[Federal Register Volume 70, Number 130 (Friday, July 8, 2005)]
[Rules and Regulations]
[Pages 39562-39607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-13038]



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Part II





Corporation for National and Community Service





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45 CFR Parts 2510, 2520, 2521, etc.



AmeriCorps National Service Program; Final Rule

  Federal Register / Vol. 70, No. 130 / Friday, July 8, 2005 / Rules 
and Regulations  

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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: Final rule.

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SUMMARY: The Corporation for National and Community Service 
(hereinafter the ``Corporation'') is amending several provisions 
relating to the AmeriCorps national service program, and adding 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: This final rule is effective September 6, 2005, with specific 
sections becoming applicable according to the implementation schedule 
in part VII of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Amy Borgstrom, Associate Director for 
Policy, Department of AmeriCorps, Corporation for National and 
Community Service, 1201 New York Avenue, NW., Washington, DC 20525, 
(202) 606-5000, ext. 132. T.D.D. (202) 606-3472. Persons with visual 
impairments may request this rule in an alternative format.

SUPPLEMENTARY INFORMATION:

List of Topics

I. Background
II. Preliminary Public Input and Public Comments
III. Terminology Change: FTE to MSY
IV. Highlights of Proposed Rule
V. Broad Policy Issues
    A. Sustainability Generally
    B. Intermediaries
    C. Education Award Program
    D. Professional Corps
VI. Specifics of Final Rule and Analysis of Comments
    A. Definitions of ``Target Community'' and ``Recognized 
Equivalent of a High-School Diploma''
    B. Member Service Activities
    C. Increase in Required Grantee Share of Program Costs
    D. Cap on Childcare Payments and Corporation Share of Health 
Care Benefits
    E. AmeriCorps Grants Selection Process and Criteria
    F. Corporation Cost per Member Service Year (MSY)
    G. Performance Measures and Evaluation
    H. Qualifications for Members Serving as Tutors and Requirements 
for Tutoring Programs
    I. Non-Displacement of Volunteers
    J. Transitional Entities
    K. State Commissions Directly Operating Programs
VII. Effective Dates
VIII. Non-Regulatory Issues
IX. Rulemaking Analyses and Notices

I. 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 
community organizations, including faith-based organizations. The E.O. 
directed the Corporation to review and modify its policies as necessary 
to accomplish these goals.
    In the Consolidated Appropriations Act for 2004, Congress directed 
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) had 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 August 12, 2004, the 
Corporation published a Notice of Proposed Rulemaking (NPRM) in the 
Federal Register for public comment (69 FR 50124).
    This rulemaking process is one of two the Corporation initiated in 
2004, and addresses several significant and time-sensitive issues. The 
Corporation intends to implement these changes over the next year, with 
some taking effect in the AmeriCorps 2005 program year, and the 
remainder in the 2006 program year (See section VII. Effective Dates). 
The second process stemmed from 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 effort is already 
underway, and we plan to issue a Notice of Proposed Rulemaking for that 
purpose later this year. The two rulemakings address distinct and 
separate issues.

II. Preliminary Public Input and Public Comments

A. 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 (69 FR 10188). 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 Arlington, Texas, to frame 
the issues and collect public input. Through the hearings, conference 
calls, and e-mail and paper submissions, the Corporation received 
comments from nearly 600 individuals and organizations, and used this 
input to inform the drafting of the proposed rule.

B. 60-Day Comment Period

    In the Federal Register of August 12, 2004 (69 FR 50122), the 
Corporation published the proposed rule with a 60-day comment period. 
In addition to accepting comments in writing, the Corporation held 
three conference calls and five public meetings across the country in 
Philadelphia, Pennsylvania; Atlanta, Georgia; Portland, Oregon; Denver, 
Colorado; and Chicago, Illinois. During the public comment period, the 
Corporation received 217 written comments and 78 oral comments from 
grantees, foundations, State governments, non-profits, Members of 
Congress, and other interested individuals and organizations.
    The comments express a wide variety of views on the merits of 
particular sections of the proposed regulations, as well as some 
broader policy statements and issues. Acknowledging that there are 
strong views on, and competing legitimate public policy interests 
relating to, the issues in this rulemaking, the Corporation has 
carefully considered all of the comments on the proposed regulations.

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    The Corporation has summarized below the major comments received on 
the proposed regulatory changes, and has described the changes we made 
in the final regulatory text in response to the comments received. In 
addition to the more substantive comments discussed below, the 
Corporation received some editorial suggestions, some of which we have 
adopted and some of which we have not. The Corporation has made a 
number of other minor editorial changes to better organize or structure 
the regulatory text. Finally, the Corporation received a number of 
comments on issues outside the scope of the proposed rule, which the 
Corporation does not address in the discussion that follows.

III. Terminology Change: FTE to MSY

    In the proposed rule, the Corporation defined cost per full-time 
equivalent (FTE), and referred to cost per FTE throughout the 
regulation. Until now, the Corporation has used the term FTE to 
describe the number of service years performed by a full-time 
AmeriCorps member (each service year being equal to 1,700 hours of 
service). Because the term FTE is most often associated with budgeting 
for employee payroll, we are replacing ``FTE'' with ``Member Service 
Year'' (MSY). We think this term more accurately describes units of 
AmeriCorps service, and we want to avoid any misimpression that 
AmeriCorps members are Federal employees. Consequently, the Corporation 
has amended the final rule to refer to cost per MSY, and uses MSY and 
cost per MSY throughout this final rule in lieu of FTE and cost per 
FTE, respectively.

IV. Highlights of Final Rule

    This final rule includes a targeted series of reforms designed to 
strengthen the impact, efficiency, and reach of AmeriCorps, 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;
     Enhance the measurable positive impact of the AmeriCorps 
program on:

--Communities and beneficiaries that receive service;
--Non-profit organizations and community infrastructures that host 
service; and
--AmeriCorps members who serve;

     Resolve longstanding issues relating to Federal share, 
Corporation cost per member service year (MSY), and sustainability of 
AmeriCorps projects to minimize uncertainty about annual grantee 
funding levels and restrictions;
     Assure fiscal and programmatic accountability and 
effective performance measurement for the Corporation, AmeriCorps, and 
grantees; and
     Generate additional and wider varieties of grant applicant 
organizations. In addition, wherever possible, this rule reflects the 
Corporation's determination to:
     Eliminate unnecessary paperwork burdens on Corporation 
grantees;
     Strengthen AmeriCorps' ability to respond to State and 
local needs;
     Engage more community volunteers;
     Include community organizations, including faith-based 
organizations, in all Corporation programs; and
     Invigorate the competitive grant-making process.
    Existing and potential AmeriCorps grantees are a strong 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 foster and encourage, rather 
than require, desired actions or activities; and
     Tailor implementation of the regulatory requirements based 
on the unique goals and circumstances of grantees, including limited 
waivers if appropriate.
    The Corporation has focused reforms in the final rule on four main 
areas: Sustainability of AmeriCorps programs, including decreasing 
grantee reliance on Federal resources and decreasing Corporation costs 
per MSY; Grant selection criteria; Performance measures and evaluation; 
and Tutor qualifications and other requirements for tutoring programs. 
The proposed rule also included a discussion in some detail of several 
non-regulatory issues including the Corporation's goal of streamlining 
continuation applications and adjusting grant cycles. As discussed in 
the proposed rule, the Corporation is undertaking both those reforms 
outside of these regulations.
    The Corporation is publishing these regulations pursuant to the 
Chief Executive Officer's statutory authority to ``prescribe such rules 
and regulations as are necessary or appropriate to carry out the 
national service laws.'' 42 U.S.C. 12651c(c). The Corporation intends 
to monitor the impact of this final rule on grantees.
    The next section of this preamble, section V, addresses 
sustainability, and specific issues concerning intermediaries, 
Education Award Program grantees, and professional corps programs. 
Section VI includes a section-by-section summary and analysis of the 
major comments we received and the Corporation's response. Section VII 
of this preamble addresses implementation of the final rule. Section 
VIII addresses several non-regulatory policy issues the Corporation 
considered in light of the public input and comments we received.

V. Broad Policy Issues

A. Sustainability

    Many of the comments the Corporation received addressed the issue 
of sustainability. Many suggested that the Corporation had too narrowly 
defined sustainability in the proposed rule as only including financial 
or monetary measures, and had given insufficient consideration to other 
measures of sustainability, such as community support and partnerships, 
and program quality. Those commenting on the definition generally 
suggested various revisions on the same theme of defining 
sustainability broadly and beyond just financial commitments. Two 
commenters suggested that sustainability be measured by criteria that 
capture capacity in terms of program quality and cost structure, fiscal 
and community support, partnerships, and leveraged resources, including 
volunteer hours and in-kind goods and services. The Corporation agrees 
that sustainability includes many elements beyond cost, and has 
modified the rule language in several places to bring greater emphasis 
on multiple and diverse measures of sustainability.
    The Corporation did not intend for the proposed rule to define 
sustainability solely in terms of money, nor did we intend for 
sustainability itself to be viewed as the only factor in the grant 
selection process. The Corporation's intent was to broadly define 
sustainability and to specify measures of sustainability in the grant 
selection criteria and program requirements. At the same time, the 
Corporation does believe that decreasing the federal share of costs for 
AmeriCorps programs is essential to sustainability, and we have, thus, 
retained increased matching requirements as a key part of our effort to 
boost program sustainability.
    As stated in the proposed rule, the Corporation's annual 
appropriation and its authorizing legislation, as well as E.O. 13331, 
support this approach to sustainability. In our annual appropriations 
act each year dating back

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to fiscal year 1996, and most recently in the Consolidated 
Appropriation Act for fiscal year 2005, 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 
133(c)(3) of the Act requires the Corporation to include in its 
selection criteria the sustainability of the national service program, 
based on evidence such as the existence of strong and broad-based 
community support for the program, and of multiple funding sources or 
private funding for the program. Section 130(b)(3) of the Act 
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, in our 
view, they do not require imposing across-the-board 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, the Corporation continues to 
believe it unnecessary to disqualify an organization from receiving 
Federal funding based on the number of years that organization has 
received funding. To do so would ultimately result in a loss of some of 
the strongest organizations with the capacity, infrastructure, and 
experience to provide high-quality service and deliver results that 
strengthen and expand national and community service. We do believe, 
however, that the majority, if not all, of the organizations that 
receive Corporation funds can and should increase their share of 
program costs as their programs mature.
    Through increased sustainability, the Corporation seeks to expand 
the national service field and provide new organizations the 
opportunity to participate in national and community service programs. 
The Corporation also seeks to strengthen the capacity of existing 
national and community service programs by promoting an expansion and 
diversification of their non-Corporation funding sources, and 
strengthening the competitive framework. At the same time, the 
Corporation wants to treat grantees fairly and equitably and avoid 
impairing their independence, operating flexibility, and autonomy.
    As described in more detail below, 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 elements 
throughout the Corporation's grant selection criteria and program 
requirements.
    2. Increases the emphasis in the selection process on program cost-
effectiveness, including using Corporation cost per MSY as one of 
several measures of cost-effectiveness.
    3. Increases, based on a predictable schedule and incremental 
scale, the grantee share of program costs to a 50 percent overall level 
by the 10th year in which an organization receives AmeriCorps funding 
for the same program. Programs in severely economically distressed or 
rural areas are eligible to apply for permission to meet an alternative 
match schedule, which would increase their grantee share to a 35 
percent overall level by the 10th year in which an organization 
receives AmeriCorps funding for the same program.
    4. Requires State commissions to develop and implement a 
sustainability approach as part of their oversight function.
    5. Targets a percentage of non-continuation AmeriCorps State and 
national grant funds each year for new applicants.
    6. Provides technical support and limited exceptions to 
organizations that demonstrate hardship in meeting the increasing match 
requirements.
    With the exception of the fourth and fifth elements, which are not 
included in the regulatory language and which we address immediately 
hereafter, the individual section discussions that follow in part VI 
address each of the other elements of sustainability in more detail.
State Commission Sustainability Approaches (Sec.  2550.80(a)(3) in 
Proposed Rule)
    Part of the Corporation's sustainability strategy is to build upon 
what some States are already accomplishing in the sustainability arena. 
The Corporation understands that roughly 25 percent of the State 
commissions already 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 subgrantees' Corporation cost per MSY over 12 years, to 
allow the commission to invest resources in new programs and encourage 
on-going programs to develop efficiencies and enhance community 
support. One State commission requires, among other things, that its 
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 costs over a three-year period, 
actively solicit private donations to use, in part, to help local 
AmeriCorps programs develop relationships with corporate donors and 
increase private support. The Corporation praises these efforts and 
encourages State commissions to consider these and other approaches to 
promote program sustainability in their States.
    In an effort to promote these State sustainability efforts, the 
proposed rule required each State to describe its sustainability 
approach in its State-wide service plan.
    Several commenters expressed confusion regarding the proposed 
requirement. One viewed this provision as requiring States to duplicate 
the new Federal sustainability and matching regulatory requirements. 
One State commission indicated that it may develop additional 
sustainability requirements for programs in its State, but did not wish 
to report those requirements to the Corporation. Another commission 
supported the development of local sustainability plans for States, but 
sought clarifying language that would leave room for States to 
determine sustainability for themselves.
    The Corporation supports the efforts that States are making towards 
sustainability in their respective States. Furthermore, the Corporation 
notes that State commissions may generally choose to impose more 
stringent requirements on State subgrantees than the Corporation's 
requirements. The Corporation's intent in proposing the reporting 
requirement was to ensure that each State engage in meaningful 
discussions about how it should manage its portfolio to maximize long-
term impact of programs in the State. The Corporation expects State 
commissions to consider, in developing their sustainability plans, 
whether they should add any sustainability requirements to the 
Corporation's minimum requirements, as well as what strategies the 
State may use to develop capacity and sustainability of projects and 
service in the State.

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    The Corporation has now concluded that the State-wide service plan 
(formerly ``unified State plan'') is not necessarily the best mechanism 
for obtaining this information. Rather, the Corporation believes that 
the most efficient way for commissions to report on their 
sustainability plans is through their administrative funds application. 
The Corporation plans to add one or more questions to the 
administrative application through which States will report their 
sustainability plan efforts. The Corporation is, therefore, removing 
from the final rule the requirement that State commissions submit a 
sustainability plan to the Corporation. Paragraph (a)(3) of section 
2550.80 in the proposed rule has been deleted.
Funds Targeted for New Programs
    The Corporation anticipates annually targeting a percentage of 
AmeriCorps funds for grants to new applicants. To give us the ability 
to manage our nationwide portfolio and ensure the appropriate mix of 
programs, the Corporation will determine the category of applicants 
eligible to receive the targeted funds annually and announce it in the 
relevant funding announcement.
    The target amount will vary, rather than be a fixed amount that the 
Corporation must use for new programs each year. In some years, the 
Corporation may receive enough high-quality new program applications to 
meet or even exceed the target, and in other years, if the new program 
applications are not of sufficient quality to merit funding, the number 
of new programs funded may be lower than the amount targeted for that 
purpose. The Corporation will, to the maximum extent possible, announce 
the amount targeted for new programs prior to the submission deadline.
    One commenter agreed with the Corporation's efforts to support new 
programs, but expressed concern that this support should not lead to 
replacing high-quality existing programs with new programs. This 
commenter supported the Corporation setting aside funding for new 
programs only under limited circumstances, including: (1) A year when 
``new'' funding represents the majority of the funding available for 
new and recompeting programs; or (2) a year when there is a substantial 
amount of new funding made available through an increase in 
appropriations for AmeriCorps grants of 10 percent or more. In 
addition, the commenter supported grants awarded out of set-aside funds 
based on the results of a ``truly competitive'' process.
    The Corporation disagrees with this commenter's suggestions. The 
Corporation will determine the target 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 www.nationalservice.gov, in advance of the selection 
process. The Corporation will not, however, tie itself now to the 
specific parameters the commenter suggests. The Corporation will ensure 
that the process for selecting new programs is competitive and results 
in the selection of high-quality proposals, as for all its AmeriCorps 
grant competitions.
    Several commenters did not support targeting funds for new 
programs. Other commenters noted that competition is the best way to 
increase the number and diversity of organizations funded over time. 
The Corporation views targeting funds for new programs as an important 
incentive for new organizations to consider applying for AmeriCorps 
funds, when they otherwise might not. The Corporation acknowledges that 
its legislative requirements can appear daunting to organizations 
unfamiliar with AmeriCorps or new to national and community service, 
particularly when competing with existing organizations that have had 
the opportunity to learn from experience. The Corporation therefore 
hopes that, by targeting funds for new programs, more new organizations 
will apply, thereby increasing the likelihood that more new programs 
will receive funding. The Corporation will award all of its AmeriCorps 
funds, including those targeted for new programs, through rigorous 
competition, to ensure that we fund the best possible programs that 
will demonstrate strong results and help address our communities' unmet 
needs.
    One commenter asked whether the Corporation would announce the 
amount we would target for new programs before the selection of 
grantees or prior to the submission deadline. While the Corporation 
will generally announce the amount of funds we will target for new 
programs before the submission deadline, in some years, we may not 
receive our appropriation until close to the application deadline or 
after applications are due. In that case, the Corporation would 
announce the amount targeted for new programs as soon as possible after 
receiving our annual appropriation.
    Several commenters asked that the Corporation specify the annual 
percentage, or at the very least the maximum annual percentage we will 
target for new programs. The Corporation cannot specify in this rule 
how much--if any--we will target for new programs each year because the 
target amount will depend each year on the level of our annual 
appropriation, as well as the number of continuation programs and the 
level of their respective grant requests.
    One commenter asked whether States would be required to set-aside a 
percentage of their formula funds for new programs. The Corporation 
will not require States to set aside or target formula funds for new 
programs, although a State may choose to do so.
    Another commenter suggested the Corporation hold a competition to 
determine the best quality programs before targeting money for new 
programs. The Corporation intends only to fund high-quality programs 
and does not believe it necessary to determine the quality of 
applications through a separate process. As discussed above, the amount 
the Corporation annually targets for new programs will not be a fixed 
amount. If the Corporation has any remaining funds from the amount 
allocated for new high-quality programs that year, the Corporation will 
make these funds available to recompeting and continuation grantees.
Other Sustainability Issues
    Several commenters expressed concern that the Corporation's 
proposed sustainability strategy may in fact jeopardize programs in 
low-income and economically-distressed regions of the country. As 
discussed more fully in the section dealing with increased grantee 
share, the final rule accommodates programs located in rural or 
severely economically-distressed areas of the country that are unable 
to meet the higher match requirements by allowing them to request a 
waiver that would qualify them for an alternative lower match 
requirement. The rule also includes programs in rural and severely 
economically-distressed areas in the list of programs eligible for 
special consideration in the competitive selection process.
    One commenter expressed concern that fundraising costs are 
currently not included in the budgets submitted to the Corporation, 
obscuring the true cost of doing business as an AmeriCorps program. 
This commenter suggested that, given the increased emphasis on program 
fundraising and increased match, the Corporation request an exception 
from the Office of Management and Budget to allow development costs to 
count as match or be reimbursed. It is government-wide Federal policy 
that fundraising costs are not reimbursable, and the Corporation can 
find no basis upon which it may deviate from that policy. Many other

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Federal grant programs require a 50 percent match without corresponding 
OMB waivers relating to development costs.
    Another commenter suggested that the Corporation apply different, 
presumably less rigorous, sustainability requirements and measures to 
``stand alone'' AmeriCorps programs--that is, organizations whose sole 
purpose is to carry out AmeriCorps. Again, the Corporation does not 
find sufficient merit to the suggestion to make a change in the final 
rule. Sustainability is one of the core principles of this rule. While 
the final rule carves out some limited exceptions to the sustainability 
requirements, the characteristics of a ``stand-alone'' AmeriCorps 
program are not sufficiently different from other AmeriCorps programs 
to warrant different treatment. Moreover, the Corporation wants to 
avoid creating a disincentive for an organization to diversify its 
activities.
    In several places in this final rule, the Corporation makes a 
distinction between compliance with a requirement and performance under 
the competitive selection criteria. For example, the final rule 
requires programs to recruit or support volunteers, unless the 
Corporation waives the requirement. At the same time, the selection 
criteria for AmeriCorps grants include volunteer recruitment and 
support as a competitive criterion. A proposal that does not include 
volunteer recruitment or support will potentially score lower in that 
category, regardless of whether, ultimately, the Corporation waives the 
volunteer recruitment or support requirement when making an award. 
Similarly, in the area of match, the Corporation is establishing 
minimum requirements for grantees that the Corporation will enforce, 
generally upon closing out a grant. If a grantee has not met its 
minimum required match, the grantee will have to repay funds to the 
Corporation. The selection criteria, on the other hand, look at match 
also from a performance perspective: An organization's failure to meet 
its budgeted match may negatively impact its success in the competitive 
process, but will not translate into a requirement that the 
organization repay funds. When considering the final rule, one should 
bear in mind this distinction between compliance and performance.
    The Corporation believes that its approach represents a fair, 
equitable, and authoritative resolution of the issue of programmatic, 
organizational, and financial sustainability. The rules are authorized 
by, and consistent with, our enabling legislation, and support our 
goals 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 conclusively resolves the issue.

B. Intermediaries

    The Corporation received significant public comment regarding 
intermediaries and, in particular, the potential effect on those 
entities of efforts to promote sustainability. 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 smaller community organizations, including faith-based 
organizations. The Corporation recognizes that many intermediary models 
include a regular infusion of new sites, which, as with any new 
program, may have higher costs initially. In designing the selection 
criteria, the Corporation has explicitly recognized the potentially 
higher cost of some intermediary models.
    One commenter suggested that the Corporation define 
``intermediary'' as a program that ``places members in community-based 
and faith-based organizations in specific communities.'' This commenter 
indicated that these intermediary model programs are more expensive 
because they take on new partnerships each year and must manage 
multiple partnerships. The higher relative cost of these intermediary 
models should, according to this commenter, be recognized in the 
selection criteria for cost-effectiveness. As discussed in the 
selection criteria below, the cost-effectiveness criteria specifically 
take into account, among other things, the higher relative costs of 
programs that either bring on new sites or engage or serve difficult-
to-reach populations. As far as defining ``intermediary,'' the 
suggested definition is, based on the Corporation's experience, too 
imprecise. The Corporation has spent considerable effort examining 
intermediaries and has determined that its portfolio of grantees 
includes many different models of intermediary, such that including a 
cost-effectiveness criterion for a multi-faceted category of 
organizations would not be appropriate or workable.
    The Corporation has set matching requirements generally at the 
grantee or parent organization level, rather than at the member 
placement or service 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 parent 
organization level gives greater flexibility to intermediaries to 
manage and achieve a healthy mix of new and established sites. As 
discussed more fully below in section VI(C), the Corporation is 
sensitive to the fact that the increased match requirements may create 
obstacles for some intermediary organizations. In particular, the 
Corporation is concerned about intermediary organizations that place 
members in small and new grass-roots organizations in needy 
communities, and rely on those communities to contribute matching 
resources to the intermediary in order to participate.

C. Education Award Programs (EAP)

    The Education Award Program (EAP) allocates education awards to 
national, State and local community service programs that can support 
most or all of the costs associated with managing the service of 
AmeriCorps members from sources other than the Corporation. Several 
commenters recommended that the final rule clarify the extent to which 
its provisions apply to Education Award Programs (EAP). One commenter 
recommended that EAP grantees be exempted from all ``irrelevant 
sections,'' including those referring to match generation, volunteer 
generation, evaluation, and health care.
    The final rule explicitly excludes Education Award Program grantees 
from its provisions where necessary, and as described herein.
EAP--Sustainability and Cost Effectiveness
    Several commenters opined that the discussion of sustainability and 
its related implementation simply should not apply to EAP grantees. 
These commenters believe that EAP programs are the epitome of 
sustainability, because they already manage programs with minimal 
financial assistance from the Federal Government, other than the 
education award that members receive for completing a term of service. 
In particular, these commenters opposed using cost per MSY as a 
selection criterion for Education Award Program grantees, as these 
grantees receive fixed amount grants of $400 per MSY currently. Two 
commenters indicated that EAP programs invest significant amounts of 
non-Corporation resources in their programs, and they are concerned 
that the Corporation has not recognized or rewarded that investment in 
considering program sustainability.

[[Page 39567]]

    In the final rule's selection criteria, the Corporation has 
retained Corporation cost per MSY as an important factor to consider in 
determining a program's cost-effectiveness for programs other than 
Education Award Program grantees. For Education Award Program grantees, 
the Corporation has included explicit language to make clear that 
Corporation cost per MSY is not a factor in considering their cost-
effectiveness. However, other measures of cost-effectiveness will apply 
to Education Award Program grants.
    The Corporation agrees that the EAP program is a clear example of a 
sustainable program from a financial perspective. The Corporation is 
aware of the significant financial contribution and investment that 
EAPs make in their programs and the relatively small amount of money 
they receive from the Corporation. The question, in evaluating EAP 
programs in the selection process, is the extent to which they can 
demonstrate sustainability in other ways. For example, an EAP program 
will fare better in the competitive process if it can show that its 
program is having a sustainable impact in the community, or its members 
are continuing to show, post-service, an ethic of service.
    One commenter asked whether the current $400 cost per MSY for EAP 
programs would be increased. Another commenter indicated that the 
Corporation's reporting requirements have become increasingly 
burdensome, while the cost per MSY for Education Award Programs has 
steadily declined. Whether or not to increase the $400 cost per MSY is 
outside the scope of this regulation. The Corporation, as indicated 
below, is committed to streamlining its reporting requirements while 
ensuring accountability and sustainability, and will continue to work 
towards that goal for all its grantees.
EAP--Member Service Activities
    Sections 2520.20 through 2520.55 of the final rule address 
allowable member service activities, and include a requirement that 
some component of each AmeriCorps program must involve recruiting or 
supporting volunteers. As discussed in part VI, encouraging more 
Americans to engage in service and volunteer activities is one of the 
pillars of our sustainability goals. Like any other AmeriCorps 
applicant, any EAP grantee that believes recruiting or supporting 
volunteers would fundamentally alter its program model may apply for a 
waiver of this requirement.
EAP--Non-Displacement of Volunteers
    The proposed rule stated that the service of an AmeriCorps member 
must complement, and may not displace, the service of other volunteers 
in the community, including partial displacement such as reducing a 
volunteer's hours. As discussed below in the section addressing the 
non-displacement of volunteers provision (Sec.  2540.100), the 
Corporation has amended that section to remove these particular 
references to volunteer hours, in favor of a broader focus on 
addressing unmet needs. The Corporation will enforce this rule for all 
AmeriCorps programs, including EAP programs.
EAP--Performance Measures
    The Corporation expects all its grantees, including EAP grantees, 
to adhere to performance reporting requirements. Performance measures 
are critical to demonstrating that national and community service 
programs are having their intended impact in our communities.
EAP--Evaluation
    The proposed rule clearly indicated that EAP grantees would not be 
required to perform an independent evaluation of their programs. The 
final rule, while not requiring an independent evaluation, will require 
EAP grantees to perform an internal program evaluation, and submit that 
evaluation with the appropriate recompete application. This provision 
is consistent with the requirements in the NCSA.

D. Professional Corps

    Professional Corps programs place members as teachers, nurses and 
other health care providers, police officers, early childhood 
development staff, engineers, or other professionals providing service 
to meet unmet needs in communities with an inadequate number of such 
professionals. Professional Corps programs pay 100 percent of the 
member support costs, but receive operating funds and an allocation of 
education awards for their members. Several commenters reiterated their 
desire that the Corporation establish separate application guidelines 
for professional corps programs to reflect the fact that they are 
responsible for 100 percent of the benefits paid to AmeriCorps members, 
and that their program model may be inconsistent with some of the 
general program requirements, such as volunteer recruitment and 
required training. The Corporation believes, however, that most program 
requirements can and should apply to all AmeriCorps programs, including 
Professional Corps programs, and therefore does not necessarily see a 
need for separate guidelines. If a program demonstrates, in its funding 
application, that its program design is incompatible with the 
requirement to recruit or support volunteers, the Corporation will 
consider waiving the requirement that programs recruit or support 
volunteers.
    In addition, the Corporation has already taken the extra step of 
soliciting proposals for Professional Corps programs in a separate 
NOFA, and envisions doing so again in the future. 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 all our AmeriCorps grant competitions. By 
grouping similar program models together in our selection process, the 
Corporation will ensure, to the maximum extent possible, that 
professional corps programs are evaluated together. The Corporation 
believes that all of these steps obviate the need for a separate set of 
application guidelines for professional corps programs.
    Several commenters asked whether the Corporation intends for all 
teaching fellows programs to apply under a professional corps NOFA, 
rather than as Education Awards programs. Professional corps may apply 
under other applicable NOFAs, such as AmeriCorps State, National, or 
EAP, in addition to any applicable Professional Corps only NOFA.

VI. Specifics of the Final Rule and Analysis of Comments

    As discussed in more detail below, the final rule:
     Defines the term ``target community'' as the geographic 
community in which an AmeriCorps grant applicant intends to address an 
identified unmet need.
     Defines the term ``recognized equivalent of a high-school 
diploma'' as including documents recognized for this purpose by the 
U.S. Department of Education.
     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.
     Increases, in an incremental and predictable fashion, the 
grantee's required share of program costs to a 50 percent overall match 
plateau over 10 years; provides alternative matching requirements for 
programs located in rural and severely economically

[[Page 39568]]

distressed communities, increasing the grantee's required share of 
program costs to a 35 percent overall match plateau over 10 years.
     Codifies that the amount of childcare payments the 
Corporation makes to an eligible provider on behalf of an AmeriCorps 
member may not exceed the amount authorized under the Child Care and 
Development Block Grant Act of 1990 (Pub. L. 101-508).
     Codifies the grant selection process and criteria.
     Clarifies how grantees are to calculate their budgeted 
Corporation cost per member service year (MSY).
     Codifies the Corporation's requirements for grantees to 
establish performance measures and to evaluate program outcomes, and 
establishes a grant amount threshold for required independent 
evaluations.
     Establishes qualifications for members serving as tutors 
and requirements for tutoring programs.
     Prohibits displacement of volunteers.
     Removes obsolete references to ``transitional entities'' 
serving as State commissions on national and community service.
     Broadens State commission flexibility to operate specified 
national service programs directly.

A. Definition of ``Target Community'' and ``Recognized Equivalent of a 
High-School Diploma'' (Sec.  2510.20)

Target Community
    In the proposed rule, the Corporation defined the term ``target 
community'' as the geographic community for which an AmeriCorps grant 
applicant identifies an unmet human need. The Corporation assumed that 
educational, environmental, and public safety needs were all subsumed 
within the term ``human need.''
    Two commenters interpreted this language as excluding educational, 
environmental, and public safety needs from the definition. In order to 
clarify our intent, the Corporation has amended the language to 
specifically include educational, environmental, and public safety 
needs (including disaster preparedness and response), in addition to 
other human needs. The Corporation has also made technical changes to 
the definition to make it clearer.
Recognized Equivalent of a High-School Diploma
    In reading the comments on the proposed tutor requirements, the 
Corporation concluded that grantees were not clear that the term 
``high-school diploma or its equivalent'' means more than simply a 
high-school diploma or a GED. For the sake of clarity, the Corporation 
is including a technical amendment to Sec.  2510.20 to clearly define 
what is a recognized equivalent to a high-school diploma. The 
definition incorporates the Department of Education's definition of the 
equivalent to a high-school diploma. Under the Department of 
Education's regulations (34 CFR Sec.  600.2), the equivalent to a high-
school diploma includes not only a GED, but also (1) a State 
certificate received by a student after the student has passed a State-
authorized examination that the State recognizes as the equivalent to a 
high-school diploma; (2) an academic transcript of a student who has 
successfully completed at least a two-year program that is acceptable 
for full credit towards a bachelor's degree; or (3) for a person 
seeking to enroll (or enrolled) in an educational program that leads to 
at least an associate degree or its equivalent and who has not 
completed high school but who excelled academically in high school, 
documentation that the student excelled academically in high school and 
has met the formalized, written policies of the institution for 
admitting such students.

B. Member Service Activities on Behalf of the Organization (Sec. Sec.  
2520.20 Through 2520.60)

    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. In the proposed regulation, the Corporation largely codified 
and clarified the Corporation's current guidelines and grant provisions 
on this issue. Specifically, the proposed rule clarified 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.
    Several commenters supported allowing AmeriCorps members to be 
involved in capacity-building, including fundraising activities. Others 
expressed concern that AmeriCorps may be diluting its mission by 
allowing members to engage in capacity building activities, rather than 
direct service exclusively. One commenter opposed members engaging in 
anything other than direct service, on the basis that partner 
organizations are providing matching resources for direct services 
provided onsite, such as tutoring during the school day. Another 
commenter expressed the hope that this policy of allowing member 
capacity-building activities remain an opportunity for programs, but 
not become a mandate.
    The principal purpose of AmeriCorps is still direct service and 
``getting things done'' in our communities and our country. With the 
exception of the requirement that programs recruit or support 
volunteers, the final rule does not require that programs allow members 
to engage in any other capacity-building activities. The final rule 
merely permits members to engage in such activities, at the discretion 
of the program. That said, the Corporation believes that AmeriCorps 
members and AmeriCorps funds have the ability to leverage resources and 
increase the capacity of the organizations with, and the communities in 
which, they serve. The Corporation sees no compelling reason to limit 
members only to direct service, as valuable as that is, when they could 
also be recruiting or supporting volunteers, helping to raise funds for 
their projects, and helping to build sustainable service in their 
communities. Because these activities promote sustainability, which is 
one of the primary reasons for this rulemaking, the final rule remains 
unchanged from the proposed rule in terms of permitting members to 
engage in both direct service and capacity-building activities.
    One commenter recommended adding K-12 education as a fifth example 
under ``developing collaborative relationships with other organizations 
working to achieve similar goals in the community'' in Sec.  
2520.30(b)(4). The Corporation agrees that including K-12 education in 
that section is appropriate, but believes that the broader category of 
``local education agencies or organizations'' is the most appropriate 
descriptor. Consequently, the Corporation has added ``local education 
agencies or organizations'' as a fifth example in Sec.  2520.30(b)(4).
AmeriCorps Members Serving With Faith-Based Organizations
    The Corporation received comments from several organizations about 
AmeriCorps members serving with faith-based organizations. Of the 
comments relating to matters in the proposed rule, one recommended that 
the Corporation clarify the final rule to ensure that activities on 
behalf of participating organizations meet statutory and constitutional 
safeguards regarding religious activity. Specifically, this commenter 
recommended that Sec. Sec.  2520.20 through 2520.65 be amended to 
acknowledge the statutory restrictions on member activities. Another

[[Page 39569]]

commenter recommended that the Corporation develop and provide clear 
guidance for AmeriCorps programs working with faith-based 
organizations.
    The redesignated section 2520.65 (formerly Sec.  2520.30) of the 
regulations addresses AmeriCorps members' prohibited activities, 
including those relating to religious activities. The Corporation 
believes that these prohibitions are sufficiently clear, and further 
that it would be outside the scope of this rulemaking process to amend 
them at this time.
    One commenter suggested that the regulations require faith-based 
organizations that receive AmeriCorps funds to establish a separate 
corporate structure to receive and segregate government funds and the 
capacity-building activities thereby supported. The Corporation 
disagrees with this suggestion. While an organization is free to 
establish a separate account for its Corporation funds, it would be 
unfair to require faith-based organizations to comply with these 
additional burdens. Except for the Education Award Program, which 
offers a modest fixed amount grant, the Corporation requires all its 
grantees to track their Corporation funds separately and to ensure that 
they use their Corporation funds only for reasonable and necessary 
expenses and permissible program activities.
Volunteer Recruitment or Support (Sec.  2520.35)
    One focus of Executive Order 13331 is leveraging Federal resources 
``to enable the recruitment and effective management of a larger number 
of volunteers than is currently possible.'' The proposed regulations 
clearly directed 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 in regulation is expected to encourage 
more Americans to engage in service and volunteer activities, and 
advance program goals.
    One commenter stated that its new homeland security program was 
successful because AmeriCorps became a tool for partnering with local 
American Red Cross chapters to maximize the effectiveness of community 
volunteers by offering them a structured, supervised and coordinated 
volunteer experience.
    On the other hand, several other commenters expressed reservations 
about the proposed requirement that programs recruit or support 
volunteers. One commenter stated that it would ``not be an effective 
use of resources to pull AmeriCorps into volunteer recruitment,'' and 
that the regulation should be broadened to allow AmeriCorps members to 
support existing volunteer efforts, rather than requiring every program 
to generate and recruit volunteers. The language in Sec.  2520.35 of 
the proposed rule specifically gives programs the option of recruiting 
or supporting volunteers--it does not require all programs to recruit 
volunteers. Some programs, for example, may not be able to recruit 
volunteers, but may be able to support volunteers recruited by other 
organizations. The Corporation, therefore, has not changed the language 
in this section of the final rule.
    Several commenters stated that the recruitment, supervision, and 
training of volunteers requires higher levels of training and 
management skills than members generally have, and detracts from direct 
service and service outcomes. One of these commenters suggested that 
the Corporation encourage volunteer recruitment, rather than require 
it. Another commenter stated that the Corporation should not stress 
sheer numbers of volunteers to the detriment of quality service and 
effectiveness. In particular, this commenter suggested that the 
Corporation should guard against taxing the volunteer base beyond its 
capacity, bearing in mind that all its streams of service, including 
AmeriCorps State and National, AmeriCorps VISTA, Learn and Serve, as 
well as Citizen Corps, America's Promise, and the Points of Light 
Foundation, are recruiting from the same pool of potential volunteers.
    As stated in the proposed rule, the Corporation does not intend for 
this requirement to distract from an organization's mission, nor do we 
expect grantees to replace direct service with volunteer generation and 
other capacity-building activities. In most cases, direct service and 
volunteer recruitment or support 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 strongly believes that most, if not all, programs can 
support the goal of increasing and supporting volunteering in this 
country.
    As discussed in the proposed rule, however, the Corporation 
recognizes 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 significant volunteer 
recruitment or support in their program model, and the Corporation will 
take these and other factors into account in considering requests to 
waive the requirement that programs recruit or support volunteers.
    The Corporation is maintaining the requirement that programs 
recruit or support volunteers as currently drafted. We believe that 
requiring programs to recruit or support volunteers is central to the 
Corporation's mission of leveraging resources.
    One commenter was concerned that many of the member activities 
permitted by the proposed rule are currently activities performed 
either by volunteers or employees. This commenter, therefore, read the 
proposed rule as encouraging displacement of volunteers and employees. 
In fact, the Corporation prohibits displacement of volunteers and 
employees. The Corporation only funds programs whose activities add 
value beyond what would occur in the absence of our funding. Any 
program that simply replaces volunteers or staff with AmeriCorps 
members performing the same activities will, by definition, be unable 
to demonstrate that its program adds value and meets unmet needs in the 
community.
    One commenter saw a disparity between full-time programs and part-
time programs in terms of their ability to recruit and support 
volunteers, and the potential for the Corporation to favor full-time 
programs. This commenter's view was that a full-time program has more 
resources upon which to draw when recruiting volunteers and thus an 
advantage in the grant selection process. The Corporation does not 
favor full-time over part-time programs, or vice versa. The Corporation 
seeks to achieve the best use of its resources in light of priorities 
and funding constraints. In applying its selection criteria, the 
Corporation has sought to take into account similarities and 
differences between programs, including part-time and full-time 
programs. A program of members serving less than full-time would have 
the opportunity to articulate in its application the challenges it 
faces in meeting any particular requirement or selection criterion, 
including the volunteer support requirement.
    Several commenters asked whether a program in which AmeriCorps 
teaching fellows guide K-12 students in a service-learning project 
could count those students as volunteers for purposes of the volunteer 
support

[[Page 39570]]

component. These commenters said that most Teaching Fellows Programs 
have a service-learning requirement and that, given the increasing use 
of service-learning in K-12 schools as a way to connect academic 
learning to service, it would be helpful to see this reflected in the 
new rule. One commenter recommended that the section be renamed 
``Volunteer Recruitment or Service Learning'' to ensure that AmeriCorps 
won't be criticized for counting mandatory K-12 class activities as 
``volunteer'' work.
    The Corporation intends to interpret the requirement that programs 
recruit or support volunteers broadly so as to allow a program to count 
as volunteers any volunteer activity generated, supported, or 
coordinated by its AmeriCorps members for purposes of requirement. A 
program could therefore expect to count as volunteers students engaged 
in service-learning projects under the supervision of AmeriCorps 
members. The Corporation does not believe it is necessary to rename the 
regulatory section to specifically include service-learning, as we will 
broadly interpret the term ``volunteers,'' as used in this section.
Waiver of Requirement To Recruit or Support Volunteers
    Several commenters requested that the Corporation clearly define 
the method and timing for requesting a waiver from the requirement to 
recruit or support volunteers, and implement it as part of a pre-
application process. Three commenters added that the rule should 
clearly state that applying for a waiver will not negatively affect a 
proposal's success in the grant selection process.
    The Corporation views volunteer recruitment and support as both a 
requirement and a competitive criterion in the grant selection process. 
The Corporation expects that a program that believes it is unable to 
fulfill the requirement to support or recruit volunteers will address 
that inability in its application and thereby request a waiver from the 
requirement. While a waiver request itself will not disadvantage an 
applicant, failure to address volunteer recruitment or support at all 
will be a disadvantage in the grant selection process. That said, the 
extent to which a program recruits or supports volunteers is but one 
criterion in the grant selection process--the Corporation does not 
expect that every applicant will be able to meet or demonstrate it can 
fulfill every criterion. In order to succeed in a competitive grant 
making process, a program unable to include volunteer recruitment or 
support will simply have to deliver more with respect to other 
selection criteria.
    If the Corporation is ready to negotiate an applicant's award, and 
the applicant has requested a waiver, the Corporation will then decide 
whether to relieve the particular program of the requirement to support 
or recruit volunteers. The Corporation needs the flexibility, in 
building our portfolio, to balance the types of programs we will fund. 
Providing a pre-application waiver, which would essentially entail 
reviewing an applicant's entire application outside of the competitive 
process to assess the program design, would undermine our ability to 
achieve that balance. Furthermore, it would not be the best use of our 
resources to consider waiver requests for applications that we have not 
yet determined to be of sufficient quality to receive funding.
    The Corporation reiterates, however, that a State commission can 
require its subgrantees to include volunteer recruitment and support, 
without regard to whether the Corporation might be willing to waive the 
requirement. Applicants applying for funding through a State commission 
will be required to request a waiver from the requirement to support or 
recruit volunteers through the State commission. We expect a commission 
to forward requests for waivers only from those applicants for whom the 
commission has approved the initial request. The Corporation will leave 
to State commissions the determination of whether a formula applicant 
effectively makes the case for a waiver from the requirement to support 
or recruit volunteers, but expects State commissions to make these 
decisions judiciously. The Corporation will include waiver application 
instructions in the grant application instructions.
Fundraising (Sec.  2520.40)
    The proposed regulation also clarified that AmeriCorps members may 
help organizations raise resources directly in support of service 
activities that meet local environmental, educational, public safety, 
homeland security, or other human needs. The proposed rule allowed 
members to 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. It also allowed members to 
write grant applications excepting those for AmeriCorps or any other 
Federal funding. The Corporation believes that these activities could 
enhance the use of AmeriCorps members to build the capacity of 
nonprofit organizations, and advance the professional development of 
the members themselves.
    The proposed rule's provisions governing fundraising were more 
flexible for AmeriCorps members than those for grantee staff, who are 
subject to Federal cost principles described in the Office of 
Management and Budget Circulars that generally disallow costs incurred 
in organized fundraising.
    Several commenters were supportive of AmeriCorps members being 
allowed to engage in fundraising, but had areas of concern. In 
particular, several commenters felt it was as important for program 
staff to be allowed to engage in fundraising on AmeriCorps time. 
Specifically, some commenters opined that if members may engage in 
fundraising, staff must be able to do so in order to coach, train, and 
supervise the members, and that absence of this ability for staff may 
fail to produce positive results.
    The OMB circulars set the parameters for allowable expenses and 
specifically identify the cost of development officers and fundraising 
staff as unallowable expenses. It would be inconsistent with 
government-wide rules for the Corporation to allow otherwise. Thus, the 
final rule is the same as the proposed rule with respect to the 
restrictions on staff fundraising.
    One commenter stated that the language in Sec.  2520.40(a) and 
(c)(1) implies that members may raise resources for program operating 
expenses, including staff salaries, travel, supplies, and, equipment. 
At most non-profit agencies, according to this commenter, this type of 
fundraising is the responsibility of paid staff. The Corporation's 
intent is merely to give grantees flexibility to allow members to 
engage in fundraising for reasonable and necessary costs attributable 
to the AmeriCorps project, which may, in certain circumstances include 
the type of expenses this commenter has listed. The Corporation is, in 
no way, requiring that members engage in fundraising. If programs do 
use members for fundraising, the programs will nonetheless have to 
ensure they can continue to meet performance expectations and show 
results.
    One commenter suggested that the rule specifically allow members to 
engage more broadly in organized fundraising, ``including financial 
campaigns, endowment drives, solicitation of gifts and bequests'' and 
similar activities performed ``solely to raise capital or obtain 
contributions.'' The Corporation's intention was to limit member 
fundraising to support for the program or project with which they are

[[Page 39571]]

serving, and its approved program objectives. Member fundraising was 
not intended to support on-going broad organizational fundraising 
objectives. The final rule does not incorporate the suggested change.
    Two commenters questioned the efficiency and cost effectiveness of 
having members help with fundraising. One stated that fundraising is a 
skill that requires contacts and grant writing abilities that develop 
over several years. The other commenter felt that many organizations 
use professional fundraisers and that the obstacle to raising resources 
is not lack of volunteer fundraisers, but rather the economy. The 
Corporation takes no position on whether or not having members engage 
in fundraising is efficient. Some organizations with limited resources 
may find it useful to use AmeriCorps members for some limited 
fundraising. Other organizations may not. Ultimately, it is up to the 
individual program to decide whether, and to what extent, to allow 
members to engage in fundraising activities. If a program does intend 
for its members to engage in fundraising, the program should inform 
prospective members that fundraising will be one of their activities. 
The Corporation's goal is simply to increase the flexibility of the 
rules in this area to enable programs to achieve results.
    One commenter asked that the Corporation clarify that including 
member fundraising in a program design will not advantage that program 
in the AmeriCorps grant selection process. The Corporation will not 
consider member fundraising as a competitive factor in selecting 
applicants, and an applicant's decision to have or not have members 
fundraise will not have a bearing on the selection process. While the 
Corporation will not judge whether a program chooses to have members 
engage in fundraising activities, we may assess, either during review 
or as part of our monitoring and oversight function, whether the 
fundraising activities are reasonably connected to the program's 
ability to carry out its objectives and meet its performance measures.
Limitation on Time Spent Fundraising (Sec.  2520.45)
    In the proposed rule, the Corporation limited the time any 
individual member may spend fundraising to not more than 10 percent of 
that member's term of service. Several commenters requested that the 
Corporation define recordkeeping requirements for tracking member 
fundraising and ensure that they are not overly burdensome to programs. 
The Corporation will require programs to identify fundraising on member 
time-sheets, just as they currently identify hours that members spend 
training. Again, member fundraising is an option, not a requirement. If 
a program chooses to have members engage in fundraising, the program 
must track and report on the number of hours members spend on 
fundraising activities.
    Several commenters believed that the 10 percent cap on hours spent 
fundraising should be counted in the aggregate across the program, as 
it has been for training and education activities, rather than member-
by-member. Another commenter proposed that members be allowed to exceed 
10 percent of their time on fundraising when fundraising activities are 
geared toward efforts to build organizational capacity and expand 
services. The Corporation's goal in establishing a member-by-member 
limit is to ensure that any one member does not spend a 
disproportionate number of hours on fundraising activities. 
Consequently, the Corporation has left the 10 percent limit on a per-
member basis. In addition, the Corporation considers 10 percent, or the 
equivalent of 170 hours for the average full-time member, as sufficient 
to allow for a meaningful member contribution in this area. The 
Corporation, therefore, has not increased the maximum allowable 
percentage in the final rule.
Clerical and Administrative Activities (Sec.  2520.65 in Proposed Rule)
    Prior to issuing the proposed rule, the general rule prohibited 
AmeriCorps members from engaging in clerical activities as part of 
their service, except if incidental to direct service, or if the 
Corporation authorized otherwise in connection with homeland security 
or other activities. The general expectation and practice among 
AmeriCorps grantees was that members did not perform clerical 
activities, except as an incidental part of their direct service. In 
the proposed rule, the Corporation increased grantees' ability to allow 
members to perform clerical activities, up to a 10 percent cap of each 
member's term of service.
    Many commenters opposed allowing members to perform any 
administrative duties. One commenter was concerned that this provision 
would create an incentive to take members away from direct service 
activities. Two other commenters were concerned about members 
supplanting the duties formerly performed by employees. Another 
commenter was concerned about the administrative burden of keeping 
records to document compliance with this limitation. Another was 
concerned that one of the reasons that individuals join AmeriCorps is 
because they believe they will be doing real service work and making a 
difference, and not to do clerical work as part of their regularly 
expected or scheduled activities.
    The Corporation agrees that the proposed rule did not sufficiently 
consider the potential for these and other unintended consequences. The 
Corporation is, therefore, removing from the final rule Sec.  2520.65 
that would allow 10 percent of a member's term of service to be spent 
on administrative activities, and thereby returning to the current 
policy. The common expectation among program directors and AmeriCorps 
members should be that members may not engage in unreasonable amounts 
of clerical activities, except in exceptional circumstances as approved 
by the Corporation. The Corporation believes that the best way to 
resolve issues relating to members engaging in more significant 
clerical activities is for Corporation staff to address them on a case-
by-case basis directly with grantees as a program quality issue. In 
limited circumstances, the Corporation may approve a member performing 
more extensive clerical duties in connection with disaster relief, or 
other compelling community needs. For example, we might approve a 
member engaging in some limited amount of clerical activities to lend 
support to an organization whose regular staff has been called up in 
the armed forces. On the other hand, it would be inappropriate for an 
individual to be performing clerical work for extended periods as a 
part of his or her daily responsibilities in a program not faced with a 
compelling need as described above.
Fee-for-Service Activities (Sec.  2520.55)
    The proposed rule authorized programs, where appropriate, to 
collect fees for services provided by AmeriCorps members. One commenter 
was concerned that allowing fee-for-service in AmeriCorps programs 
could result in programs competing with other nonprofits and for-
profits. The Corporation, consistent with government-wide OMB 
circulars, has always allowed fee-for-service activities under limited 
circumstances. For example, an AmeriCorps program that provides 
inoculations might reasonably charge a nominal fee for providing flu 
shots, in order to defray costs of the medication. The Corporation does 
not anticipate that programs will charge the public for every service 
they provide. In addition, the Corporation's goal is to fund programs 
meeting unmet needs. We, therefore, do not anticipate

[[Page 39572]]

programs will be providing a service that already exists elsewhere in 
the program's community. For sake of clarity, the Corporation has 
modified the language in Sec.  2520.55 to state that organizations may 
choose to collect fees for service under certain circumstances, rather 
than encouraging them to do so. The final rule maintains the language 
from the proposed rule that fees-for-service must be considered program 
income and used to finance the program's non-Corporation share of 
costs.
``80/20 Rule'' and Education and Training Activities (Sec.  2520.50)
    In the proposed rule, the Corporation codified its longstanding 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. Two commenters opposed the 20 
percent limit for training and educational activities, particularly for 
programs engaged in tutoring. One of these commenters asked that the 
limit be raised to 25 percent; the other asked that it be raised to 30 
percent. The Corporation continues to believe that 20 percent is an 
appropriate limit on training and education activities to ensure that 
programs are able to meet their programmatic objectives, and the final 
rule remains unchanged in that regard. However, the Corporation is 
establishing the base for the aggregate 20% limitation as the number of 
hours members agree to perform in their term of service, as reflected 
upon their enrollment in the National Service Trust. This clarification 
will alleviate the audit problem programs face when members are 
released from the program before completing the agreed-upon term of 
service, and the program has provided a large part of its training 
agenda at the beginning if the program year.

C. Increase in Required Grantee Share of Program Costs (Sec. Sec.  
2521.35 Through 2521.90)

    Sections 121 and 140 of the Act require an AmeriCorps grantee to 
provide not less than 25 percent of operating costs and 15 percent of 
member support costs. The Corporation has the discretion under the 
statute to increase the minimum grantee share of costs, and did so in 
1996, when we increased the grantee share of operating costs from 25 
percent to 33 percent.
    Section 130 of the Act explicitly authorizes the Corporation to ask 
an organization applying for renewal of assistance (or ``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, 
including most recently the Consolidated Appropriations Act for fiscal 
year 2005, 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, the proposed rule increased, in a predictable and 
incremental fashion, the grantee share of program costs to a 50 percent 
aggregate (overall) level by the 10th year in which an organization 
receives AmeriCorps funding. Under the proposed rule, each grantee was 
required to meet the current minimum requirements of 33 percent match 
(cash or in-kind) for operating costs and at least 15 percent match 
(non-Federal cash only, except for health care benefits) for member 
support costs. After meeting those minimum requirements, the grantee 
could meet the balance of its aggregate share of costs through any 
combination of operating or member support matching resources.
    To avoid confusion about the terms ``aggregate share'' and 
``aggregate match'' as used in the proposed rule, the Corporation has 
changed the terminology in the final rule to refer to an ``overall 
match'' or ``overall share.'' The overall match or share is the total 
of the program operating costs match and the member support match that 
the program must provide starting in the fourth year the program 
receives a grant. For example, consider an AmeriCorps grant with a 
total budget of $400,000--$200,000 for member support that includes 
such items as the living allowance, FICA, worker's compensation, 
unemployment insurance, and health care costs, and $200,000 for program 
operating costs that includes staff, operating, and administrative 
costs. Current matching requirements would call for this grantee to 
provide at least 15 percent of member support costs ($30,000) and 33 
percent of operating costs ($66,000). In this example, the minimum 
overall grantee share is $96,000, or about 25 percent. By year 10 with 
the same total budget, the program must provide $200,000 overall 
towards the $400,000 budget.
    In the proposed rule, the new matching requirements began in the 
fourth year and increased in each year thereafter in which an 
organization received a program grant up to a 50% overall match by the 
tenth year an organization continued to receive funding for the 
project.
    The proposed rule established that a current grantee or subgrantee 
that had received an AmeriCorps grant for one or more 3-year grant 
cycles at the time the regulation takes effect would begin meeting the 
match requirements at the year three level. So, for example, an 
organization that is in its fourth year of AmeriCorps funding when the 
regulation takes effect would remain under the existing requirement in 
the first year the new rule is in effect. In the second year the new 
rule is in effect, the grantee would be considered in year 4 on the new 
matching scale and its overall share would begin to increase in regular 
increments.
    The proposed rule signaled the Corporation's intent to provide 
training and technical assistance to grantees to assist them in 
achieving their matching goals. We also committed to consulting with 
grantees to determine the most useful and appropriate training and 
technical assistance.
    In the proposed rule, we indicated that we believe it is reasonable 
to expect most grantees to achieve the increased level of matching, and 
stated our expectation that State commissions continue to manage their 
portfolios to achieve even higher match levels.
Increased Match Requirements
    Over 70 commenters addressed the proposed increase in match. 
Several commenters supported the proposed share increase in principle 
or as an overall strategy. One commission stated that increasing a 
program's match requirement each year strengthens the program's 
connection to the local community and increases the buy-in of program 
sponsors. Several commenters specifically indicated that their 
organizations would not have trouble meeting the new match 
requirements, but they were concerned about the effect of the new rule 
on other organizations, particularly those in rural and severely 
economically-distressed areas. One commission indicated that programs 
in its State would not have a problem meeting the in-kind match 
requirements, but would have trouble meeting the cash match requirement 
over time. In response to this last comment, a grantee's cash match 
requirement may not necessarily increase over time. Once a grantee 
meets the minimum 15 percent non-Federal cash match for member support 
costs, the grantee may meet the balance of its

[[Page 39573]]

overall share of costs through any combination of operating and member 
support matching resources, including in-kind donations, provided that 
the resources meet the criteria of 45 CFR 2541.240 or 45 CFR 2543.23, 
as applicable.
    Most commenters on this issue opposed the proposed match increases. 
Most of these commenters viewed the increased match as inconsistent 
with the long-term stated goal of creating ``a framework for long-term 
growth and sustainability of the AmeriCorps program as a public-private 
partnership.'' Many commenters stated that ``in the current 
philanthropic climate, increasing the match requirements for AmeriCorps 
programs will destabilize those programs and force many out of 
existence.'' One commenter viewed the progressive match increases as 
``steps toward de-funding * * * without any consideration for need and 
the impact of the services provided.'' The Corporation, however, 
continues to believe that an important piece of sustainability is 
decreasing reliance on Federal funding, and increasing the capacity of 
organizations operating AmeriCorps programs to assume more of the cost. 
This will make existing grantees stronger and more tied to their 
communities, while allowing the Corporation to satisfy Congressional 
direction, invest in new programs, and expand the reach of national and 
community service. The Corporation does agree that there is a point at 
which match requirements can become de-stabilizing, but a 50 percent 
overall share does not reach that point. In addition, Congress has 
consistently directed the Corporation to ``increase significantly the 
level of matching funds and in-kind contribution provided by the 
private sector.'' The Corporation is, therefore, maintaining the match 
requirements as drafted in the proposed rule, according to the 
following table, except for programs in rural or severely economically 
distressed communities, which we address more fully later:

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

    The final rule clarifies that, as is currently the case, a grantee 
will be held to its matching requirements at grant closeout--usually at 
the end of each three-year grant cycle. At that time, the grantee must 
have contributed match in an amount equal to the combined total of each 
year's required match amounts. For example, if a grantee begins a 
recompeting program grant matching at the year 4 level (26 percent) and 
has a grant in the amount of $100,000 in the first year, $110,000 in 
the second year, and $115,000 in the third year, the grantee would be 
responsible at the end of the three-year grant for a total of $98,100 
in match (the sum of 26 percent of $100,000 in the first year, 30 
percent of $110,000 in the second year, and 34 percent of $115,000 in 
the third year.) The Corporation does not necessarily expect the 
grantee to provide match on a year-by-year basis according to the 
schedule, as long as the total match at the end of the three-year grant 
meets the regulatory requirements. If the grantee does not reach the 26 
percent threshold of $100,000, or of actual expenditures, in the first 
year of the grant (year 4 on the matching scale), but makes up the 
difference by matching more than the amount required in year 2 or year 
3 (year 5 or year 6 on the matching scale) such that the cumulative 
match across the three years meets the requirement, the grantee will be 
in compliance and will not be required to repay funds.
    Several commenters indicated that the increased match requirements 
will force program staff to spend more time on the administrative 
burdens of raising and documenting match, which will directly impact 
member attrition, service hours, training and education, and 
programmatic outcomes. Many programs, however, have demonstrated that 
they can exceed the expected match levels without adverse results. Our 
common challenge is to share best practices to achieve both 
sustainability goals and improve program outcomes. For example, at 
least eight State commissions already have match requirements that are 
more stringent than the Corporation's current requirements.
    One commenter questioned how the Corporation plans to use training 
and technical assistance to help programs that cannot meet the 50 
percent match. In response, the Corporation reiterates its intent to 
target training and technical assistance to assist grantees having 
difficulty raising match. The Corporation will consult with grantees 
regarding the issues that training and technical assistance should 
address, and how best to deliver such training and technical 
assistance.
Timetable for Match Increases
    One commenter supported the 3-year ``establishment phase'' during 
which the grantee share for new programs remains unchanged and 
``grandfathering'' existing programs into the match schedule at the 
year 3 level.
    A few commenters requested clarification as to what the match 
requirements would be for current programs that have completed one or 
more 3-year grant cycles on the date the regulation takes effect and 
how the ``N/A'' applies to a program beginning its match requirements 
at the year three level. In years 1 through 3 that an organization 
receives a grant, it is required only to meet the minimum 15 percent 
member support, and 33 percent operational costs match requirements. 
There is no overall match for years 1 through 3--hence the ``N/A.'' In 
each year from year 4 on, once a grantee has met the minimum 15 percent 
and 33 percent as described above, it may meet the additional match in 
whatever combination of additional member support or operational costs 
match it deems appropriate. Any program that has received 3 or more 
years of AmeriCorps funding on the date the regulation takes effect 
will begin matching at the year 3 level (meeting the minimum matches in 
member support and operating costs). These programs will, therefore, 
have another 7 years before their overall match requirement reaches the 
maximum 50 percent match. A new program will be required to meet the 15 
percent and 33 percent minimum match requirements for member support 
and program operating costs during its first three-year grant period, 
and the required overall match in year 4 and beyond, unless the program 
receives a waiver. The Corporation has not amended the final rule on 
this point.
    The following table reflects when and how the new match 
requirements will take effect:

[[Page 39574]]



------------------------------------------------------------------------
                                                         Then, you will
                                                       begin matching in
    If in the 2005 program year, your program has       the 2005 program
   received AmeriCorps funding for this many years     year at this year
                                                             level
------------------------------------------------------------------------
0....................................................                  1
1....................................................                  2
2....................................................                  3
3....................................................                  3
4 or more............................................                  3
------------------------------------------------------------------------

Impact of Match Requirements on Small, Economically-Distressed, and 
Rural Communities
    Many commenters raised concerns about the impact of the 
sustainability requirements on small, economically-distressed, and 
rural communities. One representative of a commission in a largely 
rural State was concerned that the increased match requirements would 
eventually mean that no programs would exist in that commission's State 
because of the lack of resources. Another State specifically requested 
that its ``unique geography, weather, population, and general 
remoteness be reflected in the application of the new regulations, 
either granting [the State] an exception for sustainability rules or 
creating a less onerous sliding scale.''
    While the Corporation continues to believe that most programs can 
meet the requirements as stated in the proposed rule, the Corporation 
is concerned about the impact this rule could have on programs 
operating in rural and economically distressed areas across the 
country. The Corporation wishes to increase AmeriCorps participation in 
those areas and is concerned that a ``one-size fits all'' approach to 
the match might contravene that goal.
    After much deliberation and consideration of the comments on this 
issue, the Corporation has developed an alternative match schedule 
that, while still requiring increases over time, does so more gradually 
up to a 35 percent overall match requirement in the tenth year an 
organization receives AmeriCorps funding. The Corporation will 
authorize the alternative match scale for programs that demonstrate 
they are in rural or severely economically distressed communities, and 
that they need the lower match requirement. This alternative match 
schedule will not be available to programs that the Corporation 
believes are able to meet the regular match requirements. For example, 
a program that historically has demonstrated its ability to meet the 
higher match will continue to be required to do so, even if it is 
located in a rural or severely economically distressed community. The 
alternative match requirement will allow programs in rural and severely 
economically distressed communities to provide match over 10 years at a 
lower rate than other programs, but still increase their overall match 
levels over time. The alternative match requirement will be in effect 
for the duration of the three-year grant period. A program that 
qualifies for the alternative match requirement will have to reapply to 
extend the alternative match requirement for any subsequent recompete 
application.
    The alternative match scale for programs in rural or severely 
economically distressed communities will incrementally increase 
beginning in the seventh year the organization receives AmeriCorps 
funding and reach 35 percent by the tenth year the organization 
receives AmeriCorps funding. The following table summarizes the 
alternative match requirements for these programs:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                Year  10
                                              Year 1     Year 2     Year 3     Year 4     Year 5     Year 6     Year 7     Year 8     Year 9     and on
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum Overall Share.....................        N/A        N/A        N/A        N/A        N/A        N/A        29%        31%        33%        35%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The alternative match requirement is designed to address the 
specific circumstances of programs that must primarily conduct their 
fundraising in low resource areas. The Corporation believes that this 
alternative lower match scale for the programs in our neediest 
communities will allow such programs to begin, or continue to 
participate in AmeriCorps and meet those communities' unmet needs.
Qualifying for Alternative Match Requirement as Rural
    In determining whether a program is rural, the Corporation intends 
initially to consider the most recent Beale code rating published by 
the U.S. Department of Agriculture for the county in which the program 
is located. Any program located in a county with a Beale code of 6, 7, 
8, or 9 will be eligible to apply for the alternative match 
requirement. The table below provides definitions for each Beale code.

                                                2003 Beale Codes
----------------------------------------------------------------------------------------------------------------
               Code                         Metro type                            Description
----------------------------------------------------------------------------------------------------------------
1.................................  Metro....................  Counties in metro areas of 1 million population
                                                                or more.
2.................................  Metro....................  Counties in metro areas of 250,000 to 1 million
                                                                population.
3.................................  Metro....................  Counties in metro areas of fewer than 250,000
                                                                population.
4.................................  Non-metro................  Urban population of 20,000 or more, adjacent to a
                                                                metro area.
5.................................  Non-metro................  Urban population of 20,000 or more, not adjacent
                                                                to a metro area.
6.................................  Non-metro................  Urban population of 2,500 to 19,999, adjacent to
                                                                a metro area.
7.................................  Non-metro................  Urban population of 2,500 to 19,999, not adjacent
                                                                to a metro area.
8.................................  Non-metro................  Completely rural or less than 2,500 urban
                                                                population, adjacent to a metro area.
9.................................  Non-metro................  Completely rural or less than 2,500 urban
                                                                population, not adjacent to a metro area.
----------------------------------------------------------------------------------------------------------------


[[Page 39575]]

Qualifying for Alternative Match Requirement as Severely Economically-
Distressed
    In determining whether a program is located in a severely 
economically-distressed county, the Corporation intends initially to 
consider the following county-level characteristics: County-level per 
capita income is less than or equal to 75 percent of the national 
average for all counties using the most recent census data or Bureau of 
Economic Analysis data; the county-level poverty rate is equal to or 
greater than 125 percent of the national average for all counties using 
the most recent census data; and county-level unemployment is above the 
national average for all counties for the previous 12 months using the 
most recently available Bureau of Labor Statistics data.
    The following table provides the website addresses where the 
publicly-available information referred to above can be found:

----------------------------------------------------------------------------------------------------------------
                    Web site address                                           Explanation
----------------------------------------------------------------------------------------------------------------
www.econdata.net.......................................  Econdata.Net: This site links to a variety of social
                                                          and economic data by States, counties and metro areas.
www.bea.doc.gov/bea/regional/rei.......................  Bureau of Economic Analysis' Regional Economic
                                                          Information System (REIS): Provides data on per capita
                                                          income by county for all States except Puerto Rico.
www.census.gov/hhes/www/saipe/index.html...............  Census Bureau's Small Area Poverty Estimates: Provides
                                                          data on poverty and population estimates by county for
                                                          all States except Puerto Rico.
www.census.gov/main/www/cen2000.html...................  Census Bureau's American Fact-finder: Provides all 1990
                                                          and 2000 census data including estimates on poverty,
                                                          per capita income and unemployment by counties,
                                                          States, and metro areas including Puerto Rico.
www.bls.gov/lau/home.htm...............................  Bureau of Labor Statistics' Local Area Unemployment
                                                          Statistics (LAUS): Provides data on annual and monthly
                                                          employment and unemployment by counties for all States
                                                          including Puerto Rico.
http://www.ers.usda.gov/Data/RuralUrbanContinuumCodes/.  U.S. Department of Agriculture's Rural-Urban Continuum
                                                          Codes (Beale codes): Provides urban rural code for all
                                                          counties in U.S.
----------------------------------------------------------------------------------------------------------------

    The location of a program will be determined by the legal 
applicant's address, except where the Corporation in its sole 
discretion determines that some other address is more appropriate. If a 
particular legal applicant believes that its address or the use of 
county-level data is not the appropriate way to determine the program's 
location or its funding environment, the applicant may make its case to 
the Corporation as to why the Corporation should consider the program 
location differently and the basis for requesting the alternative match 
requirement. An example might include a program located in a more 
affluent or urban area but with a majority of its members serving at 
sites located in rural or severely economically distressed counties and 
whose fundraising primarily occurs in those counties through matching 
contributions from the sites. The Corporation will disseminate 
instructions on how to apply for the alternative match schedule in the 
AmeriCorps application instructions.
    Note that the alternative match schedule for programs in rural and 
severely economically distressed counties does not replace the 
Corporation's existing statutory authority to waive match based on a 
demonstrated lack of resources at the local level (Sec.  2521.70). The 
Corporation accepts requests for waivers from any program unable to 
meet its match requirements if the waiver would be equitable due to 
lack of available financial resources at the local level. However, the 
Corporation provides these waivers only in extreme circumstances, and 
only when it would be equitable. The burden is on the grantee to 
demonstrate the unique lack of resources in its community that would 
support the Corporation's granting a waiver equitably.
Intermediaries
    The Corporation received several comments from intermediary 
organizations expressing concern that the 50 percent match requirement 
would hamper their ability to provide service to communities through a 
changing portfolio of new and small community organizations, including 
faith-based. The Corporation believes that the higher match may be 
difficult for some organizations that regularly bring on new small 
sites that themselves contribute matching funds to meet matching 
requirements. Many faith-based and small-community based organizations 
are only able to participate in AmeriCorps through this type of 
intermediary organization that has the infrastructure to manage all the 
Corporation's requirements. The Corporation is concerned that the 
increase in match requirements to 50 percent over 10 years could create 
a barrier to those organizations' continued participation in 
AmeriCorps.
    However, in attempting to craft regulatory language that addresses 
this issue, the Corporation was unable to adequately define 
``intermediary organizations'' without the rule becoming either over-
inclusive, or, alternately, inappropriately inciting organizations to 
change their business model. Moreover, after close analysis, the 
Corporation does not believe it necessary to make substantive changes 
to the regulations to accommodate these types of organizations, as the 
Corporation may use its statutory waiver authority to accommodate an 
organization that is having difficulty meeting its match requirements 
due to lack of resources at the local level.
    The Corporation will consider waiving the higher match requirements 
for this type of intermediary if the intermediary demonstrates (1) that 
the majority of its members are placed in new organizations or small 
faith-based and other community organizations, and (2) the intermediary 
derives its matching funds substantially from the contributions of 
placement organizations that are unable to generate the higher match 
amounts.
    One commenter suggested that the proposed match requirements would 
have a disproportionate impact on community organizations, including 
faith-based organizations, and thus, could violate section 104 of the 
Temporary Aid for Needy Families legislation (TANF), better known as 
``charitable choice.'' The Corporation is committed to equal protection 
and the expansion of opportunities for involvement by community

[[Page 39576]]

organizations, including faith-based organizations, and believes that 
this final rule includes several refinements that help to achieve those 
goals. These include (1) the Corporation's plan to review similar 
program models together in the selection process; (2) special 
consideration in the selection process for programs operated by, or 
involving, community organizations, including faith-based 
organizations; and (3) the ability of members to engage in capacity-
building activities. In addition, the Corporation's waiver authority, 
as discussed above, will enable the Corporation to adjust match 
requirements under limited circumstances. The Corporation will continue 
to look for effective ways to include community organizations, 
including faith-based organizations, in national and community service.
Definition of ``Grantee'' for Purposes of Match Requirements
    Several commenters asked that the Corporation clarify to whom the 
matching requirements apply. The Corporation has added a new section 
2521.40 to clarify that matching requirements apply to subgrantees of 
State commissions and direct program grantees of the Corporation. The 
Corporation will hold State commissions to an aggregate overall match 
based on the matching levels of all its subgrantees, which will be 
adjusted annually to reflect the annual change in each of the 
commission's subgrantee's share of costs. A State commission will be 
required to repay funds to the Corporation if, in the aggregate, the 
commission's subgrantees do not meet their match requirements under 
these regulations. The Corporation will expect the State commissions to 
monitor match requirements for their subgrantees and ensure that 
individual subgrantees are meeting their match requirements. The 
Corporation will review subgrantee match levels when an organization 
recompetes for AmeriCorps funding. At that point, the Corporation will 
consider an applicant's success in meeting both its budgeted match 
(match as reflected in an applicant's grant application budget) and 
regulatory match requirements (match as required under these 
regulations).
    Some national direct organizations requested that the match 
requirements be imposed at the parent organization (for multi-State 
grantees) level, while others believed that it would be more consistent 
to apply them at the sub-grantee or site level. One commenter noted 
that national directs need the flexibility to match at the grantee 
level rather than the operating site level, where resources may be more 
limited. The Corporation believes that the responsible entity for 
meeting the increased match requirements is the parent organization; 
however, the parent can choose either to pass down the match 
requirements or use a portfolio strategy to manage the match 
requirements across its sites.
    Two commenters specifically noted that tracking a program's match 
requirements based on the applicant organization's Employer 
Identification Number (EIN) penalizes large organizations that support 
a number of programs. The Corporation agrees that the EIN is not the 
appropriate identifier to track program match. For purposes of 
determining the applicable match schedule, the Corporation will 
determine tenure based on the particular grant and project, rather than 
legal applicant. The Corporation is modifying its grants management 
systems to enable us to track the longevity of each program. Thus, one 
legal applicant will, theoretically, be able to receive funding for two 
separate programs, under two separate grants, subject to two different 
match scales depending upon when each program began to receive funding. 
Similarly, the local site of a national direct grantee may choose to 
end its relationship with the national direct and compete on its own 
for State commission funding. If successful, this would constitute a 
new program and a new grant, and matching requirements would begin at 
the year one level for this program.
State Flexibility To Meet Match Requirements (Sec.  2521.65 in the 
Proposed Rule)
    Under Sec.  2521.65 of the proposed rule, if a State commission 
determined that a particular subgrantee was unable to meet its required 
matching levels because it operated in a resource-poor community, the 
State commission could still meet that subgrantee's matching 
requirements by pairing a high-matching subgrantee in the State 
commission's portfolio with the low-matching subgrantee to make up the 
difference. Several commenters supported the proposal to provide the 
States with flexibility to manage their portfolio of grantees. Two 
other commenters, however, requested that the Corporation provide 
flexibility to States to use a State portfolio average for grantee 
share, rather than allowing commissions to pair low-matching with high-
matching subgrantees, as described in the proposed rule. As discussed 
above, while a commission's subgrantees will be individually 
responsible to the State for meeting their required match levels 
according to the match scale they are on, we will hold State 
commissions to a State portfolio aggregate overall match, based on all 
the programs' match requirements in a State's portfolio. This means 
that a State commission will be required to monitor and enforce match 
requirements for its individual grantees, but will have the flexibility 
to accommodate discrepancies in match across its portfolio, without 
increasing its liability to repay funds. The Corporation will only 
consider the actual matching history of individual commission 
subgrantees if and when they apply for AmeriCorps competitive funding.
    This revised approach makes the provision in the proposed rule that 
allowed commissions to pair a low-matching subgrantee with a high-
matching one for the purpose of meeting match unnecessary. The 
Corporation has, therefore, deleted that provision from the final rule.
Match Requirements for Organizations With Break in Funding (Sec.  
2521.80)
    The proposed and final rule clarify that an organization that has 
not directly received an AmeriCorps State or National operational grant 
for five years or more, as determined by the end date of the 
organization's most recent grant period, may begin matching at the year 
1 level upon receiving a new grant from the Corporation. This means 
that, for example, a site of an existing grantee, or a recipient of a 
planning grant, that chooses to apply directly to the Corporation for 
AmeriCorps program funding will be able to apply as a year 1 program, 
subject to the year 1 match requirements. A program that starts in a 
State's formula portfolio, on the other hand, and then moves three 
years later to the competitive pool, will continue meeting match 
requirements based on where the program was matching the year before. 
One commenter supported this approach. The final rule includes a new 
paragraph (b) to Sec.  2521.80 that explains the requirements for 
former grantees with a break in funding of less than five years.
    The following table summarizes the circumstances under which an 
organization would be deemed to have had a break in funding:

[[Page 39577]]



------------------------------------------------------------------------
                                                       Your status for
  If you previously were a     And then, within 5     purposes of match
                                years, apply as a          will be
------------------------------------------------------------------------
National direct parent,       National direct       Existing grantee
 Professional Corps, State     parent,               (match at the level
 competitive, or State         Professional Corps,   you would have
 formula program.              State competitive,    matched the year
                               or State formula      following your last
                               program.              grant year).
National direct subgrantee    National direct       New grantee (begin
 or site, State competitive    parent,               match at year 1).
 subgrantee or site, or        Professional Corps,
 State formula subgrantee or   State competitive,
 site.                         or State formula
                               program.
Any other Corporation         National direct       New grantee (begin
 grantee.                      parent,               match at year 1).
                               Professional Corps,
                               State competitive,
                               or State formula
                               program.
------------------------------------------------------------------------

Changing Legal Applicants (Sec.  2521.90)
    The proposed rule stated that an organization that is a new or 
replacement legal applicant for an existing program would be required 
to provide matching resources at the same level as the previous legal 
applicant was matching at the time the new organization took over the 
program. Two commenters objected to this provision, stating that the 
original legal applicant may have many established sources for match 
that are not available to the new legal applicant, and the latter 
therefore might not be able to pick up where the first legal applicant 
left off. Another commenter asked the Corporation to define an existing 
program under this proposed provision.
    By existing program, the Corporation means a set of project 
activities meeting specific unmet needs of a community previously 
funded by the Corporation. Over the years, several programs have had a 
change in legal applicants either in the middle of a grant cycle, or at 
the end of a grant cycle. The Corporation, therefore, saw a need to 
include a provision to address this circumstance. To the extent that a 
new grantee is unable to meet the match at the level of the predecessor 
legal applicant, the grantee may request a waiver of the match 
requirements due to lack of resources at the local level.
Limitations on the Use of Federal Funds
    The comments revealed some confusion over grantees using other 
Federal funds to meet the increased match requirements. As reflected 
above, the Federal share of member support costs, excluding health 
care, may not exceed 85 percent. There is no statutory prohibition or 
limit in the NCSA on an organization using other Federal funds, to the 
extent otherwise permitted, to cover its share of operating (i.e. costs 
other than member support) or health care costs. As a matter of 
compliance, grantees may use Federal funds for their non-member support 
related match, as long as the other Federal agency permits its funds to 
be used as match for Corporation funds. However, as a matter of program 
performance, more non-Federal funds are better, because Congress' 
mandate to the Corporation is to ``increase significantly the level of 
matching funds and in-kind contributions provided by the private 
sector.'' Consequently, an organization's reliance on Federal funds 
could have an impact in the selection process, where we will consider 
the diversity of non-Corporation funding, including non-Federal 
funding, and the extent to which grantees are increasing private sector 
contributions.
    Several commenters objected to the proposed blanket prohibition on 
a grantee's using other Federal funds for the grantee's share of member 
support costs. While the proposed rule appeared to set a maximum 
Federal share of 85 percent for all member benefits, that was not the 
Corporation's intent. The Corporation has amended the language in Sec.  
2522.250(b)(3), relating to health care benefits, to reflect, 
consistent with the NCSA, that health care benefits are subject to a 
maximum Corporation share of 85 percent, rather than a maximum Federal 
share.
    The final rule also includes a technical amendment in Sec.  
2521.45(a)(2) relating to professional corps programs. In the proposed 
rule, the Corporation reiterated, in clearer language, the current 
regulatory language, by stating that professional corps programs could 
not use any Corporation or other Federal funds for any part of the 
member living allowance. In practice, the Corporation has never 
prohibited professional corps programs from using non-Corporation 
Federal funds towards the living allowance, and does not believe that 
such an extreme limitation is appropriate or warranted by statute. The 
Corporation is, therefore, amending the final rule to reflect that 
professional corps programs are prohibited only from using Corporation 
funds for the living allowance, thereby bringing the regulation in line 
with Corporation policy and practice.
Match Requirements for Indian Tribes
    Indian Tribes must, as a general matter, meet the regular match 
requirements applicable to all Corporation grantees. Most of the 
Corporation's current tribal grantees, however, are located in rural or 
severely economically depressed areas of the country. Consequently, 
they will likely be eligible to waive into the alternative match 
requirement, assuming they have not demonstrated the ability to meet 
higher match requirements in the past. To the extent that a tribal 
grantee is not able to meet even the alternative match requirement, the 
Corporation will, as always, consider using its statutory waiver due to 
lack of resources at the local level. In compliance with Executive 
Order 13175, the Corporation will handle any waiver request from an 
Indian Tribe in an expedited manner.
Match Requirements for U.S. Territories
    Section 1469a of title 48, United States Code, requires departments 
and agencies to waive ``any requirement for local matching funds under 
$200,000 (including in-kind contributions) required by law'' for Guam, 
the Virgin Islands, American Samoa, and the Northern Mariana Islands. 
Consequently, the Corporation waives the AmeriCorps matching 
requirements for those U.S. Territory governments. Non-profits and 
other organizations located in the territories that apply directly to 
the Corporation are not eligible for this title 48 waiver, and will be 
required to meet the match requirements applicable to all regular 
AmeriCorps programs, absent some other Corporation waiver.
Other Assistance for Low-Matching Programs
    In the proposed rule, the Corporation identified several strategies 
of targeted assistance for otherwise well-performing and compliant 
programs who are demonstrably at risk of not meeting the new matching 
requirements. The Corporation remains committed to assisting grantees 
in the following ways: (1) By looking for opportunities to align our 
resources, including training and technical assistance and other 
program resources such as VISTA members, if appropriate, to help 
grantees identify new strategies to raise matching resources and 
community support and to help broaden and build the capacity of 
community organizations; (2) by

[[Page 39578]]

looking for opportunities to help raise resources; (3) by providing 
State commissions the flexibility to meet their overall match 
requirements in the aggregate across their portfolio of programs; and, 
(4) through limited use of the Corporation's statutory authority to 
waive match requirements 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.
    The Corporation believes that incrementally increasing match 
requirements and providing an alternative match requirement for 
programs in rural and severely economically distressed communities, 
together with the measures described above that are designed to assist 
grantees in meeting the new requirements, satisfy Congressional 
direction and represent a fair, equitable, and authoritative resolution 
of the issue of organizational financial sustainability, such that 
additional requirements in annual appropriations bills, or through 
rulemaking, are not necessary. We intend to monitor and report to the 
public on a regular basis the progress grantees are making in 
leveraging Federal resources.

D. Codifying the Cap on Child-Care Payments and Corporation Share of 
Health Benefits (Sec.  2522.250)

Child Care
    Section 140(e) of the Act authorizes the Corporation to establish 
guidelines on the availability and amount of child-care assistance. By 
current regulation, child-care payments for eligible AmeriCorps State 
and National members are ``based on'' amounts authorized under the 
Child Care and Development Block Grant Act of 1990. These payments are 
made directly to the child care provider on behalf of a full-time 
member eligible for childcare assistance. To be eligible, a full-time 
participant must be the parent or legal guardian of a child under 13 
who resides with the participant, must have a family income less than 
75 percent of the State's median income, must not currently be 
receiving child care assistance from another source (including another 
family member), and must certify that such assistance is necessary in 
order to participate in AmeriCorps. To be eligible to receive a 
payment, a child care provider must be eligible to receive payments 
under the Child Care and Development Block Grant Act of 1990. In the 
proposed rule, the Corporation made one change to existing regulation 
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.
    One commenter opposed the proposed change on the grounds that it 
could lead to a reduction in the amount of assistance available to an 
AmeriCorps member in a State that requires counties to match Federal 
Child Care and Development Block Grant funds. Several commenters 
expressed concern that the proposed rule did not provide direction to a 
State that is issued a waiver under the CCDBG program. Several 
commenters expressed concern that the proposed rule was not clear on 
what formula would be used to determine child care assistance. Two 
commenters commended the proposed rule for providing clarity and 
direction to State childcare agencies and providers. Another commenter 
recommended that current levels for child care be maintained in order 
to preserve equal access and opportunity to AmeriCorps.
    The final rule ensures that child care assistance on behalf of 
eligible AmeriCorps members does not exceed applicable payment rates to 
an eligible child care provider established by each State under the 
Child Care and Development Block Grant Act. Under that Act, each State 
must certify that payment rates are sufficient to provide access to 
child care services for eligible families that are comparable to those 
provided to families that do not receive subsidies. To demonstrate that 
its plan achieves equal access, a State must consider the results of a 
local market survey conducted at least every two years. The CCBDG Act 
affords States latitude in setting payment rates--rather than a formal 
waiver mechanism--provided that a State demonstrates that it has 
considered key elements of equal access, outlined in the U.S. 
Department of Health and Human Services regulations published at 45 CFR 
98.16 and 98.43. The fact that a particular State might require 
counties to contribute a portion of the payment does not affect the 
amount of the payment to an eligible provider, which is based on the 
local market survey. An AmeriCorps member is eligible for the same 
payment established by the State under the CCDBG Act to an eligible 
child care provider in the applicable locality, regardless of whether a 
county contributes to that payment. The Corporation seeks only to 
ensure that any child care assistance to an eligible AmeriCorps member 
not exceed the applicable payment rate to an eligible provider under 
the CCDBG Act. Therefore, the only change we have made in the final 
rule is to clarify that the payment rate in question is ``to an 
eligible provider.'' However, we intend to solicit suggestions about 
how, given the relatively limited Federal funds available, we should 
structure the provision of child care assistance to full-time 
AmeriCorps members, and may amend these regulations in the future.
Health Care Benefits
    In Sec.  2522.250(b)(3) of the proposed rule, the Corporation 
mistakenly referred to a maximum Federal share for health care 
benefits, rather than the maximum Corporation share of 85 percent, as 
provided in statute. Several commenters noted the discrepancy. The 
Corporation has amended the above-referenced section, and added a new 
Sec.  2521.45(a)(4) to now refer to the maximum Corporation share.
    One commenter read the proposed rule as mandating health care 
benefits for all members. The Corporation did not, in fact, change any 
of the rules relating to health care benefits for AmeriCorps members. 
Programs must, as always, provide each full-time member with health 
benefits if the member does not otherwise have coverage.

E. AmeriCorps Grants Selection Process and Criteria (Sec. Sec.  
2522.400 Through 2522.475)

    In addition to establishing specific AmeriCorps grant application 
requirements, section 130 of the Act, gives the Corporation broad 
authority to set additional application requirements and to establish 
the selection process. We are adjusting 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 all elements of sustainability; 
and (3) To provide transparency, predictability, and consistency for 
organizations applying for AmeriCorps funds.
    The proposed rule described 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 can manage 
Federal funds, and operate and support the proposed program 
effectively; (3) The budget adequacy and cost-effectiveness of the 
proposed program; and (4) For an existing program, whether the 
organization has implemented a sound program, including achieving 
strong outputs and outcomes, demonstrating organizational

[[Page 39579]]

capability and cost-effectiveness, and complying with other Corporation 
requirements.
    To address these issues, the proposed rule modified the current 
structure of three overall categories of criteria--Program Design, 
Organizational Capability (formerly Organizational Capacity), and Cost-
Effectiveness (formerly Budget/Cost-Effectiveness). We 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 was worth 50 percent of the score (as 
opposed to 60 percent currently),
     Organizational Capability remained at its current 25 
percent weight, and
     Cost-Effectiveness increased to 25 percent (as opposed to 
15 percent currently).
    Under these regulations, the Corporation's focus within Program 
Design is now on the relationship between an applicant's rationale and 
approach, on the one hand, and the outputs and outcomes to be achieved 
for members and the community, on the other. Most of the criteria from 
the Corporation's current AmeriCorps 2005 guidelines remain part of the 
revised selection criteria, although they may now appear under a 
different category. (Please visit our website at 
www.nationalservice.gov/funding_initiatives to view the AmeriCorps 
2005 guidelines). We also added criteria across all three categories to 
better reflect our focus on outcomes and sustainability and our desire 
to maintain a portfolio that serves a broad range of people through 
diverse program models.
General Comments About Selection Criteria and Process
    Two commenters supported the Corporation's effort to clarify the 
grant selection criteria. One of these commenters expressed the hope 
that this process and the criteria would foster stronger cooperation 
between States and the Corporation. Several commenters, however, felt 
that the proposed rule did not achieve the NPRM's stated goals of 
providing transparency, predictability, and consistency. Three 
commenters recommended maintaining the grant selection criteria 
currently in use.
    The Corporation strongly believes that, in setting out the 
selection process and criteria in regulation, and tightening the 
selection criteria themselves, the Corporation has greatly increased 
the transparency, predictability and consistency of the selection 
process. Furthermore, the Corporation has endeavored to clarify, step 
by step, how the selection process works.
    One commenter noted that the proposed rule fails to distinguish 
between new and recompeting applicants regarding which elements would 
apply only to recompeting organizations. The Corporation has amended 
the language to indicate, where relevant, that a particular provision 
applies only to applicants that have previously received AmeriCorps 
funding.
    Some commenters read the proposed rule as removing State and local 
control over which programs receive funding in the State. The 
Corporation disagrees with this interpretation. First, States, as 
always, have broad discretion over which programs to fund through their 
formula allocation. Second, States continue to have the discretion to 
decide which proposals to forward to the Corporation for competitive 
funding. The selection criteria, as proposed, do not represent a 
substantial deviation from the selection criteria the Corporation has 
used up until now--they are more focused, clearer, more specific, and 
incorporate more elements relating to performance and sustainability.
    Two commenters recommended that the selection criteria explicitly 
include program enrollment and retention rates. The Corporation agrees 
that a program's history of member enrollment and retention rates 
should be a factor in the selection process. The final rule includes a 
new subsection 2522.425(b)(2) to reflect this. The Corporation does 
not, however, believe it necessary to include a specific selection 
criterion on the timeliness of reporting, particularly since the 
Corporation may consider a grantee's reporting on prior grants under 
Sec.  2522.470(b)(1), in the context of clarifying and verifying 
information in a grant application. We expect all Corporation grantees 
to comply with all program requirements, including timely reporting. 
While the Corporation has an interest in improving grantee timeliness 
with reporting requirements, we do not believe it is appropriate to 
measure as basic an expectation as meeting deadlines in the competitive 
process.
    One commenter suggested that the Corporation hold a separate grant 
competition for stand-alone AmeriCorps programs whose sole mission is 
national service. This commenter viewed such stand-alone programs as 
having unique costs and benefits that the Corporation may not be able 
to consider in the context of a broader competition. The Corporation 
does not believe that a separate grants competition is necessary for 
these types of programs as we are prepared, in the grant selection 
process, to consider the unique circumstances of programs.
Overall Criteria Weight (Sec.  2522.440)
    One commenter supported the increased weight on cost-effectiveness. 
Four commenters, on the other hand, specifically recommended keeping 
the weight of program design at 60 percent. One recommended decreasing 
the weight of organizational capability to 15 percent in order to keep 
program design at 60 percent. One commenter felt that 25 percent for 
program infrastructure (presumably organizational capability) was too 
high, because if a program is performing well and cost-effective, one 
may presume sound program infrastructure. The Corporation notes, in 
response, that we did not propose to change the current weight of 
organizational capability. Both the proposed rule and the final rule 
maintain the weight of organizational capability at its current 25 
percent.
    Several commenters recommended that program quality should be more 
important than cost-effectiveness, and others urged that program design 
and performance measurement be given more weight. Many commenters 
opposed increasing the weight of the cost-effectiveness category. One 
of these commenters believed that AmeriCorps programs are already cost-
effective.
    Four commenters suggested that the emphasis on cost-effectiveness 
will lead to lower quality programs. Several commenters expressed 
concern that it will discourage innovative program design, particularly 
those reaching hard to serve areas or populations, or distressed rural, 
poor communities with lack of private and local government resources. 
As stated throughout this document, the Corporation is very 
deliberately trying to ensure that the selection criteria, particularly 
those relating to cost-effectiveness, take into consideration the 
inherent costs and unique circumstances of each program. The 
Corporation, therefore, does not anticipate that the shift in emphasis 
of the selection criteria will lead to the results the commenters above 
are expecting. The Corporation will, however, monitor the impact of the 
proposed rule and will publicly share its findings.
Program Design (Sec.  2522.425)
    One commenter stated that fostering civic responsibility should not 
be a criterion for selection. The Corporation disagrees. The 
Corporation believes that

[[Page 39580]]

AmeriCorps programs should plan for this in a systematic way, and that 
it is a relevant measure of sustainability. This criterion remains in 
the final rule.
    One commenter recommended including in the final rule language that 
would ask intermediaries to identify the process by which they will 
select issue areas and partners, rather than require them to define 
services and partners for the coming year. Applicants can do this 
already under the proposed selection criteria. An organization that 
typically selects its placement sites and specific service activities 
following approval of the grant will be able, within the selection 
criteria as currently drafted, to identify how it will select its 
placement sites and emphasize the types of service activities the 
program typically supports. The Corporation will continue, however, to 
require all applicants to include their proposed operating sites and, 
at least, a general description of member activities in the application 
for funding.
    One commenter recommended that if a program scores poorly in the 
rationale and approach category, it should receive no further 
consideration. The Corporation anticipates that any applicant that 
scores poorly in the rationale and approach category will be unable to 
adequately respond to the other selection criteria and, therefore, will 
ultimately score poorly overall. In our view, it is significantly 
easier to articulate the need for the program than to describe and 
secure all the elements necessary for program success. For that reason, 
we do not believe that the rationale and approach subcategory of 
program design needs more weight or emphasis than it had in the 
proposed rule.
    One commenter recommended that the Corporation clarify its 
commitment to racial, ethnic, and socioeconomic diversity. Two 
commenters urged the Corporation to reward programs that successfully 
recruit a diverse group of participants in terms of racial, ethnic, 
socioeconomic, geographic and educational backgrounds in the grant 
selection process. In fact, the Corporation's selection criteria under 
program design specifically reward applicants who can show they have 
plans to recruit a diverse corps of members. Another commenter 
suggested the Corporation intensify efforts to identify and support 
programs that seek to enroll youth who are low-income or out-of-school. 
The Corporation's on-line application allows applicants to self-
identify their program model from a list that includes youth corps. Our 
ability to more clearly identify program models, and our plan to 
review, to the extent possible, similar models together, will allow us 
to ensure that our portfolio of programs is rich and diverse. In 
addition, three of the Corporation's priorities, as listed in Sec.  
2522.450, specifically include this population.
    One commenter interpreted the language in Sec.  2522.425(c)(3) as 
expecting programs to replace member activities with volunteers. The 
language refers to assessing the extent to which a program ``generates 
and supports volunteers to expand the reach of your program in the 
community.'' This section was not intended to result in volunteers 
replacing member activities--the goal of this provision was to assess 
the impact and reach of a program's volunteer generation and support 
activities in the community.
Organizational Capability (Sec.  2522.430)
    In Sec.  2522.430(c) of the proposed rule, the Corporation stated 
that in reviewing a proposal submitted by a State commission for 
competitive funding, the Corporation may deny funding to a program 
applicant if the Corporation determines that the State commission's 
financial management and monitoring capabilities are ``materially 
weak.'' Several commenters expressed concern that the process for 
determining a State commission to be ``materially weak'' is not clear. 
One commenter recommended that the status of a commission be based on 
set criteria and clarified prior to the opening of the grant process, 
and others opined that applicants should not be penalized if their 
State commission is weak.
    The Corporation's intent in including this factor in the selection 
criteria was to ensure that, in approving a State's portfolio of 
programs, the Corporation is able to match the commission's capacity 
with the needs of the programs we are approving. While the Corporation 
does assess commission capacity through the administrative standards 
process, the Corporation does not, in fact, have a mechanism by which 
it determines a State commission to be ``materially weak,'' and 
therefore has decided not to use the term in this context. For these 
reasons, the Corporation has removed paragraph (c) from Sec.  2522.430 
in the final rule.
    The Corporation will, however, assess a commission's capacity to 
manage and monitor grants as it prepares to approve the commission's 
grants package, and may determine that a commission does not have 
sufficient capacity to manage a particular grant, or manage more than a 
certain number of grants. The Corporation has added a new paragraph (c) 
to section 2522.470 that addresses this issue.
    Section 2522.430(a)(3) of the proposed rule included as a criterion 
the extent to which an applicant is securing community support that is 
``stronger'' and more diverse. One commenter found the use of the term 
``stronger'' unclear, and recommended that the final rule replace that 
language with ``recurs, expands in scope, or increases in amount.'' The 
Corporation agrees that the suggested language is more precise and has 
amended the final rule accordingly.
Cost Effectiveness and Corporation Cost per MSY (Sec.  2522.435)
    In the proposed rule, the Corporation changed the name of the 
former Budget/Cost Effectiveness category to ``Cost-Effectiveness'' and 
increased the overall weight of the category from 15 percent to 25 
percent. Within this category, the Corporation focused on the adequacy 
of the applicant's budget to support the planned program design, and 
whether the program is cost-effective, as measured through one or more 
of several indicators of cost-effectiveness, including a program's 
Corporation cost per MSY.
    The Corporation received a significant number of comments on the 
proposed cost-effectiveness category. Several comments focused on 
defining the cost-effectiveness of a program based on program quality 
and results. Other commenters recommended determining cost-
effectiveness by comparing similar program models for their value as an 
investment based on mission, quality, location, and results, as well as 
cost.
    One commenter expressed concern that the Corporation would decide 
not to fund an otherwise high-quality program for falling just short of 
its required matching level. The Corporation's goal is to fund high-
quality programs. The principal mechanism to enforce match requirements 
is through the grants closeout process, which could require a grantee 
to repay funds if the grantee has not met required match levels. The 
inability to meet match does not necessarily bar a program from 
successfully recompeting, because the selection process allows the 
Corporation to take into account specific circumstances, strengths, 
contributions, and challenges of individual programs in deciding who 
should receive funding. Clearly, a program's record of match is a 
factor the Corporation will consider, but it is just one of many 
factors, and each applicant will have the opportunity in the selection 
process to explain its record in meeting its required match.

[[Page 39581]]

    Many commenters did not support increasing the weight of the cost-
effectiveness category. Some commenters suggested that the emphasis on 
cost-effectiveness would lead to lower quality programs. One commenter 
suggested renaming the category as ``Budget, Cost, and Grantee Share,'' 
maintaining the total score of the cost-effectiveness category at 15 
percent (rather than 25 percent as proposed), and, within that 15 
percent, assigning 5 percent for Corporation cost per MSY, 5 percent 
for budget grantee share, and 5 percent for adequacy of budget to 
support program design. Another commenter suggested weighting the 
budget adequacy with 50 percent of the points in that category, and 
Corporation cost per MSY with the other 50 percent. Another suggested 
that cost-effectiveness be further divided to reflect 60 percent for 
budget adequacy and 40 percent for Corporation cost per MSY.
    With respect to renaming the category as proposed above, grantee 
share and Corporation cost per MSY are two of several indicators of 
cost-effectiveness. It would not, therefore, make sense to limit the 
category to these two indicators. The Corporation agrees, however, that 
removing the term ``budget'' from the name of this category may have 
led people to believe that cost-effectiveness was the only aspect the 
Corporation considered important. In fact, the Corporation believes 
that budget adequacy is an important factor in the selection process. 
Accordingly, the Corporation is reinserting the words ``budget 
adequacy'' into the title of this category of criteria in Sec. Sec.  
2522.420 through 2522.448.
    As to the commenter's proposal to maintain the overall scoring of 
the cost-effectiveness and budget adequacy category back at 15 percent, 
the Corporation believes that doing so would be counter to its efforts 
to increase the importance of budget adequacy and cost-effectiveness in 
the grant selection process. The Corporation views cost-effectiveness 
and budget adequacy as at least as important as organizational 
capability, which is also 25 percent, and believes that the appropriate 
balance is 50 percent for program design, and 50 percent for 
organizational capability and cost-effectiveness and budget adequacy 
combined. Consequently, the Corporation is maintaining the cost-
effectiveness and budget adequacy category at 25 percent in the final 
rule.
    With respect to weighting the factors within cost-effectiveness and 
budget adequacy, the Corporation does see merit in clarifying how it 
will weigh the two separate criteria of cost-effectiveness and budget 
adequacy. Consequently, the final rule, in new Sec.  2522.448, 
indicates that the criterion relating to program cost-effectiveness 
will be worth 15 points out of the 25, with the remaining 10 points for 
the adequacy of the budget to support the program design. The 15 points 
for program cost-effectiveness incorporate several different elements: 
The program's proposed Corporation cost per MSY, and other cost-
effectiveness indicators, such as the extent to which the program 
demonstrates diverse non-Federal resources; the program's matching 
levels; and, for a recompeting program, the program's ability to expand 
outcomes without a commensurate increase in Corporation assistance. An 
applicant can receive high points for cost-effectiveness by proposing a 
competitive cost per MSY and by showing its strength in any one (or 
more) of the other cost-effectiveness criteria. We did not, however, 
include sub-scores for these individual elements, but only for cost-
effectiveness as a whole.
    Several commenters read the proposed rule as emphasizing cost over 
quality in the grant selection process. Two commenters recommended 
conducting a blind review of program design and organizational capacity 
prior to evaluating programs on the basis of cost-effectiveness in 
order to ensure that the Corporation funds programs with good models, 
rather than programs that are simply cheap. The Corporation notes that 
the cost-effectiveness portion of the new cost-effectiveness and budget 
adequacy category is worth only 15 of the 100 total possible points. 
While the Corporation is placing more weight on cost-effectiveness than 
in the past, this emphasis is consistent with Congressional direction 
and our efforts to promote program sustainability. That being said, the 
quality of a proposal is still important, and a poor quality program is 
unlikely to receive funding, even if it is low-cost.
    Because cost-effectiveness is only worth 15 percent of the total 
score and the criteria allow the Corporation to take into account 
individual contributions and circumstances of programs, the Corporation 
sees no reason to review program design and organizational capacity 
separately--the most cost-effective program will not receive funding if 
the program model is not sound and the organization does not have the 
capability to operate it.
    Two commenters requested clarification on how the 25 percent for 
cost-effectiveness and budget adequacy would apply to Education Award 
Programs. As discussed earlier, Corporation cost per MSY and increase 
in match indicators are not relevant in the context of assessing the 
cost-effectiveness of an EAP program. The Corporation does believe, 
however, that both the adequacy of the budget to support the program, 
and other indicators of cost-effectiveness can and should apply to EAP 
programs. Consequently, the cost-effectiveness and budget adequacy 
category will remain at 25 percent for EAP programs, just like for 
other programs. The Corporation has, however, amended Sec.  2522.435 by 
adding a new paragraph (c) that explicitly identifies the cost-
effectiveness indicators that do not apply to EAP programs.
Corporation Cost per MSY in the Selection Process
    The proposed rule included, for the first time, Corporation cost 
per MSY as an indicator of cost-effectiveness. A few commenters noted 
that Corporation cost per MSY should be considered, but should not be 
the primary consideration. Many commenters read the proposed rule as 
making Corporation cost per MSY the paramount or ``tie-breaker'' 
criterion in the new selection criteria. This was not the Corporation's 
intent. The Corporation's goal in emphasizing its inclusion of 
Corporation cost per MSY in the criteria as one measure or indicator of 
cost-effectiveness was to give programs an incentive to lower their 
Corporation cost per MSY as one of many elements to be more 
competitive. The Corporation continues to view the cost per MSY as a 
key indicator of cost-effectiveness. Nonetheless, a program that has a 
higher Corporation cost per MSY that is justified in its application 
and that demonstrates cost efficiency in other ways under the cost-
effectiveness criteria, could still score enough points in the cost-
effectiveness category to be eligible for funding.
    Five commenters found the proposed rule to be unrealistic in that 
it appears to value expanding program size and impact while, at the 
same time, decreasing funding. Several commenters recommended removing 
program growth and expansion from the selection criteria, given the 
emphasis on decreasing the Federal share of funding. The Corporation 
does not agree with this recommendation, as a program can show cost-
effectiveness either by decreasing the Corporation share of costs or by 
growing in size without a commensurate growth in budget.
    One commenter did not intrinsically have a concern with the 
increase in

[[Page 39582]]

emphasis in Corporation cost per MSY, but considered the determination 
of cost-effectiveness as subjective, and therefore suggested that each 
program be evaluated individually. While the Corporation will review 
programs together on panels of like programs, we do not score programs 
against each other, but rather each program individually against the 
selection criteria.
    One commenter requested clarification of the terms ``deeper 
impact'' and ``broader reach'' as used in Sec.  2522.435(a)(2)(iii) of 
the proposed rule (Sec.  2522.435(a)(1)(ii)(C) in the final rule). By 
``deeper impact,'' the Corporation is looking for more pronounced 
outcomes that show the program is having a more beneficial impact on a 
static number of beneficiaries. By ``broader reach,'' the Corporation 
means outcomes that affect more beneficiaries in the community or 
affect a larger portion of the community with a static level of impact.
Individual Program Circumstances
    Several commenters viewed the proposed rules as favoring low-cost 
programs over a program's quality and results. Some commenters were 
concerned that the criteria favor part-time programs over full-time 
programs. Other commenters viewed the selection criteria as favoring 
urban areas with more access to resources than rural areas. And yet 
another commenter was concerned that the rule did not adequately 
recognize or address the fact that different program models require 
different levels of Federal investment. Two commenters were concerned 
that the emphasis on cost-effectiveness will discourage innovative 
program designs, particularly those reaching hard-to-serve populations. 
Another commenter stated that the rule would threaten programs with at-
risk members, because they require more resources than programs with 
college-educated members.
    Sections 2522.430(b) and 2522.435(b) of the proposed rule indicated 
that, in assessing an organization's capability and the cost-
effectiveness and budget adequacy of the proposed program, the 
Corporation would consider a variety of individual program 
circumstances that might put an applicant's proposal into context. The 
goal was to give the Corporation the opportunity to fully weigh the 
contributions and benefits, as well as the challenges that individual 
programs and organizations might face in competing under these 
criteria.
    While the language in sections 2522.430(b) and 2522.435(b) remains 
unchanged, the Corporation reiterates here its commitment to 
considering cost-effectiveness in the context of all that the applicant 
proposes--including its level of innovation, its focus on areas with 
higher need, its program model, its contributions, and its challenges. 
The Corporation does not believe that there can be a ``one cost fits 
all'' approach in the AmeriCorps program; on the contrary, the 
Corporation recognizes the breadth and diversity of programs, service, 
community beneficiaries, and individual circumstances, and is committed 
to considering all of these when selecting programs. The Corporation 
will not replace high-quality and high-impact programs with low-cost 
programs that cannot meet the unmet needs in our communities.
Waiver Process and Impact on Selection
    The proposed rule included two possible bases for waivers--one 
relating to the requirement to recruit or support volunteers; the other 
relating to match requirements. Several commenters expressed concern as 
to when applicants would apply for and receive waivers, and the impact 
those waivers would have on the selection process. Three commenters 
suggested that the Corporation address waiver requests before the 
applicant submits the full grant application, and three others asked 
how the waiver request would impact the selection process. Several 
commenters specifically recommended that waivers not affect grant 
scoring.
    As discussed earlier in section VI(B) of this preamble, the 
Corporation intends to consider waivers of the requirement that 
programs recruit or support volunteers after the proposal has been 
reviewed, but prior to awarding the grant. Volunteer recruitment will 
also remain a competitive criterion in the grant selection process, 
regardless of the outcome on the waiver request.
    An applicant requesting an alternative match requirement or a 
waiver of match due to lack of resources at the local level, must 
request a waiver before submitting its application for funding. This 
will enable applicants to include an appropriate budget with their 
grant application. Applicants applying through a State commission will 
be required to request waivers from the Corporation through the 
commission. The Corporation will address the process for obtaining a 
waiver in the applicable grant application instructions.
Considering Similar Program Models Together
    In applying the selection criteria, the Corporation will ensure, to 
the maximum extent possible, that similar program models are evaluated 
together. This will help promote equity and fairness. One commenter 
strongly supported this approach. A different commenter requested a 
definition of ``similar program models.'' Another commenter asked the 
Corporation to clarify how it will consider programs together. As a 
general matter, the Corporation defines its different program models 
according to the list of statutory program models included in Sec.  
122(a) of the NCSA. When an organization applies to the Corporation, it 
must self-identify which program model best describes its proposal. To 
the extent practicable, the Corporation then groups programs together 
on review panels, first by program model, such as youth corps or 
professional corps, and then, if possible, by other factors such as 
program design (e.g., statewide initiative or intermediary), member 
model (e.g., individual placement or team-based), issue area (e.g., 
environment or tutoring) and geographic area to be served (e.g., urban 
or rural). The more applications the Corporation receives in a 
particular competition, the more focused each review panel can be. For 
example, in the 2004 competition, the review panels the Corporation 
used included a panel reviewing proposals from campus-based 
professional corps, one reviewing community corps statewide 
initiatives, and two panels looking at community corps team-based 
programs focused on independent living. In addition to looking at like-
programs together, this process allows us to ensure that we fund a 
broad and diverse portfolio of programs.
Information Outside the Application (Sec.  2522.470)
    The proposed rule described in detail relevant information outside 
of the grant application that the Corporation may consider in making 
grant decisions. A few commenters asked how the Corporation would 
consider each document in the selection process. Two commenters argued 
that considering supplemental documents would create an unlevel playing 
field and could ``appear to be an advantage to a more sophisticated 
sponsor, or, again, to discourage new small community-based 
organizations.'' One of these commenters recommended that, if the 
Corporation does consider additional documents, the Corporation should 
only use documents provided by the applicant and should clearly 
identify how the document will be scored. One commenter asked the 
Corporation whether the documents on this list will be used to 
supplement information in an application, or just to verify

[[Page 39583]]

information. Another commenter recommended that the Corporation clarify 
what information it will consider and the weight it will give to the 
information.
    The Corporation will not supplement an applicant's proposal with 
information that is not included in the proposal except to clarify or 
verify information as described below--to do otherwise could create an 
unlevel playing field and would be contrary to the Corporation's 
practice that an applicant may not submit supplemental material after 
the application deadline. Nor will the Corporation score any additional 
information it may consider. The primary purpose for obtaining 
information outside the application is to clarify information that is 
included in the applicant's proposal and to verify assertions made in 
an applicant organization's proposal, including engaging in due 
diligence to ensure that the applicant organization can appropriately 
manage Federal funds. The Corporation will not lower an applicant's 
score, for example, based on the quality of its Web site--however, the 
information on the Web site may, in certain circumstances, clarify an 
organization's structure, shed light on an organization's history, or 
provide other information that validates data in the application. To 
clarify the Corporation's intent with respect to considering 
information outside of the grant application, the final rule includes 
specific language in Sec.  2522.470(b) stating that the Corporation may 
consider this information only to clarify or verify information in an 
application, including engaging in due diligence.
    In addition, the Corporation has pared down the list of information 
sources from 21 items to 11. Several of the individual items listed in 
the proposed rule have been subsumed into single broader categories. 
The Corporation removed the financial management survey from the list 
because the Corporation does not use the survey to make grant 
decisions. Rather, the Corporation uses it to assess the training and 
technical assistance that approved applicants may need to establish 
appropriate systems for managing Federal funds.
    One of the information sources in the proposed rule was reports 
from the Corporation's Office of Inspector General (OIG). One commenter 
suggested that the Corporation only consider final OIG reports because 
issues raised in draft reports often are resolved before the IG issues 
its final report. The Corporation does not believe it should be 
precluded from considering any information the OIG might make available 
to the Corporation regarding prospective grantees, particularly 
information that might impact a prospective grantee's ability to manage 
Federal funds or operate an AmeriCorps program. Reports, whether draft 
or final, contain information that the Corporation may properly 
consider even before a final report is issued. However, we recognize 
that a final report might have more reliable information than a draft 
report, and we intend to give appropriate consideration based on the 
specific circumstances surrounding the report. The Corporation has 
amended the language in Sec.  2522.470(b)(4) (2522.470(b)(6) in the 
proposed rule) to clarify that the Corporation may consider any 
internal agency information, including information from the OIG.
    One commenter suggested that the Corporation replace the list of 
outside information with language that states that ``the Corporation 
conducts due diligence on prospective applicants,'' including examining 
``financial and programmatic information as well as [an applicant's] 
previous experience operating Corporation programs as applicable.'' As 
discussed above, the Corporation has added language to the final rule 
that speaks to the Corporation using the information described as a 
part of conducting due diligence on applicants, but the Corporation 
believes that including a list provides more clarity and specificity 
than simply stating the Corporation will undertake due diligence 
activities.
    If the Corporation denies an application for funding based on 
outside information that is at variance with information in the 
application, the Corporation will inform the applicant, through the 
Corporation's feedback process, of the specific information the 
Corporation considered.
Applicants Eligible for Special Consideration (Sec.  2522.450)
    In the NPRM, the Corporation indicated that, after we apply the 
basic selection criteria, we may apply one or more of the Corporation's 
selection priorities. The NPRM also indicated that the Corporation may 
announce additional priorities in the Notice of Funding Availability 
(NOFA), or other notice to the public. Our intent, however, in 
codifying the selection priorities in these regulations was to provide 
transparency and baseline consistency for current and prospective 
grantees. The list of selection priorities in the proposed rule 
reflects several long-standing priorities as well as a smaller number 
of new priorities that we believe are appropriate.
    Three commenters asked the Corporation to clearly identify how it 
will apply selection priorities or provide ``special consideration'' to 
programs under Sec.  2522.450. One commenter was concerned that many 
programs address more than one program activity and recommended that 
the final rule reflect that. The Corporation's goal in giving special 
consideration to certain program models or activities is to ensure that 
our portfolio of programs includes, to the extent possible, a 
meaningful representation of programs addressing those priorities. In 
each competition, the number of proposals that receive special 
consideration will vary depending upon how many high-quality 
applications the Corporation receives that address the enumerated 
priorities. The Corporation has amended the language in the final rule 
to clarify that the Corporation may give special consideration to 
ensure that its portfolio of programs includes a meaningful 
representation of programs that address one or more of the enumerated 
priorities.
    One commenter supported adding homeland security to the list of 
national priorities, as long as homeland security-related activities 
were not required for all programs. As stated above, the Corporation 
will ensure that its portfolio of programs includes a meaningful 
representation of programs that address homeland security, but is not 
requiring all programs to engage in homeland security activities, or 
any of the other activities included on the list for special 
consideration.
    One commenter supported the inclusion of lower-cost professional 
corps programs (Sec.  2522.450(a)(2)) on the list for special 
consideration because it will encourage the development of more high-
quality professional corps programs. Another person commented that 
States find it difficult to develop programs from community 
organizations, including faith-based organizations, because of the 
complicated application process and the lack of State resources to 
coach applicants through the process. Consequently, this commenter 
found the priority for such programs somewhat meaningless. The 
Corporation acknowledges that many community organizations may find the 
AmeriCorps structure and process challenging. Nonetheless, the 
Corporation hopes that special consideration for this group of 
applicants will encourage more such programs to accept this challenge 
and apply for funding. In addition, the special consideration for 
community organizations, including faith-based organizations, (Sec.  
2522.450(a)(1))

[[Page 39584]]

includes both programs operated by these types of organizations, and 
programs that do not have these characteristics themselves, but that 
support the efforts of community organizations, including faith-based 
organizations, to solve local problems. This means that an 
intermediary, for example, that includes significant service or 
placements with community organizations, including faith-based 
organizations, would fall within this category of programs eligible for 
special consideration. The Corporation hopes that larger grantees will 
bring on as sites or sub-grantees other community organizations, 
including faith-based organizations, that are unable themselves to 
apply directly for funds.
    One commenter noted that the proposed rule created a preference for 
faith-based organizations over secular organizations by providing 
special consideration to ``an organization of any size that is faith-
based'' but limiting the analogous special consideration to only 
``small community-based organizations.'' To avoid this, the Corporation 
has amended Sec.  2522.450(a)(1) to remove the reference to ``small.'' 
The Corporation has also amended the language in this section of the 
final rule to refer to ``community organizations, including faith-based 
organizations,'' rather than ``faith-based and community-based 
organizations,'' as was used in the proposed rule.
    One commenter opined that any religion-based criterion or 
preference in the grant selection process is unconstitutional and 
therefore should be eliminated from the final rule. Another commenter 
opposed faith-based organizations receiving a preference over secular 
programs because secular programs are more likely to be subject to non-
discrimination laws. In including a priority for community 
organizations, including faith-based organizations, the Corporation is 
not carving out funding exclusively for faith-based organizations. 
Providing special consideration for community organizations, including 
faith-based organizations, is not including any religion-based 
criterion in the selection process--it is merely a way to ensure that 
the Corporation's portfolio includes a meaningful representation of 
programs operated by or reaching community organizations, including 
faith-based organizations. The Corporation has acknowledged that many 
community organizations may find the AmeriCorps structure and process 
challenging, and hopes that providing special consideration for this 
category of applicants may make it more worthwhile for this type of 
organization to apply for AmeriCorps funding.
    One commenter recommended that special consideration be given to 
programs that address a State priority. Section 2522.460 of the 
proposed rule, mirrored in the final rule, addresses the circumstances 
under which the Corporation will give special consideration to programs 
that address a State priority, rather than one of the Corporation's 
priorities.
    The Corporation has added ``disadvantaged youth'' to Sec.  
2522.450(b)(1) to better align that selection preference with the 
Corporation's strategic goal of addressing the needs of that 
population. In addition, the Corporation has added programs that will 
be conducted in rural communities and in severely economically-
distressed communities to the list in Sec.  2522.450(c) to reflect the 
Corporation's goal of expanding the presence of AmeriCorps in those 
communities. To align our selection criteria with the Corporation's 
strategic goals, the final list of programs eligible for special 
consideration includes programs that increase service and service-
learning on higher education campuses in partnership with their 
surrounding communities, and programs that foster service opportunities 
for baby-boomers. Finally, the Corporation has more clearly defined in 
Sec.  2522.450(b)(8) the types of community-development programs that 
may receive special consideration.
State Commission Rankings of Competitive Proposals (Sec.  2522.465)
    The final rule mirrors the proposed rule in requiring State 
commissions to prioritize their State competitive proposals in rank 
order to help inform our selection process. The Corporation originally 
included this provision in response to State commission feedback that 
the Corporation sometimes did not fund proposals that a State 
considered its strongest or most competitive. The Corporation, however, 
had no way to know which proposals each State felt were most worthy of 
competitive funding and, thus, was unable to take that into 
consideration in the selection process.
    The Corporation received several comments relating to this new 
requirement. One commenter strongly supported State rankings because 
States are in a better position to know the local needs than anyone 
else. On the other hand, two commenters opposed State rankings based on 
the increase in time and effort it will take at the State level, and 
the uncertainty of whether the Corporation will abide by the rankings. 
Several commenters expressed concern over the Corporation's lack of 
specificity about how and when the Corporation would use the rankings, 
and what criteria States should use in ranking the proposals.
    The Corporation intentionally did not specify how States should go 
about ranking their proposals, in an effort to give maximum flexibility 
to each State to decide what is important to that State. The 
Corporation understands that each State may rank its proposals based on 
different criteria and different priorities. The Corporation expects 
States to rank their proposals based on the relative quality of the 
proposals. In providing the rankings, a State will have the ability to 
summarize the process and criteria it used in ranking its proposals.
    With respect to how and when the Corporation will use the rankings, 
the proposed rule stated that the Corporation ``may consider'' them, 
and made clear that we would not necessarily be bound by them in making 
grant decisions. Again, the State rankings will not be determinative or 
definitive. However, the Corporation will use them as a way of checking 
against potential disparities in the peer review process to ensure 
appropriate treatment for a program that a State highly values. For 
example, if a proposal that a State has ranked very high scores very 
low in peer review, the Corporation may move that proposal to staff 
review to ensure that the peer review scores were, in fact, 
appropriate. If the staff review agreed with peer review, the proposal 
would not move forward, despite its top ranking from the State. The 
Corporation also plans to use the rankings towards the end of the 
selection process to assist us in determining the best funding package 
for each State. The Corporation does not believe it necessary to amend 
the regulatory language to reflect this. The only change in the final 
rule is to clarify that the Corporation ``will,'' rather than ``may'' 
consider rankings.
    In the proposed rule, the Corporation indicated that 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. One 
commenter opposed any such limitation. The Corporation notes that it 
has limited the number of proposals a State may submit in at least one 
past competition. The Corporation does not, however, intend to 
implement this limitation in the short-term, but reserves the right to 
do so in the future. If so, we will announce the limitation in the

[[Page 39585]]

appropriate NOFA or other funding announcement.
State Peer Review and Selection Processes (Sec.  2522.475)
    In the proposed rule, the Corporation addressed questions about 
State commission peer review requirements and why the Corporation 
conducts peer reviews of proposals that State commissions may have 
already peer reviewed. Section 133(d)(4) of the NCSA requires the 
Corporation to ``establish panels of experts'' to review applications 
for funding for more than $250,000, and to consider the opinions of the 
panels prior to making grant decisions. Again, while the regulatory 
language does not specify this, the Corporation wishes to clarify that 
the Corporation does not require State commissions to peer review 
AmeriCorps State competitive proposals. The Corporation conducts peer 
reviews of competitive proposals at the national level to ensure 
equitable consideration of all applications and to comply with the 
NCSA. A State commission may be required, under State law, to peer 
review State competitive proposals, or it may choose to do so on its 
own. The Corporation does require State commissions to peer review 
their formula proposals to ensure compliance with the NCSA, as the 
Corporation never has the opportunity to peer review those proposals at 
a national level.
    Two commenters strongly supported State commissions using peer 
reviews to decide which applications to propose for funding. One 
commenter suggested that if States are not required to conduct peer 
review processes, they will have to expend a great deal of energy to 
ensure fairness and objectivity in their selection process. Again, 
State commissions must peer review formula proposals and may use a peer 
review process for competitive proposals if they so choose. The 
Corporation recognizes that State commissions that peer review all the 
proposals they receive in selecting both their competitive and formula 
submissions, this leads to successive peer review of some applications. 
The Corporation, however, peer reviews all competitive proposals at the 
national level across all States so that we can establish a common 
review nationally, rather than State by State, and to comply with the 
statute.
    In Sec.  2522.475 of the proposed rule, the Corporation indicated 
that it ``does not require [commissions] to use the Corporation's 
selection criteria and priorities'' in selecting State formula grant 
programs or operating sites. One commenter strongly supported this 
policy. Two commenters, on the other hand, interpreted this language as 
inconsistent with the statutory requirement in 122 (b)(3) of the Act 
(42 U.S.C. 12572(b)(3)). These commenters read this section of the 
statute as requiring ``universal use of the selection criteria'' that 
the Corporation establishes for its own selection process. The NCSA 
does not support these commenters' interpretation. The section of the 
NCSA in question deals specifically with ``qualification criteria to 
determine eligibility'' for AmeriCorps grants--that is to say, who is 
eligible to apply--which is different from determining who ultimately 
is selected to receive a grant from the pool of eligible applicants. 
The NCSA requires each recipient of AmeriCorps funds to use the 
qualification or eligibility criteria that the Corporation establishes, 
but does not require States to use the selection criteria the 
Corporation develops for deciding to whom to award funds.
    Note, however, that 133 of the NCSA does include a list of required 
criteria that both the Corporation and States must include among the 
selection criteria they develop. (42 U.S.C. 12585). The list includes 
the following required criteria: (1) The quality of the national 
service program proposed to be carried out; (2) the innovative aspects 
of the national service program, and the feasibility of replicating the 
program; (3) the sustainability of the national service program based 
on evidence such as the existence of strong and broad-based community 
support for the program and of multiple funding sources or private 
funding for the program; (4) the quality of the leadership of the 
national service program, the past performance of the program, and the 
extent to which the program builds on existing programs; (5) the extent 
to which participants of the national service program are recruited 
from among residents of the communities in which projects are to be 
conducted, and the extent to which participants and community residents 
are involved in the design, leadership, and operation of the program; 
(6) the extent to which projects would be conducted in one of the 
country's distressed and neediest areas; and (7) for non-State 
applicants, the extent to which the application is consistent with the 
State-wide service plan of the State in which the projects would be 
conducted. The Corporation has added this list of required criteria to 
Sec.  2522.475. The Corporation has incorporated all of these criteria 
in its selection process for AmeriCorps grants, and States must do the 
same.

F. Corporation Cost per Member Service Year (MSY) (Sec.  2522.485)

    In the proposed rule, the Corporation's goal was to strengthen the 
Corporation's basic selection criteria, and explicitly include a 
program's proposed Corporation cost per MSY as a key indicator of cost-
effectiveness at Sec.  2522.435. The proposed regulations also defined 
the Corporation cost per MSY as the budgeted grant costs divided by the 
number of MSYs 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 successfully completing a term of service.
    One commenter felt that using the term ``budgeted grant costs'' 
could be read to include both the Corporation's share of budgeted grant 
costs as well as the grantee's share. The commenter suggested that the 
Corporation amend this section to specify that we are referring to 
``the Corporation's share of budgeted grant costs.'' The Corporation 
agrees with this comment and has made this change in Sec.  2522.485 of 
the final rule.
    As stated in the proposed rule, the Corporation will announce 
annually any changes in the maximum program Corporation cost per MSY. 
Several commenters recommended that the mandated cost of living 
increase be indexed with corresponding increases in the Corporation 
cost per MSY. Two commenters suggested that organizations be allowed to 
apply for an increase in funding not just for the living allowance 
increases, but also increases in health care expenses. One commenter 
recommended that the Corporation grant exceptions in the maximum 
Corporation cost per MSY for programs incurring exceptionally high 
costs for members in States with high workers' compensation premiums. 
In response, we note that the Corporation does not address Corporation 
cost per MSY by waiver; rather, we negotiate the Corporation cost per 
MSY for each program before awarding a grant. The Corporation sets a 
maximum Corporation cost per MSY for State programs to accommodate 
programs with inherently higher costs that make it difficult for them 
to meet the average Corporation cost per MSY. National Direct grantees 
have the ability to balance higher cost sites with lower cost sites to 
stay within their maximum Corporation cost per MSY. With rare 
exceptions, the Corporation does not believe it should fund programs 
whose

[[Page 39586]]

Corporation cost per MSY exceeds the maximum Corporation cost per MSY. 
That said, the Corporation does reassess annually the maximum 
Corporation cost per MSY for individual AmeriCorps State programs and 
the maximum average Corporation cost per MSY, and makes adjustments as 
necessary and appropriate.
    We anticipate that making Corporation cost per MSY a competitive 
factor and gradually decreasing the Federal share of grantee costs 
through our sustainability efforts will, over time, create sufficient 
and optimum downward pressure on Corporation costs, both at the 
individual program level and within State portfolios, and is, 
ultimately, more appropriate than arbitrary maximum and maximum 
averages. In the short term, however, the Corporation will review 
annually the maximum Corporation cost per MSY and maximum average 
Corporation cost per MSY and consider granting a continuation or 
recompeting program's request to increase its Corporation cost per MSY 
by an amount not to exceed the statutorily-required percentage increase 
in its previous year's AmeriCorps member living allowance. (42 U.S.C. 
12594(a)). However, the Corporation cannot, by rule, automatically 
index the Corporation cost per MSY to increases in the living allowance 
and other fixed costs, given the unpredictability of the annual 
appropriations process.
    One commenter was concerned that the regulatory language itself did 
not articulate the Corporation's intent to consider increases in the 
allowable cost per MSY. The regulatory language establishes how an 
organization calculates its Corporation cost per MSY. The Corporation 
does not set a maximum in the regulation and, therefore, does not need 
to include any language about increases to the maximum.
    As stated above and in the proposed rule, the Corporation will 
continue to hold State commissions to a maximum average, and direct 
grantees to a maximum Corporation cost per MSY. State commissions will 
calculate their portfolio's average Corporation cost per MSY by 
dividing the Corporation's share of the budgeted grant costs for all 
their AmeriCorps programs (including EAP and planning grants) by the 
number of member MSYs awarded across their portfolio of AmeriCorps 
programs. The budgeted grant costs do not include child-care for 
individual members, the education award a member receives from the 
National Service Trust for fulfilling a term of service, or non-program 
grant funds such as a State commission's administrative grant, 
disability, or Program Development and Training (PDAT) funds. We 
encourage State commissions to use the Education Award and Professional 
Corps programs and national direct grantees to use ``education award 
only'' positions within their overall national direct grant as a way to 
lower their average Corporation cost per MSY, while maintaining high-
quality programs.
    One commenter asked the Corporation to allow States to receive a 
fixed number of Education Award Program slots annually for them to 
award through their State formula process. The Corporation does not 
believe that dividing up the allocation of Education Award Program 
positions among all State commissions would be a good use of these 
resources at this time. In addition, Federal policy is that grants 
should be made on a competitive basis. The NCSA authorizes the 
Corporation to award formula funds and corresponding AmeriCorps 
positions non-competitively, but we have no similar congressional 
directive for Education Award Program positions and grant funds. The 
Corporation believes that this is a matter best addressed through 
authorizing legislation, rather than regulation.
    In the proposed rule, the Corporation discussed the possibility of 
excluding planning grants from a State's calculation of its average 
Corporation cost per MSY. Currently, the average Corporation cost per 
MSY for each commission includes the formula funds they use for 
planning grants. Some of the input the Corporation received prior to 
publishing the proposed rule for comment 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 
Corporation cost per MSY calculation for each commission. Many 
commenters strongly supported the idea of excluding planning grants 
from the calculation of program costs. As indicated in the proposed 
rule, the Corporation plans to study the budgetary implications of this 
approach over the coming year. However, we are unable to implement this 
measure at this time given current budget constraints.
    One commenter suggested that national direct grantees be allowed to 
exclude funds they use to train their members from their Corporation 
cost per MSY calculation, in the same way that State commission PDAT 
funds are excluded from the commission's average Corporation cost per 
MSY. This commenter also suggested that grantees be allowed to exclude 
the costs required for in-depth program evaluation from the cost per 
MSY calculation. With respect to training funds, it would not be 
appropriate to exclude them from a national direct grantee's cost per 
MSY for several reasons. First, national directs often benefit from 
State PDAT allocations because each commission is strongly encouraged 
to include national direct grantees in any program development and 
training activities they conduct at the State level. In addition, while 
commissions do not include PDAT in their Corporation cost per MSY, 
their AmeriCorps program grants include training funds for programs, 
which are included in the Corporation cost per MSY calculation. 
Finally, the Corporation views PDAT funds as more similar to a 
commission's administrative grant than to program funds for purposes of 
calculating the commission's Corporation cost per MSY.
    In response to a commenter's suggestion that evaluation costs be 
excluded from a program's Corporation cost per MSY, the Corporation 
does not agree. Evaluation is a program requirement and an essential 
cost of operating a successful program. The Corporation will take into 
account the impact of evaluation costs on a program's Corporation cost 
per MSY when applying the cost-effectiveness criteria in the selection 
process.
    The Corporation will announce on its website at 
www.nationalservice.gov the annual maximum average Corporation cost per 
MSY for State commissions and the maximum Corporation cost per MSY for 
national directs. For the 2005 program year, the maximum average 
Corporation cost per MSY for State commissions and the maximum 
Corporation cost per MSY for 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 MSY annually with this and other changes to program costs, and 
our sustainability goals, in mind.
    While we acknowledge that cost per MSY may be defined in several 
different ways, our methodology is intended primarily to enable 
grantees and subgrantees to manage Corporation costs at the program and 
State commission level, and to estimate the projected costs of proposed 
programs.

G. Performance Measures and Evaluation (Sec. Sec.  2522.500 Through 
2522.740)

    The Corporation is continuing to build on the progress we have made 
in

[[Page 39587]]

demonstrating results, both 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, the Administration's 
Program Assessment Rating Tool (or PART), and Executive Order 13331 on 
National and Community Service Programs. The proposed rule codified the 
Corporation's current requirements for performance measurement, focused 
independent evaluation requirements on large grantees, and generally 
reflected current Corporation practice. In addition, the proposed rule 
described 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, 
as well as programmatic weaknesses that can be corrected most 
effectively when identified early.
    The proposed rule distinguished 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 on administrative costs. 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. These provisions remain largely unchanged in 
the final rule.
    Several commenters viewed the proposed rule as increasing 
performance measures and the burden on grantees. While the proposed 
rule and final rule emphasize performance measures, neither the 
proposed rule, nor the final rule, is intended to increase the burden 
on grantees. The final rule generally codifies existing Corporation 
policy in this area.
    One commenter was concerned that the Corporation does not use the 
data it collects for any type of national reporting. One of the 
Corporation's goals is to identify the best way to report the data that 
the Corporation collects to our grantees and the public. Currently, 
individual program officers use this information to assist in managing 
the grants and directing programs to the appropriate resources, as well 
as to assess program impact and effectiveness. The Corporation provides 
information to the public using the data submitted by grantees and 
programs in the Corporation's annual Performance and Accountability 
Report (www.cns.gov/about/reports.html). Also, the State Profiles and 
Performance Report presents performance results achieved by the 
Corporation's national and community service programs (www.cns.gov/pdf/research/CNCS-PerformanceReport-Ind.pdf). This recently released report 
is the first report offering comprehensive performance data by State 
and program. Finally, the Corporation is in the process of redesigning 
its Web site so that members of the public and grantees can more easily 
negotiate the site and locate pertinent information and reports. The 
Corporation views this as an ongoing process of increasing the 
availability and transparency in our reporting of performance data. The 
Corporation will continue to collaborate with grantees to make better 
use of data and to ensure that a key benefit of all reporting is the 
opportunity to see data reflected back in broader context.
    One commenter opposed the Corporation's performance measures 
requirement because, in this commenter's opinion, they have made 
applying for AmeriCorps funds more confusing and have increased the 
complexity and detail of reporting. This commenter recommended 
returning to simple objectives or using simplified performance 
measures.
    The Federal government, as a whole, is moving towards performance 
measurement and reporting on outcomes. The Corporation does not believe 
that the previous system of reporting on objectives provided enough 
detail or substance to show the true impact national service has in our 
communities across the nation.
Defining Performance Measurement, Outputs, and Outcomes
    In sections 2522.520, 2522.570, and 2522.700 of the proposed rule, 
the Corporation defined the terms performance measurement, output 
indicators, intermediate-outcome indicators, and end-outcome 
indicators. One commenter found the use of the word ``indicator'' in 
these definitions misleading, given that the rest of the rule does not 
refer to indicators, and suggested that the Corporation resolve the 
mismatch in the final rule. Another commenter suggested that the final 
rule broaden the definitions to include references to community changes 
in addition to changes in the lives of community beneficiaries. The 
Corporation agrees with both these comments, and has (1) removed the 
word indicator from the above-referenced sections, and (2) broadened 
the language of the definitions in the above-referenced sections to 
include changes to the community.
National Performance Measures (Sec.  2522.590(b))
    While the proposed rule allowed an applicant organization to 
propose and negotiate performance measures unique to the applicant's 
program, the rule also provided that the Corporation would establish 
one or more national performance measures on which all grantees would 
have to report. The proposed rule indicated that the Corporation would 
establish a national performance measure on volunteer leveraging, may 
establish performance measures of member satisfaction, and will develop 
any national standardized performance measures in consultation with 
AmeriCorps grantees.
    In general, most commenters supported the concept of developing 
national performance measures for all programs. However, several 
commenters noted potential concerns, such as the ability of these 
national measures to reflect the diversity of programs and approaches, 
the ability of programs to set their own measure of how well they are 
meeting needs in their communities, the need to preserve creativity and 
innovation of local programs, and the potential for programs to be 
redesigned to fit a certain model based on the national performance 
measures, rather than being designed to meet community needs. Several 
commenters suggested that the Corporation consult with grantees in 
developing any national performance measures.
    The Corporation does intend, as stated in the proposed rule, to 
develop a limited number of national measures applicable to all (or 
most) programs, such as the number of community volunteers leveraged, 
hours served by community volunteers, and member-related measures, in 
addition to the program-nominated national performance measures. The 
Corporation also plans to develop other standard national measures that 
might apply only to particular types of programs or activities. The 
Corporation's goal in doing this will be to diminish the burden on 
grantees to develop measures in these areas, and to provide the 
Corporation with consistent measures on which to report at the national 
level. This process of developing national outcome measures for all 
programs to reflect their impact on communities or the lives of service 
recipients is a long-term project, given the diversity of programs and 
issue areas. Even within

[[Page 39588]]

a single issue area, such as youth development or environment, the 
diversity of programs addressing different needs and interests makes it 
challenging to develop uniform outcome measures at the national level 
without significant dialogue with State commissions and our other 
service partners. Finally, the Corporation notes that national measures 
will not replace the need for or the ability of programs to show 
progress in areas of local concern through program-nominated measures. 
The Corporation intends, as reflected in the proposed rule, to engage 
the field in developing any national performance measures, through an 
open public process, and plans to finalize member-related national 
measures within 18 months of publication of this final rule. The 
Corporation will continue to dialogue with the field in developing 
these and other national measures over the coming months and years. The 
Corporation, does not, however, see a need to change the language in 
Sec.  2522.590(b) of the proposed rule.
Measuring Performance of the ``Primary'' Service Activity (Sec.  
2522.580)
    Section Sec.  2522.580(b) and (c) of the proposed rule stated that 
performance measures need not cover the scope of an entire program, but 
should give a clear indication of a program's primary purpose and 
objectives. Section 2522.580(c) also required programs to include at 
least one end-outcome measure that captures the results of the 
program's primary activity.
    Several commenters noted that their programs, mostly intermediary 
models, do not have a primary activity, but rather engage in many 
different activities in different issue areas. One commenter suggested 
that the rule define the elements of an intermediary program and accept 
performance measures that speak to an intermediary's overall goal. 
Another commenter recommended embracing the overall goal of the 
intermediary program to allow programs to collect performance 
measurement across service activities focused on areas such as large-
scale capacity building.
    If at all possible, intermediaries should report on the activities 
of their operating sites or subgrantees. We recognize, however, that in 
some cases this is not feasible. If it is not possible for an 
intermediary to identify a primary or significant area of activity, the 
Corporation is open to considering other measures that relate 
specifically to the overall mission and focus of the intermediary 
organization itself. For example, an intermediary organization with 
members placed at multiple unaffiliated sites, through which members 
participate in many different activities in many different communities, 
might be able to submit a measure relating to the extent to which the 
intermediary is building the capacity of grass-roots organizations to 
serve their communities. For another program in which members engage in 
many different activities, the program may nonetheless be able to 
identify one activity that makes up a significant part of the program's 
service activities, and report an end-outcome on that activity. To 
clarify our intent in this regard, the Corporation has incorporated 
what was paragraph (c) of Sec.  2522.580 in the proposed rule into 
paragraph (a)(1) of that section, and changed the language to capture 
the results of ``the program's primary activity, or area of significant 
activity for programs whose design precludes identifying a primary 
activity.''
    The Corporation is also modifying the requirement that only an end-
outcome capture the program's primary activity or area of significant 
activity. The Corporation has concluded that, as a general matter, a 
program would likely need to start with an output and an intermediate 
outcome, in order to be able to report on an end outcome. Furthermore, 
the Corporation has an interest in seeing at least one set of 
performance data on a program's primary activity or area of significant 
activity. Consequently, the final rule requires that grantees submit at 
least one set of aligned measures (described in more detail below), 
rather than just an end-outcome, on the program's primary activity or 
area of significant activity. Programs should note that, in addition to 
the minimum requirements, they may submit additional relevant measures 
of their performance in other issue areas.
    One commenter opined that end outcomes, in general, are not 
reasonable in AmeriCorps because of the annual turnover of members. 
This commenter recommended that the Corporation not require end 
outcomes. The Corporation has made available guidance and technical 
assistance materials to the field on how programs can achieve end-
outcomes, not within a member service year, but within the grant period 
(See www.nationalservice.gov/resources for information on toolkits, 
available Corporation assistance, and helpful websites.) While programs 
may not be able to achieve some end-outcomes, such as preventing air 
pollution, they can achieve measurable results. Youth development and 
education programs can assess improvements in achievement and behavior 
of youth tutored and mentored, environmental programs can measure 
changes in water pollution and improvements in lands and trails, and 
programs designed to develop members can achieve outcomes such as 
members obtaining GEDs, developing specific skills, or entering careers 
based on their program experience. Logic models can be very helpful 
tools in helping programs to identify clear and measurable outcomes and 
understand the steps along the way in achieving their goals, each of 
which can be measured and used as performance measures.
Aligning Performance Measures (Sec.  2522.580)
    Section Sec.  2522.580(d) of the proposed rule required programs to 
choose at least one set of performance measures that are aligned with 
one another. For example, a tutoring program might use the following 
aligned performance measures: (1) Output: Number of students 
participating in a tutoring program; (2) Intermediate Outcome: Percent 
of students reading more books; and (3) End Outcome: Average increase 
in reading level or test scores. The Corporation included this 
requirement to allow both service programs and Corporation staff to 
understand the logical connections between each step in the chain from 
program activity to program performance and results. As discussed 
above, the final rule in Sec.  2522.580(a)(1) requires that the one 
required set of aligned performance measures must capture the program's 
primary activity or area of significant activity. The Corporation 
believes that this will provide a clearer picture of the extent to 
which programs are demonstrating results.
    Several commenters noted that their programs engage in many 
different activities in different issue areas, and, therefore, want to 
submit measures in several areas rather than just one set of aligned 
measures in only one area. Several commenters appeared to read the 
provision as requiring all the performance measures of a program to be 
aligned and speak to the same priority--for example, if a program 
chooses one set of performance measures on tutoring, all its 
performance measures must relate to tutoring and tutoring activities. 
One commenter suggested revising the language to clarify that one set 
of aligned performance measures is the minimum requirement, but that 
any additional performance measures that a program submits need not be 
aligned.
    The Corporation believes that it is important for a program to 
identify the

[[Page 39589]]

connections between activities and results, and to have information to 
assess performance. That is the impetus for continuing to require one 
set of aligned performance measures--that is to say one output, one 
intermediate outcome, and one end-outcome all relating to the same 
primary activity or priority. The Corporation does not, however, expect 
that all of a program's performance measures, beyond the one required 
set of aligned measures, will speak to the same priority, or to the 
program's primary activity. Nor does the Corporation require programs 
to submit more than one aligned set of measures. A program may, once 
the minimum requirement of one set of three aligned measures is 
satisfied, submit relevant additional measures of their performance in 
other issue areas that do not necessarily need to be aligned. For 
example, a program may submit a set of performance measures around 
tutoring, such as the example given above, and, in addition, provide 
various outputs, intermediate outcomes, or end outcomes relating to 
other program activities such as volunteer recruitment or support, 
mentoring, or member development. To make this clear, the Corporation 
is amending the language in Sec.  2522.580(d) and (f) of the proposed 
rule (Sec.  2522.580(a) and (d) of the final rule) to make clear that 
one set of aligned measures is the minimum requirement, and that 
programs may submit additional performance measures that are aligned or 
are not aligned.
Flexibility To Change Performance Measures Over the Course of the Grant
    Two commenters suggested that programs need flexibility to change 
measures in year two or three of a three-year grant to react to 
changing needs and unforeseen challenges. The proposed rule envisaged 
that programs would submit performance measures in the first year of 
their three-year grant on which they would report over the three-year 
period of the grant. The goal was to decrease the burden on our 
grantees to have to submit new performance measures each year, and to 
increase the value of the reporting over a longer period of time. That 
said, section 2522.640 of the proposed rule and the final rule 
specifically authorizes programs to change their performance measures, 
with Corporation or State commission approval as appropriate. Since 
this flexibility is already in the rule, the Corporation sees no need 
to change or add language to address this issue.
Grantees' Responsibilities in Meeting Performance Measures (Sec.  
2522.630)
    The final rule is more specific about what a corrective action plan 
to address performance deficiencies must include, and requires grantees 
to submit such a plan within 30 days of a determination that the 
grantee is not on track to meeting the performance measures.
Performance Measures and Funding Decisions
    One commenter was concerned that the selection criteria in the 
proposed rule include a program's progress towards meeting performance 
goals in the decision of whether or not to fund the program. This 
commenter believed that this would result in programs lowering their 
performance goals to ensure that they meet them. The Corporation does 
not believe that this is a concern. Beyond any national performance 
measures that the Corporation may require of programs, the Corporation, 
or the State commission, will approve all other performance measures 
and, thus, will have the opportunity to ensure that each program is 
selecting ambitious performance measures upon which to report. In 
addition, the benefits the program anticipates and captures through 
performance targets are also significant elements of the selection 
criteria.
Evaluation
    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 authorizes the Corporation to 
make alternative evaluation requirements ``based upon the amount of 
assistance'' a grantee receives.
    In light of these provisions, in the proposed rule the Corporation 
proposed revising its current requirement that all grantees arrange for 
independent evaluations, unless the Corporation approves an internal 
evaluation. The proposed rule required that only the Corporation's 
largest grantees--those receiving an average annual program grant of 
$500,000 or more--conduct an independent evaluation that covers a 
period of at least 5 years, and submit the evaluation results with 
their application for recompete funding. Our rationale for this 
approach was that it is burdensome to require independent evaluation 
for smaller grants, and, for larger grants, we wanted 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. Under the proposed rule, the 
Corporation would not consider for funding any recompete application 
from a program receiving an average annual program grant of $500,000 or 
more that did not include the required evaluation summary, or results, 
as applicable.
    One commenter supported the proposed rule's approach to evaluation. 
Four commenters, however, opposed outside evaluations, because they use 
up resources that should be used in support of the program's service 
activities. One stated that outside evaluations are not helpful and 
usually lead to more questions than answers. Another noted that most 
programs lack the resources to develop the level of evaluation proposed 
and that it is difficult to pursue funding for evaluation and research.
    While sensitive to the concerns of these commenters, the 
Corporation strongly believes in the value of independent evaluation, 
particularly for our largest grantees. Furthermore, the Corporation 
does not believe it unreasonable to require an independent evaluation 
from a grantee that has received over 2.5 million dollars from the 
Corporation, and is applying for additional funds, by the time it 
submits the evaluation results to us.
    The Corporation also received many comments suggesting that the 
Corporation develop basic guidelines for assessing evaluations in the 
grant selection process, or that the Corporation nationalize or 
standardize the aggregated data to make it more useful. Several 
commenters suggested that the Corporation develop national guidelines 
on evaluation or standardized evaluation tools that programs could use 
for internal evaluations rather than paying for an external evaluator. 
Several commenters suggested that the Corporation develop national 
evaluation standards for all programs, while others suggested 
standardized evaluation criteria. One commenter recommended that the 
Corporation design flexible questionnaires on the data it seeks in 
evaluations, which would save large programs thousands of dollars 
through standardization.
    Two State commissions recommended that the Corporation establish a 
national evaluation agenda with two components: (1) Competitive funds 
for commissions to engage in statewide AmeriCorps program evaluations, 
and (2) a Corporation-conducted national evaluation to assess

[[Page 39590]]

the impact and effectiveness of program models nationally. Another 
State commission suggested that the Corporation work with State 
commissions to perform statewide evaluations. This commenter agreed 
that evaluations are important for all programs, big and small, and 
therefore recommended requiring evaluations for all programs. Another 
commenter recommended funding ``statewide and or national evaluations 
that are both cost-effective and provide potentially broader analysis 
and impact data.'' Another commenter recommended that the Corporation 
either provide programs the tools to conduct internal evaluations, or 
provide funding to offset the cost of external evaluations.
    The Corporation intends to work cooperatively with grantees and 
other interested parties with a goal of seeking input on one or more 
strategies like those suggested in the comments, including, 
potentially, national Corporation-administered evaluations, statewide 
evaluations, and the development of evaluation tools and guidelines for 
grantees to use in performing internal evaluations. The Corporation 
will offer sufficient opportunity to grantees and other interested 
parties to provide input. In the meantime, however, the Corporation is 
maintaining, in this final rule, the requirement from the proposed rule 
that any grantee that receives an average annual grant of $500,000 or 
more must arrange for an independent evaluation. In anticipation of 
other potential evaluation strategies, however, the final rule also 
includes language from the NCSA that requires grantees to cooperate 
with requests for information for any national evaluation that the 
Corporation or one of its providers may conduct. The Corporation will 
consider relieving grantees of the requirement to conduct an evaluation 
if a grantee participates in national or statewide evaluations, or uses 
the evaluation tools the Corporation develops.
    One commenter requested clarification on whether the threshold for 
independent evaluation is the total program budget or the Corporation 
share only. As stated above, the independent evaluation requirement 
applies to any grantee that receives an average annual grant of 
$500,000 or more--in this specific context, the term ``grant'' refers 
to the amount the Corporation provides in grant funds, not the total 
program revenues from other sources. The final rule refers to the 
``Corporation'' program grant to make this point clear.
Independent Evaluation (Sec.  2522.700)
    In defining evaluation in the proposed rule, the Corporation 
referred to evaluation as using scientifically-based research methods 
to assess the effectiveness of programs by comparing the observed 
program outcomes with what would have happened in the absence of the 
program. The proposed rule intended to include random assignment as one 
example of a scientifically-based research method, but erroneously made 
it appear like random assignment was the only type of method the 
Corporation would allow. The Corporation received many comments 
opposing the requirement of random assignment evaluations, and other 
comments requesting that we more clearly define ``scientifically-
based'' to include other methods of evaluation other than random 
assignment. To avoid any confusion, the Corporation has amended the 
final rule to remove the reference to random assignment methods. This 
should make clear that a program may use any appropriate 
scientifically-based evaluation method it chooses.
    Scientifically-based research can be broadly defined as using 
appropriate research design, methods, and techniques to ensure that the 
methods used can reliably address the research questions and support 
the conclusions. Scientifically based research describes research that 
involves the application of rigorous, systematic, and objective 
procedures to obtain reliable and valid knowledge relevant to 
activities and programs.
    When organizations are attempting to determine whether there is a 
causal relationship between their programs and observed outcomes, or 
whether a program caused a change for participants, they will need to 
employ an experimental or quasi-experimental design or demonstrate how 
their study design will allow them to determine causality. One of the 
key characteristics of experimental designs is random assignment of 
persons or entities to treatment (or experimental) and control (or 
comparison) conditions. For example, participants in the treatment 
condition may receive benefits or services, while participants in the 
control condition do not. This random assignment of persons to 
conditions should equalize preexisting differences between the two 
groups so that differences observed between the groups can be 
attributed to the program. If random assignment is not possible, then 
quasi-experimental designs can be employed. These designs rely on 
identifying appropriate comparison groups, and may even take 
measurements at two or more points in time or include multiple 
comparisons in order to rule out or reduce threats to validity or 
alternative explanations for differences between the experimental and 
comparison groups.
    Making comparisons to similar individuals not receiving services, 
whether through an experimental or quasi-experimental design, is an 
important part of ensuring the observed program effects are 
attributable to the programs and not to other factors. Comparison 
groups can be identified in several ways, including direct methods such 
as collecting information for similar individuals and communities not 
being served, and indirect methods such as using local, regional or 
national data or information available from federal, State and local 
agencies and private and nonprofit organizations. In the absence of 
comparison data, programs are limited in their capacity to demonstrate 
the added value of their program for the individuals and communities 
they serve.
    For example, a tutoring program that is not able to serve all of 
the eligible students due to excess demand may be able to randomly 
select students to participate in the program. If random assignment is 
not feasible, the program may use a quasi-experimental approach to 
compare the achievement or literacy scores of the students served with 
those of similar students in nearby communities and schools. 
Alternatively, the program may compare students to benchmark 
information reported by local schools, school districts, or even State 
and national data on education achievement. A program may be able to 
successfully assess program results by comparing the achievement of the 
students they serve at multiple points in time (baseline, during the 
program, at the end of the program) against an appropriate comparison 
benchmarks. While not as rigorous as a random assignment design, quasi-
experimental comparison group designs can provide reliable evidence of 
program effectiveness.
    One commenter opposed the requirement that programs be evaluated in 
depth against a similar population that does not receive the benefits 
or services of the AmeriCorps program. This commenter believed that 
such a group is hard to find, and that data gathering would be 
difficult and error-prone. The Corporation disagrees. As discussed 
above, making comparisons to similar individuals not receiving services 
is an important part of ensuring the observed program effects are 
attributable to the programs and not to

[[Page 39591]]

other factors. Many programs attempt to create changes in individuals 
and communities, but can not provide evidence that any observed changes 
are due to the program. For example, because children learn and develop 
over time, youth development and education programs need to be able to 
measure the effects of their programs and compare them against the 
learning and development that occurs in other children. Comparisons can 
be identified in several ways, including direct methods such as 
collecting information from similar individuals or communities not 
being served, and indirect methods such as using local, regional or 
national data and information available from federal, State and local 
agencies, and private and nonprofit organizations. In the absence of 
comparison data, programs are limited in their ability to demonstrate 
the added value of their program for the individuals and communities 
they serve.
Evaluation Requirements for Smaller Grantees
    In the proposed rule, the Corporation encouraged (but did not 
require) grantees who receive under $500,000 in grant funds per year, 
to perform independent evaluations and indicated that the Corporation 
would consider the results of these evaluations when making decisions 
on an organization's application for funds. Several commenters found 
the term ``encourage'' ambiguous and felt it created a de facto 
requirement. At least one commenter suggested that the Corporation 
remove that requirement. One commenter suggested that the rule either 
(1) require only that programs ``show improvement'', but not 
necessarily a scientifically-based evaluation, or (2) permit programs 
to submit information for statewide evaluation.
    The Corporation continues to believe that independent evaluations 
are intrinsically stronger and, often, more useful, than internal 
evaluations. That being said, the Corporation has removed the language 
encouraging smaller grantees to arrange for independent evaluations. 
The Corporation does believe that all effective programs need to 
continuously improve their results for both participants and the people 
they serve, and therefore expects all grantees to perform some type of 
evaluation as part of their programs, in accordance with the NCSA. 
Consequently, the Corporation is including in the final rule the 
statutory minimum requirement of an internal evaluation for smaller 
grantees.
Five-Year Timetable for Evaluations
    At least one commenter found the proposed rule unclear on when a 
grantee will be expected to produce an evaluation. The Corporation is 
removing the requirement that an evaluation be conducted every 5 years. 
Rather, the Corporation will require each grantee to submit a summary 
of its evaluation plan with its first recompete application following 
the effective date of this provision, and the full evaluation results 
with its second recompete application for funding. For example, if a 
current grantee recompetes for funding in 2006, it will be required to 
submit with its application a summary of its evaluation plan or 
progress to date. If the grantee again recompetes for funding in 2009, 
it will have to submit the completed evaluation with its recompete 
application at that time. The evaluation must cover a minimum of one 
year, but may cover longer periods. This applies for both internal and 
independent evaluations.
Consideration of Evaluations in Selection Process
    The proposed rule stated that the Corporation will consider in the 
grant selection process the results of any evaluation a grantee 
submits. One commenter strongly recommended that external professional 
evaluators review the evaluations that grantees submit, particularly if 
the evaluations will have a major impact on future funding. The 
Corporation agrees that this is a promising idea and will consider it 
in the future, funding permitting. The Corporation will use an 
evaluation that a grantee submits to inform our consideration of the 
selection criteria. The evaluation itself will not receive any score in 
the selection process.
Costs of Evaluation
    Two commenters asserted that the independent evaluation requirement 
for large programs is an unfunded Federal mandate, through which the 
Corporation is forcing a program to decide how to pay for program 
evaluation for Corporation program operations. Several commenters noted 
that the independent evaluation requirement for large programs is an 
undue burden on those programs as compared with smaller programs. These 
commenters also noted that the requirement would increase the costs and 
Corporation cost per MSY for larger programs. Another commenter noted 
that, while evaluation is important, it is costly and will likely lead 
to programs cutting costs on other quality elements of the program. 
This commenter, therefore, recommended that the Corporation bear the 
costs of evaluations beyond each program's budget, and that this cost 
not be counted in the total Corporation cost per MSY or operational 
costs of the program. Several commenters recommended that the 
Corporation pay for evaluation costs, or at the very least a percentage 
of evaluation costs for each program. As discussed earlier, the 
Corporation does not believe it appropriate to exclude evaluation costs 
from a program's Corporation cost per MSY. The Corporation will, 
however, consider the impact of evaluation costs on a program's 
Corporation cost per MSY in the context of applying the cost-
effectiveness criteria in the grant selection process.

H. 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 
balance struck by the No Child Left Behind Act (NCLBA), which, on the 
one hand ensures that children who need tutoring are receiving the best 
possible support, and, on the other hand ensures AmeriCorps' continued 
support for our education system.
    We therefore also strongly believe that these rules should not 
create burdens on AmeriCorps members and programs that are not already 
imposed by the NCLBA. Thousands of AmeriCorps members are providing 
invaluable support to children through a range of activities that the 
NCLBA has specifically exempted from coverage. To be consistent with 
the NCLBA, in setting tutor qualifications in the proposed rule, we 
narrowly defined ``tutor'' to include only individuals whose primary 
goal is to increase academic achievement in core subjects through 
planned, consistent, one-to-one or small-group activities and sessions, 
that build on students' academic strengths and target students' 
academic needs. We did not intend to establish qualifications for 
AmeriCorps members 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 confirmed that the qualification 
requirements for tutors and other paraprofessionals under the NCLBA 
apply to tutors who are

[[Page 39592]]

employees of the Local Education Agency (LEA) or school, as determined 
by the State, 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 (including tutors) 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. For a member 
serving as a tutor, other than one employed by the LEA or school, the 
proposed rule required 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, the proposed rule required tutoring programs to show 
competency to provide tutoring service through their recruitment, 
specialized training, performance measures, and supervision.
AmeriCorps Members as ``employees'' and Application of the NCLBA
    Many commenters expressed concern over the characterization of 
AmeriCorps members as ``employees'' of, or ``hired by'' the LEA or 
school, particularly given that the NCSA specifically states that 
members are not to be considered employees of the programs with which 
they serve. Some of the commenters were concerned that identifying 
members in this way could bring them under the auspices of other 
employment and labor laws such as those dealing with minimum wage.
    The Corporation used this terminology because that is how the U.S. 
Department of Education has characterized the distinction between those 
AmeriCorps members who will be covered by the NCLBA and those who will 
not. In its regulations implementing the NCLBA, the U.S. Department of 
Education defines a covered paraprofessional as any paraprofessional 
``hired by the LEA''. 34 CFR 200.58(a)(1)). In subsequent guidance on 
implementation of its rules, the Department of Education specifically 
addressed the application of NCLBA paraprofessional requirements to 
AmeriCorps members working in schools as follows:

The National and Community Service Act states that AmeriCorps 
volunteers are not considered employees of the entities where they 
are placed (42 U.S.C. 12511 (17B)). Unless AmeriCorps volunteers are 
considered employees of a school district under State law, the 
paraprofessional requirements in section 1119 (see items B-1 and B-
5) do not apply. U.S. Department of Education, Title I 
Paraprofessionals, Non-Regulatory Guidance, March 1, 2004.

Whether an AmeriCorps member is considered an employee under State law 
is a State law question, and not a Corporation determination. Over the 
years, there have been occasions when a particular State considered 
AmeriCorps members serving in that State to be employees for some 
purposes, such as minimum wage and overtime, or unemployment insurance. 
To the Corporation's knowledge, however, no State currently considers 
AmeriCorps members serving in schools to be employees for purposes of 
the NCLBA. In light of the confusion caused by the proposed rule, 
however, the Corporation is amending the language in this final rule to 
make clear that only those members considered to be hired by the LEA or 
school under State law must comply with NCLBA paraprofessional 
requirements.
    Several commenters interpreted the proposed rule as extending NCLBA 
coverage and its requirements to AmeriCorps members who are not 
currently covered under that law. This was not the Corporation's 
intent. The Corporation's intent was simply to reiterate the current 
U.S. Department of Education rules on which AmeriCorps members may be 
subject to NCLBA. The Corporation is not imposing NCLBA requirements 
beyond what the U.S. Department of Education already requires.
    Grantees should note that the NCLBA paraprofessional requirements 
apply to any individual who meets the definition of paraprofessional, 
including tutors. Again, the Corporation would expect grantees to 
determine whether its AmeriCorps members are covered paraprofessionals 
under the NCLBA and, therefore, subject to NCLBA requirements. If they 
are not covered paraprofessionals subject to NCLBA requirements, the 
grantee must then determine whether they are tutors, as defined in this 
rule, and therefore subject to the qualifications established by this 
rule.
    One commenter indicated that at least six States have opted out of 
the NCLBA and sixteen more have pending legislation to opt out. As 
stated above, this rule will not impose NCLBA requirements where they 
are not already applicable. States that have opted out of NCLBA 
requirements by choosing not to receive Title I Federal education funds 
will have only to ensure that any members serving as tutors, as defined 
in this regulation, meet the qualifications established by this 
regulation--i.e. a high-school diploma or its equivalent, or successful 
completion of a proficiency test--and provide training and supervision 
as required in this regulation.
Definition of ``Tutoring''
    As discussed above, the proposed rule narrowly defined ``tutor'' 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 activities and sessions, that 
build on students' academic strengths and target students' academic 
needs.
    One commenter recommended that the Corporation clarify whether the 
definition of tutoring applies only in the K-12 years, or whether it 
would apply to a member ``tutoring'' pre-school children. Another 
commenter sought clarification on whether tutoring, as defined, in this 
regulation included adult-learning. The Corporation's intent, in this 
regulation, was to impose requirements on tutoring that occurs during 
the K-12 school years, as a parallel requirement to the NCLBA. We did 
not intend to extend the tutor qualification requirements to activities 
involving pre-kindergarten students or adults. Consequently, the 
Corporation has amended the regulation to make clear that tutoring in 
this regulation relates only to children in grades kindergarten through 
twelfth.
AmeriCorps Tutor Qualifications
    As discussed above, for a member serving as a tutor, other than one 
employed by the LEA or school as determined by State law, the proposed 
rule required either that the member has a high school diploma (or its 
equivalent), or that the member pass 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 and screening requirements.
    Two commenters found the proposed rules for tutor qualifications 
acceptable, and one of the two thought the increased qualifications 
would be

[[Page 39593]]

beneficial. One commenter commended the proposed rule because it 
established necessary standards and provided the flexibility for 
programs to test proficiencies appropriate for the local population and 
educational priorities. One commenter supported the rule as applied to 
non-profits and noted its importance in that it resolves issues raised 
by the NCLBA. On the other hand, one commenter criticized the rule as 
``unnecessary and burdensome,'' and unbeneficial for innovative 
programs designed to meet community needs. Fifteen commenters expressed 
concern that they would not be able to recruit sufficient numbers of 
tutors who qualify under the proposed rule. Many commenters were in 
favor of some training and education requirements for tutors, but 
disagreed with the standards in the proposed rule. Some commenters 
believed that their tutoring programs are already successful with the 
tutors they currently recruit, train, test, and supervise, and 
therefore did not see the need for additional Corporation requirements. 
One commenter was concerned that this rule would lead to different 
member qualifications for tutors ``hired by LEAs'' versus those ``hired 
by'' non-profits. As discussed above, under current law and in the 
absence of an AmeriCorps regulation, there are already different 
standards for tutors considered by State law to be ``hired by the 
LEAs'' than other AmeriCorps tutors, as only those ``hired by the 
LEAs'' are subject to the paraprofessional requirements under the 
NCLBA. The Corporation is merely imposing some additional limited 
qualifications requirements on the group of tutors not covered by the 
NCLBA.
    One commenter was also concerned about having different 
requirements for tutors depending upon the State law where the members 
were serving, and the impact that would have on multi-State programs. 
In the Corporation's view, this is no different than any issue that 
might vary for multi-State programs depending upon State law. For 
example, some States cover AmeriCorps members under unemployment 
insurance laws, while others do not; some States cover members under 
workers' compensation, while others do not. Any multi-State program 
with members serving in States covered by different laws has to deal 
with members potentially being treated one way in one State and another 
way in a different State. The application of the NCLBA on a State-by-
State basis is no different.
    One commenter expressed concern over the increased training costs 
necessary to meet the new training requirements for members serving as 
tutors. The Corporation is aware that programs will need assistance in 
ensuring that tutors receive appropriate training and this issue will 
be part of our training and technical assistance strategy in the coming 
year.
    Four commenters recommended that the current standards for tutors 
be maintained. One of these commenters supported requiring the high-
school diploma or its equivalent, and successful completion of pre- and 
in-service training, but no proficiency test. One commenter recommended 
revising the rule to permit ``qualified AmeriCorps members [to serve] 
as tutors without the requirement for specific levels of education or 
expensive competency tests.'' In fact, the vast majority of AmeriCorps 
members have a high-school diploma or its equivalent before they begin 
serving. So no proficiency test will be necessary for most AmeriCorps 
members serving as tutors. The Corporation did not, however, want to 
limit the ability to tutor only to those with a high-school diploma or 
its equivalent, as we understand that some programs have members 
serving who do not have a high-school diploma or its equivalent but 
who, nonetheless, are competent tutors. Our intent was to ensure a 
minimum standard that all tutors must meet, while leaving flexibility 
to programs to engage as tutors individuals who would not qualify under 
a ``high-school diploma or its equivalent'' standard. We believe that 
the proficiency test accomplishes the goal of establishing this minimum 
requirement for the small number of members who may not have a high-
school diploma or its equivalent. (We note that the equivalent of a 
high-school diploma includes more than just a GED, and we have included 
a technical amendment to the final rule in Sec.  2510.20 to reflect the 
definition of recognized equivalent of a high-school diploma.)
    One commenter questioned which proficiency test programs should use 
to qualify tutors and who would approve the test. The commenter stated 
that local LEAs and schools do not currently have an appropriate test 
for measuring proficiency and that the ``on-line ParaPro test'' can be 
very challenging. The Corporation does not expect programs to 
necessarily use the test that paraprofessionals must pass to qualify 
under the NLCBA. The program may use the test that it deems appropriate 
to test the proficiency of its members, be it in math or English, or 
whatever core subjects the member may tutor. To select skill exams or 
tests, programs should consider seeking input from professionals in 
their local area. State Departments of Education, Adult Basic 
Education, or GED programs can provide names and sources of tests 
commonly used for basic subjects or skills at the level the program 
requires.
    Potential proficiency tests might also include tests used by the 
U.S. Department of Education to enroll students who do not otherwise 
have a high-school diploma or its equivalent on what is known as an 
``ability-to-benefit basis.'' The U.S. Department of Education 
periodically publishes the list of these approved tests and acceptable 
passing scores in the Federal Register. You may read the most recent 
list at 69 FR 26087 (May 11, 2004). We reiterate that a program is not 
required to use these tests. The program must determine an appropriate 
proficiency test given the focus of the program, the members recruited, 
and the population receiving the tutoring. The qualifications 
requirements for tutors in the final rule mirror the language of the 
proposed rule.
Tutor Program Requirements (Sec.  2522.940)
    The proposed rule required tutoring programs to show competency to 
provide tutoring service through their recruitment, specialized 
training, performance measures, and supervision. One commenter 
commended the program requirements because they establish necessary 
standards and provide programs with implementation flexibility. This 
provision has not changed in the final rule.

I. Non-Displacement of Volunteers (Sec.  2540.100)

    The Corporation's focus has consistently been, pursuant to the Act, 
to fund programs meeting needs that would otherwise go unmet 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. In addition, E.O. 13331 directed 
national and community service programs to avoid or eliminate any 
practice that displaces volunteers. Consequently, the proposed rule 
stated that the service of an AmeriCorps member must complement, and 
may not displace, the service of other volunteers in the community, 
including partial displacement such as reducing a volunteer's hours.
    One commenter supported the new provision on volunteer 
displacement. Three commenters requested that the Corporation clarify 
in the final rule its definition of volunteer displacement,

[[Page 39594]]

and how the Corporation and grantees will monitor volunteer 
displacement.
    Six other commenters did not support the provision and thought it 
may have unintended consequences. One of the reasons proffered was that 
programs often use AmeriCorps members to transition from an 
administrative design that is no longer able to meet community demands 
for service. In one commenter's State, AmeriCorps members put ``legs 
under recruitment and outreach plans that were formerly the domain of 
one or two community volunteers. The result is more volunteers for the 
organization.'' One commission noted that the proposed rule language 
will focus attention on whether a particular volunteer function is 
assigned to an AmeriCorps member, rather than whether the AmeriCorps 
member's presence and work have resulted in a stronger community 
volunteer program. This commenter suggested that the Corporation focus 
the prohibition on the extent to which an AmeriCorps member's 
participation in a program results in ``either fewer community 
volunteers or fewer hours of volunteer service by the organization's 
community volunteers.'' Five other commenters, including two 
commissions, made similar comments.
    The Corporation does not believe that a focus on the number of 
volunteers or volunteer hours is appropriate, primarily because of the 
burden it would place on organizations to track those numbers. In fact, 
the final rule omits the reference to volunteer hours, but maintains 
the rest of the language from the proposed rule.
    The Corporation wants our programs to build on, rather than 
substitute for, service that is already occurring in the non-profit 
world. We do not want programs to use AmeriCorps members for activities 
that a community volunteer is already performing. However, we will 
consider whether in bringing on AmeriCorps members, the grantee is 
launching new sites or new service activities, expanding the role of 
community volunteers in the program, improving the caliber or diversity 
of members enrolled, or promoting other strategies to expand the 
program or enhance its impact in the community.
    Monitoring and enforcement of this prohibition will occur as they 
currently do with respect to displacement of employees: The Corporation 
and grantees will be alert to the issues of displacement of volunteers 
in the selection process; the Corporation will include non-displacement 
of volunteers as one of the assurances grantees will make when 
accepting a grant; Corporation program officers will ask a program to 
demonstrate compliance if they have concerns; and, if a community 
volunteer raises displacement as an issue, the volunteer will have the 
option of filing a grievance at the program level, and the commission 
or the Corporation, as appropriate, will investigate any allegation of 
displacement as a compliance matter.

J. 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 Corporation received no comments on this issue. The final 
rule is identical to the proposed rule and amends the regulations to 
remove any obsolete references to transitional entities.

K. State Commissions Directly Operating Programs (Sec.  2550.80(j))

    Under the NCSA, a State commission or alternative administrative 
entity may not directly carry out any national service program that 
receives assistance under subtitle C of title I of the NCSA. 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 (except as permitted in the Learn 
and Serve legislation), AmeriCorps VISTA, or Senior Corps program. In 
the proposed rule, the Corporation proposed relaxing the restriction by 
amending the regulations to conform to the Act and give commissions 
more flexibility to directly operate non-subtitle C programs.
    Six commenters were in favor of this provision, while fifty-one 
commenters opposed it. Most of the commenters opposing the provision 
represented Retired and Senior Volunteer Program and Foster Grandparent 
Program grantees or supporters, and specifically objected to State 
commissions directly operating Senior Corps programs. The Corporation 
was not persuaded by most of the reasons the commenters proffered for 
why State commissions should not be allowed to directly operate Senior 
Corps programs. However, one of their main oppositions to this 
provision was that it would eliminate one of the greatest strengths of 
the National Senior Service Corps programs--the local governance and 
local decision-making by local community-based sponsors regarding 
program focus and activities.
    One commenter suggested that, because of the significance of this 
issue, this proposed change should be addressed in reauthorization, 
rather than in regulation. The Corporation, however, has proposed going 
no further than the current statutory language allows and, thus, does 
not believe statutory language is necessary to permit State commissions 
greater involvement in program delivery.
    Nonetheless, the Corporation appreciates the concerns that the 
commenters expressed over the local nature of Senior Corps programs and 
the local needs they address. Furthermore, the Corporation notes that 
its current policy and regulations prohibit a Senior Corps grantee from 
sub-granting, delegating, or contracting project management 
responsibilities to any other entity. 45 CFR 2551.22, 2552.22, and 
2553.22. While this language does not, in and of itself, prohibit a 
State commission from becoming a Senior Corps project sponsor, it would 
require a commission, like any other sponsor, to handle all project 
management responsibilities itself. The Corporation does not believe 
that most State commissions are in a position to operate a Senior Corps 
program without the ability to delegate or subgrant, and agrees with 
the commenters that local organizations are in the best position to 
identify local needs and operate the programs.
    Furthermore, the Corporation received no indication that State 
commissions are in any way eager to operate Senior Corps programs--
their interest appears to lie more with AmeriCorps VISTA, Special 
Volunteer Programs, and other initiatives that the Corporation might 
fund with subtitle H funds. Note that, under the NCSA, only an LEA may 
apply for school-based Learn and Serve funds.
    Consequently, the Corporation is changing the proposed language in 
section 2550.80(j) to allow State commissions to directly operate any 
national service program except for those that receive assistance under 
subtitle C of title I of the NCSA (AmeriCorps), and Title II of the 
Domestic Volunteer Service Act of 1973 (Senior Corps).

[[Page 39595]]

VII. Effective Dates

    The final rule will take effect September 6, 2005. However, the 
following sections will become operational for the 2006 program year:
    Sec. Sec.  2522.400 through 2522.475--Selection Criteria and 
Process
    Sec. Sec.  2522.500 through 2522.650--Performance Measures
    Sec. Sec.  2522.700 through 2522.740--Evaluation Requirements
    To the extent that certain sections of the final rule restate 
current Corporation policy, current policy will remain in effect until 
superseded by the regulation.

VIII. Non-Regulatory Issues

A. Streamlining Grantee Requirements and Aligning Them With Grantee 
Needs

    In the Notice of Proposed Rulemaking, the Corporation indicated its 
intent to streamline our grant application and grant-making processes, 
and streamline and align with grantee needs our reporting and other 
requirements. In particular, we discussed revising the timing of the 
grant cycle to better accommodate programs with start dates in the 
fall; streamlining continuation grant application and reporting 
requirements; and clarifying and streamlining our guidance to the 
field.
    Several commenters appreciated the Corporation's efforts to make 
the grant cycles and reporting requirements flexible based on the needs 
of grantees, to streamline grant applications and guidelines, to 
decrease the time it takes to make a grant award, and to cut 
unnecessary paperwork out of the grant-making process. The Corporation 
is continuing its efforts to better align the grant-making timetable 
with grantees' needs, and to streamline application and reporting 
requirements.
Streamlining Continuation Grants and Reporting Requirements
    Section 130 of the National and Community Service Act of 1990 
authorizes the Corporation to determine the timing and content of 
applications for AmeriCorps funding. In the NPRM, the Corporation 
signaled its intent 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 goal is to streamline the application and 
review processes for continuations, as well as to give grantees more 
predictability over the three-year grant cycle.
    In our discussion of the streamlining we envisioned in this area, 
the Corporation stated that we intended to work with State commissions 
on a schedule that accommodates the different start dates of programs 
within a State's portfolio. We also stated that, because of the 
uncertainties of annual appropriations, we were 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 MSYs), and may establish an alternate timetable for 
considering those requests.
    Two commenters expressed concern about the impact of approving 
grants on a rolling basis and tying application and reporting 
requirements to program start dates. These commenters indicated that 
States have AmeriCorps programs under a single grant code for specific 
funding categories--formula, competitive, and EAP. Rolling grant 
approvals based on program start dates may necessitate a different 
grant code for each program and would force multiple grant codes to be 
open and managed for longer periods, according to these commenters. The 
Corporation does not intend to make separate grants for each program in 
a State commission's portfolio. Rather, the Corporation intends that a 
State commission's grant is awarded in time for the program in the 
State's portfolio with the earliest start date to begin operations.
    One commenter discussed the possibility of establishing an 
alternative timetable for those programs that wish to include an 
expansion request with their continuation application. This commenter 
indicated an understanding of how uncertain the annual appropriations 
process is, but believed that a program should not potentially lose 
funding because there was no increase in appropriations. A continuation 
program, according to this commenter, should at least be guaranteed 
level funding, assuming that it meets all the requirements and 
demonstrates that it is a high-quality program. While the Corporation 
typically awards three-year grants, the grants are incrementally funded 
on an annual basis, and consequently contingent on the availability of 
appropriations. For continuation programs that are compliant and 
meeting performance measures, the Corporation makes every effort to 
ensure level operations, but we cannot guarantee funding across the 
three years of a grant. The Corporation is continuing to identify ways 
to streamline this process and will provide further guidance later this 
year.

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

Re-Fill Rule
    Since 2003, the Corporation prohibited programs from re-filling a 
slot when a member left without completing a term of service. We 
received 42 comments urging the Corporation to allow programs to refill 
vacant slots. On January 12, 2005, the Corporation implemented a change 
in the refill rule, on a pilot basis, to allow limited re-fill of 
positions. The Corporation will monitor and evaluate this pilot refill 
rule, and determine whether and to what extent to continue the refill 
rule in the future.

C. Improving the AmeriCorps Member Experience

    During the preliminary input process, the Corporation 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, as we indicated in the Notice of Proposed 
Rulemaking, the Corporation intends to explore creating a member 
satisfaction survey through which AmeriCorps members would be able to 
evaluate their programs and their AmeriCorps experience. One commenter 
supported the creation of a member satisfaction survey to gauge 
members' experience with both their program and AmeriCorps, as long as 
it is not a requirement that programs use the survey that the 
Corporation creates. The Corporation is in the process of creating a 
national survey for AmeriCorps members and we intend to post the 
results on our Web site when they are available, for prospective 
members to consider. Although the survey will be open to all members, 
the Corporation has not yet determined whether programs will be 
required to ensure all members participate.

IX. Rulemaking Analyses and Notices

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 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,

[[Page 39596]]

or tribal government or communities. This is, however, a significant 
rule, and therefore has been reviewed by OMB.
    The 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-funded 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 
assistance, the program's required matching percentage increases 
gradually to 50 percent. Programs on the alternative match scale will 
begin increasing their share of match to 29 percent in the seventh year 
of operation, increasing gradually to 35 percent in the tenth year and 
beyond.
    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 20.2 percent of all AmeriCorps 
grantees and subgrantees had match percentages less than 26 percent. 
About 13 percent of these low-matching programs will not need to match 
at 26 percent immediately, because they would qualify for the lower 
match rate available for rural and low-income programs.
    Among the rest of the low-matching programs, the average amount of 
matching money needed to reach the 26 percent level is about $18,900 
per program, or about $2,274,700 per year across all AmeriCorps 
programs. The median program would require about $13,700 in additional 
matching money to reach the 26 percent level. The total annual project 
amount needed would increase somewhat--to about $2,806,500 per year--if 
all programs matched at 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 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, 3045-0065, 3045-0100, and 3045-0101 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.


0
For the reasons stated in the preamble, the Corporation for National 
and Community Service amends chapter XXV, title 45 of the Code of 
Federal Regulations as follows:

PART 2510--OVERALL PURPOSES AND DEFINITIONS

0
1. The authority citation for part 2510 continues to read as follows:

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


0
2. Amend Sec.  2510.20 by adding the definitions ``recognized 
equivalent of a high-school diploma'' and ``target community'' in 
alphabetical order to read as follows:


Sec.  2510.20  Definitions.

* * * * *
    Recognized equivalent of a high-school diploma. The term recognized 
equivalent of a high-school diploma means:
    (1) A General Education Development Certificate (GED);
    (2) A State certificate received by a student after the student has 
passed a State-authorized examination that the State recognizes as the 
equivalent of a high-school diploma;
    (3) An academic transcript of a student who has successfully 
completed at least a two-year program that is acceptable for full 
credit toward a bachelor's degree; or
    (4) For a person who is seeking enrollment in an educational 
program that leads to at least an associate degree or its equivalent 
and who has not completed high-school but who excelled academically in 
high-school, documentation that the student excelled academically in 
high-school and has met the formalized, written policies of the 
institution for admitting such students.
* * * * *
    Target community. The term target community means the geographic 
community in which an AmeriCorps grant applicant intends to provide 
service to address an identified unmet human, educational, 
environmental, or public safety (including disaster-preparedness and 
response) need.
* * * * *

PART 2520--GENERAL PROVISIONS: AMERICORPS SUBTITLE C PROGRAMS

0
1. The authority citation for part 2520 is revised to read as follows:

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


0
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.


0
3. Revise Sec.  2520.20 to read as follows:

[[Page 39597]]

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 unmet 
environmental, educational, public safety (including disaster 
preparedness and response), 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.  2520.65]

0
4. Redesignate Sec.  2520.30 as Sec.  2520.65, and add the following 
sections: Sec. Sec.  2520.25, 2520.30, 2520.35, 2520.40, 2520.45, 
2520.50, 2520.55, and 2520.60.


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 address local 
environmental, educational, public safety (including disaster 
preparedness and response), 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) Engaging in community clean-up projects;
    (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 public 
safety 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 that is meeting 
unmet community needs. 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; and
    (v) Assisting an organization in reaching out to individuals and 
communities of different backgrounds when encouraging volunteering 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 education.
    (4) Developing collaborative relationships with other organizations 
working to achieve similar goals in the community, such as:
    (i) Community organizations, including faith-based organizations;
    (ii) Foundations;
    (iii) Local government agencies;
    (iv) Institutions of higher education; and
    (v) Local education agencies or organizations.


Sec.  2520.35  Must my program recruit or support volunteers?

    (a) Unless the Corporation or the State commission, as appropriate, 
approves 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 (or the State commission for formula 
programs) 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 resources?

    (a) AmeriCorps members may raise resources 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 individuals;
    (4) Securing financial resources from the community to assist 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 a 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 project) operating expenses or endowment;

[[Page 39598]]

    (2) Write a grant application to the Corporation or to any other 
Federal agency.


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 originally agreed-upon term of service, as reflected in the member 
enrollment in the National Service Trust, 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, as reflected in the member 
enrollments in the National Service Trust, 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?

    You may, where appropriate, collect fees for direct services 
provided by AmeriCorps members if:
    (a) The service activities conducted by the members are allowable, 
as defined 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.

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

0
1. The authority citation for part 2521 is revised to read as follows:

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


0
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.


0
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]

0
4-5. Transfer the text of paragraph (h) of Sec.  2521.30 to new Sec.  
2521.95, and remove Sec.  2521.30(g); and:
0
a. In new Sec.  2521.95, redesignate transfered paragraphs (h)(1), 
(h)(2) and (h)(3) introductory text as (a), (b), and (c), respectively;
0
b. Redesignate transfered (h)(3)(i), (h)(3)(i)(A), and (h)(3)(i)(B) as 
(c)(1), (c)(1)(i), (c)(1)(ii), respectively; and
0
c. Redesignate transfered (h)(3)(ii) and (h)(3)(iii) as (c)(2), and 
(c)(3), respectively.


0
6. Add a new center heading after Sec.  2521.30 as set forth below.

Program Matching Requirements

0
7. Add the following sections: Sec. Sec.  2521.35, 2521.40, 2521.45, 
2521.50, 2521.60, 2521.70, 2521.80, and 2521.90.


Sec.  2521.35  Who must comply with matching requirements?

    (a) The matching requirements described in Sec. Sec.  2521.40 
through 2521.95 apply to you if you are a subgrantee of a State 
commission or a direct program grantee of the Corporation. These 
requirements do not apply to Education Award Programs.
    (b) If you are a State commission, you must ensure that your 
grantees meet the match requirements established in this part, and you 
are also responsible for meeting an aggregate overall match based on 
your grantees' match individual match requirements.


Sec.  2521.40  What are the matching requirements?

    If you are subject to matching requirements under Sec.  2521.35, 
you must adhere to the following:
    (a) Basic match: At a minimum, you must meet the basic match 
requirements as articulated in Sec.  2521.45.
    (b) Regulatory match: In addition to the basic requirements under 
paragraph (a) of this section, you must provide an overall level of 
matching funds according to the schedule in Sec.  2521.60(a), or Sec.  
2521.60(b) if applicable.
    (c) Budgeted match: To the extent that the match in your approved 
budget exceeds your required match levels under paragraph (a) or (b) of 
this section, any failure to provide the amount above your regulatory 
match but below your budgeted match will be considered as a measure of 
past performance in subsequent grant competitions.


Sec.  2521.45  What are the limitations on the Federal government's 
share of program costs?

    The limitations on the Federal government's share are different--in 
type 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 include 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), is limited as follows:
    (1) The Federal share of the living allowance 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 funds for the living 
allowance.
    (3) Your share of member support costs must be non-Federal cash.
    (4) The Corporation's share of health care costs may not exceed 85 
percent.
    (b) Program operating costs: The Corporation share of program 
operating costs may not exceed 67 percent. These costs include 
expenditures (other than member support costs described in paragraph 
(a) of this section) such as staff, operating expenses, internal 
evaluation, and administration costs.
    (1) You may provide your share of program operating costs with 
cash, including other Federal funds (as long as the other Federal 
agency permits its funds to be used as match), 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

[[Page 39599]]

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?

    Except as provided in paragraph (b) of this section, if your 
program continues to receive funding after an initial three-year grant 
period, you must continue to meet the minimum requirements in Sec.  
2541.45 of this part. In addition, your required share of program 
costs, including member support and operating costs, will incrementally 
increase to a 50 percent overall share by the tenth year and any year 
thereafter that you receive a grant, without a break in funding of five 
years or more. A 50 percent overall match means that you will be 
required to match $1 for every $1 you receive from the Corporation.
    (a) Minimum Organization Share: (1) Subject to the requirements of 
Sec.  2521.45 of this part, and except as provided in paragraph (b) of 
this section, your overall share of program costs will increase as of 
the fourth consecutive year that you receive a grant, 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
                                            (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 overall share.....................        N/A        N/A        N/A         26         30         34         38         42         46         50
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (2) A grantee must have contributed matching resources by the end 
of a grant period in an amount equal to the combined total of the 
minimum overall annual match for each year of the grant period, 
according to the table in paragraph (a)(1) of this section.
    (3) A State commission may meet its match based on the aggregate of 
its grantees' individual match requirements.
    (b) Alternative match requirements: If your program is unable to 
meet the match requirements as required in paragraph (a) of this 
section, and is located in a rural or a severely economically 
distressed community, you may apply to the Corporation for a waiver 
that would require you to increase the overall amount of your share of 
program costs beginning in the seventh consecutive year that you 
receive a grant, according to the following table:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Year 1     Year 2     Year 3     Year 4     Year 5     Year 6     Year 7     Year 8     Year 9    Year 10
                                            (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)  (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 overall share.....................        N/A        N/A        N/A        N/A        N/A        N/A         29         31         33         35
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (c) Determining Program Location. (1) The Corporation will 
determine whether your program is located in a rural county by 
considering the U.S. Department of Agriculture's Beale Codes.
    (2) The Corporation will determine whether your program is located 
in a severely economically distressed county by considering 
unemployment rates, per capita income, and poverty rates.
    (3) Unless the Corporation approves otherwise, as provided in 
paragraph (c)(4) of this section, the Corporation will determine the 
location of your program based on the legal applicant's address.
    (4) If you believe that the legal applicant's address is not the 
appropriate way to consider the location of your program, you may 
request the waiver described in paragraph (b) of this section and 
provide the relevant facts about your program location to support your 
request.
    (d) Schedule for current program grants: If you have completed at 
least one three-year grant cycle 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.
    (e) Flexibility in how you provide your share: As long as you meet 
the basic match requirements in Sec.  2521.45, you may use cash or in-
kind contributions to reach the overall share level. For example, if 
your organization finds it easier to raise member support match, you 
may choose to meet the required overall match by raising only more 
member support match, and leave operational match at the basic level, 
as long as you provide the required overall match.
    (f) 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 and applicable 
OMB circulars in documenting cash and in-kind contributions and excess 
resources.


Sec.  2521.70  To what extent may the Corporation waive the matching 
requirements in Sec. Sec.  2521.45 and 2521.60 of this part?

    (a) The Corporation may waive, in whole or in part, the 
requirements of Sec. Sec.  2521.45 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) That the lack of resources in your local community is unique or 
unusual;
    (3) The efforts you have made to raise matching resources; and

[[Page 39600]]

    (4) The amount of matching resources you have raised or reasonably 
expect to raise.
    (c) You must provide with your waiver request:
    (1) A request for the specific amount of match you are requesting 
that the Corporation waive; and
    (2) A budget and budget narrative that reflects the requested level 
in matching resources.


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

    (a) If you have not been a direct recipient of an AmeriCorps 
operational grant from the Corporation or a State commission for five 
years or more, as determined by the end date of your most recent grant 
period, 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.
    (b) If you have not been a direct recipient of an AmeriCorps 
operational grant from the Corporation or a State commission for fewer 
than five years, you must begin matching at the same level you were 
matching at the end of your most recent grant period.


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 resources at the level the 
previous legal applicant had reached at the time you took over the 
program.

PART 2522--AMERICORPS PARTICIPANTS, PROGRAMS, AND APPLICANTS

0
1. The authority citation for part 2522 is revised to read as follows:

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


0
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.

0
3. Amend Sec.  2522.250 as follows:
0
a. In paragraph (a)(3) revise the text to read as follows; and
0
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 to an eligible provider 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) Corporation share. (i) Except as provided in paragraph 
(b)(3)(ii) of this section, the Corporation's share of the cost of 
health coverage may not exceed 85 percent.
* * * * *


0
4a. 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, which may include 
review by panels of experts, 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.  2522.420  [Redesignated as Sec.  2522.480]

0
4b. Redesignate Sec.  2522.420 as Sec.  2522.480.

0
5. Add the following sections: Sec. Sec.  2522.415, 2522.420, 2522.425, 
2522.430, 2522.435, 2522.440, 2522.445, 2522.448, 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's cost-effectiveness and budget adequacy.


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.
    (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 members, including those 
from the target community, and demonstrating member satisfaction;
    (2) If you are a current grantee, has succeeded in meeting 
reasonable member enrollment and retention targets in prior grant 
periods, as determined by the Corporation;
    (3) Includes effective and feasible plans for, or evidence of, 
developing, training, and supervising members;
    (4) Demonstrates well-designed training or service activities that 
promote and sustain post-service, an ethic of service and civic 
responsibility, including structured opportunities for

[[Page 39601]]

members to reflect on and learn from their service; and
    (5) If you are a current grantee, has met well-defined, performance 
measures regarding AmeriCorps members, including any applicable 
national performance measures, and including outputs and outcomes.
    (c) Community outputs and outcomes. In evaluating whether your 
proposal adequately addresses community 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 
any applicable national performance measures, and including outputs and 
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 community organizations, including faith-based 
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;
    (ii) Demonstrate leadership within the organization and the 
community served; and
    (iii) If you are an existing grantee, you have secured the matching 
resources as reflected in your prior grant awards;
    (3) The extent to which you are securing community support that 
recurs, expands in scope, or increases in amount, and is more diverse, 
as evidenced by--
    (i) Collaborations that increase the quality and reach of service 
and include well-defined roles for faith-based and 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 philanthropic and corporate 
resources.


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

    (a) In evaluating the cost-effectiveness and budget adequacy of 
your proposed program, the Corporation considers the following:
    (1) Whether your program is cost-effective based on:
    (i) Your program's proposed Corporation cost per MSY, as defined in 
Sec.  2522.485; and
    (ii) Other indicators of cost-effectiveness, such as:
    (A) The extent to which your program demonstrates diverse non-
Federal resources for program implementation and sustainability;
    (B) If you are a current grantee, the extent to which you are 
increasing your share of costs to meet or exceed program goals; or
    (C) If you are a current grantee, the extent to which you are 
proposing deeper impact or broader reach without a commensurate 
increase in Federal costs; and
    (2) Whether your budget is adequate to support your program design.
    (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 distressed 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.
    (c) The indicators in paragraphs (a)(1)(i) and (a)(1)(ii)(B) of 
this section do not apply to Education Award Program applicants.


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 and budget adequacy.....................           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.  2522.448  What weights does the Corporation give to the 
subcategories under Cost Effectiveness and Budget Adequacy?

------------------------------------------------------------------------
    Cost-effectiveness and budget adequacy sub-category       Percentage
------------------------------------------------------------------------
Cost-effectiveness.........................................           15
Adequacy of budget.........................................           10
------------------------------------------------------------------------


[[Page 39602]]

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.  2522.440 of this 
part, the Corporation will seek to ensure that its portfolio of 
approved programs includes a meaningful representation of proposals 
that address one or more of the following priorities:
    (a) Program models: (1) Programs operated by community 
organizations, including faith-based organizations, or programs that 
support the efforts of community organizations, including faith-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 disadvantaged youth and 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;
    (6) Programs that increase service and service-learning on higher 
education campuses in partnership with their surrounding communities;
    (7) Programs that foster opportunities for Americans born in the 
post-World War II baby boom to serve and volunteer in their 
communities; and
    (8) Programs that involve community-development by finding and 
using local resources, and the capacities, skills, and assets of lower-
income people and their community, to rejuvenate their local economy, 
strengthen public and private investments in the community, and help 
rebuild civil society.
    (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;
    (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;
    (6) A rural community, as demonstrated by Federal and State data; 
or
    (7) A severely economically distressed community, as demonstrated 
by Federal and State data.
    (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 posts discretionary funding opportunities 
addressing the Corporation's selection preferences and additional 
requirements on our website at www.nationalservice.gov and at 
www.grants.gov in advance of grant competitions


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

    (a) The Corporation may give special 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, and why the program meets one of 
the State's priorities.
    (b) A State may apply priorities different than those of the 
Corporation in selecting its formula programs.


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 
based on their relative quality and according to the following table:

------------------------------------------------------------------------
    If you submit this  number of state       Then you must rank  this
 competitive proposals  to the corporation      number 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 rankings you provide will not be determinative in the 
grant selection process, and the Corporation will not be bound by them, 
we will 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 rural, high poverty, and economically distressed areas.
    (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 for purposes of 
clarifying or verifying information in a proposal, including conducting 
due diligence to ensure an applicant's ability to manage Federal funds:
    (1) For an applicant that has previously received a Corporation 
grant, any information or records the applicant submitted to the 
Corporation, or that the Corporation has in its system of records, in 
connection with its previous grant (e.g. progress reports, site visit 
reports, financial status reports, audits, HHS Account Payment Data 
Reports, Federal Cash Transaction Reports, timeliness of past 
reporting, etc.);
    (2) Program evaluations;
    (3) Member-related information from the Corporation's systems;
    (4) Other Corporation internal information, including information 
from the Office of Inspector General, administrative standards for 
State commissions, and reports on program training and technical 
assistance;
    (5) IRS Tax Form 990;
    (6) An applicant organization's annual report;
    (7) Information relating to the applicant's financial management 
from Corporation records;
    (8) Member satisfaction indicators;
    (9) Publicly available information including:
    (i) Socio-economic and demographic data, such as poverty rate, 
unemployment rate, labor force

[[Page 39603]]

participation, and median household income;
    (ii) Information on where an applicant and its activities fall on 
the U.S. Department of Agriculture's urban-rural continuum (Beale 
codes);
    (iii) Information on the nonprofit and philanthropic community, 
such as charitable giving per capita;
    (iv) Information from an applicant organization's website; and
    (v) U.S. Department of Education data on Federal Work Study and 
Community Service; and
    (10) 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.
    (c) Before approving a program grant to a State commission, the 
Corporation will consider a State commission's capacity to manage and 
monitor grants.


Sec.  2522. 475  To what extent must I use the Corporation's selection 
criteria and priorities when selecting formula programs or operating 
sites?

    You must ensure that the selection criteria you use include the 
following criteria:
    (a) The quality of the national service program proposed to be 
carried out directly by the applicant or supported by a grant from the 
applicant.
    (b) The innovative aspects of the national service program, and the 
feasibility of replicating the program.
    (c) The sustainability of the national service program.
    (d) The quality of the leadership of the national service program, 
the past performance of the program, and the extent to which the 
program builds on existing programs.
    (e) The extent to which participants of the national service 
program are recruited from among residents of the communities in which 
projects are to be conducted, and the extent to which participants and 
community residents are involved in the design, leadership, and 
operation of the program.
    (f) The extent to which projects would be conducted in one of the 
areas listed in Sec.  2522.450(c)(1) through (5) of this subpart.
    (g) In the case of applicants other than States, the extent to 
which the application is consistent with the application of the State 
in which the projects would be conducted.
    (h) Such other criteria as the Corporation considers to be 
appropriate, following appropriate notice.

0
6. Add new Sec.  2522.485 to read as follows:


Sec.  2522.485  How do I calculate my program's budgeted Corporation 
cost per member service year (MSY)?

    If you are an AmeriCorps national and community service program, 
you calculate your Corporation cost per MSY by dividing the 
Corporation's share of budgeted grant costs by the number of member 
service years 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.  2522.540, 2522.550, and 2522.560  [Redesignated as 
Sec. Sec.  2522.800, 2522.810, and 2522.820]

0
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, 2522.700, 2522.710, 2522.720, 2522.730, and 2522.740; and
    d. By adding undesignated center headings preceding Sec. Sec.  
2522.550 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 
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, including an Education Award Program 
grant, or if you are applying to receive AmeriCorps 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) Outputs are the amount or units of service that members or 
volunteers have completed, or the number of community beneficiaries the 
program has served. Outputs do not provide information on benefits or 
other changes in communities or in the lives of members or community 
beneficiaries. Examples of outputs could include the number of people a 
program tutors, counsels, houses, or feeds.
    (d) Intermediate-outcomes specify a change that has occurred in 
communities or 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 
and are logically connected to end outcomes. 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) Internal evaluation means an evaluation that a grantee performs 
in-house without the use of an independent external evaluator.
    (f) End-outcomes specify a change that has occurred in communities 
or 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 could be the percent and number of students 
who have improved their reading scores to grade-level, or other 
specific measures of academic achievement.
    (g) Grantee includes subgrantees, programs, and projects.
    (h) National performance measures are performance measures that the 
Corporation develops.
    (h) You refers to a grantee or applicant organization.


Sec.  2522.530  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

[[Page 39604]]

program grant funds to support them, consistent with the level of 
approved costs for such activities in your grant award.


Sec.  2522.540  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.

Performance Measures: Requirements and Procedures


Sec.  2522.550  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 measure and evaluation 
requirements. In addition, 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.  2522.560  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 
in communities or in the lives of members or community beneficiaries.
    (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.  2522.570  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.  2522.580 
and 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, as follows:
    (i) For continuation programs, performance data over the course of 
the grant to date; and
    (ii) For recompeting programs, performance data for the preceding 
three-year grant cycle.


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

    (a) When applying for funds, you must submit, at a minimum, the 
following performance measures:
    (1) One set of aligned performance measures (one output, one 
intermediate-outcome, and one end-outcome) that capture the results of 
your program's primary activity, or area of significant activity for 
programs whose design precludes identifying a primary activity; and
    (2) Any national performance measures the Corporation may require, 
as specified in paragraph (b) of Sec.  2522.590.
    (b) For example, a tutoring program might use the following aligned 
performance measures:
    (1) Output: Number of students that participated in a tutoring 
program;
    (2) Intermediate-Outcome: Percent of students reading more books; 
and
    (3) End-Outcome: Number and percent of students who have improved 
their reading score to grade level.
    (c) 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. Any 
performance measures you submit beyond what is required in paragraph 
(a)(1) of this section may or may not be aligned sets of measures.


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 non-formula 
programs. If the Corporation selects your application for funding, the 
Corporation will approve your performance measures as part of your 
grant award.
    (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 national performance measures above and 
beyond what the State commission has individually 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

[[Page 39605]]

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 are not on track to meet your performance measures, you must 
develop and submit to the Corporation, or the State commission for 
formula programs, a corrective action plan, consistent with paragraph 
(a) of this section, or submit a request to the Corporation, or the 
State commission for formula programs, consistent with paragraph (b) of 
this section, to amend your requirements under the circumstances 
described in Sec.  2522.640 of this subpart.
    (a) Your corrective action plan must be in writing and include all 
of the following:
    (1) The factors impacting your performance goals;
    (2) The strategy you are using and corrective action you are taking 
to get back on track toward your established performance measures; and
    (3) The timeframe in which you plan to achieve getting back on 
track with your performance measures.
    (b) A request to amend your performance measures must include all 
of the following:
    (1) Why you are not on track to meet your performance requirements;
    (2) How you have been tracking performance measures;
    (3) Evidence of the corrective action you have taken;
    (4) Any new proposed performance measures or targets; and
    (5) Your plan to ensure that you meet any new measures.
    (c) You must submit your plan under paragraph (a) of this section, 
or your request under paragraph (b) of this section, within 30 days of 
determining that you are not on track to meeting your performance 
measures.
    (d) If you are a formula program, the State commission that 
approves the plan under paragraph (a) of this section or the request to 
amend your performance measures under paragraph (b) of this section, 
must forward an information copy to the Corporation's AmeriCorps 
program office within 15 days of approving the plan or the request.


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;
    (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 want to replace one measure of literacy tutoring (increased 
attendance at school) with another (percentage of students who are 
promoted to the next grade level).
    (b) [Reserved].


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, or 
the State commission for formula grantees, 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 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 is the process of systematically and 
regularly collecting and monitoring data related to the direction of 
observed changes in communities, participants (members), or end 
beneficiaries receiving your program's services. It is intended to 
provide an indication of your program's operations and performance. In 
contrast to evaluation, it is not intended to establish a causal 
relationship between your program and a desired (or undesired) program 
outcome. For example, a performance measure for a literacy program may 
include the percentage of students receiving services from your program 
who increase their reading ability from ``below grade level'' to ``at 
or above grade level''. This measure indicates something good is 
happening to your program's service beneficiaries, but it does not 
indicate that the change can be wholly attributed to your program's 
services.


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 AmeriCorps 
grantee (other than an Education Award Program grantee), and your 
average annual Corporation program grant is $500,000 or more, you must 
arrange for an independent evaluation of your program, and you must 
submit the

[[Page 39606]]

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 AmeriCorps 
grantee whose average annual Corporation program grant is less than 
$500,000, or an Education Award Program grantee, you must conduct an 
internal evaluation of your program, and you must submit the evaluation 
with any application to the Corporation for competitive funds as 
required in Sec.  2522.730 of this subpart.
    (d) The Corporation may, in its discretion, supersede these 
requirements with an alternative evaluation approach, including one 
conducted by the Corporation at the national level.
    (e) Grantees must cooperate fully with all Corporation evaluation 
activities.


Sec.  2522.720  How many years must my evaluation cover?

    (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, 
your evaluation must cover a minimum of one year but may cover longer 
periods.


Sec.  2522.730  How and when do I submit my evaluation to the 
Corporation?

    (a) If you are an existing grantee recompeting for AmeriCorps funds 
for the first time, you must submit a summary of your evaluation 
efforts or plan 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?

    The Corporation will consider the evaluation you submit with your 
application as follows:
    (a) 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 reserves the right to 
not consider your application.
    (b) 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.

0
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?
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 sessions and activities that 
build on the academic strengths of students in kindergarten through 
12th grade, and target their academic needs. A tutor does not include 
someone engaged in other academic support activities, such as mentoring 
and after-school program support, 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
            If the tutor is:                following qualifications:
------------------------------------------------------------------------
(a) Is considered to be an employee of   Paraprofessional qualifications
 the Local Education Agency or school,    under No Child Left Behind
 as determined by State law.              Act, as required in 34 CFR
                                          200.58
(b) Is not considered to be an employee  (1)(i) High School diploma or
 of the Local Education Agency or         its equivalent, or a higher
 school, as determined by State law.      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 K-12 student tutoring younger 
children in the school or after 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, including the requirements in Sec.  2522.910 of this subpart;
    (b) Identify the strategies or tools it will use to assess student 
progress and measure student outcomes;
    (c) Certify that the tutoring 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.

[[Page 39607]]

    (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

0
1. The authority citation for part 2540 is revised to read as follows:

    Authority: EO 13331, 69 FR 9911.

0
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 by using a 
participant in a program receiving Corporation assistance.
* * * * *

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

0
1. Revise the heading of part 2550 to read as set forth above.

0
2. The authority citation for part 2550 is revised to read as follows:

    Authority: 42 U.S.C. 12638.


0
3. Amend Sec.  2550.10 as follows:
0
a. By revising paragraph (b);
0
b. By revising paragraph (c);
0
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]

0
4. Amend Sec.  2550.20 by removing paragraph (o).

0
5. Amend Sec.  2550.30 by revising the section heading to read as set 
forth 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]

0
6. Amend Sec.  2550.40 by removing paragraph (c).


Sec.  2550.70  [Removed and reserved]

0
7. Remove and reserve Sec.  2550.70.

0
8. Amend Sec.  2550.80 as follows:
0
a. Revise the first two sentences of the introductory text; and
0
b. 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. * * *
* * * * *
    (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 or title II of the 
DVSA.
* * * * *

    Dated: June 28, 2005.
David Eisner,
Chief Executive Officer.
[FR Doc. 05-13038 Filed 7-1-05; 8:45 am]
BILLING CODE 6050-28-P