[Federal Register Volume 72, Number 125 (Friday, June 29, 2007)]
[Rules and Regulations]
[Pages 35832-35848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12541]



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Part III





Department of Labor





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Employment and Training Administration



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20 CFR Part 641



Senior Community Service Employment Program; Performance 
Accountability; Interim Rule

  Federal Register / Vol. 72, No. 125 / Friday, June 29, 2007 / Rules 
and Regulations  

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 641

RIN 1205-AB47


Senior Community Service Employment Program; Performance 
Accountability

AGENCY: Employment and Training Administration, Labor.

ACTION: Interim final rule; request for comments.

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SUMMARY: The Employment and Training Administration (ETA) of the 
Department of Labor (Department) is issuing this Interim Final Rule 
establishing new performance accountability measures for the Senior 
Community Service Employment Program (SCSEP). New measures are 
necessary due to the 2006 Amendments to Title V of the Older Americans 
Act. Specifically, this rule amends 20 CFR part 641 Subpart G--
Performance Accountability and corresponding definitions found in 
Subpart A--Purpose and Definitions. This notice also solicits public 
comment on this Interim Final Rule which the Department will consider 
when it issues a Final Rule.

DATES: This rule is effective June 29, 2007. The Department invites 
interested persons to submit comments on this interim final rule. To 
ensure consideration, comments must be in writing and must be received 
on or before August 28, 2007. Comments received after that date will be 
considered to the extent possible.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1205-AB47, by any of the following methods:
     Federal e-Rulemaking Portal: www.regulations.gov. Follow 
the Web site instructions for submitting comments.
     Fax: (202) 693-2766.
     Mail: Written comments, disk, and CD-Rom submissions may 
be mailed to Maria Kniesler Flynn, Administrator, Office of Policy 
Development and Research, U.S. Department of Labor, 200 Constitution 
Avenue NW., Room N-5641, Washington, DC 20210.
     Hand Delivery/Courier: Maria Kniesler Flynn, 
Administrator, Office of Policy Development and Research, U.S. 
Department of Labor, 200 Constitution Avenue NW., Room N-5641, 
Washington, DC 20210.
    The Department will post all comments received on 
www.regulations.gov without making any change to the comments, 
including any personal information provided.
    The www.regulations.gov Web site is the Federal e-rulemaking portal 
and all comments posted there are available and accessible to the 
public. The Department recommends that commenters not include their 
personal information such as Social Security Numbers, personal 
addresses, telephone numbers, and e-mail addresses in their comments as 
such submitted information will become easily available to the public 
via the www.regulations.gov Web site. Comments submitted through 
www.regulations.gov will not include the e-mail address of the 
commenter unless the commenter chooses to include that information as 
part of their comment. It is the responsibility of the commenter to 
safeguard his or her information.
    Postal mail delivery in Washington, DC, may be delayed due to 
security concerns. Therefore, the Department encourages the public to 
submit comments via the Internet as indicated above.
    Docket: The Department will make all the comments it receives 
available for public inspection during normal business hours at the 
above address. If you need assistance to review the comments, the 
Department will provide you with appropriate aids such as readers or 
print magnifiers. The Department will make copies of the rule 
available, upon request, in large print and electronic file on computer 
disk. The Department will consider providing the rule in other formats 
upon request. To schedule an appointment to review the comments and/or 
obtain the rule in an alternate format, contact the office of Maria 
Kniesler Flynn at (202) 693-3700 (VOICE) or 1-800-877-8339 TTY/ASCII. 
Please note these are not toll-free numbers. You may also contact Ms. 
Flynn's office at the address listed above.

FOR FURTHER INFORMATION CONTACT: Adele Gagliardi, Senior Regulatory 
Specialist, Employment and Training Administration (ETA), U.S. 
Department of Labor, 200 Constitution Avenue, NW., Room N-5641, 
Washington, DC 20210; E-mail [email protected]; Telephone (202) 
693-3700 (this is not a toll-free number).
    Individuals with hearing or speech impairments may access the 
telephone number above via TTY by calling the toll-free Federal 
Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:
    The preamble to this Interim Final Rule is organized as follows:
I. Background--provides a brief description of the purpose and timing 
of the Interim Final Rule.
II. Summary and Explanation of the Interim Final Rule--discusses the 
substance of the rule.
III. Administrative Information--sets forth the applicable regulatory 
requirements.

I. Background

    On October 17, 2006, President Bush signed the Older Americans Act 
Amendments of 2006, Pub. L. 109-365 (2006 OAA Amendments). This law 
amended the statute authorizing the SCSEP and necessitates changes to 
the SCSEP regulations. (The Department will continue to use the name 
``Senior Community Service Employment Program'' for this program, 
although the law refers to it in various terms.) The purpose of this 
Interim Final Rule is to implement changes to the SCSEP performance 
measurement system required by the 2006 OAA Amendments. The Department 
intends to issue a separate Notice of Proposed Rulemaking, proceeding 
under related RIN 1205-AB48, to implement additional changes to the 
SCSEP regulations necessitated by the 2006 OAA Amendments.
    The SCSEP, authorized by Title V of the Older Americans Act, is the 
only federally-sponsored employment and training program targeted 
specifically to low-income older individuals who want to enter or re-
enter the workforce. Participants must be 55 years of age or older with 
incomes no more than 125 percent of the Federal poverty level. The 
program offers participants training at community service employment 
assignments in public and non-profit so that they can gain on-the-job 
experience. The goals of the program are to move SCSEP participants 
into unsubsidized employment so that they can achieve economic self-
sufficiency and to promote useful opportunities in community service 
activities. In the 2006 OAA Amendments, Congress expressed its sense of 
the benefits of SCSEP, stating, ``placing older individuals in 
community service positions strengthens the ability of the individuals 
to become self-sufficient, provides much-needed support to 
organizations that benefit from increased civic engagement, and 
strengthens the communities that are served by such organizations.'' 
Pub. L. 109-365 Sec.  516(2).\1\
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    \1\ Section 501 of the Older Americans Act Amendments of 2006, 
Pub. L. 109-365, amended the various provisions of title V of the 
Older Americans Act of 1965 (42 U.S.C. 3056 et seq.). For ease of 
reference, we will refer to the changes to title V made by the 2006 
OAA Amendments by referring to the relevant sections of title V as 
those sections were reflected in the Amendments.

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    The statute requires the Department to issue definitions of the 
indicators of performance through regulation. Section 513(b)(3). The 
statute also requires the Department to establish and implement the 
performance measures referred to in the statute as ``core measures and 
additional indicators of performance'' by July 1, 2007. Section 
513(d)(4). The Department has determined that the most effective way to 
define the indicators of performance is to do so in conjunction with 
the rules that implement such definitions. Defining the performance 
measures and implementing them concurrently and in the same document is 
also more helpful to the grantees. In addition, given the importance of 
the measures in terms of corrective actions and the potential impact 
they could have on grantee funding, it is preferable to continue to 
describe and define the measures through regulation even though the 
statute only requires the Department to implement the definitions 
through regulation. Accordingly the Department is both defining and 
describing the indicators through this rule.
    The Department is unable to promulgate these regulations through 
the normal notice and comment rulemaking process because of the July 1, 
2007, statutory deadline. Development of this rule necessitated 
extensive consultation within the Department, among multiple Employment 
and Training Administration offices, the Solicitor's Office and the 
Office of the Assistant Secretary for Policy. Activities of this group 
included developing a strategy for promulgating the regulation, 
addressing policy and programmatic issues and drafting the regulatory 
text and explanatory preamble. In addition, the Department was required 
to establish and implement the new SCSEP performance measures after 
consultation with stakeholders. Pub. L. 109-365 Sec.  513(b)(3). 
Therefore, the Department drafted, cleared internally, and published a 
notice in the Federal Register (published February 8, 2007, 72 FR 5999) 
in order to provide a fair and meaningful opportunity for stakeholders 
to respond. The Department received comments during the period 
announced in the notice and fully considered these comments, which 
informed the Interim Final Rule development. This process is described 
more thoroughly below. In addition, the Department needed to examine 
potential Paperwork Reduction Act implications of this Interim Final 
rule as well as examine the Interim Final Rule under additional laws 
and Executive Orders which cover rulemaking. Finally, the Department 
needed to obtain all clearances required in rulemaking. Therefore, time 
only allowed for the Department to issue an Interim Final Rule. There 
is not time to draft, clear, and publish a Notice of Proposed 
Rulemaking, receive and respond to comments, and draft, clear, and 
publish a Final Rule by the July 1, 2007, deadline. Because Sec.  
513(a)(2)(C) of the statute prohibits funding grants until the 
Department and the grantee have agreed upon expected levels of 
performance, it is adverse to the public interest, and to the interest 
of those served under the SCSEP program as well as the grantees who 
seek to serve them, if the rule is delayed and a gap in services to 
individuals occurs. Therefore, the rule is being published as an 
Interim Final Rule so that the performance measures and the supporting 
definitions are effective immediately upon publication and without 
further delay. This approach will enable the Department and the 
grantees to negotiate performance agreements in time for all Program 
Year 2007 grants to be funded at the beginning of the Program Year.
    Since the statute requires that the Department and each grantee 
reach agreement on the expected levels of performance for each of the 
core indicators before to the Department may fund the grants that will 
be subject to these new rules, starting with Program Year 2007, or July 
1, 2007, the Department has made every effort to issue this Interim 
Final Rule in as timely a manner as possible and to assist grantees in 
meeting their obligations under the new performance requirements. To 
further assist grantees to adjust to the changes and to enable grantees 
to prepare for and to intelligently negotiate their performance goal 
for Program Year 2007, the Department previously issued a Training and 
Employment Guidance Letter (TEGL) describing the anticipated changes in 
the performance measures.
    This Interim Final Rule supersedes the previously issued TEGL. If 
the Department determines that the information in this Interim Final 
Rule conflicts in a material way with the information previously issued 
through the TEGL, and has a material impact on the grantees' negotiated 
performance level goals, grantees will be allowed to renegotiate their 
performance level goals. The Department will make this determination 
and will issue further guidance if necessary.
    The Department sought public input on the SCSEP performance 
measures during the development of this Interim Final Rule in response 
to the statutory requirement that the Department establish and 
implement the new SCSEP performance measures after consultation with 
stakeholders. Specifically, section 513(a)(1) states that ``[t]he 
Secretary shall establish and implement, after consultation with 
grantees, sub-grantees and host agencies under this title, States, 
older individuals, area agencies on aging and other organizations 
serving older individuals, core indicators of performance and 
additional indicators of performance for each grantee for projects and 
services carried out under this title.'' The statute also instructs the 
Department to consult with stakeholders prior to defining the 
performance indicators. Pub. L. 109-365 Sec.  513(b)(3). The Department 
satisfied these statutory requirements when it solicited public input 
on the definitions and implementation of the statutory performance 
measures in the Federal Register notice published February 8, 2007, 72 
FR 5999.
    The February 8, 2007, Federal Register notice specifically 
requested input on six topics: (1) The core indicators, (2) the new 
one-year retention indicator, (3) customer satisfaction, (4) other 
additional indicators including possibly retaining the SCSEP placement 
measure, (5) performance outcomes, and (6) other comments related to 
SCSEP performance measures. 72 FR 5999 (Feb. 8, 2007). The Department 
made extensive efforts to make grantees aware of the notice and inform 
them of the timeframe for submitting comments; the Department e-mailed 
every grantee and briefed grantees during several all-grantee 
conference calls. In response to the notice, the Department received 
comments from 28 persons or entities. In addition, the Department 
presented a summary of the 2006 OAA Amendments at six regional SCSEP 
grantee training conferences in January, February, and March of 2007, 
and provided an opportunity for questions and comments.
    The Department carefully considered the comments received as we 
developed the content of this rule. In the preamble discussion of the 
regulatory changes, the Department discusses input we received from 
stakeholders. A full summary of the input received on each subject is 
available on the SCSEP Web site at http://www.doleta.gov/seniors.
    Although the Department solicited stakeholder input through the 
February

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8, 2007, notice and carefully considered the concerns raised through 
the process, the Department solicits comments on all sections of this 
Interim Final Rule. The Department particularly invites comments 
addressing any concerns that this Interim Final Rule significantly 
compromises the ability of grantees, in areas where a substantial 
population of minority individuals reside, to serve their targeted 
population of minority older individuals, in accordance with the 
requirements of section 514(f) of the 2006 OAA Amendments.
    The SCSEP performance measures have evolved over time. Program-
specific measures to monitor the performance of each SCSEP grantee were 
first codified in the 2000 Amendments to the OAA. The 2000 OAA 
Amendments required the following performance measures:
    1. The number of persons served, with particular consideration 
given to individuals with greatest economic need, greatest social need, 
or poor employment history or prospects, and individuals who are over 
the age of 60;
    2. Community services provided;
    3. Placement into and retention in unsubsidized public or private 
employment;
    4. Satisfaction of the enrollees, employers, and their host 
agencies with their experiences and the services provided; and
    5. Any additional indicators of performance that the Secretary 
determines to be appropriate to evaluate services and performance.

Pub. L. 106-501 Sec.  513(b).
    When the Department implemented the 2000 OAA Amendments, it also 
began employing the ``common measures'' in the SCSEP performance 
system. The ``common measures'' are a government-wide initiative to 
apply uniform accountability measures to federally-funded employment 
and training programs, including those administered by the Department 
of Labor. Adoption of these common measures helps implement the 
President's Management Agenda for budget and performance integration as 
well as reduce barriers to integrated service delivery through local 
One-Stop Career Centers. To date, ETA has implemented the common 
performance measures for the majority of its workforce programs, 
including the SCSEP.
    The common performance measures are:
    1. Entered employment;
    2. Retention in employment; and
    3. Average earnings.
    The value of implementing common performance measures is in the 
ability to describe in a similar manner the core purposes of the 
workforce system: How many people found jobs? Did they stay employed? 
What did they earn? Historically, multiple sets of performance measures 
have burdened grantees, as they are required to report performance 
outcomes based on varying definitions and methodologies. By minimizing 
the different reporting and performance requirements, common 
performance measures can facilitate the integration of service 
delivery, reduce barriers to cooperation among programs, and enhance 
the ability to assess the effectiveness and impact of the workforce 
investment system. Current Department guidance on the common measures 
is contained in TEGL No. 17-05, issued on February 17, 2006. This TEGL 
is available at http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2195.
    The Department previously identified ``program efficiency'' as a 
common measure for federal job training and employment programs, and 
listed program efficiency as a common measure in the last SCSEP Final 
Rule. 69 FR 19015, 19064 (April 9, 2004). However, since TEGL No. 17-
05, grantees have not been required to report on program efficiency. 
Therefore, this measure is not addressed in this Interim Final Rule.
    This Interim Final Rule marks the beginning of the next phase of 
the SCSEP performance measures. The 2006 OAA Amendments direct the 
SCSEP to track the following performance measures:
    Indicators of Performance:
    (1) Core Indicators--The core indicators of performance * * * shall 
consist of--
    (A) Hours (in the aggregate) of community service employment;
    (B) Entry into unsubsidized employment;
    (C) Retention in unsubsidized employment for six months;
    (D) Earnings; and
    (E) The number of eligible individuals served, including the number 
of participating individuals described in subsection (a)(3)(B)(ii) or 
(b)(2) of section 518.
    (2) Additional Indicators--The additional indicators of performance 
* * * shall consist of--
    (A) Retention in unsubsidized employment for 1 year;
    (B) Satisfaction of the participants, employers, and their host 
agencies with their experiences and the services provided;
    (C) Any other indicators of performance that the Secretary 
determines to be appropriate to evaluate services and performance.

Pub. L. 109-365 Sec.  513(b).
    Note that core indicators B, C, and D are consistent with the 
common measures.
    All of these indicators are discussed and defined below.

II. Summary and Explanation of the Interim Final Rule

    This Interim Final Rule addresses only the SCSEP performance 
measures; it amends Subpart G, and related definitions located in 
Subpart A, of the SCSEP regulations. As discussed in the background 
section, the Department is proceeding separately with this portion of 
the regulation because of certain provisions of the 2006 OAA Amendments 
which mandate implementation of the new performance indicators during 
the Program Year 2007 grant solicitation and award process. The 
Department will be proceeding with the normal rulemaking process as it 
promulgates regulations addressing the remainder of the changes the 
2006 OAA Amendments made to the SCSEP.
    As the Department implements these performance measures, it remains 
cognizant of Congress' statement that the indicators ``shall be 
designed to promote continuous improvement in performance.'' Pub. L. 
109-365 Sec.  513(a)(2)(B). The Department remains committed to a 
system-wide continuous improvement approach grounded upon proven 
quality principles and practices. The Department is implementing these 
performance measures with the goal of further aligning the SCSEP with 
performance measures used in the rest of the workforce investment 
system. Accordingly, the Department purposely defined the entry into 
unsubsidized employment, retention in unsubsidized employment for six 
months, and earnings performance measures to be consistent with the 
common performance measures which are intended for similar, federally-
funded employment and training programs serving adults. Further, the 
Department defines the one-year retention indicator to align with the 
equivalent indicator used for ETA's Adult and Dislocated Workers 
programs.

Subpart A--Purpose and Definitions

What definitions apply to this subpart? (Sec.  641.140)
    Section 641.140 of the SCSEP regulations provides definitions for 
the SCSEP, including those definitions relevant to the SCSEP 
performance measures. This Interim Final Rule, however, includes only 
those

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definitions relevant to the performance measures that are new or have 
been changed. Definitions relevant to performance measures that have 
not changed, as well as SCSEP definitions that are not directly related 
to performance measures, remain in the existing rule.
    This Interim Final Rule contains new definitions. Several of them 
clarify which participants satisfy the core indicator that tracks ``the 
number of participating individuals described in subsection 
(a)(3)(B)(ii) or (b)(2) of section 518.'' Pub. L. 109-365 Sec.  
513(b)(1)(E). The Department received several suggestions for these 
definitions; many aspects of that input are mentioned in the 
descriptions of each definition, below. Several commenters encouraged 
the Department to keep current definitions and/or adopt definitions 
that are familiar to the SCSEP, including the definitions from the 
SCSEP Data Collection Handbook. Our general approach to defining new 
terms in this rule is consistent with these comments; our goal was to 
minimize the number of new or potentially duplicative definitions. 
Accordingly, we attempted to define terms in a manner consistent with 
established definitions used in programs SCSEP grantees are familiar 
with, and in many cases those definitions also formed the basis for the 
definitions that exist in the Data Collection Handbook. For example, 
the definition of veteran comes from the Jobs for Veterans Act, which 
has been used by the SCSEP for years to distinguish which veterans 
qualify for a priority for SCSEP services.
    Descriptions of the new definitions follow:
    Additional indicators: Following the structure established in the 
2006 OAA Amendments, we define additional indicators to distinguish 
them from core indicators; additional indicators are those indicators 
not subject to goals and corrective action. We currently implement only 
two additional indicators--one-year retention and customer 
satisfaction. These are the additional indicators required by the 2006 
OAA Amendments. At this time, the Department declines to add any 
additional indicators, but the regulations reserve the Secretary's 
authority, under section 513(b)(2)(C), to develop new additional 
measures when the Secretary determines that such additional indicators 
are appropriate for evaluation of services and performance.
    At risk for homelessness: The Department defines at risk for 
homelessness in relation to the definition of homeless, such that a 
person is at risk for homelessness if the person is likely to become 
homeless and is unable, using his or her own resources and support 
network, to obtain housing.
    Community service employment: The 2006 OAA Amendments added a 
definition of community service employment. We took the definition here 
directly from the statute.
    Core indicators: The 2006 OAA Amendments establish core indicators 
as a new category of indicators that are subject to goal-setting and 
corrective action. The indicators in the definition are those listed in 
the statute.
    Frail: A few commenters urged various definitions from sources such 
as the Older Americans Act and the Journal of Gerontology, Another 
commenter suggested consultation with the Administration on Aging. We 
adopt the definition of frail that is in the Older Americans Act in 
order to promote consistency with other OAA programs.
    Homeless: We adopt the definition of homeless that is in the 
McKinney-Vento Homeless Assistance Act; that Act's definition of 
homeless has consistently been used by the SCSEP for data collection 
purposes. One commenter recommended that we adopt a definition of 
homeless contained in a bill pending in Congress; however, the 
Department determined that the more prudent course was to adopt a 
definition already in statute.
    Limited English Proficiency: A few commenters urged various 
definitions from sources such as those used by the Department of 
Education and the Workforce Investment Act of 1998 (WIA). We adopt the 
definition of limited English proficiency (LEP) that is used by the 
Federal Interagency Working Group on Limited English Proficiency. The 
LEP Working Group was created at the request of Assistant Attorney 
General for Civil Rights and includes members representing more than 35 
federal agencies; the group's focus is to ensure that limited English 
proficient persons have meaningful access to federal and federally-
assisted programs. Its Web site, maintained by the U.S. Department of 
Justice, is http://www.lep.gov. ETA and the Department's Civil Rights 
Center adopted this definition for use in official guidance to the 
workforce system in 2004. That guidance may be viewed at http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=1488. Use of this 
definition by the SCSEP will promote consistency within the workforce 
system.
    Low employment prospects: The Department interprets the statute's 
term ``low employment prospects'' to be essentially equivalent to the 
similar phrase which also appears in the statute, ``poor employment 
prospects.'' ``Poor employment prospects'' also appeared in the prior 
OAA Amendments and was defined in the prior SCSEP rule. The Department 
developed the definition of low employment prospects from the prior 
definition of poor employment prospects.
    Low literacy skills: A few commenters urged various definitions 
such as those used by the Department of Education and WIA. In an effort 
to maintain program consistency, the Department defines low literacy 
skills based on a definition of a very similar term, ``literacy skills 
deficient,'' which is already in use in the SCSEP through the Data 
Collection Handbook.
    Most-in-need: Most-in-need is a label for the core indicator that 
tracks ``the number of participating individuals described in 
subsection (a)(3)(B)(ii) or (b)(2) of section 518.'' Pub. L. 109-365 
Sec.  513(b)(1)(E).
    Persistent Unemployment: The Department defines persistent 
unemployment by reference to the unemployment rate for a locale, as a 
rate that is more than 20 percent higher than the national average for 
two of the last three years.
    Rural: We received suggestions about this definition that cited 
sources such as the Office of Management and Budget,the Administration 
on Aging, and the Economic Research Service at the Department of 
Agriculture. We have decided to align this definition of rural with 
that of the Rural Health Service at the U.S. Department of Health and 
Human Services; this is also consistent with the approach taken by the 
Economic Research Service at the Department of Agriculture. This 
definition is the broadest one available. First, the definition of 
rural includes areas not designated as metropolitan statistical areas 
by the Census Bureau. Information on which locations have been 
designated as metropolitan by the Census Bureau is available on the 
Census Bureau's Web site at census.gov/population/www/estimates/metrodef.html. To identify a particular Census tract, visit the Web 
page at ffiec.gov/geocode/default.htm and enter a street address. 
Second, rural also includes segments of metropolitan counties that have 
been assigned a Rural Urban Commuting Area (RUCA) code between four and 
ten. To determine whether a portion of a metropolitan county has been 
so classified, readers may consult the RUCA codes, which can currently 
be located at the Web site of the Economic Research Service of the U.S. 
Department of Agriculture,

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ers.usda.gov/data/ruralurbancommutingareacodes/. Finally, Census tracts 
that are larger than 400 square miles, have a population density of 
less than 30 people per square mile, and have been assigned RUCA codes 
2 or 3, are also considered rural. Further information on the Rural 
Health Service's rural classification system, including a list of areas 
classified by the Service as rural, can be found at their Web site, 
ruralhealth.hrsa.gov/funding/eligibilitytestv2.asp. The University of 
Washington has created a zip-code-specific approximation of rural 
status which can be downloaded at depts.washington.edu/uwruca/data.html.
    Severe disability: We adopt the definition of severe disability 
that is in the Older Americans Act.
    Severely limited employment prospects: The Department developed the 
definition of severely limited employment prospects to relate to the 
definition of low employment prospects; a person faces severely limited 
employment prospects when that person has more than one significant 
barrier to employment.
    Veteran: We define veteran by reference to the Jobs for Veterans 
Act, 38 U.S.C. 4215(a). The SCSEP has consistently used that statute to 
distinguish precisely which veterans qualify for SCSEP priority and 
thus it was a logical source of our definition. We note that under 
certain circumstances spouses of veterans qualify as veterans under the 
Jobs for Veterans Act.
    The following terms were defined in the prior SCSEP rule but have 
been modified:
    Disability: The only change to the definition of disability 
concerns the citation. The definition comes from the Older Americans 
Act, and the paragraph number to which the definition is assigned 
changed as a result of the 2006 OAA Amendments.
    National grantee: We modify the definition of National grantee by 
removing the word ``Federal'' as a modifier to the word ``public'' to 
be consistent with the 2006 OAA Amendments, see Pub. L. 109-365 Sec.  
506(g)(5), and by making various technical corrections.

Subpart G--Performance Accountability

What performance measures/indicators apply to SCSEP grantees? (Sec.  
641.700)
    The 2006 OAA Amendments separate SCSEP performance measures into 
two categories, core and additional. The Department and each grantee 
must agree upon goals for core indicator performance levels before the 
start of each program year. A grantee that fails to meet the agreed-
upon core performance levels, which may be adjusted as discussed below, 
is subject to corrective action. Additional indicators are not subject 
to goal-setting and are, therefore, not subject to corrective action. 
However, the statute does mandate that the Department annually publish 
each grantee's performance on the additional indicators.
    Section 513(a)(3)(b)(1) of the 2006 OAA Amendments lists the core 
indicators:
    1. Hours (in the aggregate) of community service employment;
    2. Entry into unsubsidized employment;
    3. Retention in unsubsidized employment for six months;
    4. Earnings;
    5. The number of eligible individuals served, including the number 
of participating individuals described in subsection (a)(3)(B)(ii) or 
(b)(2) of section 518.
    The Department received numerous comments about whether the fifth 
core indicator should be split into two indicators. Many commenters 
supported establishing two separate measures, with one measure for 
total persons served and one for ``the number of participating 
individuals described in subsection (a)(3)(B)(ii) or (b)(2) of section 
518.'' Respondents provided a variety of rationales for this position. 
For example, several respondents noted that this would be a better 
measure of services provided to those individuals with barriers to 
employment; one noted that this would ensure service to ``high barrier 
populations''; one noted that combining measures would not give an 
accurate depiction of the individuals being served; and one noted that 
two measures can be beneficial for effective program management.
    Several commenters expressed support for one combined measure, 
rather than two separate measures. These respondents also provided a 
range of rationales for their position. For example, one noted that 
grantees cannot control who enters the program and that many of the 
individuals that have attributes cited in the priority list cannot find 
unsubsidized employment in 27 months; one noted that one measure would 
promote more effective services and ensure services to those ``at great 
risk'' but falling outside the priority of service list; and one noted 
that, based on income eligibility requirements, all individuals 
eligible for SCSEP are effectively most-in-need and so a separate 
measure for most-in-need is not necessary.
    After considering this input, the Department has decided to divide 
the fifth core indicator into two separate core indicators: (1) The 
number of eligible individuals served, described in section 
641.710(a)(5), and (2) the number of participating individuals 
described in subsection (a)(3)(B)(ii) or (b)(2) of section 518 (i.e., 
most-in-need), described in section 641.710(a)(6)). This is consistent 
with current practice in which we have a separate measure for a 
narrower group of participants in need as well as with the 
recommendation of a majority of respondents who commented on this 
measure, and it more clearly tracks relevant program data than a 
combined indicator.
    The statute then lists the additional indicators:
    1. Retention in unsubsidized employment for one year;
    2. Satisfaction of the participants, employers, and their host 
agencies with their experiences and the services provided; and
    3. Any other indicators of performance that the Secretary 
determines to be appropriate to evaluate services and performance.

Pub. L. 109-365 Sec.  513(a)(3)(b)(2).
    An agreement to be evaluated on the core indicators of performance 
and to report information on the additional indicators of performance 
is a requirement for application for, and a condition of, all SCSEP 
grants. Pub. L. 109-365 Sec.  513(a)(3).
    The Department considered an additional indicator, SCSEP Placement. 
The SCSEP Placement indicator has tracked how many exiting participants 
were employed for 30 days within the first 90 days after program exit. 
Several stakeholders, however, argued against the need for doing so. 
Some expressed the view that the SCSEP has too many measures already 
and that the SCSEP should be evaluated on only the common measures, as 
is the case with other Department programs. Other commenters focused on 
the notion that the common measure ``entered employment'' indicator is 
sufficient to track placement and that the SCSEP placement rate is 
duplicative. The Department is persuaded that the potential benefit of 
tracking the SCSEP Placement measure does not outweigh the added burden 
on grantees. Accordingly, the SCSEP Placement indicator will no longer 
be required.
    Several commenters argued in favor of retaining the SCSEP Placement 
indicator. Any grantee is welcome to continue its use, as grantees may 
use

[[Page 35837]]

additional performance measures that assist them in managing their 
SCSEP project.
    We received some comments suggesting that the Department adopt 
various other additional indicators, such as a measure to record 
recruitment; and measures related to the unique aspects of SCSEP (i.e., 
community service and service to a specific population). Other 
respondents urged us not to adopt any more indicators. Although the 
statute allows the Department to establish ``[a]ny other indicators of 
performance that the Secretary determines to be appropriate to evaluate 
services and performance'' we choose not to establish any further 
indicators at this time. Again, this course was chosen because any 
potential benefits of additional reporting do not outweigh the costs of 
that reporting.
How are the performance indicators defined? (Sec.  641.710)
Core Indicators
    1. Hours (in the aggregate) of community service employment. Hours 
(in the aggregate) of community service employment compares the total 
number of hours of community service provided by each SCSEP grantee to 
the number of community service hours funded by the grant. Current 
practice is for SCSEP grantees to report the number of hours of 
community service; that is, the number of hours that participants 
worked at host agencies. In order to provide a meaningful way to assess 
and compare performance, however, it is necessary to transform the 
number of hours into a community service participation rate. The 
Department began computing such a rate during Program Year 2006. To 
calculate the rate, the Department takes the number of community 
service hours as reported by each grantee and divides that number by 
the total community service hours funded for the grantee, adjusted for 
minimum wage differences among the States and areas.
    The Department received a variety of comments on this indicator. A 
number of these comments expressed support for this performance 
indicator because it relates to the community service goal of the 
SCSEP, and because community service employment assignments are a 
unique and vital aspect of the SCSEP that is valuable to participants 
as well as to communities. Several commenters encouraged the Department 
in its new practice of transforming the raw data provided by grantees 
into a rate that can be the subject of a performance goal. A few 
respondents suggested definitions for this indicator; these comments 
included recommendations that the performance measure for hours of 
community service employment be determined by (1) comparing the number 
of community service hours provided to the potential number of 
community service hours based on the average current participants; and 
(2) dividing the actual number of community service hours completed by 
the potential number of community service hours that could be completed 
(Enrollee Wages and Fringe Benefits divided by the hourly community 
service cost). Finally, a commenter also suggested that participant 
training for computer skills and soft skills be counted as community 
service hours because of the importance of developing such skills in 
today's workforce. Soft skills are short-term pre-vocational services, 
including development of learning skills, communication skills, 
interviewing skills, punctuality, personal maintenance skills and 
professional conduct, to prepare individuals for unsubsidized 
employment.
    At this time, the Department has decided not to change to the way 
this indicator is currently calculated. While a few commenters 
suggested slight revisions to the current definition, the Department 
declines to adopt those suggestions at present. Though we acknowledge 
that computer and soft skills are important for many jobs in current 
employment market, the 2006 OAA Amendments define community service 
employment to mean part-time, temporary employment (the full definition 
is included in the definitions section of these regulations, Sec.  
641.140). Furthermore, we concur with those commenters that find value 
in data quantifying the hours worked by SCSEP participants in service 
to their communities.
    Accordingly, grantees will continue to report the raw number of 
hours of community service as they have in the past. The Department 
clarifies, however, that hours of paid participation in non-host agency 
training such as classroom training and on-the-job experience, are 
excluded from the hours of community service reported by grantees. 
Hours spent on such paid training are also excluded from the total 
number of community service hours funded (the denominator when the 
Department calculates the rate); excluding non-host agency paid 
training from both figures avoids penalizing grantees that provide such 
training to their participants.
    2. Entry into unsubsidized employment. The 2000 OAA Amendments 
defined placement into unsubsidized employment so that it measured how 
many exited participants had obtained paid employment for 30 days 
within the 90-day period following their program exit. Pub. L. 106-501 
Sec.  513(c)(2)(A). The 2006 OAA Amendments eliminate that statutory 
definition, and instead require the Department to define each of the 
indicators by regulation after consultation with stakeholders. To more 
fully align the SCSEP with the indicators required of other federally-
funded employment and training programs, the Department has decided to 
define this core indicator in the same manner as the common measures 
entered employment indicator. We note that while we did not receive 
many comments on this indicator, the input we did receive generally 
favored adoption of the common measures and alignment with WIA.
    TEGL 17-05, which explains ETA's common measures policy, describes 
entered employment as, ``[o]f those who are not employed at the date of 
participation: the number of participants who are employed in the first 
quarter after the exit quarter divided by the number of adult 
participants who exit during the quarter.'' Grantees have been 
reporting on this indicator already, and there will not be any change 
in their reporting at this time.
    3. Retention in unsubsidized employment for six months. As with 
entry into unsubsidized employment, the 2006 OAA Amendments eliminated 
the 2000 OAA Amendments' definition of six-month retention, and charged 
the Department with defining the indicators by regulation.
    The Department has decided to define retention in unsubsidized 
employment for six months in the same manner as the common measures 
employment retention measure; this approach is generally consistent 
with the few comments we received on this indicator. Using this 
definition will decrease the burden on grantees, as the Department 
previously required grantees to report on both the former statutory 
six-month indicator (measured 180 days after program exit) as well as 
the common measures employment retention measure. Grantees will no 
longer be required to conduct a follow-up 180 days after placement, as 
they have been doing to comply with the previous statutory retention 
indicator.
    TEGL 17-05 describes the common measures employment retention 
indicator as, ``[o]f those who are employed in the first quarter after 
the exit quarter: The number of adult participants who are employed in 
both the second and third quarters after the

[[Page 35838]]

exit quarter divided by the number of adult participants who exit 
during the quarter.'' Again, grantees have already been reporting on 
this indicator, and there will be no change to their reporting at this 
time.
    4. Earnings. When SCSEP regulations were last published in April 
2004, the earnings common measure compared the difference in earnings 
pre- versus post-program participation. The Department subsequently 
revised its earnings measure in TEGL 17-05 in response to concerns that 
focusing on the change in earnings provided a disincentive to serving 
people with previous work experience, especially those with higher pre-
program wages, and that in practice the measure was more likely to 
indicate participants' previous earnings history than a measure of 
program effectiveness. With the revision, the focus of the earnings 
measure shifted to post-program earnings. The Department implemented a 
new methodology for reporting the earnings measure, which looks at 
wages over a six month period following program exit (average 
earnings). SCSEP grantees have been reporting on the average earnings 
common measure for participants who entered the program on or after 
July 1, 2005, since the first quarter of Program Year 2006 and there 
will be no change to their reporting at this time.
    The Department received a small number of comments on the earnings 
measure. Some commenters recommended eliminating this measure; however, 
the 2006 OAA Amendments require an earnings measure so the Department 
does not have the discretion to eliminate it. We also received a 
comment encouraging the Department to calculate earnings based on wages 
earned at any time during a quarter (rather than a specific date), and 
a suggestion that earnings increase should be measured from entry in 
the program to the earnings at six months.
    In order to align with similar, federally-funded employment and 
training programs, the Department has determined that earnings will be 
defined in the same manner as the average earnings common measure. TEGL 
17-05 describes average earnings as, ``[o]f those adult participants 
who are employed in the first, second and third quarters after the exit 
quarter: The total earnings in the second quarter plus total earnings 
in the third quarter after the exit quarter divided by the number of 
adult participants who exit during the quarter.'' It is important to 
note that this measure looks only at those individuals who are included 
in the retention measure, so the earnings are a reflection of what 
participants who are still working are earning. Previous earnings 
measures counted program exiters who were not still employed, which had 
the effect of lowering the outcomes and distorted the outcomes of the 
measure. By including those who were not employed in the earnings 
measure, it was difficult to determine how much those who were employed 
were actually earning.
    A few respondents encouraged the Department to facilitate grantee 
access to unemployment insurance wage records, which would make it much 
easier to capture entered employment, retention, and earnings data. The 
Department is always interested in improving data collection methods, 
and we will continue to explore the possibility of access to 
unemployment insurance wage records as an option for future 
implementation.
    5. Number of eligible individuals served. The 2006 OAA Amendments 
list ``the number of eligible individuals served, including the number 
of participating individuals described in subsection (a)(3)(B)(ii) or 
(b)(2) of section 518'' as the fifth and final core indicator. As 
discussed above, the Department has decided it will continue its 
current practice of dividing this indicator into two measures to 
clearly track relevant program data and for ease of reporting.
    The first portion of this indicator, the number of eligible 
individuals served (also referred to as the service level) has been 
reported by SCSEP grantees for years, and there is no change in the 
reporting requirements as a result of the 2006 OAA Amendments. The 
number of eligible individuals served performance measure will continue 
to be calculated by comparing the total number of participants served 
to a grantee's authorized number of positions, adjusted for the 
differences in minimum wage among the States and other areas.
    6. Most-in-need. The second portion of the statutory fifth and 
final core indicator, ``the number of participating individuals 
described in subsection (a)(3)(B)(ii) or (b)(2) of section 518'' 
establishes the most-in-need indicator.
    The Department received numerous comments concerning the most-in-
need indicator. In addition to providing feedback on the question of 
whether to divide the fifth indicator into two measures, several 
respondents discussed the list of characteristics of those to whom a 
priority of service will be given. The statutory priority list 
contributes to the most-in-need list. However, to the extent that these 
comments focused on priority requirements, we have not incorporated the 
comments into this Interim Final Rule because the scope of this rule is 
limited to the performance measurement system. Non-performance measure 
changes to the SCSEP required by the 2006 OAA Amendments, such as the 
new priority characteristics, will be addressed in a forthcoming Notice 
of Proposed Rulemaking.
    Subsection (a)(3)(B)(ii) of section 518 lists the factors relevant 
to requesting a waiver to the new 48-month limit on program 
participation. It states that a grantee may request an increased period 
of participation for individuals who have a severe disability; are 
frail or are age 75 or older; meet the eligibility requirements related 
to age for, but do not receive, benefits under Title II of the Social 
Security Act (42 U.S.C. 401 et seq.); live in an area with persistent 
unemployment and are individuals with severely limited employment 
prospects; or have limited English proficiency or low literacy skills. 
Subsection (b)(2) of section 518 lists characteristics (other than age) 
of individuals who have priority for SCSEP services. Priority is to be 
given to individuals who: Have a disability; have limited English 
proficiency or low literacy skills; reside in a rural area; are 
veterans; have low employment prospects; have failed to find employment 
after utilizing services provided under title I of WIA; or are homeless 
or at risk for homelessness.
    The statute is written in such a way that a participant with any 
one characteristic from either the waiver list or the priority list 
will be included in the most-in-need performance measure. For ease of 
administration, the Department has consolidated these two lists into 
one list of most-in-need characteristics. Some characteristics, for 
example, low literacy skills, are listed in both subsection 
(a)(3)(B)(ii) and subsection (b)(2) of section 518; such 
characteristics are only listed once in the most-in-need list. One 
statutory description of a characteristic actually contains two 
characteristics (``are frail or are age 75 or older,'' Pub. L. 109-365 
Sec.  518 (a)(3)(B)(ii)(II)), and so those characteristics are listed 
separately here. Each of the thirteen characteristics on the most-in-
need list will be given the same weight.
    Because some characteristics, such as poor employment prospects, 
are shared by most SCSEP participants, all or nearly all participants 
may qualify as most-in-need. To distinguish among the level of 
grantees' efforts to enroll participants with additional serious 
barriers to employment, and to make the most-in-need measure a more 
effective assessment of grantees' compliance with statutory priorities, 
grantees will report

[[Page 35839]]

on each characteristic and the most-in-need measure will be an average 
of the total number of characteristics per participant served. For 
example, if a 70 year-old veteran with a severe disability who lives in 
a rural area enrolls in the SCSEP, that participant will be marked as 
possessing four of the most-in-need characteristics: Veteran, 
disability, severe disability, and rural resident. To restate, then, 
the Department will define most-in-need by counting the total number of 
the most-in-need characteristics for all participants and dividing by 
the number of participants served.
    Most-in-need is a core indicator and is, therefore, subject to 
goal-setting. However, the 2006 OAA Amendments significantly expanded 
the most-in-need list of characteristics. While the most-in-need list 
used to contain four characteristics (individuals over age 60 who have 
the greatest economic need, greatest social need, or poor employment 
history or prospects), the list now contains thirteen characteristics. 
Because there is not yet a body of performance data on the new 
characteristics, it is not possible to set rational goals for the first 
program year for this indicator. Accordingly, the Department will use 
Program Year 2007 as a baseline year so that grantees and the 
Department may collect sufficient data to set a meaningful goal for 
this measure for Program Year 2008. We intend that all grantees will be 
required to negotiate goals for and be held accountable to this measure 
in Program Year 2008.
    At the conclusion of Program Year 2007, the Department will be able 
to report on the average number of most-in-need characteristics per 
participant for each grantee, as well as the total number of 
participants exhibiting each characteristic.
Additional Indicators
    1. Retention in unsubsidized employment for one year. The 2006 OAA 
Amendments include retention in unsubsidized employment for one year as 
an additional indicator. This is a new indicator for the SCSEP.
    Many respondents commented on this measure. In terms of choosing 
the time at which to measure one-year retention: no one recommended 
measuring one-year retention during the 5th quarter after the exit 
quarter, a few commenters recommended the 365th day, and many 
commenters encouraged the Department to measure this indicator during 
the 4th quarter after the exit quarter. One commenter recommended 
measuring one-year retention during the fourth quarter but not later 
than the 365th day. Another commenter suggested this indicator be 
measured during the twelfth month after the date the unsubsidized 
employment began.
    Consistent with the majority of comments received on this question, 
the Department is defining this indicator to align with the WIA one-
year retention performance measure. ETA defined the WIA one-year 
retention measure in its WIA Annual Report, General Reporting 
Instructions, Revised 2006, as, ``[o]f those who are employed in the 
first quarter after the exit quarter: the number of participants who 
are employed in the fourth quarter after the exit quarter divided by 
the number of participants who exit during the quarter.'' This measure 
looks only at those individuals who are included in the entered 
unsubsidized employment indicator.
    By examining whether participants are employed in the fourth 
quarter after the quarter of exit, grantees will be focused on whether 
participants who entered unsubsidized employment are still employed 
approximately one calendar year after exiting the SCSEP. For example, 
if a participant exits during the first quarter of the calendar year 
(between January 1 and March 31), the fourth quarter after the exit 
quarter will be the first quarter of the next calendar year (January 1 
to March 31). Retention is measured at one year, only one quarter after 
measuring retention at six months, because the one-year retention 
measure has been determined by the Department to most accurately 
capture retention twelve months after program exit.
    The Department received many comments expressing the view that 
obtaining follow-up data one year after program exit will be a 
challenge. One commenter noted that while participants are generally 
grateful for the services provided through the SCSEP, participants 
sometimes feel ``a sort of infringement'' about providing follow-up 
information. One commenter noted that employers sometimes hesitate to 
release employment and wage information despite being provided with a 
release signed by the participant. One commenter noted that in her 
experience it is difficult to maintain participant contact more than 
six months after program exit; similarly, another commenter pointed out 
that securing follow-up information becomes more difficult the longer 
the participant has been exited from the SCSEP. Another commenter 
maintained that it may be difficult for participants who satisfy the 
new priority characteristics to remain employed for one year. One 
commenter argued that grantees should not be penalized if follow-up 
data is unobtainable; another contended that grantees should not be 
punished if a participant must exit the workforce due to failing health 
before one-year retention gets measured. Finally, one commenter 
suggested that the Department delay implementation of the one-year 
retention measure until the SCSEP gains access to Unemployment 
Insurance wage records.
    The Department recognizes that obtaining one-year retention data 
may prove to be a demanding task. However, the 2006 OAA Amendments 
require a one-year indicator, and the Department must follow the 
mandates of the statute. The Department remains available to provide 
technical assistance as grantees implement this new indicator. Indeed, 
it is our intention to share with grantees whatever information we can 
that will facilitate this data collection process. And, as stated with 
regard to the earnings measure, the Department has been exploring 
options for access to unemployment insurance wage records as an option 
for future implementation. Finally, note that we have no current 
intention of altering the exclusion policies relating to participants 
that must exit the program or the workforce due to extraordinary 
circumstances such as ill health. As listed in TEGL 17-05, the 
circumstances for excluding participants in the common measures 
calculations include institutionalization, health/medical issues for 
self or family, deceased, and called to active duty from the reserves.
    2. Satisfaction of the participants, employers, and their host 
agencies with their experiences and the services provided. The 2006 OAA 
Amendments continue the customer satisfaction indicator. The Department 
envisions no change in this reporting requirement at this time. 
Grantees will continue to track three distinct measures of customer 
satisfaction: one measure for participant satisfaction, one measure for 
employer satisfaction, and one measure for host agency satisfaction. 
Customer satisfaction for all three groups will continue to be 
determined using an established methodology.
    The Department received a handful of comments on this performance 
measure. Several commenters recommended that the Department maintain 
the current system because the information received is valuable and the 
system appears to be working satisfactorily. A small number of 
commenters suggested that the Department entirely eliminate customer 
satisfaction surveys or at least not use them as a performance measure. 
Several commenters suggested that customer satisfaction surveys are 
either too costly

[[Page 35840]]

to administer, do not add value to the program, or should be 
administered less frequently than every year. There was also a range of 
comments on related issues: A small number of commenters suggested that 
the Department not conduct the satisfaction surveys in Program Year 
2006 because the recent national grant competition would lead to data 
that is not useful; some respondents offered suggestions on how to 
improve the survey instrument such as convening focus groups to refine 
survey questions, shortening the surveys, and adding more questions to 
the surveys; and one commenter suggested that the Department, rather 
than the grantees, conduct the surveys of employers.
    As stated with regard to the other statutorily-mandated performance 
measures, it is not within the scope of the Department's discretion to 
eliminate the customer satisfaction indicator, and the surveys will be 
administered during Program Year 2006. There are, however, plans for a 
pilot project in 2007 to test the feasibility of the Department 
conducting the employer surveys. The Department will take other 
commenters' suggestions under advisement.
    To summarize, the Department will now be collecting data on eight 
performance indicators, six of which are core indicators, subject to 
goal-setting:
    Core Indicators:
    (1) Hours (in the aggregate) of community service employment;
    (2) Entry into unsubsidized employment (common measure);
    (3) Retention in unsubsidized employment for six months (common 
measure);
    (4) Earnings (common measure);
    (5) Number of eligible individuals served;
    (6) The number of most-in-need individuals served/number of 
participating individuals described in subsection (a)(3)(B)(ii) or 
(b)(2) of section 518 (second part of fifth statutory core indicator, 
treated here as separate indicator).
    Additional Indicators:
    (1) Retention in unsubsidized employment for one year;
    (2) Satisfaction of the participants, employers, and their host 
agencies with their experiences and the services provided.
    By using the SCSEP Performance and Results Quarterly Progress 
Report, or SPARQ, system, grantees only need to input the raw data, and 
the data management system will complete the performance measure 
calculations. Performance measure results may be viewed at virtually 
any time by producing a grantee or sub-grantee Quarterly Progress 
Report. Grantees are also provided with data quality reports which 
indicate the existence of any missing or impermissible data values.
How will the Department and grantees initially determine and then 
adjust expected levels of performance for the core performance 
measures? (Sec.  641.720)
    The Department and SCSEP grantees have been reaching agreement on 
performance levels for several years and the Department does not 
envision any change at this time to the process for reaching agreement. 
The performance levels will continue to be agreed upon before the 
beginning of each Program Year. The Department will continue to 
initially propose a baseline performance level, taking into 
consideration such things as grantees' past performance, the need for 
continuous improvement, and the statutory adjustment factors described 
in Sec.  641.720(b). A grantee may respond with data on either the 
statutory adjustment factors or other relevant dynamics to alter the 
proposed goals. At the conclusion of this process, the parties will 
form agreement on performance levels for the coming Program Year. A 
grantee may submit comments to the Department concerning the grantee's 
satisfaction with the negotiated levels; those comments will be made 
available for public review.
    Section 641.720(a)(5) implements another new provision in the 2006 
OAA Amendments which concerns making public the agreed-upon performance 
levels. Once all agreements have been reached, the Department will make 
available for public review the final expected levels of performance 
for each grantee, including any comments submitted by any grantee about 
the grantee's satisfaction with the agreed-upon levels.
    The Department received a few comments about the process of 
reaching agreement on the expected levels of performance, and on the 
goals themselves. A small number of respondents expressed general 
support for the current process, and a small number of commenters 
suggested that in the goal-setting process more weight should be given 
to grantee input. There were also comments suggesting that the same 
performance goals be established for all national grantees or that the 
Department make public the specific criteria and rationale used to 
justify different goals for each grantee.
    The Department elects to retain its current process of reaching 
agreement on performance goals as this process already allows for 
significant grantee input, and is an objective, data-driven process. We 
will not set the same goals for all national grantees because that 
would not account for the varying performance levels among the 
grantees, nor would allow for reasonable levels of continuous 
improvement. In terms of the information available to grantees about 
the goals set for other grantees, we note that all grantees have access 
to all other grantees' performance outcomes, as well as the performance 
levels initially proposed by the Department and the final, negotiated 
goals. Further, the Department explains to each grantee the objective, 
data-driven process used in reaching agreement on the performance 
levels, and the same process is consistently employed with all 
grantees. Finally, we again note the new provision in the 2006 OAA 
Amendments that allows grantees to submit, and the Department to make 
public, comments concerning a grantee's satisfaction with the agreed-
upon levels.
    The 2006 OAA Amendments create a graduated ``floor'' for the entry 
into unsubsidized employment indicator. That is, under the 2000 OAA 
Amendments, the entry into unsubsidized employment measure could not be 
less than 20 percent. The 2006 OAA Amendments require the following 
levels of entry into unsubsidized employment: 21 percent for Program 
Year 2007; 22 percent for Program Year 2008; 23 percent for Program 
Year 2009; 24 percent for Program Year 2010; and 25 percent for Program 
Year 2011. In the pursuit of continuous improvement, and based on the 
prior performance of the grantees, the Department has consistently 
established a performance level higher than the graduated floor set by 
statute for many grantees, and expects to continue to do so.
    The 2006 OAA Amendments continue the practice of allowing grantees 
to petition for an adjustment to the agreed-upon performance levels, in 
recognition of the reality that circumstances affecting program 
performance can change markedly over the course of a year. The list of 
statutory adjustment factors has changed. Section 513(a)(2)(D) of the 
2006 OAA Amendments limits the new adjustment factors to:
    (i)(a) High rates of unemployment in the areas served by a grantee, 
relative to other areas of the State involved or Nation; or
    (i)(b) High rates of poverty in the areas served by a grantee, 
relative to other areas of the State involved or Nation; or
    (i)(c) High rates of participation in TANF (Temporary Assistance 
for Needy Families, a program of block grants to States established 
under part A of title

[[Page 35841]]

IV of the Social Security Act (42 U.S.C. 601 et seq.)), in the areas 
served by a grantee, relative to other areas of the State involved or 
Nation;
    (ii) Significant economic downturns in the areas served by the 
grantee or in the national economy;
    (iii) Significant numbers or proportions of participants with one 
or more barriers to employment, including individuals described in 
subsection (a)(3)(B)(ii) or (b)(2) of section 518 (most-in-need), 
served by a grantee relative to such numbers or proportions for 
grantees serving other areas of the State or Nation;
    (iv) Changes in Federal, State, or local minimum wage requirements; 
and
    (v) Limited economies of scale for the provision of community 
service employment and other authorized activities in the areas served 
by the grantee.
    In petitioning for an adjustment, grantees must support their case 
with data based on one or more of the factors from this list. Obtaining 
an adjustment to negotiated performance levels is a data-driven 
process.
How will the Department assist grantees in the transition to the new 
core performance indicators? (Sec.  641.730)
    Section 513(d)(1) of the 2006 OAA Amendments calls for the 
Department, as soon as practicable after July 1, 2007, to determine 
whether grantees have, for Program Year 2006, met the performance 
levels set for the core indicators for Program Year 2007. The 
Department will also determine whether grantees have achieved the 
statutory percentages required for placement. If the Department 
determines that a grantee failed to achieve either the agreed-upon 
performance levels or the required placement percentages, the 
Department will provide technical assistance to assist that grantee to 
meet the agreed-upon performance levels and/or the applicable placement 
percentage during Program Year 2007. This technical assistance is for 
the purpose of assisting the grantees to be able to work successfully 
with the new performance measures and does not count as technical 
assistance provided under Sec.  513(d)(2) or (3).
    Further, and as discussed in relation to the most-in-need measure, 
Program Year 2007 will be treated as a baseline year for the most-in-
need indicator so that grantees and the Department may gather data on 
the expanded list of characteristics. Expected levels of performance 
will be set for Program Year 2008 for the most-in-need measure.
How will the Department determine whether a grantee fails, meets, or 
exceeds the expected levels of performance for the core indicators and 
what will be the consequences of failing to meet expected levels of 
performance? (Sec.  641.740)
    The Department will annually evaluate the performance of each 
grantee with respect to the levels achieved for each of the core 
indicators of performance in comparison to the levels of performance 
set by agreement (including any adjustments). As required by the 
statute, the Department's evaluation will be published, and information 
on each grantee's performance on the core indicators will be made 
available for public review. Information on the annual performance of 
each grantee with respect to the additional performance indicators will 
also be published and made available for public review. According to 
the statute, the Department will report the results of the Department's 
annual evaluation to Congress.
    Sections 513(d)(2)(A) and 513(d)(3)(A) of the 2006 OAA Amendments 
require the Department to determine whether a grantee has met or failed 
to meet the agreed-upon levels of performance for the core indicators 
``not later than 120 days after the end of each program year.'' In 
evaluating Program Year performance, and although we did receive 
comments urging various other approaches, the Department will continue 
to aggregate the core indicators to determine if, on the whole, a 
grantee met its performance objectives (including any adjustment made.) 
The aggregate is calculated by combining the percentage of goals 
achieved on each of the individual core indicators to obtain an average 
score.
    The Department received many comments concerning the evaluation of 
performance outcomes. Several commenters recommended staying with the 
methodology that is currently used, i.e., requiring that grantees 
achieve at least 80 percent of the negotiated levels of performance for 
the aggregate of all the core indicators. Other commenters suggested 
that any grantee that meets or exceeds the negotiated (i.e., 
``expected'') levels of performance in the aggregate for a majority of 
the core indicators should be considered to have met the expected 
levels of performance. A small number of commenters suggested lowering 
the threshold for achievement of expected levels of performance in the 
aggregate for all core indicators to 65 percent.
    The Department has decided to continue to determine that a grantee 
has failed to meet its performance measures when it is does not meet 80 
percent of the agreed-upon level of performance for the aggregate of 
all the core indicators. Performance in the range of 80 to 100 percent 
constitutes meeting the level for the core performance measures. 
Performance in excess of 100 percent constitutes exceeding the level 
for the core performance measures.
    The Department also received comments expressing concern about 
achieving the expected levels of performance given a service population 
distinguished by hard-to-serve characteristics. A small number of 
respondents recommended separate performance goals for separate 
population groups, one for those most-in-need and one for those not 
most-in-need. A few commenters suggested separate performance goals for 
priority populations and participants who did not have the priority 
characteristics. The Department chooses to continue the practice of 
setting unified expected levels of performance for the SCSEP population 
as a whole, rather than setting separate goals for separate 
populations. Performance goals currently covering all participants 
already account for those individuals with priority and/or most-in-need 
characteristics because performance goals are based in large part on 
each grantee's past performance, which includes the outcomes of the 
most-in-need and priority participants. These populations will continue 
to be accounted for in the same manner.
    If the Department determines that a State or national grantee fails 
to meet the expected levels of performance for the core indicators, the 
Department, after each year of such failure, will provide technical 
assistance to the failing grantee and will require the failing grantee 
to submit a corrective action plan not later than 160 days after the 
end of the Program Year. The corrective action plan must detail the 
steps the grantee will take to meet the expected levels of performance 
in the next Program Year.
    A national grantee that fails to meet the expected levels of 
performance for the core indicators for four consecutive years 
(beginning with Program Year 2007) will not be allowed to compete in 
the subsequent SCSEP grant competition following the fourth consecutive 
year of failure but may compete in the next grant competition after 
that subsequent competition.
    If the Department determines that a State grantee fails to meet the 
expected levels of performance for the core

[[Page 35842]]

indicators for three consecutive years (beginning with Program Year 
2007) the Department will require the State to compete the SCSEP funds 
awarded under section 506(e) of the OAA for the first full Program Year 
following the Department's determination. The grantee that is then 
awarded the SCSEP grant will administer the SCSEP in that State and 
will be subject to the same rules and responsibilities as the State 
grantee. We emphasize that the failure of a State grantee does not mean 
that the SCSEP would cease or lapse in a State; it merely means that a 
different entity would be chosen to administer the existing program. 
Indeed, the 2006 OAA Amendments require that grant applicants be 
evaluated, among other things, for their ability to minimize disruption 
in services for participants and in community services provided. Pub. 
L. 109-365 Sec. Sec.  503(a)(6), 514(c)(9).
    A few commenters suggested that the same criteria for sanctions be 
applied to State and national grantees. Congress decided to apply 
corrective actions to national grantees who fail to achieve the 
expected levels of performance for four consecutive years, while State 
grantees are subject to corrective action if they fail to achieve their 
performance goals for three consecutive years and the Department must 
implement the statute as written.
    Finally, under the 2000 OAA Amendments, each national grantee in a 
State was required to meet the goals agreed upon for the State as well 
as that grantee's national performance goals. The 2006 OAA Amendments 
alter those requirements so that national grantees are now held 
accountable only for their national goals.
Will there be performance-related incentives? (Sec.  641.750)
    Section 517(c)(1) of the 2006 OAA Amendments authorizes the 
Department to re-obligate recaptured funds for incentive grants and 
section 502(e)(2)(B)(iv) authorizes the Department to award incentives 
for exemplary performance. Section 641.750 of these regulations 
addresses performance-based incentives for grantees. Such incentives 
may take the form of financial or non-financial awards. The Department 
will issue guidance setting out the procedures and standards that will 
be used to award the incentives. The Department will exercise this 
authority at its discretion.

Other Comments Received

    The Department received a variety of comments that have not been 
mentioned above. A summary of the input received on each subject was 
posted on the SCSEP Web site at http://www.doleta.gov/seniors. Some 
comments received suggested actions that contradict the 2006 OAA 
Amendments that we are implementing; the Department does not have the 
authority to act in contradiction to the statute. Several other 
comments exceeded the scope of this Interim Final Rule by discussing 
policies in the 2006 OAA Amendments that are not directly related to 
performance measures. A forthcoming Notice of Proposed Rulemaking 
(NPRM) will address all non-performance measure changes to the SCSEP 
resulting from the 2006 OAA Amendments; the public will be invited to 
comment on the NPRM, and the Department will consider the out-of-scope 
comments submitted here when it considers the comments that are 
submitted in response to the NPRM. Other performance-related comments 
will be taken under advisement.

III. Administrative Information

Regulatory Flexibility Analysis, Executive Order 13272, Small Business 
Regulatory Enforcement Fairness Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. Chapter 6, requires 
the Department to evaluate the economic impact of this rule with regard 
to small entities. The RFA defines small entities to include small 
businesses, small organizations including not-for-profit organizations, 
and small governmental jurisdictions. The Department must determine 
whether the rule imposes a significant economic impact on a substantial 
number of such small entities.
    First, the Department has determined that this Interim Final Rule 
does not affect a substantial number of small entities. There are 74 
SCSEP grantees; 50 of these are States and are not small entities as 
defined by the RFA. Six grantees are governmental jurisdictions other 
than States (four grantees are territories such as Guam, one grantee is 
Washington, DC, and another grantee is Puerto Rico). Governmental 
jurisdictions must have a population of less than 50,000 to qualify as 
a small entity for RFA purposes and the population of these six SCSEP 
grantees each exceeds 50,000. The remaining 18 grantees are non-profit 
organizations, which includes some large national non-profit 
organizations. Eighteen is simply not a substantial number; in fact, it 
is a minute number compared to the total number of non-profits in the 
country, which has been estimated to be over one million.
    The Department has also determined that the economic impact of this 
Interim Final Rule is not significant because the additional burden 
imposed by the new performance measurement system will not impose any 
considerable costs on grantees. In addition, all costs are covered by 
the SCSEP program money provided to grantees. Two performance measures 
that had been statutorily required in the 2000 OAA Amendments are now 
being dropped: the indicator known as ``SCSEP placement,'' which 
determined that an unsubsidized placement had been accomplished if a 
participant worked 30 days within the first 90 days after program exit, 
and the retention indicator which examined whether the participant was 
still employed 180 days after program exit. Based on our program 
experience, we estimate that it takes approximately fifteen minutes for 
program staff to capture each of those indicators. Accordingly, 
grantees will see a cost savings equivalent to 30 minutes of program 
staff time per placement.
    Conversely, two changes required by the 2006 OAA Amendments will 
necessitate additional expenditures by grantees. First, there are 
changes in the list of which characteristics qualify a participant as 
most-in-need that will require nominal staff time to implement, mostly 
at the beginning of the first Program Year under this Interim Final 
Rule as grantee staff adjust to the new list. We note that the most-in-
need indicator itself is not new and so grantee staff are already used 
to the process of capturing information on a list of characteristics. 
Accordingly, and based on our program expertise, we estimate that 
grantee staff will spend an average of one minute per participant 
adjusting to the new list of characteristics.
    Second, the addition of the one-year retention measure represents 
the most time-consuming change in the set of performance measures. 
Implementing this indicator requires grantee staff to conduct an 
additional follow-up with an employer to determine whether the 
participant is still employed. Given the considerable length of time 
that will elapse between program exit and this follow-up, grantee staff 
may have to initiate several contacts with an employer before the 
information sought can be gathered. The Department acknowledges the 
several comments received on this point in response to the notice 
published in the Federal Register. Accordingly, although we estimate 
that earlier follow-up contacts may each be successfully accomplished 
in fifteen minutes, based on our program expertise, we allow that the 
one-year retention follow-up will take an average of thirty minutes per 
placed participant.

[[Page 35843]]

    For each placement, then, we have estimated that grantees will see 
cost savings equivalent to thirty minutes of staff time and will be 
required to invest a new thirty minutes of staff time. These amounts 
cancel each other out. The effect of the changes to the most-in-need 
indicator end up being the net effect of the new performance measures: 
An additional amount equal to one minute of staff time per participant.
    Applying our program expertise we estimate that program staff 
persons perform work roughly equivalent to that performed by a grade 
12, step 1 Federal employee. The base pay hourly rate for such an 
employee is $26.53. Adding one-third additional funds for fringe 
benefits, the total hourly rate for this employee becomes $35.28. One 
minute of such a person's time would cost $0.59. The smallest SCSEP 
national grant award goes to two organizations that each have the 
capacity to serve 205 participants. Multiplying 205 times fifty-nine 
cents equals $120.95. The smallest SCSEP national grants are over $1.1 
million. The expenditure of roughly $121 is not significant in terms of 
a budget of over $1.1 million. We further note that the capacity to 
serve participants is always related to the award amount, so national 
grantees with different (higher) grant awards would not spend any 
greater a percentage of their funds on the implementation of these 
performance measures even though they would serve more participants.
    According to the above analysis, we therefore determine and certify 
that this Interim Final Rule does not impose a significant economic 
impact on a substantial number of small entities. The Department 
welcomes comments on this RFA certification.
    We note that this analysis is also applicable under Executive Order 
13272; for those purposes as well we certify that this Interim Final 
Rule does not impose a significant economic impact on a substantial 
number of small entities.
    The Department has also determined that this rule is not a ``major 
rule'' for purposes of the Small Business Regulatory Enforcement 
Fairness Act (SBREFA), 5 U.S.C. Chapter 8. SBREFA requires agencies to 
take certain actions when a ``major rule'' is promulgated. SBREFA 
defines a ``major rule'' as one that will have an annual effect on the 
economy of $100,000,000 or more; that will result in a major increase 
in costs or prices for, among other things, State or local government 
agencies; or that will significantly and adversely effect the business 
climate. For the reasons already discussed, the Department estimates 
that the only additional costs to grantees implementing these SCSEP 
regulations will be $0.59 per participant. Accordingly, none of the 
definitions of ``major rule'' apply in this instance.

Executive Order 12866

    Executive Order 12866 requires that for each ``significant 
regulatory action'' proposed by the Department, the Department conduct 
an assessment of the proposed regulatory action and provide the Office 
of Management and Budget (OMB) with the proposed regulation and the 
requisite assessment prior to publishing the regulation. A significant 
regulatory action is defined to include an action that will have an 
annual effect on the economy of $100 million or more, as well as an 
action that raises a novel legal or policy issue.
    The performance measures defined and implemented by this rule will 
not have an annual effect on the economy of $100 million or more, for 
the reasons outlined above, but do raise novel policy issues related to 
implementing the performance measures required by the 2006 OAA 
Amendments to the SCSEP. Accordingly, the OMB has reviewed this Interim 
Final Rule.

Paperwork Reduction Act

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
effected entities. The PRA requires certain actions before an agency 
can adopt or revise the collection of information, including publishing 
a summary of the collection of information and a brief description of 
the need for and proposed use of the information.
    The performance accountability system described in this Interim 
Final Rule requires grantees to continue to maintain electronic 
participant records that include the data needed for each performance 
indicator. Quarterly and annual reports on performance measures are 
generated using these electronic records. Grantees may use the SPARQ 
computer system developed by the Department for the SCSEP, or they may 
maintain their own computer database as long as they are able to 
electronically provide the necessary data for the quarterly and annual 
reports. These information gathering activities are required to 
implement the performance measurement system enacted in the 2006 OAA 
Amendments, and will promote program effectiveness by providing 
valuable data on program performance.
    The forms used until now by grantees to maintain and report 
performance measures data were approved by the OMB and assigned OMB 
control number 1205-0040. Revised forms that account for the changes in 
the performance measures described in this Interim Final Rule have been 
submitted as required by the PRA as modifications to existing forms, 
using the same control number.
    The Department estimates that the public reporting burden for this 
collection of information is an average of 8.4 minutes per response. 
Note that this estimate does not represent the total burden on grantees 
for all SCSEP paperwork, rather it is an estimate of the burden 
resulting just from the paperwork directly related to the performance 
measures.
    The Department invites comments on its Paperwork Reduction 
Analysis.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995, this rule 
does not include any Federal mandate that may result in increased 
expenditure by State, local, and tribal governments in the aggregate of 
more than $100 million, or increased expenditures by the private sector 
of more than $100 million.

Executive Order 13132

    The Department has reviewed this rule in accordance with Executive 
Order 13132 regarding federalism and has determined that it does not 
have ``federalism implications.'' The rule does not ``have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.'' This interim 
rule defines and implements performance measures for the SCSEP, and 
while States are SCSEP grantees, this rule merely makes changes to data 
collection processes that are ongoing. Requiring State grantees to 
implement these changes does not constitute a ``substantial direct 
effect'' on the States, nor will it alter the relationship or 
responsibilities between the Federal and State governments.

Executive Order 13045

    Executive Order 13045 concerns the protection of children from 
environmental health risks and safety risks. This rule defines and 
details the performance measures to be utilized by the SCSEP, a program 
for older Americans, and has no impact on safety or health risks to 
children.

Executive Order 13175

    Executive Order 13175 addresses the unique relationship between the 
Federal

[[Page 35844]]

Government and Indian tribal governments. The order requires Federal 
agencies to take certain actions when regulations have ``tribal 
implications.'' Required actions include consulting with Tribal 
Governments prior to promulgating a regulation with tribal implications 
and preparing a tribal impact statement. The order defines regulations 
as having ``tribal implications'' when they have substantial direct 
effects on one or more Indian tribes, on the relationship between the 
Federal Government and Indian tribes, or on the distribution of power 
and responsibilities between the Federal Government and Indian tribes.
    The Department has reviewed this Interim Final Rule and concludes 
that it does not have tribal implications. While tribes are sub-
grantees of national SCSEP grantees, this rule will not have a 
substantial direct effect on those tribes, because, as outlined in the 
Regulatory Flexibility section of the preamble, there are only small 
cost increases associated with implementing this regulation. This 
regulation does not affect the relationship between the Federal 
Government and the tribes, nor does it affect the distribution of power 
and responsibilities between the Federal Government and Tribal 
Governments.
    The Department notes that it did receive a submission from the 
National Indian Council on Aging (NICOA). However, the NICOA's comments 
did not raise concerns about the relationship between the Federal 
Government and Indian tribes or the distribution of power and 
responsibilities between the Federal Government and Indian tribes. 
Instead, the NICOA thoroughly responded to the issues outlined in the 
notice.
    Accordingly we conclude that this rule does not have tribal 
implications for the purposes of Executive Order 13175.

Environmental Impact Assessment

    The Department has reviewed this rule in accordance with the 
requirements of the National Environmental Policy Act (NEPA) of 1969 
(42 U.S.C. 4321 et seq.), the regulations of the Council on 
Environmental Quality (40 CFR part 1500), and the Department's NEPA 
procedures (29 CFR part 11). The rule will not have a significant 
impact on the quality of the human environment, and, thus, the 
Department has not prepared an environmental assessment or an 
environmental impact statement.

Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act, enacted as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 
2681), requires the Department to assess the impact of this rule on 
family well-being. A rule that is determined to have a negative affect 
on families must be supported with an adequate rationale.
    The Department has assessed this rule and determines that it will 
not have a negative effect on families. Indeed, we believe the SCSEP 
strengthens families by providing job training and support services to 
low-income older Americans so that they can obtain fruitful employment 
and enjoy increased economic self-sufficiency.

Privacy Act

    The Privacy Act of 1974, 5 U.S.C. 552a, provides safeguards to 
individuals concerning their personal information which the Government 
collects. The Act requires certain actions by an agency that collects 
information on individuals when that information contains personally 
identifying information such as Social Security Numbers or names. 
Because SCSEP participant records are maintained by Social Security 
Number, the Act applies here.
    A key concern is for the protection of participant Social Security 
Numbers. Grantees must collect the Social Security Number in order to 
properly pay participants for their community service work in host 
agencies. When participant files are sent to the Department for 
aggregation, the transmittal is protected by secure encryption. When 
participant files are retrieved within the Internet-based SCSEP data 
management system, or SPARQ, only the last four digits of the Social 
Security Number are displayed. Any information that is shared or made 
public is aggregated by grantee and does not reveal personal 
information on specific individuals.
    The Department works diligently to ensure the highest level of 
security whenever personally identifiable information is stored or 
transmitted. All contractors that have access to individually 
identifying information are required to provide assurances that they 
will respect and protect the confidentiality of the data. ETA's Office 
of Performance and Technology has been an active participant in the 
development and approval of data security measures--especially as they 
apply to SPARQ.
    In addition to the above, a Privacy Act Statement is provided to 
grantees for distribution to all program participants. The grantees 
were advised of the requirement in ETA's Older Worker Bulletin OWB-04-
06. Participants receive this information when they meet with a case 
worker or intake counselor. When the programs are monitored, 
implementation of this item is included in the review.

Executive Order 12630

    This rule is not subject to Executive Order 12630, Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights, because it does not involve implementation of a policy with 
takings implications.

Executive Order 12988

    This regulation has been drafted and reviewed in accordance with 
Executive Order 12988, Civil Justice Reform, and will not unduly burden 
the Federal court system. The regulation has been written so as to 
minimize litigation and provide a clear legal standard for affected 
conduct, and has been reviewed carefully to eliminate drafting errors 
and ambiguities.

Executive Order 13211

    This rule is not subject to Executive Order 13211, because it will 
not have a significant adverse effect on the supply, distribution, or 
use of energy.

Plain Language

    The Department drafted this Interim Final Rule in plain language.

Effective Date and Absence of Notice and Comment

    The Department has, for good cause, determined, in accordance with 
5 U.S.C. 553(b)(3)(B), that in order to meet the 2006 OAA Amendments' 
requirements for implementation of the SCSEP performance accountability 
system it is impracticable and contrary to the public interest to 
promulgate these regulations through the normal notice and comment 
rulemaking process. In addition, for similar reasons, good cause exists 
for this rule to take effect immediately upon publication pursuant to 5 
U.S.C. 553(d)(3).
    The 2006 OAA Amendments call for several specific changes to the 
existing performance accountability system, and require that DOL 
establish and implement the new SCSEP performance measures after 
consultation with stakeholders by July 1, 2007. Specifically, section 
513(a)(1) states that ``The Secretary shall establish and implement, 
after consultation with grantees, subgrantees and host agencies

[[Page 35845]]

under this title, States, older individuals, area agencies on aging and 
other organizations serving older individuals, core measures of 
performance and additional indicators of performance for each grantee 
for projects and services carried out under this title.'' Section 
513(d)(4) calls for the Department to establish and implement the core 
measures and additional indicators of performance identified in the 
2006 Amendments ``not later than July 1, 2007.'' Further, section 
513(a)(2)(C) requires that ``The Secretary and each grantee shall reach 
agreement on the expected levels of performance for each program year 
for each of the core indicators of performance * * *. Funds may not be 
awarded under the grant until such agreement is reached.'' Finally, 
section 513(b)(3) states that ``(t)he Secretary, after consultation 
with national and State grantees, representatives of business and labor 
organizations, and providers of services, shall, by regulation, issue 
definitions of the indicators of performance'' described in OAA-2006.
    The tasks required to implement the performance accountability 
section are interconnected and the consequences of failing to achieve 
them by July 1 are contrary to the public interest. Without regulatory 
definitions, the Department will likely be unable to reach agreement 
with grantees on expected levels of performance. Without such 
agreements, grants may not be awarded. Failure to award grants on time 
may result in a gap in service during which needy seniors go without 
the assistance authorized by the Act.
    The Department has worked diligently to develop a strategy and 
achieve the tasks necessary to implement the performance accountability 
system by the July 1 deadline. For example, we have implemented an 
interagency group to oversee the strategy for implementation; consulted 
with stakeholders through a Federal Register notice seeking public 
input on the matters covered by this rule; and we published a Training 
and Employment Guidance Letter to inform grantees of the anticipated 
changes to the performance measures. The establishment of the 
regulatory definitions in this Interim Final Rule is critical to this 
strategy. In order to carry out this multi-pronged approach, it is not 
possible to develop and publish a Notice of Proposed Rulemaking 
followed by a Final Rule in the short period of time available. 
Therefore, in order to assure that the system is implemented by July 1 
and to avoid harmful gaps in service, it is necessary and in the public 
interest to implement the regulations through an Interim Final Rule. We 
are committed to public input in the development of SCSEP regulations, 
including this Interim Final Rule. We provided an opportunity for input 
into the development of this regulation; we request and are committed 
to considering comments on this rule; and we will be implementing the 
remaining regulations to the SCSEP program through Notice and Comment 
Rulemaking.

List of Subjects in 20 CFR Part 641

    Aged, Employment, Government contracts, Grant programs--labor, 
Reporting and recordkeeping requirements.


0
For the reasons discussed in the preamble, the Department of Labor 
amends 20 CFR part 641 as follows:

PART 641--PROVISIONS GOVERNING THE SENIOR COMMUNITY SERVICE 
EMPLOYMENT PROGRAM

0
1. The authority citation for part 641 continues to read as follows:

    Authority: 42 U.S.C. 3056 et seq.


0
2. Amend Sec.  641.140 to:
0
a. Add in alphabetical order the definitions of ``additional 
indicators,'' ``at risk for homelessness,'' ``community service 
employment,'' ``core indicators,'' ``frail,'' ``homeless,'' ``limited 
English proficiency,'' ``low employment prospects,'' ``low literacy 
skills,'' ``most-in-need,'' ``persistent unemployment,'' ``rural,'' 
``severe disability,'' ``severely limited employment prospects,'' and 
``veteran'' as set forth below;
0
b. Revise the definitions of ``disability'' and ``national grantee;'' 
to read as set forth below.


Sec.  641.140  What definitions apply to this part?

* * * * *
    Additional indicators mean retention in unsubsidized employment for 
one year; and satisfaction of participants, employers and their host 
agencies with their experiences and the services provided and any other 
indicators of performance that the Secretary determines to be 
appropriate to evaluate services and performance. (Sec.  513(b)(2) as 
amended by Pub. L. 109-365).
    At risk for homelessness means an individual is likely to become 
homeless and the individual lacks the resources and support networks 
needed to obtain housing.
* * * * *
    Community service employment means part-time, temporary employment 
paid with grant funds in projects in host agencies through which 
eligible individuals are engaged in community service and receive work 
experience and job skills that can lead to unsubsidized employment. 
(Sec.  518(a)(2) as amended by Pub. L. 109-365).
    Core indicators means hours (in the aggregate) of community service 
employment; entry into unsubsidized employment; retention in 
unsubsidized employment for six months; earnings; the number of 
eligible individuals served; and most-in-need (the number of 
individuals described in subsection (a)(3)(B)(ii) or (b)(2) of section 
518 of the OAA). (Sec.  513(b)(1) as amended by Pub. L. 109-365).
* * * * *
    Disability means a disability attributable to mental or physical 
impairment, or a combination of mental and physical impairments, that 
results in substantial functional limitations in one or more of the 
following areas of major life activity:
    (1) Self-care;
    (2) Receptive and expressive language;
    (3) Learning;
    (4) Mobility;
    (5) Self-direction;
    (6) Capacity for independent living;
    (7) Economic self-sufficiency;
    (8) Cognitive functioning; and
    (9) Emotional adjustment.

(42 U.S.C. 3002(13)).
* * * * *
    Frail means an individual 55 years of age or older who is 
determined to be functionally impaired because the individual--
    (1)(i) Is unable to perform at least two activities of daily living 
without substantial human assistance, including verbal reminding, 
physical cueing, or supervision; or
    (ii) At the option of the State, is unable to perform at least 
three such activities without such assistance; or
    (2) Due to a cognitive or other mental impairment, requires 
substantial supervision because the individual behaves in a manner that 
poses a serious health or safety hazard to the individual or to another 
individual.

(42 U.S.C. 3002(22)).
* * * * *
    Homeless includes
    (1) An individual who lacks a fixed, regular, and adequate 
nighttime residence; and
    (2) An individual who has a primary nighttime residence that is:
    (i) A supervised publicly or privately operated shelter designed to 
provide temporary living accommodations (including welfare hotels, 
congregate

[[Page 35846]]

shelters, and transitional housing for the mentally ill);
    (ii) An institution that provides a temporary residence for 
individuals intended to be institutionalized; or
    (iii) A public or private place not designed for, or ordinarily 
used as, a regular sleeping accommodations for human beings.

(42 U.S.C. 11302(a)).
* * * * *
    Limited English proficiency means individuals who do not speak 
English as their primary language and who have a limited ability to 
read, speak, write, or understand English.
* * * * *
    Low employment prospects means the likelihood that an individual 
will not obtain employment without the assistance of the SCSEP or 
another workforce development program. Persons with low employment 
prospects have a significant barrier to employment. Significant 
barriers to employment may include but are not limited to: Lacking a 
substantial employment history, basic skills, and/or English-language 
proficiency; lacking a high school diploma or the equivalent; having a 
disability; being homeless; or residing in socially and economically 
isolated rural or urban areas where employment opportunities are 
limited.
    Low literacy skills means the individual computes or solves 
problems, reads, writes, or speaks at or below the 8th grade level or 
is unable to compute or solve problems, read, write, or speak at a 
level necessary to function on the job, in the individual's family, or 
in society.
    Most-in-need means participants with one or more of the following 
characteristics: Have a severe disability; are frail; are age 75 or 
older; are age-eligible but not receiving benefits under title II of 
the Social Security Act; reside in an area with persistent unemployment 
and have severely limited employment prospects; have limited English 
proficiency; have low literacy skills; have a disability; reside in a 
rural area; are veterans; have low employment prospects; have failed to 
find employment after utilizing services provided under title I of the 
Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.); or are 
homeless or at risk for homelessness. (Older Americans Act (OAA) 
section 513(b)(1)(E) as amended by Pub. L. 109-365).
    National grantee means a public or non-profit private agency or 
organization, or Tribal organization, that receives a grant under title 
V of the OAA (42 U.S.C. 3056 et seq.) to administer a SCSEP project. 
(See OAA section 506(g)(5) as amended by Pub. L. 109-365).
* * * * *
    Persistent unemployment means that the annual average unemployment 
rate for a county or city is more than 20 percent higher than the 
national average for two out of the last three years.
* * * * *
    Rural means an area not designated as a metropolitan statistical 
area by the Census Bureau; segments within metropolitan counties 
identified by codes 4 through 10 in the Rural Urban Commuting Area 
(RUCA) system; and RUCA codes 2 and 3 for census tracts that are larger 
than 400 square miles and have population density of less than 30 
people per square mile.
* * * * *
    Severe disability means a severe, chronic disability attributable 
to mental or physical impairment, or a combination of mental and 
physical impairments, that--
    (1) Is likely to continue indefinitely; and
    (2) Results in substantial functional limitation in 3 or more of 
the following areas of major life activity:
    (i) Self-care;
    (ii) Receptive and expressive language;
    (iii) Learning;
    (iv) Mobility;
    (v) Self-direction;
    (vi) Capacity for independent living;
    (vii) Economic self-sufficiency.

(42 U.S.C. 3002(48)).

    Severely limited employment prospects means a substantially higher 
likelihood that an individual will not obtain employment without the 
assistance of the SCSEP or another workforce development program. 
Persons with severely limited employment prospects have more than one 
significant barrier to employment; significant barriers to employment 
may include but are not limited to: Lacking a substantial employment 
history, basic skills, and/or English-language proficiency; lacking a 
high school diploma or the equivalent; having a disability; being 
homeless; or residing in socially and economically isolated rural or 
urban areas where employment opportunities are limited.
* * * * *
    Veteran means an individual who is a ``covered person'' for 
purposes of the Jobs for Veterans Act, 38 U.S.C. 4215(a)(1).
* * * * *

0
3. Revise Subpart G to read as follows:

Subpart G--Performance Accountability

Sec.
641.700 What performance measures/indicators apply to SCSEP 
grantees?
641.710 How are the performance indicators defined?
641.720 How will the Department and grantees initially determine and 
then adjust expected levels of performance for the core performance 
measures?
641.730 How will the Department assist grantees in the transition to 
the new core performance indicators?
641.740 How will the Department determine whether a grantee fails, 
meets, or exceeds the expected levels of performance for the core 
indicators and what will be the consequences of failing to meet 
expected levels of performance?
641.750 Will there be performance-related incentives?


Sec.  641.700  What performance measures/indicators apply to SCSEP 
grantees?

    (a) Indicators of performance. There are currently eight 
performance measures, of which six are core indicators and two are 
additional indicators. Core indicators (defined in Sec.  641.710) are 
subject to goal-setting and corrective action (described in Sec.  
641.720); that is, performance level goals for each core indicator must 
be agreed upon between the Department and each grantee before the start 
of each program year, and if a grantee fails to meet the performance 
level goals for the core indicators, that grantee is subject to 
corrective action. Additional indicators (defined in Sec.  641.710) are 
not subject to goal-setting and are, therefore, also not subject to 
corrective action.
    (b) Core Indicators. Section 513(b)(1) as amended by Pub. L. 109-
365 establishes the following core indicators of performance:
    (1) Hours (in the aggregate) of community service employment;
    (2) Entry into unsubsidized employment;
    (3) Retention in unsubsidized employment for six months;
    (4) Earnings;
    (5) The number of eligible individuals served; and
    (6) The number of most-in-need individuals served (the number of 
participating individuals described in subsection (a)(3)(B)(ii) or 
(b)(2) of section 518).
    (c) Additional Indicators. Section 513(b)(2) as amended by Pub. L. 
109-365 establishes the following additional indicators of performance:
    (1) Retention in unsubsidized employment for one year; and
    (2) Satisfaction of the participants, employers, and their host 
agencies with their experiences and the services provided.

[[Page 35847]]

    (3) Any other indicators of performance that the Secretary 
determines to be appropriate to evaluate services and performance.
    (d) Affected entities. The core indicators of performance and 
additional indicators of performance are applicable to each grantee 
without regard to whether such grantee operates the program directly or 
through sub-contracts, sub-grants, or agreements with other entities. 
Grantees must assure that their sub-grantees and lower-tier sub-
grantees are collecting and reporting program data.
    (e) Required evaluation and reporting. An agreement to be evaluated 
on the core indicators of performance and to report information on the 
additional indicators of performance is a requirement for application 
for, and is a condition of, all SCSEP grants.


Sec.  641.710  How are the performance indicators defined?

    (a) The core indicators are defined as follows:
    (1) ``Hours of community service employment'' is defined as the 
total number of hours of community service provided by SCSEP 
participants divided by the number of hours of community service funded 
by the grantee's grant, after adjusting for differences in minimum wage 
among the States and areas. Paid training hours are excluded from this 
measure.
    (2) ``Entry into unsubsidized employment'' is defined by the 
formula: Of those who are not employed at the date of participation: 
The number of participants who are employed in the first quarter after 
the exit quarter divided by the number of adult participants who exit 
during the quarter.
    (3) ``Retention in unsubsidized employment for six months'' is 
defined by the formula: Of those who are employed in the first quarter 
after the exit quarter: The number of adult participants who are 
employed in both the second and third quarters after the exit quarter 
divided by the number of adult participants who exit during the 
quarter.
    (4) ``Earnings'' is defined by the formula: Of those participants 
who are employed in the first, second and third quarters after the exit 
quarter: Total earnings in the second quarter plus total earnings in 
the third quarter after the exit quarter divided by the number of 
participants who exit during the quarter.
    (5) ``The number of eligible individuals served'' is defined as the 
total number of participants served divided by a grantee's authorized 
number of positions, after adjusting for differences in minimum wage 
among the States and areas.
    (6) ``Most-in-need'' or ``the number of participating individuals 
described in subsection (a)(3)(B)(ii) or (b)(2) of section 518'' is 
defined by counting the total number of the following characteristics 
for all participants and dividing by the number of participants served. 
Participants are characterized as most-in-need if they:
    (i) Have a severe disability;
    (ii) Are frail;
    (iii) Are age 75 or older;
    (iv) Meet the eligibility requirements related to age for, but do 
not receive, benefits under Title II of the Social Security Act (42 
U.S.C. 401 et seq.);
    (v) Live in an area with persistent unemployment and are 
individuals with severely limited employment prospects;
    (vi) Have limited English proficiency;
    (vii) Have low literacy skills;
    (viii) Have a disability;
    (ix) Reside in a rural area;
    (x) Are veterans;
    (xi) Have low employment prospects;
    (xii) Have failed to find employment after utilizing services 
provided under title I of the Workforce Investment Act of 1998 (29 
U.S.C. 2801 et seq.); or
    (xiii) Are homeless or at risk for homelessness.
    (b) The additional indicators are defined as follows:
    (1) ``Retention in unsubsidized employment for 1 year'' is defined 
by the formula: of those who are employed in the first quarter after 
the exit quarter: The number of participants who are employed in the 
fourth quarter after the exit quarter divided by the number of 
participants who exit during the quarter.
    (2) ``Satisfaction of the participants, employers, and their host 
agencies with their experiences and the services provided'' is defined 
as the results of customer satisfaction surveys administered to each of 
these three customer groups. The Department will prescribe the content 
of the surveys.


Sec.  641.720  How will the Department and grantees initially determine 
and then adjust expected levels of performance for the core performance 
measures?

    (a) Initial agreement. Before the beginning of each Program Year, 
the Department and each grantee will undertake to agree upon expected 
levels of performance for each core indicator, except as provided in 
paragraph (b) of Sec.  641.730.
    (1) As a first step in this process, the Department proposes a 
baseline performance level for each core indicator, taking into account 
any statutory performance requirements, the need to promote continuous 
improvement in the program overall and in each grantee, the grantee's 
past performance, and the statutory adjustment factors articulated in 
paragraph (b) of this section.
    (2) A grantee may request a revision to the Department's initial 
performance level goal determination. The request must be based on data 
that supports the revision request. The data supplied by the grantee at 
this stage may concern the statutory adjustment factors articulated in 
paragraph (b) of this section, but is not limited to those factors; it 
is permissible for a grantee to supply data on ``other appropriate 
factors as determined by the Secretary.'' Section 513(a)(2)(C) as 
amended by Pub. L. 109-365.
    (3) The Department may revise the performance level goal in 
response to the data provided. The Department then sets the expected 
levels of performance for the core indicators. Grantee may agree to the 
expected level of performance and thereby receive the grant. At this 
point, agreement is reached by the parties and funds may be awarded. If 
a grantee does not agree with the offered expected level of 
performance, agreement is not reached and no funds may be awarded. A 
grantee may submit comments to the Department regarding the grantee's 
satisfaction with the expected levels of performance.
    (4) Funds may not be awarded under the grant until such agreement 
is reached.
    (5) At the conclusion of negotiations concerning the performance 
levels with all grantees, the Department will make available for public 
review the final negotiated expected levels of performance for each 
grantee, including any comments submitted by the grantee regarding the 
grantee's satisfaction with the negotiated levels.
    (6) The minimum percentage for the expected level of performance 
for the entry into unsubsidized employment core indicator is:
    (i) 21 percent for Program Year 2007;
    (ii) 22 percent for Program Year 2008;
    (iii) 23 percent for Program Year 2009;
    (iv) 24 percent for Program Year 2010; and
    (v) 25 percent for Program Year 2011.
    (b) Adjustment during the Program Year. After the Department and 
grantees reach agreement on the core indicator levels, those levels may 
only be revised in response to a request from a grantee based on data 
supporting one or more of the following statutory adjustment factors:
    (1) High rates of unemployment or of poverty or of participation in 
the program of block grants to States for

[[Page 35848]]

temporary assistance for needy families established under part A of 
title IV of the Social Security Act (42 U.S.C. 601 et seq.), in the 
areas served by a grantee, relative to other areas of the State 
involved or Nation.
    (2) Significant downturns in the areas served by the grantee or in 
the national economy.
    (3) Significant numbers or proportions of participants with one or 
more barriers to employment, including individuals described in 
subsection (a)(3)(B)(ii) or (b)(2) of section 518 as amended by Pub. L. 
109-365 (most-in-need), served by a grantee relative to such numbers or 
proportions for grantees serving other areas of the State or Nation.
    (4) Changes in Federal, State, or local minimum wage requirements.
    (5) Limited economies of scale for the provision of community 
service employment and other authorized activities in the areas served 
by the grantee.


Sec.  641.730  How will the Department assist grantees in the 
transition to the new core performance indicators?

    (a) General transition provision. As soon as practicable after July 
1, 2007, the Department will determine if an SCSEP grantee has, for 
Program Year 2006, met the expected levels of performance for the 
Program Year 2007. If the Department determines that the grantee failed 
to meet Program Year 2007 goals in Program Year 2006, the Department 
will provide technical assistance to help the grantee meet those 
expected levels of performance in Program Year 2007.
    (b) Exception for most-in-need for Program Year 2007. Because the 
2006 OAA Amendments expanded the list of most-in-need characteristics 
neither the Department nor the grantees have sufficient data to set a 
goal for measuring performance. Accordingly, Program Year 2007 will be 
treated as a baseline year for the most-in-need indicator so that the 
grantees and the Department may collect sufficient data to set a 
meaningful goal for this measure for Program Year 2008.


Sec.  641.740  How will the Department determine whether a grantee 
fails, meets, or exceeds the expected levels of performance for the 
core indicators and what will be the consequences of failing to meet 
expected levels of performance?

    (a) Aggregate Calculation of Performance. Not later than 120 days 
after the end of each Program Year, the Department will determine if a 
national grantee has met the expected levels of performance (including 
any adjustments to such levels) by aggregating the grantee's core 
indicators. The aggregate is calculated by combining the percentage of 
goal achieved on each of the individual core indicators to obtain an 
average score. A grantee will fail to meet its performance measures 
when it is does not meet 80 percent of the agreed-upon level of 
performance for the aggregate of all the core indicators. Performance 
in the range of 80 to 100 percent constitutes meeting the level for the 
core performance measures. Performance in excess of 100 percent 
constitutes exceeding the level for the core performance measures.
    (b) Consequences--(1) National grantees. (i) If the Department 
determines that a national grantee fails to meet the expected levels of 
performance in a Program Year, the Department, after each year of such 
failure, will provide technical assistance and will require such 
grantee to submit a corrective action plan not later than 160 days 
after the end of the Program Year.
    (ii) The corrective action plan must detail the steps the grantee 
will take to meet the expected levels of performance in the next 
Program Year.
    (iii) Any national grantee that has failed to meet the expected 
levels of performance for 4 consecutive years (beginning with Program 
Year 2007) will not be allowed to compete in the subsequent grant 
competition, but may compete in the next grant competition after that 
subsequent competition.
    (2) State Grantees. (i) If the Department determines that a State 
fails to meet the expected levels of performance, the Department, after 
each year of such failure, will provide technical assistance and will 
require the State to submit a corrective action plan not later than 160 
days after the end of the Program Year.
    (ii) The corrective action plan must detail the steps the State 
will take to meet the expected levels of performance in the next 
Program Year.
    (iii) If the Department determines that the State fails to meet the 
expected levels of performance for 3 consecutive Program Years 
(beginning with Program Year 2007), the Department will require the 
State to conduct a competition to award the funds allotted to the State 
under section 506(e) of the OAA for the first full Program Year 
following the Department's determination. The new grantee will be 
responsible for administering the SCSEP in the State and will be 
subject to the same requirements and responsibilities as had been the 
State grantee.
    (c) Evaluation. The Department will annually evaluate, publish and 
make available for public review, information on the actual performance 
of each grantee with respect to the levels achieved for each of the 
core indicators of performance, compared to the expected levels of 
performance, and the actual performance of each grantee with respect to 
the levels achieved for each of the additional indicators of 
performance. The results of the Department's annual evaluation will be 
reported to Congress.


Sec.  641.750  Will there be performance-related incentives?

    The Department is authorized by sections 502(e)(2)(B)(iv) and 
517(c)(1) as amended by Pub. L. 109-365 to use recaptured SCSEP funds 
to provide incentive awards. The Department will exercise this 
authority at its discretion.

    Signed at Washington, DC, this 25th day of June, 2007.
Emily Stover DeRocco,
Assistant Secretary for Employment and Training.
 [FR Doc. E7-12541 Filed 6-28-07; 8:45 am]
BILLING CODE 4510-FN-P