basic selection criteria, and explicitly includes a 
program's proposed Corporation cost per FTE as an indicator of cost-
effectiveness at Sec.  2522.435. The proposed regulations also quantify 
an individual program's Corporation cost per FTE. For individual 
programs, the Corporation cost per FTE is the budgeted grant costs 
divided by the number of member FTEs awarded in the grant. The budgeted 
grant costs exclude: (1) Child-care for individual members, for which 
the Corporation pays directly; and (2) The education award a member may 
receive from the National Service Trust after fulfilling a term of 
service.
    The Corporation will announce annually any changes in a program's 
Corporation cost per FTE. We anticipate that making cost per FTE a 
competitive factor and gradually decreasing the Federal share of 
grantee costs will cause the cost per FTE for most programs to decrease 
over time. Generally, however, the Corporation will consider granting 
continuation and recompete program requests to increase their 
Corporation cost per FTE up to the statutorily-required percentage 
increase in their previous year's AmeriCorps member living allowance. 
(42 U.S.C. Sec.  12594(a)).
    The Corporation will continue to hold State commissions and 
national direct grantees to a maximum average Corporation cost per FTE. 
State commissions and national direct grantees will calculate their 
portfolio's average Corporation cost per FTE by dividing the budgeted 
grant costs for all their AmeriCorps programs by the number of member 
FTEs awarded across their portfolio of AmeriCorps programs, including 
Education Award programs. The budgeted grant costs do not include 
child-care for individual members, the education award a member may 
receive from the National Service Trust for fulfilling a term of 
service, or non-program grant funds such as a State commission's 
administrative grant or Program Development and Training (PDAT) funds. 
We encourage State commissions and national direct grantees to use the 
Education Award Program as a way to lower their average Corporation 
cost per FTE, to the extent feasible while maintaining high quality 
programs.
    Currently, the average cost per FTE for each commission includes 
the formula funds they use for planning grants. Some of the input 
suggested that the Corporation give States more leeway to use planning 
grants to foster new AmeriCorps programs by taking the cost of planning 
grants out of the average cost per FTE calculation for each commission. 
The Corporation is considering allowing commissions, in calculating 
their average Corporation cost per FTE, to exclude some amount of 
planning grants from their budgeted grant costs, in an amount to be 
determined by the Corporation each year. The Corporation plans to study 
the budgetary and National Service Trust implications of this approach 
in the coming months. However, we invite the public to suggest other 
ideas for expanding the use of planning grants.
    The Corporation will announce in the Federal Register and on its 
Web site at http://www.nationalservice.org the annual maximum average 
Corporation cost per FTE for State commissions and national direct 
portfolios. For the 2004 and 2005 program years, the maximum average 
Corporation cost per FTE for both State commissions and national 
directs will remain at the current level of $12,400. The Corporation 
recognizes that the member living allowance may increase and we will 
review the maximum average cost per FTE annually with this and other 
changes to program costs in mind.
    While we acknowledge that cost per FTE may be defined in several 
different ways, our proposed calculations of Corporation cost per FTE 
are primarily to enable grantees and subgrantees to manage Corporation 
costs at the program and State commission level, and to estimate costs 
for the grant selection process.
Performance Measures and Evaluation (Sec.  2522.500 Through 2522.740)
    To ensure that the Corporation continues to demonstrate the true 
impact of national service, and that programs continue to improve, as 
well as to fulfill the expectations laid out in the Government 
Performance Results Act of 1993 and OMB's Program Assessment Rating 
Tool (or PART), we are continuing to build on the progress we have made 
in demonstrating results. The proposed rule codifies the Corporation's 
current requirements for performance measurement, focuses independent 
evaluation requirements on large grantees, and generally reflects 
current Corporation practice. In addition, the proposed rule clearly 
describes the relationship between performance measures, evaluations, 
and funding decisions. The Corporation believes that a stronger 
emphasis on performance measurement and evaluation will strengthen 
AmeriCorps programs and foster continuous improvement. In line with 
E.O. 13331, emphasizing performance measures and evaluation will also 
help us identify both best practices and models that merit replication, 
and programmatic weaknesses that can be corrected most effectively when 
identified early.
    The proposed rule distinguishes performance measurement from 
program evaluation, while making explicit that grant funds used to pay 
for either activity are not considered ``administrative costs'' or 
subject to the 5 percent statutory cap. A grantee would be allowed to 
use grant funds to pay for performance measurement and evaluation up to 
the approved amounts for such activities in its grant.
    While the proposed rule allows an applicant organization to propose 
and negotiate performance measures unique to the applicant's program, 
the rule provides that the Corporation will establish one or more 
national performance measures on which all grantees would have to 
report. The Corporation will establish a national performance measure 
on volunteer leveraging, and may establish performance indicators of 
member satisfaction. The Corporation will develop national standardized 
performance measures in consultation with AmeriCorps grantees.
    Section 131(d)(1) of the Act specifies that an applicant must 
arrange for an independent evaluation of an AmeriCorps national service 
program receiving assistance under Subtitle C of Title I of the Act, 
unless the applicant obtains Corporation approval to conduct an 
internal evaluation. The statute also

[[Page 50128]]

authorizes the Corporation to make alternative evaluation requirements 
``based upon the amount of assistance'' a grantee receives.
    In light of these provisions, the Corporation is revising its 
current requirement that all grantees arrange for evaluations every 4 
years. The proposed rule requires that only grantees receiving an 
average annual program grant of $500,000 or more conduct an evaluation 
that covers a period of at least 5 years, and submit the evaluation 
results with their application for recompete funding. The Corporation 
intends to strictly enforce this requirement. Our rationale for this 
approach is that it is burdensome to require evaluation for smaller 
grants, and, for larger grants, we want to give a grantee enough time 
to complete a rigorous evaluation, and ensure that the Corporation 
receives it in time to consider with a grantee's second recompete 
application for funding. The Corporation will not consider for funding 
any recompete application that does not include the required evaluation 
summary, or results, as applicable.
    For grantees that do not meet the dollar threshold, the Corporation 
encourages (but does not require) them to perform evaluations and may 
consider the results of these evaluations when making decisions on an 
organization's application for funds. See our Web site (http://www.nationalservice.org), under the AmeriCorps application guidelines 
and AmeriCorps application instructions for the relevant program year 
for information on how to submit evaluation materials.
    To continuously improve the results of programs for both 
participants and the people they serve, we encourage all grantees to 
provide for evaluations as part of their programs.
Qualifications for Members Serving as Reading Tutors and Requirements 
for Tutoring Programs (Sec. Sec. 2522.900 Through 2522.950)
    E.O. 13331 directs that school-based national and community service 
programs ``should employ tutors who meet required paraprofessional 
qualifications, and use such practices and methodologies as are 
required for supplemental educational services.'' The Corporation 
believes strongly that it is important to maintain consistency with the 
No Child Left Behind Act (NCLBA) and ensure that children who need 
tutoring are receiving the best possible support.
    At the same time, we recognize that thousands of AmeriCorps members 
are providing invaluable support to children through a wide range of 
activities. In setting qualifications, we have narrowly defined 
``tutor'' in these regulations to include only individuals whose 
primary goal is to increase academic achievement in reading or other 
core subjects through planned, consistent, one-to-one or small-group 
reading, or other small-group sessions, that build on students' 
academic strengths and target students' academic needs. We do not 
intend to establish qualifications for national service participants 
who engage in other school-related support activities, such as homework 
help provided as part of a safe-place-after-school program.
    The proposed rule also confirms that the qualification requirements 
for tutors and other paraprofessionals under the NCLBA apply to tutors 
who are employees of the Local Education Agency (LEA) or school, but do 
not apply to AmeriCorps members serving as tutors under the sponsorship 
of an organization other than the school district.
    Under the NCLBA, paraprofessionals who provide instructional 
support in Title I schools must have a secondary school diploma or its 
equivalent and must have: (a) Completed two years of study at an 
institution of higher education; or (b) Obtained an associate's or 
higher degree; or (c) Met a rigorous standard of quality and be able to 
demonstrate the appropriate and relevant job skills through a formal 
State or local academic assessment. As stated above, these requirements 
apply only to tutors who are employees of the LEA or school, but do not 
apply to AmeriCorps members serving as tutors under the sponsorship of 
an organization other than the school.
    For a member serving as a tutor, other than one employed by the LEA 
or school, the proposed rule requires either that the member has a high 
school diploma (or its equivalent), or that the member passes a 
proficiency test that the grantee has determined effective in ensuring 
that the member has the necessary skills to serve as a tutor. A member 
serving as a tutor would also have to successfully complete any pre- 
and in-service specialized training required by the program.
    In addition, tutoring programs are required to show competency to 
provide tutoring service through their recruitment, specialized 
training, performance measures, and supervision. We believe that these 
requirements will help improve the overall quality of tutoring and 
literacy programs in which AmeriCorps members serve.
Non-Displacement of Volunteers (Sec.  2540.100)
    The Corporation's focus has always been, pursuant to the Act, to 
fund programs meeting unmet needs in their communities. The non-
displacement rules are one way to ensure that programs are meeting 
unmet needs, rather than needs that employees or volunteers are meeting 
already. Consequently, we are proposing to clarify, in the regulation, 
that the service of an AmeriCorps member must complement, and may not 
displace, the service of other volunteers in the community. This 
clarification is consistent with the directive in E.O. 13331 that 
national and community service programs avoid or eliminate any practice 
that displaces volunteers.
Transitional Entities (Sec. Sec.  2550.10 Through 2550.80)
    The National Service Trust Act of 1993 and the Corporation's 
regulations, originally issued in 1994, contemplated the existence of 
transitional entities, in addition to State commissions and alternative 
administrative entities, as State bodies that could be eligible to 
receive Corporation funding and administer national service programs on 
an interim basis. The provisions relating to transitional entities, 
however, sunsetted 27 months after the passage of the Act, or December 
1995. The proposed rule amends the regulations to remove any obsolete 
references to transitional entities.
State Commission Sustainability Approaches (Sec.  2550.80(a)(3))
    Part of the Corporation's sustainability strategy is to build upon 
what some States are already doing in the sustainability arena. Through 
the public input process and follow-up discussions, we learned that 
roughly one-quarter of the State commissions have written 
sustainability policies or approaches through which they promote 
sustainability and encourage new programs in their States. Some States, 
for example, gradually and predictably reduce their programs' 
Corporation cost per FTE over 12 years, to allow the commission to 
invest funds in new programs and encourage on-going programs to develop 
efficiencies and enhance community support. Other State commissions 
require, among other things, that their subgrantees develop their own 
sustainability plans, and increase the subgrantee share of program 
operating costs over a seven-year period to 75 percent. Some States, in 
addition to requiring a small increase in program share of member 
support

[[Page 50129]]

costs over a three-year period, actively solicit private donations to 
use, in part, to help AmeriCorps programs meet corporate donors and 
improve private support.
    We expect these States to continue their sustainability efforts, 
and other States to begin planning how they can help make national and 
community service sustainable at the state level. For this reason, the 
proposed rule requires each State to describe its sustainability 
approach in its State plan. To address this requirement, States will 
need to consider how best to use the Corporation's sustainability 
approaches in conjunction with State needs to achieve sustainable 
national and community service programs, and the Corporation will have 
the opportunity to learn from what the States are doing and to share 
best practices.
State Commissions Directly Operating Programs (Sec.  2550.80(j))
    The Corporation proposes to ease the restriction on State 
commissions directly carrying out national and community service 
programs. Under the Act, a State commission or alternative 
administrative entity may not directly carry out any national service 
program that receives assistance under subtitle C. 42 U.S.C. 12638(f). 
Currently, however, 45 CFR 2550.80 goes further than the statute by 
prohibiting State commissions from directly operating any national 
service program receiving assistance, in any form, from the 
Corporation. This means that, currently, a State commission is 
prohibited from operating not only a subtitle C AmeriCorps program, but 
also any subtitle H, Learn and Serve, or Senior Corps program. The 
Corporation is relaxing the restriction by amending the regulations to 
conform to the Act and to give commissions more flexibility to directly 
operate programs other than subtitle C AmeriCorps programs.

V. Effective Dates

    The Corporation intends to make any final rule based on this 
proposal effective no sooner than 30 days after the final rule is 
published in the Federal Register. We will include an implementation 
schedule in the final rule, based on the final rule's date of 
publication.

VI. Significant Non-Regulatory Issues

    The Corporation announced in its March 4, 2004 Federal Register 
notice that we would not respond to the input we received during the 
preliminary input process, but that we would use it to inform our 
drafting process. That said, we received sufficient input on certain 
issues that we feel we should address here, even in the absence of 
regulatory language.

A. Streamlining Grantee Requirements and Aligning Them With Grantee 
Needs

    Much of the public input we received focused on suggestions for 
streamlining our grant application and grant-making processes, and 
streamlining and aligning with grantee needs our reporting and other 
requirements. The following are some of the issues we considered and 
our response.
Revising the Timing of the Grant Cycle
    During the preliminary public input process, we heard that our 
current grant calendar is not optimal for many organizations with start 
dates in the fall. To the extent that appropriations are made 
available, we intend to move application deadlines and grant awards to 
earlier in the fiscal year. Our goal is to execute grant awards to 
allow grantees as much time as possible from the time they receive the 
grant to the date that they start their programs. Part of this process 
will also include revisiting our current application requirements to 
tailor them more closely to the information we reasonably need to make 
decisions.
    The Corporation received several requests to authorize grantees to 
allow members to begin serving before we actually execute the grant 
award. By law, the Corporation cannot meet this request. The Strengthen 
AmeriCorps Act re-emphasizes the statutory requirement that the 
obligational event for an education award is the execution of the grant 
award. Thus, we cannot allow programs to enroll members before we have 
awarded both the grant and the member FTEs associated with the grant.
Streamlining Continuation Grants and Reporting Requirements
    Section 130 of the National and Community Service Act of 1990, as 
amended, authorizes the Corporation to determine the timing and content 
of applications for AmeriCorps funding. The public input we received 
overwhelmingly indicated that we should streamline our current process 
for applying for continuation funding in years two and three of a 
three-year grant period. We agree and intend to change our continuation 
application requirements to minimize the burden on grantees, while 
ensuring that the Corporation receives the information it needs to make 
fiscally responsible continuation awards. Our intent is to streamline 
the application, reporting requirements, and the review process for 
continuations, as well as to give grantees more predictability over the 
three-year grant cycle.
    We propose:
     Allowing grantees, generally, to request their 
continuation award on a rolling basis, according to their needs, rather 
than by a specific due date;
     Requiring grant applicants to submit a three-year budget 
and three-year plan for performance measures with their initial 
application for funding, and to update it annually when they request 
additional funds for years two and three of the grant;
     Requiring grantees to submit their progress report and, if 
applicable, a narrative describing any proposed changes in the scope of 
the program with their request for continuation funding;
     Eliminating the requirement that grantees submit a new SF 
424 Face sheet, a complete program narrative, and other information 
that we determine to be unnecessary; and
     Eliminating the requirement that State commissions provide 
annual summaries, and other information we determine to be unnecessary 
for their State competitive programs.
    Accordingly, the Corporation will be revising and streamlining many 
of the information collection requirements related to grant 
applications. The Corporation intends, to the maximum extent possible, 
to award continuation grants within one month of a grantee's request, 
or within one month of the Corporation's receipt of its annual 
appropriation, whichever is later. This means that, as a general rule, 
the Corporation intends to award continuation requests on a rolling 
basis, rather than requiring all applications to be submitted on a 
specific day and considering them at the same time. We intend to work 
with State commissions on a schedule that accommodates the different 
start dates of programs within a State's portfolio. Because of the 
uncertainties of annual appropriations, however, we are reviewing how 
this process would affect continuation requests that include an 
expansion request (including both requests for more program funds and 
requests for more member FTEs), and may establish an alternate 
timetable for considering those requests.
    The Corporation intends to approve continuation requests based on:
    1. The Grantee's satisfactory performance, as demonstrated in the 
progress report and other information the Corporation may have 
obtained;
    2. Whether the grantee is in compliance with its grant provisions;
    3. Any proposed changes to the grantee's program or budget; and

[[Page 50130]]

    4. The availability of appropriations.
    To make this new process work, the Corporation intends to tie 
reporting requirements, such as the progress report, to the start date 
of individual grants, rather than setting an arbitrary deadline for all 
grantees. We anticipate issuing a three-year schedule of reporting due 
dates with each initial grant award so that the grantee will know what 
is expected at the outset. This will also ensure that the Corporation 
receives the reports at the optimal point in time for making funding 
decisions. In addition, we are committed to focusing and streamlining 
our current reporting requirements to reduce grantee burden.
    In sum, these anticipated changes are expected to decrease the 
burden on grantees, increase the efficiency of the grant-making 
process, and increase the utility of what grantees report. We will 
inform our grantees once we have finalized our continuation request 
processes.
Providing Three-Year Funding for Three-Year Grants
    The input we received indicated a strong preference for providing 
three years of funding up front to a grantee. However, funding three-
year grants up front would necessarily decrease the size of the 
national service field, at least initially, as we would only be able to 
award about a third of the annual grants we award now. We, therefore, 
decline to accept this suggestion and do not anticipate providing three 
years of funding up front for a three-year grant.
Clarifying and Streamlining Guidance
    As mentioned earlier, the Corporation is initiating a second 
rulemaking process this year to rewrite and reorganize our current 
regulations, and streamline and incorporate the grant provisions and 
guidelines into regulation. We believe that this will result in much 
clearer, more focused, and transparent guidance for applicants and 
grantees and a decrease in grantee burden.

B. Maximizing a Grantee's Ability To Meet Objectives and Achieve Strong 
Outcomes

Re-Fill Rule
    Since last year, the Corporation has prohibited programs from re-
filling a slot when a member left without completing a term of service. 
We received a significant amount of input asking that we revisit this 
policy. We are still examining this possibility for the 2004 program 
year and will issue more specific guidance on this issue in the near 
future. We will address this issue outside of rulemaking.
Challenge Grants
    Many individuals who provided input saw challenge grants as a way 
to increase the capacity of the national and community service field. 
The Corporation supports making challenge grants under certain 
circumstances. Under the VA/HUD appropriation, however, challenge 
grants are currently authorized and funded under subtitle H of the Act, 
as amended, and are not available for the purpose of supporting 
AmeriCorps programs. To date, we have not had authority in our 
appropriations statute to fund challenge grants with AmeriCorps State 
and National funds and are, therefore, unable to accept this 
suggestion.
Professional Corps
    The Corporation received a substantial amount of input on behalf of 
professional corps grantees requesting separate application guidelines 
and requirements for professional corps programs. We have concluded 
that we do not need to establish separate guidelines in regulation. The 
Corporation believes, however, that professional corps programs, 
particularly those for which the cost is largely borne by sponsoring 
organizations, will continue to compete well in our AmeriCorps grant 
competitions. By using an ``apples to apples'' approach during our 
selection process, we will ensure, to the maximum extent possible, that 
we evaluate professional corps programs together. In addition, for a 
program able to demonstrate the requirement to leverage volunteers is a 
fundamental program structure alteration, we will consider a request to 
waive such leveraging requirement.
    Finally, we recently issued a Notice of Funding Availability 
directed only at professional corps, and would consider doing so again 
in the future.

C. Improving the AmeriCorps Member Experience

    We received input from current and former AmeriCorps members asking 
us to focus on their experience and the resources available to them. 
The Corporation has a strong interest in the AmeriCorps member 
experience and intends to further explore ways to improve it.
    In particular, we intend to explore creating a member satisfaction 
survey through which AmeriCorps members would be able to evaluate their 
programs and their AmeriCorps experience.

D. Issues That the Corporation Cannot Address Under Current Law

    The Corporation received many suggestions for reforms that it is 
unable to address without legislation. The following table lists 
examples of these proposed reforms and the associated statutory 
constraints.

----------------------------------------------------------------------------------------------------------------
         Public input proposal               Statutory constraint                  Statutory citation
----------------------------------------------------------------------------------------------------------------
Increase amount of education award....  Amount for a full-time term of  42 U.S.C. 12603(a).
                                         service is fixed at $4,725.
Education award should be exempt from   Internal Revenue Code.........  26 U.S.C. 1 et seq.
 taxation.
Permit transfer of education award....  Recipient must be AmeriCorps    42 U.S.C. 12602.
                                         member.
Permit education award to be used for   Limited to costs of attending   42 U.S.C. 12604.
 additional purposes.                    Title IV institutions of
                                         higher education and
                                         repayment of qualified
                                         student loans.
Permit AmeriCorps members to receive    Limit is two education awards   42 U.S.C. 12602(c).
 more than two education awards as       for the first and second
 long as the total amount does not       terms of service, regardless
 exceed the value of two full-time       of length.
 education awards.
Make payment of education award         Disbursement must be to         42 U.S.C. 12604.
 directly to AmeriCorps member.          institution of higher
                                         education or loan holder.
Permit AmeriCorps members to enroll as  Approval of position does not   42 U.S.C. 12581;
 soon as the grant selections are        occur until grant award is     42 U.S.C. 12605.
 announced.                              executed.
Increase percentage of grant costs      Limit is five percent of grant  42 U.S.C. 12571(d).
 that may be spent on administrative     amount.
 functions.
Grant period should be up to 5 years..  Grant period may not exceed     42 U.S.C. 12574.
                                         three years.
----------------------------------------------------------------------------------------------------------------


[[Page 50131]]

Executive Order 12866
    The Corporation has determined that this rule, while a significant 
regulatory action, is not an ``economically significant'' rule within 
the meaning of E.O. 12866 because it is not likely to result in: (1) An 
annual effect on the economy of $100 million or more, or an adverse and 
material effect on a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal government or communities; (2) the creation of a serious 
inconsistency or interference with an action taken or planned by 
another agency; (3) a material alteration in the budgetary impacts of 
entitlement, grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) the raising of novel legal or 
policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in E.O. 12866.
    The proposed rule requires all grantees and subgrantees of the 
Corporation to increase, based on a predictable and incremental 
schedule, the grantee share of program costs. After the initial three-
year grant period, a Corporation program in its fourth year of 
operation must provide at least 26 percent of their overall program 
budget in matching money. During years five through ten of Corporation 
sponsorship, the program's required matching percentage increases 
gradually to 50 percent.
    The initial impact of this change will be small. During the 2000-
2002 grant period--the most recent three-year period where we have 
complete data on program budgets--about 20.6 percent of all AmeriCorps 
grantees and subgrantees had match percentages less than 26 percent. On 
average, about 146 programs per grant year would be affected. Among 
these programs, the average amount of matching money needed to reach 
the 26 percent level is about $20,250 per program, or about $2,950,000 
per year across all AmeriCorps programs. However, the median program 
would require about $14,200 in additional matching money to reach the 
26 percent level. All told, this analysis indicates that the programs 
that would be affected would require very little additional money to 
achieve a 26 percent match, and that the overall impact of the rule on 
Corporation programs falls well short of $100 million annually.
Regulatory Flexibility Act
    The Corporation has determined that this regulatory action will not 
result in (1) An annual effect on the economy of $100 million or more; 
(2) a major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions; or (3) significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based enterprises to compete with foreign-based enterprises in 
domestic and export markets. Therefore, the Corporation has not 
performed the initial regulatory flexibility analysis that is required 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) for major 
rules that are expected to have such results.
Other Impact Analyses
    Under the Paperwork Reduction Act, information collection 
requirements which must be imposed as a result of this regulation have 
been reviewed by the Office of Management and Budget under OMB nos. 
3045-0047 and 3045-0065 and these may be revised before this rule 
becomes effective.
    For purposes of Title II of the Unfunded Mandates Reform Act of 
1995, 2 U.S.C. 1531-1538, as well as Executive Order 12875, this 
regulatory action does not contain any Federal mandate that may result 
in increased expenditures in either Federal, State, local, or tribal 
governments in the aggregate, or impose an annual burden exceeding $100 
million on the private sector.

List of Subjects

45 CFR Part 2510

    Grant programs-social programs, Volunteers.

45 CFR Part 2520

    Grant programs-social programs, Volunteers.

45 CFR Part 2521

    Grant programs-social programs, Volunteers.

45 CFR Part 2522

    Grant programs-social programs, Reporting and recordkeeping 
requirements, Volunteers.

45 CFR Part 2540

    Administrative practice and procedure, Grant programs-social 
programs, Reporting and recordkeeping requirements, Volunteers.

45 CFR Part 2550

    Administrative practice and procedure, Grant programs-social 
programs.
    For the reasons stated in the preamble, the Corporation for 
National and Community Service proposes to amend chapter XXV, title 45 
of the Code of Federal Regulations as follows:

PART 2510--OVERALL PURPOSES AND DEFINITIONS

    1. The authority citation for part 2510 continues to read as 
follows:

    Authority: 42 U.S.C. 12501 et seq.

    2. Amend Sec.  2510.20 by adding the definition ``target 
community'' in alphabetical order to read as follows:


Sec.  2510.20  Definitions

* * * * *
    Target community. The term target community means the geographic 
community for which an AmeriCorps grant applicant identifies an unmet 
human need to be addressed.
* * * * *

PART 2520--GENERAL PROVISIONS: AMERICORPS SUBTITLE C PROGRAMS

    1. The authority citation for part 2520 is revised to read as 
follows:

    Authority: 42 U.S.C. 12571-12595.
    2. Add a new Sec.  2520.5 to read as follows:


Sec.  2520.5  What definitions apply to this part?

    You. For this part, you refers to the grantee or an organization 
operating an AmeriCorps program.
    3. Revise Sec.  2520.20 to read as follows:


Sec.  2520.20  What service activities may I support with my grant?

    (a) Your grant must initiate, improve, or expand the ability of an 
organization and community to provide services to address local 
environmental, educational, public safety, homeland security, or other 
human needs.
    (b) You may use your grant to support AmeriCorps members:
    (1) Performing direct service activities that meet local needs.
    (2) Performing capacity building activities that improve the 
organizational and financial capability of nonprofit organizations and 
communities to meet local needs by achieving greater organizational 
efficiency and effectiveness, greater impact and quality of impact, 
stronger likelihood of successful replicability, or expanded scale.


Sec.  2520.30  [Redesignated as Sec.  2520.70]

    3. Redesignate Sec.  2520.30 as Sec.  2520.70, and add the 
following sections: Sec. Sec.  2520.25, 2520.30, 2520.35, 2520.40,

[[Page 50132]]

2520.45, 2520.50, 2520.55, 2520.60, and 2520.65.


Sec.  2520.25  What direct service activities may AmeriCorps members 
perform?

    (a) The AmeriCorps members you support under your grant may perform 
direct service activities that will advance the goals of your program, 
that will result in a specific identifiable service or improvement that 
otherwise would not be provided, and that are included in, or 
consistent with, your Corporation-approved grant application.
    (b) Your members' direct service activities must meet local 
environmental, educational, public safety, homeland security, or other 
human needs.
    (c) Direct service activities generally refer to activities that 
provide a direct, measurable benefit to an individual, a group, or a 
community.
    (d) Examples of the types of direct service activities AmeriCorps 
members may perform include, but are not limited to, the following:
    (1) Tutoring children in reading;
    (2) Helping to run an after-school program;
    (3) Removing garbage and debris from a park;
    (4) Providing health information to a vulnerable population;
    (5) Teaching as part of a professional corps;
    (6) Providing relief services to a community affected by a 
disaster; and
    (7) Conducting a neighborhood watch program as part of a homeland 
security or law enforcement effort.


Sec.  2520.30  What capacity-building activities may AmeriCorps members 
perform?

    Capacity-building activities that AmeriCorps members perform should 
enhance the mission, strategy, skills, and culture, as well as systems, 
infrastructure, and human resources of an organization. Capacity-
building activities help an organization gain greater independence and 
sustainability.
    (a) The AmeriCorps members you support under your grant may perform 
capacity-building activities that advance your program's goals and that 
are included in, or consistent with, your Corporation-approved grant 
application.
    (b) Examples of capacity-building activities your members may 
perform include, but are not limited to, the following:
    (1) Strengthening volunteer management and recruitment, including:
    (i) Enlisting, training, or coordinating volunteers;
    (ii) Helping an organization develop an effective volunteer 
management system;
    (iii) Organizing service days and other events in the community to 
increase citizen engagement;
    (iv) Promoting retention of volunteers by planning recognition 
events or providing ongoing support and follow-up to ensure that 
volunteers have a high-quality experience;
    (v) Assisting an organization in reaching out to individuals and 
communities of different backgrounds when encouraging volunteerism to 
ensure that a breadth of experiences and expertise is represented in 
service activities.
    (2) Conducting outreach and securing resources in support of 
service activities that meet specific needs in the community;
    (3) Helping build the infrastructure of the sponsoring 
organization, including:
    (i) Conducting research, mapping community assets, or gathering 
other information that will strengthen the sponsoring organization's 
ability to meet community needs;
    (ii) Developing new programs or services in a sponsoring 
organization seeking to expand;
    (iii) Developing organizational systems to improve efficiency and 
effectiveness;
    (iv) Automating organizational operations to improve efficiency and 
effectiveness;
    (v) Initiating or expanding revenue-generating operations directly 
in support of service activities; and
    (vi) Supporting staff and board development.
    (4) Developing collaborative relationships with other organizations 
working to achieve similar goals in the community, such as:
    (i) Faith-based and other community organizations;
    (ii) Foundations;
    (iii) Local government agencies; and
    (iv) Institutions of higher education.


Sec.  2520.35  Must my program recruit or support volunteers?

    (a) Unless we approve otherwise, some component of your program 
that is supported through the grant awarded by the Corporation must 
involve recruiting or supporting volunteers.
    (b) If you demonstrate that requiring your program to recruit or 
support volunteers would constitute a fundamental alteration to your 
program structure, the Corporation may waive the requirement in 
response to your written request for such a waiver in the grant 
application.


Sec.  2520.40  Under what circumstances may AmeriCorps members in my 
program raise funds?

    (a) AmeriCorps members may raise funds directly in support of your 
program's service activities.
    (b) Examples of fundraising activities AmeriCorps members may 
perform include, but are not limited to, the following:
    (1) Seeking donations of books from companies and individuals for a 
program in which volunteers teach children to read;
    (2) Writing a grant proposal to a foundation to secure resources to 
support the training of volunteers;
    (3) Securing supplies and equipment from the community to enable 
volunteers to help build houses for low-income individual;
    (4) Securing financial resources from the community to assist a 
community-based organization in launching or expanding a program that 
provides social services to the members of the community and is 
delivered, in whole or in part, through the members of the community-
based organization;
    (5) Seeking donations from alumni of the program for specific 
service projects being performed by current members.
    (c) AmeriCorps members may not:
    (1) Raise funds for living allowances or for an organization's 
general (as opposed to program) operating expenses or endowment;
    (2) Write a grant application for AmeriCorps funding or for any 
other Corporation or Federal funding.


Sec.  2520.45  How much time may an AmeriCorps member spend 
fundraising?

    An AmeriCorps member may spend no more than ten percent of his or 
her term of service performing fundraising activities, as described in 
Sec.  2520.40.


Sec.  2520.50  How much time may AmeriCorps members in my program spend 
in education and training activities?

    (a) No more than 20 percent of the aggregate of all AmeriCorps 
member service hours in your program may be spent in education and 
training activities.
    (b) Capacity-building activities and direct service activities do 
not count towards the 20 percent cap on education and training 
activities.


Sec.  2520. 55  When may my organization collect fees for services 
provided by AmeriCorps members?

    We encourage you, where appropriate, to collect fees for direct 
services provided by AmeriCorps members if:
    (a) The service activities conducted by the members are allowable, 
as defined

[[Page 50133]]

in this part, and do not violate the non-displacement provisions in 
Sec.  2540.100 of these regulations; and
    (b) You use any fees collected to finance your non-Corporation 
share, or as otherwise authorized by the Corporation.


Sec.  2520.60  What government-wide requirements apply to staff 
fundraising under my AmeriCorps grant?

    You must follow all applicable OMB circulars on allowable costs 
(OMB Circular A-87 for State, Local, and Indian Tribal Governments, OMB 
Circular A-122 for Nonprofit Organizations, and OMB Circular A-21 for 
Educational Institutions). In general, the OMB circulars do not allow 
the following as direct costs under the grant: costs of organized 
fundraising, including financial campaigns, endowment drives, 
solicitation of gifts and bequests, and similar expenses incurred 
solely to raise capital or obtain contributions.


Sec.  2520.65  What other member activities are not permissible?

    In addition to the activities prohibited under Sec.  2520.70 of 
this subpart, you may not assign members to permanent duties that are 
solely clerical. However, you may have members perform administrative 
duties associated with the projects financed by the grant temporarily 
at your discretion as long as:
    (a) Any one member does not spend more than 10 percent of his or 
her term of service on these duties; and
    (b) Allowing a member to perform these duties does not keep you 
from meeting the performance goals in your approved grant application.

PART 2521--ELIGIBLE AMERICORPS SUBTITLE C PROGRAM APPLICANTS AND 
TYPES OF GRANTS AVAILABLE FOR AWARD

    1. The authority citation for part 2521 is revised to read as 
follows:

    Authority: 42 U.S.C. 12571-12595.
    2. Add a new Sec.  2521.5 to read as follows:


Sec.  2521.5  What definitions apply to this part?

    You. For this part, you refers to the grantee, unless otherwise 
noted.
    3. Establish a new Sec.  2521.95 with the heading as set forth 
below.


Sec.  2521.95  To what extent may I use grant funds for administrative 
costs?

* * * * *


Sec.  2521.30  [Amended]

    4. Transfer the text of paragraph (h) of Sec.  2521.30 to new Sec.  
2521.95, and
    a. Redesignate paragraphs (h)(1), (h)(2) and (h)(3) introductory 
text as (a), (b), and (c), respectively;
    b. Redesignate (h)(3)(i), (h)(3)(i)(A), and (h)(3)(i)(B) as (c)(1), 
(c)(1)(i), (c)(1)(ii), respectively; and
    c. Redesignate (h)(3)(ii) and (h)(3)(iii) as (c)(2), and (c)(3), 
respectively.
    5. Amend Sec.  2521.30 by removing paragraph (g).
    6. Add the following sections: Sec. Sec.  2521.40, 2521.50, 
2521.60, 2521.65, 2521.70, 2521.80, and 2521.90.


Sec.  2521.40  What are the statutory limitations on the Federal 
government's share of program costs?

    The statutory limitations on the Federal government's share are 
different--in kind and amount--for member support costs and program 
operating costs.
    (a) Member support: The Federal share, including Corporation and 
other Federal funds, of member support costs, which includes the living 
allowance required under Sec.  2522.240(b)(1), FICA, unemployment 
insurance (if required under State law), worker's compensation (if 
required under State law), and health care, is limited as follows:
    (1) The Federal share may not exceed 85 percent of the minimum 
living allowance required under Sec.  2522.240(b)(1), and 85 percent of 
other member support costs.
    (2) If you are a professional corps described in Sec.  
2522.240(b)(2)(i), you may not use Corporation or any other Federal 
funds for the living allowance.
    (3) Your share of member support costs must be non-Federal cash.
    (b) Program operating costs: The Corporation share of program 
operating costs may not exceed 67 percent. These costs include costs 
other than member support costs, staff, operating costs, and internal 
evaluation and administration costs.
    (1) You may provide your share of program operating costs with 
cash, including other Federal funds, or third party in-kind 
contributions.
    (2) Contributions, including third party in-kind must:
    (i) Be verifiable from your records;
    (ii) Not be included as contributions for any other federally 
assisted program;
    (iii) Be necessary and reasonable for the proper and efficient 
accomplishment of your program's objectives; and
    (iv) Be allowable under applicable OMB cost principles.
    (3) You may not include the value of direct community service 
performed by volunteers, but you may include the value of services 
contributed by volunteers to your organizations for organizational 
functions such as accounting, audit, and training of staff and 
AmeriCorps programs.


Sec.  2521.50  If I am an Indian Tribe, to what extent may I use tribal 
funds towards my share of costs?

    If you are an Indian Tribe that receives tribal funds through 
Public Law 93-638 (the Indian Self-Determination and Education 
Assistance Act), those funds are considered non-Federal and you may use 
them towards your share of costs, including member support costs.


Sec.  2521.60  To what extent must my share of program costs increase 
over time?

    If your program continues to receive funding after an initial 
three-year grant period and continues to meet the minimum requirements 
in Sec.  2541.40 of this part, your required share of program costs, 
including member support and operating costs, will increase to a 50 
percent aggregate for the tenth year that you receive a grant, and any 
subsequent year without a break in funding of two years or more. In 
other words, by your tenth year as a grantee without a break in funding 
of two years or more, you will be required to match $1 for every $1 you 
receive from the Corporation.
    (a) Minimum Organization Share: Subject to the requirements of 
Sec.  2521.40 of this part, and except as provided in paragraph (d) of 
this section, the aggregate amount of your share of program costs will 
increase as of the fourth consecutive year that you receive a grant 
without a break in funding of two years or more, according to the 
following timetable:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Year 1   Year 2   Year 3   Year 4   Year 5   Year 6   Year 7   Year 8   Year 9   Year 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum member support......................................      15%      15%      15%      15%      15%      15%      15%      15%      15%        15%
Minimum operating costs.....................................      33%      33%      33%      33%      33%      33%      33%      33%      33%        33%
Minimum aggregate share.....................................       NA       NA       NA      26%      30%      34%      38%      42%      46%        50%
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 50134]]

    (b) Schedule for current program grants: If you have completed one 
or more three-year grant cycles on the date this regulation takes 
effect, you will be required to provide your share of costs beginning 
at the year three level, according to the table in paragraph (a) of 
this section, in the first program year in your grant following the 
regulation's effective date, and increasing each year thereafter as 
reflected in the table.
    (c) Flexibility in how you provide your share: As long as you meet 
the minimum match requirements in Sec.  2521.40, you may use cash or 
in-kind contributions to reach the aggregate share level. For example, 
if your organization finds it easier to raise member support match, you 
may choose to meet the required aggregate match by raising only more 
member support match, and leave operational match at the minimum level, 
as long as you provide the required aggregate match.
    (d) Reporting excess resources.
    (1) The Corporation encourages you to obtain support over-and-above 
the matching fund requirements. Reporting these resources may make your 
application more likely to be selected for funding, based on the 
selection criteria in Sec. Sec.  2522.430 and 2522.435 of these 
regulations.
    (2) You must comply with Sec.  2543.23 of this title in documenting 
cash and in-kind contributions and excess resources.


Sec.  2521.65  What flexibility does a state commission have for a 
grantee that is unable to meet the required matching levels?

    If a State commission determines that a particular grantee is 
unable to meet its required matching levels because it operates in a 
resource-poor community, the State commission may deem grantee's 
matching requirements to have been satisfied if one or more grantees in 
the State commission's portfolio are over-matching and therefore able 
to make up the difference in the lower grantee's matching requirements.


Sec.  2521.70  To what extent may the Corporation waive the matching 
requirements in Sec. Sec.  2521.40 and 2521.60 of this part?

    (a) The Corporation may waive, in whole or in part, the 
requirements of Sec. Sec.  2521.40 and 2521.60 of this part if the 
Corporation determines that a waiver would be equitable because of a 
lack of available financial resources at the local level.
    (b) If you are requesting a waiver, you must demonstrate:
    (1) The lack of resources at the local level;
    (2) The efforts you have made to raise matching funding; and
    (3) How much of the matching funds you have raised or reasonably 
expect to raise.
    (c) You must provide with your waiver:
    (1) A request for the specific amount of matching funds you are 
requesting that the Corporation waive; and
    (2) A budget and budget narrative that reflects the requested 
change in matching funds.


Sec.  2521.80  What matching level applies if my program was funded in 
the past but has not recently received an AmeriCorps grant?

    If your program has not received an AmeriCorps grant for five years 
or more, you may begin matching at the year one level, as reflected in 
the timetable in Sec.  2521.60(a) of this part, upon receiving your new 
grant award.


Sec.  2521.90  If I am a new or replacement legal applicant for an 
existing program, what will my matching requirements be?

    If your organization is a new or replacement legal applicant for an 
existing program, you must provide matching funds at the level that the 
previous legal applicant was at the time you took over the program.

PART 2522--AMERICORPS PARTICIPANTS, PROGRAMS, AND APPLICANTS

    1. The authority citation for part 2522 is revised to read as 
follows:

    Authority: 42 U.S.C. 12571-12595

    2. Add a new Sec.  2522.10 to subpart A to read as follows:


Sec.  2522.10  What definitions apply to this part?

    You. For this part, you refers to the grantee, unless otherwise 
noted.
    3. Amend Sec.  2522.250 as follows:
    a. In paragraph (a)(3) revise the text to read as follows; and
    b. In paragraph (b)(3) revise the paragraph heading, and paragraph 
(b)(3)(i), to read as follows:


Sec.  2522.250  What other benefits do AmeriCorps participants serving 
in approved AmeriCorps positions receive?

    (a) * * *
    (3) * * * The amount of the child-care allowance may not exceed the 
applicable payment rate established by the State for child care funded 
under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
9858c(4)(A)).
* * * * *
    (b) * * *
    (3) Federal share. (i) Except as provided in paragraph (b)(3)(ii) 
of this section, the Federal share of the cost of health coverage may 
not exceed 85 percent.
* * * * *
    4. Revise Sec.  2522.400 and Sec.  2522.410 to read as follows:


Sec.  2522.400  What process does the Corporation use to select new 
grantees?

    The Corporation uses a multi-stage process including peer 
reviewers, Corporation staff review, and approval by the Chief 
Executive Officer or the Board of Directors, or their designee.


Sec.  2522.410  What is the role of the Corporation's Board of 
Directors in the selection process?

    The Board of Directors has general authority to determine the 
selection process, including priorities and selection criteria, and has 
authority to make grant decisions. The Board may delegate these 
functions to the Chief Executive Officer.


Sec.  2522.480  [Redesignated from Sec.  2522.420]

    5. Redesignate Sec.  2522.420 as Sec.  2522.480 and add the 
following sections: Sec. Sec.  2522.415, 2522.420, 2522.425, 2522.430, 
2522.435, 2522.440, 2522.445, 2522.450, 2522.455, 2522.460, 2522.465, 
2522.470, and 2522.475.


Sec.  2522.415  How does the grant selection process work?

    The selection process includes:
    (a) Determining whether your proposal complies with the application 
requirements, such as deadlines and eligibility requirements;
    (b) Applying the basic selection criteria to assess the quality of 
your proposal;
    (c) Applying any applicable priorities or preferences, as stated in 
these regulations and in the applicable Notice of Funding Availability; 
and
    (d) Ensuring innovation and geographic, demographic, and 
programmatic diversity across the Corporation's national AmeriCorps 
portfolio.


Sec.  2522.420  What basic criteria does the Corporation use in making 
funding decisions?

    In evaluating your application for funding, the Corporation will 
assess:
    (a) Your program design;
    (b) Your organizational capability; and
    (c) Your program cost-effectiveness.


Sec.  2522. 425  What does the Corporation consider in assessing 
Program Design?

    In determining the quality of your proposal's program design, the 
Corporation considers your rationale and approach for the proposed 
program, member outputs and outcomes, and community outputs and 
outcomes.

[[Page 50135]]

    (a) Rationale and approach. In evaluating your rationale and 
approach, the Corporation considers the following criteria:
    (1) Whether your proposal describes and adequately documents a 
compelling need within the target community, including a description of 
how you identified the need;
    (2) Whether your proposal includes well-designed activities that 
address the compelling need, with ambitious performance measures, and a 
plan or system for continuous program self-assessment and improvement;
    (3) Whether your proposal describes well-defined roles for 
participants that are aligned with the identified needs and that lead 
to measurable outputs and outcomes; and
    (4) The extent to which your proposed program or project:
    (i) Effectively involves the target community in planning and 
implementation;
    (ii) Builds on (without duplicating), or reflects collaboration 
with, other national and community service programs supported by the 
Corporation; and
    (iii) Is designed to be replicated.
    (b) Member outputs and outcomes. In evaluating how your proposal 
addresses member outputs and outcomes, the Corporation considers the 
extent to which your proposal or program:
    (1) Includes effective and feasible plans for, or evidence of, 
recruiting, managing, and rewarding diverse participants, including 
participants from the target community, and demonstrating member 
satisfaction;
    (2) Includes effective and feasible plans for, or evidence of, 
development, training, and supervision of participants;
    (3) Demonstrates well-designed training or service activities that 
promote and sustain post-service, an ethic of service and civic 
responsibility, including structured opportunities for participants to 
reflect on and learn from their service; and
    (4) Has met well-defined, member-based performance measures, 
including outputs and outcomes, if applicable.
    (c) Community outputs and outcomes. In evaluating whether your 
proposal adequately addresses member outputs and outcomes, the 
Corporation considers the extent to which your proposal or program:
    (1) Is successful in meeting targeted, compelling community needs, 
or if you are a current grantee, the extent to which your program has 
met its well-defined, community-based performance measures, including 
outcomes, in previous grant cycles, and is continually expanding and 
increasing its reach and impact in the community;
    (2) Has an impact in the community that is sustainable beyond the 
presence of Federal support (For example, if one of your projects is to 
revitalize a local park, you would meet this criterion by showing that 
after you have completed your revitalization project, the community 
will continue its upkeep on its own);
    (3) Generates and supports volunteers to expand the reach of your 
program in the community; and
    (4) Enhances capacity-building of other organizations and 
institutions important to the community, such as schools, homeland 
security organizations, neighborhood watch organizations, civic 
associations, and faith-based and other community organizations.


Sec.  2522.430  How does the Corporation assess my organizational 
capability?

    (a) In evaluating your organizational capability, the Corporation 
considers the following:
    (1) The extent to which your organization has a sound structure 
including:
    (i) The ability to provide sound programmatic and fiscal oversight;
    (ii) Well-defined roles for your board of directors, 
administrators, and staff;
    (iii) A well-designed plan or systems for organizational (as 
opposed to program) self-assessment and continuous improvement; and
    (iv) The ability to provide or secure effective technical 
assistance.
    (2) Whether your organization has a sound record of accomplishment 
as an organization, including the extent to which you:
    (i) Generate and support diverse volunteers who increase your 
organization's capacity; and
    (ii) Demonstrate leadership within the organization and the 
community served.
    (3) The extent to which you are securing community support that 
becomes stronger and more diverse, as evidenced by--
    (i) Collaborations that increase the quality and reach of service 
and include well-defined roles for faith-based or other community 
organizations;
    (ii) Local financial and in-kind contributions; and
    (iii) Supporters who represent a wide range of community 
stakeholders.
    (b) In applying the criteria in paragraph (a) of this section to 
each proposal, the Corporation may take into account the following 
circumstances of individual organizations:
    (1) The age of your organization and its rate of growth; and
    (2) Whether your organization serves a resource-poor community, 
such as a rural or remote community, a community with a high poverty 
rate, or a community with a scarcity of corporate resources.
    (c) When reviewing a proposal submitted by a state commission, the 
Corporation may consider the State commission's financial management 
and monitoring capabilities, and may turn down a program application if 
the Corporation determines that the State commission's capabilities are 
materially weak.


Sec.  2522.435  How does the Corporation evaluate the cost-
effectiveness of my program?

    (a) In evaluating the cost-effectiveness of your proposed program, 
the Corporation considers the following:
    (1) Whether your budget is adequate to support your program design, 
and
    (2) Cost-effectiveness indicators that include, at a minimum:
    (i) Your program's proposed Corporation cost per FTE, as defined in 
Sec.  2522.485;
    (ii) The extent to which your program demonstrates diverse non-
Federal resources for program implementation and sustainability;
    (iii) The extent to which you are increasing your share of costs to 
meet or exceed program goals; and
    (iv) The extent to which you are proposing deeper impact or broader 
reach without a commensurate increase in Federal costs.
    (b) In applying the cost-effectiveness criteria in paragraph (a) of 
this section, the Corporation will take into account the following 
circumstances of individual programs:
    (1) Program age, or the extent to which your program brings on new 
sites;
    (2) Whether your program or project is located in a resource-poor 
community, such as a rural or remote community, a community with a high 
poverty rate, or a community with a scarcity of corporate or 
philanthropic resources;
    (3) Whether your program or project is located in a high-cost, 
economically disadvantaged community, measured by applying appropriate 
Federal and State data; and
    (4) Whether the reasonable and necessary costs of your program or 
project are higher because they are associated with engaging or serving 
difficult-to-reach populations, or achieving greater program impact as 
evidenced through performance measures and program evaluation.

[[Page 50136]]

Sec.  2522.440  What weight does the Corporation give to each category 
of the basic criteria?

    In evaluating applications, the Corporation assigns the following 
weights for each category:

------------------------------------------------------------------------
                          Category                            Percentage
------------------------------------------------------------------------
Program Design.............................................           50
Organizational Capability..................................           25
Cost-Effectiveness.........................................           25
------------------------------------------------------------------------

Sec.  2522. 445  What weights does the Corporation give to the 
subcategories under Program Design?

    The Corporation gives the following weights to the subcategories 
under Program Design:

------------------------------------------------------------------------
                Program design sub-category                   Percentage
------------------------------------------------------------------------
Rationale and Approach.....................................           10
Member Outputs and Outcomes................................           20
Community Outputs and Outcomes.............................           20
------------------------------------------------------------------------

Sec.  2522.450  What types of programs or program models may receive 
special consideration in the selection process?

    Following the scoring of proposals under Sec. Sec.  2522.440 of 
this part, the Corporation may give special consideration to the 
following categories of programs to ensure a balanced portfolio:
    (a) Program models:
    (1) Programs operated by faith-based and small community-based 
organizations, or programs that support the efforts of faith-based and 
small community-based organizations, to solve local problems;
    (2) Lower-cost professional corps programs, as defined in paragraph 
(a)(3) of Sec.  2522.110 of this chapter.
    (b) Program activities:
    (1) Programs that serve or involve children and youth, including 
mentoring of children of prisoners;
    (2) Programs that address educational needs, including those that 
carry out literacy and tutoring activities generally, and those that 
focus on reading for children in the third grade or younger;
    (3) Programs that focus on homeland security activities that 
support and promote public safety, public health, and preparedness for 
any emergency, natural or man-made (this includes programs that help to 
plan, equip, train, and practice the response capabilities of many 
different response units ready to mobilize without warning for any 
emergency);
    (4) Programs that address issues relating to the environment;
    (5) Programs that support independent living for seniors or 
individuals with disabilities; and
    (6) Programs that involve community-development.
    (c) Programs supporting distressed communities: Programs or 
projects that will be conducted in:
    (1) A community designated as an empowerment zone or redevelopment 
area, targeted for special economic incentives, or otherwise 
identifiable as having high concentrations of low-income people;
    (2) An area that is environmentally distressed, as demonstrated by 
Federal and State data;
    (3) An area adversely affected by Federal actions related to 
managing Federal lands that result in significant regional job losses 
and economic dislocation;
    (4) An area adversely affected by reductions in defense spending or 
the closure or realignment of military installation; or
    (5) An area that has an unemployment rate greater than the national 
average unemployment for the most recent 12 months for which State or 
Federal data are available.
    (d) Other programs: Programs that meet any additional priorities as 
the Corporation determines and disseminates in advance of the selection 
process.


Sec.  2522.455  How do I find out about additional priorities governing 
the selection process?

    The Corporation publishes a Notice of Funding Availability (NOFA) 
in advance of a grant competition, addressing the Corporation's 
priorities and additional requirements, including those directed by 
annual appropriations. We also post the NOFA on our Web site at http://www.nationalservice.org and at http://www.grants.gov.


Sec.  2522. 460  To what extent does the Corporation consider 
priorities other than those stated in these regulations or the Notice 
of Funding Availability?

    The Corporation may give priority consideration to a national 
service program submitted by a State commission that does not meet one 
of the Corporation's priorities if the State commission adequately 
explains why the State is not able to carry out a program that meets 
one of the Corporation's priorities.


Sec.  2522.465  What information must a State commission submit on the 
relative strengths of applicants for State competitive funding?

    (a) If you are a State commission applying for State competitive 
funding, you must prioritize the proposals you submit in rank order 
according to the following table:

 
------------------------------------------------------------------------
   If you submit this number of State
      competitive proposals to the        Then you must rank this number
              corporation:                        of proposals:
------------------------------------------------------------------------
1 to 12................................  At least top 5.
13 to 24...............................  At least top 10.
25 or more.............................  At least top 15.
------------------------------------------------------------------------

    (b) While the Corporation will not be bound by the rankings you 
submit, we may consider them in our selection process.


Sec.  2522.470  What other factors or information may the Corporation 
consider in making final funding decisions?

    (a) The Corporation will seek to ensure that our portfolio of 
AmeriCorps programs is programmatically, demographically, and 
geographically diverse and includes innovative programs and projects in 
areas with the highest rates of poverty.
    (b) In applying the selection criteria under Sec. Sec.  2522.420 
through 2522.435, the Corporation may, with respect to a particular 
proposal, also consider one or more of the following:
    (1) Progress reports;
    (2) Corporation site visit reports, including grantee responses;
    (3) Member satisfaction indicators;
    (4) Program evaluations;
    (5) Member-related information from the Corporation's systems;
    (6) Other evaluation material, including IG reports, and 
administrative standards for State commissions, reports on program 
training and technical assistance;
    (7) Grantee communications with the Corporation;
    (8) Financial Status Reports (FSR);
    (9) Audits;
    (10) Information for an applicant organization's Web site;
    (11) IRS Tax Form 990;
    (12) HHS Account Payment Data Report of the HHS Payment Management 
System;
    (13) Federal Cash Transaction Report (SF-272);
    (14) An applicant organization's annual report;
    (15) An applicant organization's Financial Management Survey;
    (16) Financial Management Training and Technical Assistance Report;
    (17) Publicly available socio-economic and demographic data, such 
as poverty rate, unemployment rate, labor force participation, and 
median household income;
    (18) Publicly available information on where an applicant and its 
activities fall

[[Page 50137]]

on the U.S. Department of Agriculture's urban-rural continuum (Beale 
codes);
    (19) Publicly available information on the nonprofit and 
philanthropic community, such as charitable giving per capita;
    (20) U.S. Department of Education data on Federal Work Study and 
Community Service; and
    (21) Other information, following notice in the relevant Notice of 
Funding Availability, of the specific information and the Corporation's 
intention to be able to consider that information in the review 
process.


Sec.  2522. 475  If I am a state commission or a national direct 
grantee, to what extent must I use the Corporation's selection criteria 
and priorities when selecting formula programs or operating sites?

    While the Corporation does not require you to use the Corporation's 
selection criteria and priorities in selecting your state formula grant 
programs or operating site, we encourage you to do so.
    6. Add new Sec.  2522.485 to read as follows:


Sec.  2522.485  If I am an AmeriCorps national and community service 
program, how do I calculate my budgeted Corporation cost per full-time-
equivalent (FTE)?

    If you are an AmeriCorps national and community service program, 
you calculate your Corporation cost per FTE by dividing your budgeted 
grant costs by the number of member full time equivalents you are 
awarded in your grant. You do not include child-care or the cost of the 
education award a member may earn through serving with your program.


Sec. Sec.  2522.800, 2522.810, 2522.820  [Redesignated from Sec. Sec.  
2522.540, 2252.550, 2522.560]

    7. Amend subpart E of part 2522 as follows:
    a. By redesignating Sec.  2522.540, Sec.  2522.550, and Sec.  
2522.560 as Sec.  2522.800, Sec.  2522.810, and Sec.  2522.820 
respectively;
    b. By revising Sec. Sec.  2522.500, 2522.510, 2522.520, and 
2522.530;
    c. By adding Sec. Sec.  2522.540, 2522.550, 2522.560, 2522.570, 
2522.580, 2522.590, 2522.600, 2522.610, 2522.620, 2522.630, 2522.640, 
2522.650, 2522.650, 2522.700, 2522.710, 2522.720, 2522.730, and 
2522.740; and
    d. By adding undesignated center headings preceding Sec. Sec.  
2522.650 and 2522.700.
    The added and revised text reads as follows:


Sec.  2522.500  What is the purpose of this subpart?

    (a) This subpart sets forth the minimum performance measures and 
evaluation requirements that you as a Corporation applicant or grantee 
must follow.
    (b) The performance measures that you, as an applicant, propose 
when you apply will be considered in the review process and may affect 
whether the Corporation selects you to receive a grant. Your 
performance related to your approved measures will influence whether 
you continue to receive funding.
    (c) Performance measures and evaluations are designed to strengthen 
your AmeriCorps program and foster continuous improvement, and help us 
identify best practices and models that merit replication, as well as 
programmatic weaknesses that need attention.


Sec.  2522.510  To whom does this subpart apply?

    This subpart applies to you if you are a Corporation grantee 
administering an AmeriCorps grant, or if you are applying to receive 
funding from the Corporation.


Sec.  2522.520  What special terms are used in this subpart?

    The following definitions apply to terms used in this subpart of 
the regulations:
    (a) Approved application means the application approved by the 
Corporation or, for formula programs, by a State commission.
    (b) Community beneficiaries refers to persons who receive services 
or benefits from a program, but not to AmeriCorps members or to staff 
of the organization operating the program.
    (c) Output indicators are the amount or units of service that 
members or volunteers have completed, or the number of community 
beneficiaries the program has served. Output indicators do not provide 
information on benefits or other changes in the lives of members or 
community beneficiaries. Examples of output indicators might include 
the number of people a program tutors, counsels, houses, or feeds.
    (d) Intermediate-outcome indicators specify a change that has 
occurred in the lives of community beneficiaries or members, but is not 
necessarily a lasting benefit for them. They are observable and 
measurable indications of whether or not a program is making progress. 
An example would be the number and percentage of students who report 
reading more books as a result of their participation in a tutoring 
program.
    (e) End-outcome indicators specify a change that has occurred in 
the lives of community beneficiaries or members that is significant and 
lasting. These are actual benefits or changes for participants during 
or after a program. For example, in a tutoring program, the end outcome 
might be the percent and number of students who have improved their 
reading scores to grade-level, or other specific measures of academic 
achievement.
    (f) Grantee includes subgrantees and projects.
    (g) You refers to the reader, either as a grantee or applicant 
organization.


Sec.  2522.530  What basic requirements must I follow in measuring 
performance under my grant?

    All grantees must establish, track, and assess performance measures 
for their programs. As a grantee, you must ensure that any program 
under your oversight fulfills performance measures and evaluation 
requirements, and ensure that you take appropriate steps to correct any 
problems that develop. You must:
    (a) Establish ambitious performance measures in consultation with 
the Corporation, or the State commission, as appropriate, following 
Sec. Sec.  2422.560 through 2422.660 of this subpart;
    (b) Ensure that any program under your oversight collects and 
organizes performance data on an ongoing basis, at least annually;
    (c) Ensure that any program under your oversight tracks progress 
toward meeting your performance measures;
    (d) Ensure that any program under your oversight corrects 
performance deficiencies promptly; and
    (e) Accurately and fairly present the results in reports to the 
Corporation.


Sec.  2522.540  May I use the Corporation's program grant funds for 
performance measurement and evaluation?

    If performance measurement and evaluation costs were approved as 
part of your grant, you may use your program grant funds to support 
them, consistent with the level of approved costs for such activities 
in your grant award.


Sec.  2522.550  Do the costs of performance measurement or evaluation 
count towards the statutory cap on administrative costs?

    No, the costs of performance measurement and evaluation do not 
count towards the statutory five percent cap on administrative costs in 
the grant, as provided in Sec.  2540.110 of this chapter.

[[Page 50138]]

Performance Measures: Requirements and Procedures


Sec.  2522.560  What information on performance measures must my grant 
application include?

    You must submit all of the following as part of your application 
for each program:
    (a) Proposed performance measures, as described in Sec.  2522.570 
through Sec.  2522.590 of this part.
    (b) Estimated performance data for the program years for which you 
submit your application; and
    (c) Actual performance data, where available, for the preceding 
completed program year.


Sec.  2522.570  What are performance measures and performance 
measurement?

    (a) Performance measures are measurable indicators of a program's 
performance as it relates to member service activities.
    (b) Performance measurement is the process of regularly measuring 
the services provided by your program and the effect your program has 
on the intended beneficiaries' lives.
    (c) The main purpose of performance measurement is to strengthen 
your AmeriCorps program and foster continuous improvement and to 
identify best practices and models that merit replication. Performance 
measurement will also help identify programmatic weaknesses that need 
attention.


Sec.  2522.580  What performance measures am I required to submit to 
the Corporation?

    (a) When applying for funds, you must submit at least one of each 
of the following types of performance measures:
    (1) Output measures;
    (2) Intermediate-outcomes; and
    (3) End-outcome measures.
    (b) Your measures need not cover the scope of your entire program, 
but they should give a clear indication of your program's primary 
purpose and objectives.
    (c) You must include at least one end-outcome measure that captures 
the results of your program's primary activity.
    (d) The measures you choose must be aligned with one another. For 
example, a tutoring program might use the following aligned performance 
measures:
    (1) Output: Number of students tutored;
    (2) Intermediate Outcome: Percent of students reading more books; 
and
    (3) End Outcome: Percent of students reading at or above grade 
level.
    (e) The Corporation may include additional requirements for 
performance measures on a periodic basis through program guidance and 
related materials. This information will be available at the 
Corporation's Web site at http://www.nationalservice.org.
    (f) The Corporation encourages you to exceed the minimum 
requirements expressed in this section and expects, in second and 
subsequent grant cycles, that you will more fully develop your 
performance measures, including establishing multiple performance 
indicators, and improving and refining those you used in the past.


Sec.  2522.590  Who develops my performance measures?

    (a) You are responsible for developing your program-specific 
performance measures through your own internal process.
    (b) In addition, the Corporation may, in consultation with 
grantees, establish performance measures that will apply to all 
Corporation-sponsored programs, which you will be responsible for 
collecting and meeting.


Sec.  2522.600  Who approves my performance measures?

    (a) The Corporation will review and approve performance measures, 
as part of the grant application review process, for all programs 
submitting applications for funding directly to the Corporation. If the 
Corporation selects your application for funding, the Corporation will 
approve your performance measures as part of the negotiation process 
before we award the grant.
    (b) If you are a program submitting an application under the State 
formula category, the applicable State commission is responsible for 
reviewing and approving your performance measures. The Corporation will 
not separately approve these measures.


Sec.  2522.610  What is the difference in performance measurements 
requirements for competitive and formula programs?

    (a) Except as provided in paragraph (b) of this section, State 
commissions are responsible for making the final determination of 
performance measures for State formula programs, while the Corporation 
makes the final determination for all other programs.
    (b) The Corporation may, through the State commission, require that 
formula programs meet certain performance measures above and beyond 
what the State commission has negotiated with its formula grantees.
    (c) While State commissions must hold their sub-grantees 
responsible for their performance measures, a State commission, as a 
grantee, is responsible to the Corporation for its formula programs' 
performance measures.


Sec.  2522.620  How do I report my performance measures to the 
Corporation?

    The Corporation sets specific reporting requirements, including 
frequency and deadlines, for performance measures in the grant award.
    (a) In general, you are required to report on the actual results 
that occurred when implementing the grant and to regularly measure your 
program's performance.
    (b) Your report must include the results on the performance 
measures approved as part of your grant award.
    (c) At a minimum, you are required to report on outputs at the end 
of year one; outputs and intermediate-outcomes at the end of year two; 
and outputs, intermediate-outcomes and end-outcomes at the end of year 
three. We encourage you to exceed these minimum requirements and report 
results earlier.


Sec.  2522.630  What must I do if I am not able to meet my performance 
measures?

    If you realize that you are not on track to meet your performance 
measures, you must develop a plan to get back on track, or submit a 
request to the Corporation to amend your requirements.
    The request must include all of the following:
    (a) Why you are not on track to meet your performance requirements;
    (b) How you have been tracking performance measures;
    (c) Evidence of the corrective steps you have taken;
    (d) Any new proposed performance measures or targets; and
    (e) Your plan to ensure that you meet any new measures.


Sec.  2522.640  Under what circumstances may I change my performance 
measures?

    (a) You may change your performance measures only if the 
Corporation or, for formula programs, the State commission, approves 
your request to do so based on your need to:
    (1) Adjust your performance measure or target based on experience 
so that your program's goals are more realistic and manageable;
    (2) Replace a measure related to one issue area with one related to 
a different issue area that is more aligned with your program service 
activity. For example, you may need to replace an objective related to 
health with one related to the environment;
    (3) Redefine the service that individuals perform under the grant. 
For example, you may need to define your service as tutoring adults in 
English, as opposed to operating an after-school program for third-
graders;

[[Page 50139]]

    (4) Eliminate an activity because you have been unable to secure 
necessary matching funding; or
    (5) Replace one measure with another. For example, you may decide 
that you wish to replace one measure of literacy tutoring (increased 
attendance at school) with another (percentage of students who are 
promoted to the next grade level).


Sec.  2522.650  What happens if I fail to meet the performance measures 
included in my grant?

    (a) If you are significantly under-performing based on the 
performance measures approved in your grant, or fail to collect 
appropriate data to allow performance measurement, the Corporation may 
specify a period of correction, after consulting with you. As a 
grantee, you must report results at the end of the period of 
correction. At that point, if you continue to under-perform, or fail to 
collect appropriate data to allow performance measurement, the 
Corporation may take one or more of the following actions:
    (1) Reduce the amount of your grant;
    (2) Suspend or terminate your grant;
    (3) Use this information to assess any application from your 
organization for a new AmeriCorps grant or a new grant under another 
program administered by the Corporation;
    (4) Amend the terms of any Corporation grants to your organization; 
or
    (5) Take other actions that the Corporation deems appropriate.
    (b) If you are a State commission whose formula program(s) is 
significantly under-performing or failing to collect appropriate data 
to allow performance measurement, we encourage you to take action as 
delineated in paragraph (a) of this section.

Evaluating Programs: Requirements and Procedures


Sec.  2522.700  How does evaluation differ from performance 
measurement?

    (a) Evaluation is a more in-depth, rigorous effort to measure the 
impact of programs. While performance measurement and evaluation both 
include systematic data collection and measurement of progress, 
evaluation uses scientifically-based research methods (i.e., random 
assignment) to assess the effectiveness of programs by comparing the 
observed program outcomes with what would have happened in the absence 
of the program. Unlike performance measures, evaluations estimate the 
impacts of programs by comparing the outcomes for individuals receiving 
a service or participating in a program to the outcomes for similar 
individuals not receiving a service or not participating in a program. 
For example, an evaluation of a literacy program may compare the 
reading ability of students in a program over time to a similar group 
of students not participating in a program.
    (b) Performance measurement describes the effects of the program on 
the population being served through the systematic collection of data 
on a continual basis. Performance measures may include counts of 
activities and people served, and changes in the level of knowledge or 
behavior of people being served. For example, a performance measure for 
a literacy program may include the percentage of students who increase 
their reading ability from ``below grade level'' to ``at or above grade 
level''. In contrast to an evaluation, performance measurement does not 
generally compare the impact of the program on community beneficiaries 
or participants with those who are not part of AmeriCorps.


Sec.  2522.710  What are my evaluation requirements?

    (a) If you are a State commission, you must establish and enforce 
evaluation requirements for your State formula subgrantees, as you deem 
appropriate.
    (b) If you are a State competitive or direct Corporation grantee, 
and your average annual program grant is $500,000 or more, you must 
arrange for an independent evaluation of your program covering a period 
of at least 5 years, and you must submit the evaluation with any 
application to the Corporation for competitive funds as required in 
Sec.  2522.730 of this subpart.
    (c) If you are a State competitive or direct Corporation grantee 
whose average annual program grant is less than $500,000, or an 
Education Award Program grantee, the Corporation does not require that 
you conduct an evaluation of your program. However, the Corporation 
encourages you to conduct or arrange for an evaluation and may consider 
any such evaluation in assessing the quality of your program in any 
future grant competitions.
    (d) The Corporation may, in its discretion, supercede these 
requirements with an alternative evaluation approach, including one 
conducted by the Corporation at the national level.


Sec.  2522.720  How often must I conduct an evaluation?

    (a) If you are a State formula grantee, you must conduct an 
evaluation, as your State commission requires.
    (b) If you are a State competitive or direct Corporation grantee, 
and are required to arrange for an independent evaluation under Sec.  
2522.710(c) of this subpart, you must arrange for such an evaluation at 
least every 5 years.


Sec.  2522.730  If I am required to arrange for an independent 
evaluation, how and when do I submit my evaluation to the Corporation?

    (a) If you compete for AmeriCorps funds after an initial three-year 
grant cycle, you must submit a summary of your evaluation efforts to 
date, and a copy of any evaluation that has been completed, as part of 
your application for funding.
    (b) If you again compete for AmeriCorps funding after a second 
three-year grant cycle, you must submit the completed evaluation with 
your application for funding.


Sec.  2522.740  How will the Corporation use my evaluation?

    (a) If you are required to arrange for an independent evaluation 
under Sec.  2522.710(c) of this subpart, the Corporation will consider 
the evaluation you submit with your application as follows:
    (1) If you do not include with your application for AmeriCorps 
funding a summary of the evaluation, or the evaluation itself, as 
applicable, under Sec.  2522.730, the Corporation will not consider 
your application.
    (2) If you do submit an evaluation with your application, the 
Corporation will consider the results of your evaluation in assessing 
the quality and outcomes of your program.
    (b) If you are not required to arrange for an independent 
evaluation under Sec.  2522.710(c) but have nonetheless completed one, 
the Corporation may consider the results of your evaluation in 
assessing the quality of your program. Your inclusion of an evaluation 
with your application may make your application more likely to be 
selected.
    8. Add subpart F to part 2522 consisting of Sec.  2522.900 through 
Sec.  2522.950, to read as follows:
Subpart F--Program Management Requirements for Grantees
Sec.
2522.900 What definitions apply to this subpart?
2522.910 What basic qualifications must an AmeriCorps member have to 
serve as a tutor?
2522.920 Are there any exceptions to the qualifications 
requirements?
2522.930 What is an appropriate proficiency test?
2522.940 What are the requirements for a program in which AmeriCorps 
members serve as tutors?

[[Page 50140]]

2522.950 What requirements and qualifications apply if my program 
focuses on supplemental academic support activities other than 
tutoring?

Subpart F--Program Management Requirements for Grantees


Sec.  2522.900  What definitions apply to this subpart?

    Tutor is defined as someone whose primary goal is to increase 
academic achievement in reading or other core subjects through planned, 
consistent, one-to-one or small-group reading or other small-group 
sessions that build on students' academic strengths and target 
students' academic needs. A tutor does not include someone engaged in 
supplemental academic support activities whose primary goal is 
something other than increasing academic achievement. For example, 
providing a safe place for children is not tutoring, even if some of 
the program activities focus on homework help.


Sec.  2522.910  What basic qualifications must an AmeriCorps member 
have to serve as a tutor?

------------------------------------------------------------------------
                                 Then the tutor must meet the following
       If the tutor is:                     qualifications:
------------------------------------------------------------------------
(a) Hired by Local Education   Paraprofessional qualifications under No
 Agency or school.              Child Left Behind Act, as required in 34
                                CFR 200.58.
(b) Not hired by Local         (1)(i) High School diploma or its
 Education Agency or school.    equivalent, or a higher degree OR
                               (ii) Proficiency test, as described in
                                Sec.   2522.930 of this subpart; and
                               (2) Successful completion of pre- and in-
                                service specialized training, as
                                required in Sec.   2522.940 of this
                                subpart.
------------------------------------------------------------------------

Sec.  2522.920  Are there any exceptions to the qualifications 
requirements?

    The qualifications requirements in Sec.  2522.910 of this subpart 
do not apply to a member who is a student tutoring younger children in 
the school as part of a structured, school-managed cross-grade tutoring 
program.


Sec.  2522.930  What is an appropriate proficiency test?

    (a) If a member serving as a tutor does not have a high-school 
diploma or its equivalent, or a higher degree, the member must pass a 
proficiency test that the program has determined effective in ensuring 
that members serving as tutors have the necessary skills to achieve 
program goals.
    (b) The program must maintain in the member file of each member who 
takes the test documentation on the proficiency test selected and the 
results.


Sec.  2522.940  What are the requirements for a program in which 
AmeriCorps members serve as tutors?

    A program in which members engage in tutoring for children must:
    (a) Articulate appropriate criteria for selecting and qualifying 
tutors;
    (b) Identify the strategies or tools it will use to assess student 
progress and measure student outcomes;
    (c) Certify that the curriculum and pre-service and in-service 
training content are high-quality and research-based, consistent with 
the instructional program of the local educational agency or with state 
academic content standards;
    (d) Include appropriate member supervision by individuals with 
expertise in tutoring; and
    (e) Provide specialized high-quality and research-based, member 
pre-service and in-service training consistent with the activities the 
member will perform.


Sec.  2522.950  What requirements and qualifications apply if my 
program focuses on supplemental academic support activities other than 
tutoring?

    (a) If your program does not involve tutoring as defined in Sec.  
2522.900 of this subpart, the Corporation will not impose the 
requirements in Sec.  2522.910 through Sec.  2522.940 of this subpart 
on your program.
    (b) At a minimum, you must articulate in your application how you 
will recruit, train, and supervise members to ensure that they have the 
qualifications and skills necessary to provide the service activities 
in which they will be engaged.

PART 2540--GENERAL ADMINISTRATIVE PROVISIONS

    1. The authority citation for part 2540 is revised to read as 
follows:

    Authority: E.O. 13331, 69 FR 9911; 42 U.S.C. 12571, 12631-12637, 
12651d.

    2. Amend Sec.  2540.100 by redesignating paragraphs (f)(2) through 
(f)(5) as f(3) through (f)(6) respectively, and adding a new paragraph 
(f)(2) to read as follows:


Sec.  2540.100  What restrictions govern the use of Corporation 
assistance?

* * * * *
    (f) * * *
    (2) An organization may not displace a volunteer, including partial 
displacement such as reducing a volunteer's hours, by using a 
participant in a program receiving Corporation assistance.
* * * * *

PART 2550--REQUIREMENTS AND GENERAL PROVISIONS FOR STATE 
COMMISSIONS AND ALTERNATIVE ADMINISTRATIVE ENTITIES

    1. Revise the heading of part 2550 to read as set forth above.
    2. The authority citation for part 2550 is revised to read as 
follows:

    Authority: 42 U.S.C. 12638.

    3. Amend Sec.  2550.10 as follows:
    a. By revising paragraph (b);
    b. By revising paragraph (c);
    c. By revising the last sentence of paragraph (d).
    The revisions read as follows:


Sec.  2550.10  What is the purpose of this part?

* * * * *
    (b) To be eligible to apply for program funding, or approved 
national service positions, each State must establish a State 
commission on national and community service to administer the State 
program grant making process and to develop a State plan. The 
Corporation may, in some instances, approve an alternative 
administrative entity (AAE).
    (c) The Corporation will distribute grants of between $125,000 and 
$750,000 to States to cover the Federal share of operating the State 
commissions or AAEs.
    (d) * * * This part also offers guidance on which of the two State 
entities States should seek to establish, and it explains the 
composition requirements, duties, responsibilities, restrictions, and 
other relevant information for State commissions and AAEs.


Sec.  2550.20  [Amended]

    4. Amend Sec.  2550.20 by removing paragraph (o).
    5. Amend Sec.  2550.30 by revising the section heading to read as 
set forth

[[Page 50141]]

below, removing paragraphs (c) and (d), and redesignating paragraph (e) 
as paragraph (c).


Sec.  2550.30  How does a State decide whether to establish a state 
commission or an alternative administrative entity?

* * * * *


Sec.  2550.40  [Amended]

    6. Amend Sec.  2550.40 by removing paragraph (c).


Sec.  2550.70  [Removed and reserved]

    7. Remove and reserve Sec.  2550.70.
    8. Amend Sec.  2550.80 as follows:
    a. Revise the first two sentences of the introductory text;
    b. Redesignate paragraph (a)(3) as paragraph (a)(4);
    c. Add new paragraph (a)(3); and
    d. Revise paragraph (j) to read as follows:


Sec.  2550.80  What are the duties of the State entities?

    Both State commissions and AAEs have the same duties. This section 
lists the duties that apply to both State commissions and AAEs--
collectively referred to as State entities. * * *
    (a) * * *
    (3) The plan must include a summary of the State commission's 
program sustainability approach.
* * * * *
    (j) Activity ineligible for assistance. A State commission or AAE 
may not directly carry out any national service program that receives 
financial assistance under section 121 of the NCSA.
* * * * *

    Dated: August 10, 2004.
Frank R. Trinity,
General Counsel.
[FR Doc. 04-18594 Filed 8-12-04; 8:45 am]
BILLING CODE 6050-28-P