Senior Community Service Employment Program; Final Rule

DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 641

RIN 1205-AB48 and RIN 1205-AB47

Senior Community Service Employment Program; Final Rule

AGENCY:

Employment and Training Administration, Labor.

ACTION:

Final rule.

SUMMARY:

The Employment and Training Administration (ETA) of the Department of Labor (Department) issues this final rule to implement changes in the Senior Community Service Employment Program (SCSEP) resulting from the 2006 Amendments to title V of the Older Americans Act, and to clarify various policies. These regulations provide administrative and programmatic guidance and requirements for the implementation of the SCSEP.

The Department issued an interim final rule (IFR) implementing changes in the SCSEP performance accountability regulations. We issued a notice of proposed rulemaking (NPRM) proposing changes to the remainder of the SCSEP regulations on August 14, 2008. This final rule takes into consideration comments received on the IFR and the NPRM.

DATES:

Effective date:

This final rule is effective October 1, 2010.

FOR FURTHER INFORMATION CONTACT:

Judith Gilbert, Team Leader, Division of Adult Services, Office of Workforce Investment, U.S. Department of Labor, 200 Constitution Avenue, NW., Room S-4209, Washington, DC 20210; telephone (202) 693-3046 (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 final rule is organized as follows:

I. Background—provides a brief description of the development of the rule.

II. Summary of the Comments—provides an overview of the comments received.

III. Section-by-Section Review—discusses comments on the SCSEP regulations.

IV. Administrative Information—sets forth the applicable regulatory requirements.

I. Background

The Older Americans Act (OAA) Amendments of 2006, Public Law 109-365 (2006 OAA) were signed into law on October 17, 2006. This law amended the statute authorizing the SCSEP and necessitates changes to the SCSEP regulations. The 2006 OAA required regulations that address performance measures by July 1, 2007. To meet this deadline, the Department promulgated an Interim Final Rule on June 29, 2007. 72 FR 35832. We issued an NPRM on August 14, 2008, to propose changes to the remainder of the SCSEP regulations in light of the 2006 OAA. 73 FR 47770. We invited comments on both the IFR and the NPRM, and thoroughly evaluated those comments in the process of developing this final rule.

The SCSEP, authorized by title V of the OAA, 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 unemployed, 55 years of age or older, and have incomes no more than 125 percent of the Federal poverty level. The program offers participants community service assignments and training in public and non-profit agencies. The dual goals of the program are to promote useful opportunities in community service activities and to also move SCSEP participants into unsubsidized employment, where appropriate, so that they can achieve economic self-sufficiency. In the 2006 OAA, Congress expressed its sense of the benefits of the 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.” OAA § 516(2).

Although some of these regulations remain unchanged from the 2004 SCSEP final rule, this final rule does include certain significant changes to the program. Perhaps most notably, the new 48-month limitation on participation (OAA § 518(a)(3)(B); § 641.570 of this part), and the increase in available funds for training and supportive services (OAA § 502(c)(6)(C); § 641.874 of this part).

The 2006 OAA also increases the accountability of national grantees by clearly requiring a competitive process for grant awards. This final rule implements the statute's requirement that the national SCSEP grants be re-competed regularly, generally every four years. OAA § 514(a); § 641.490(a) of this part. This final rule also implements the statute's requirement that a State compete its SCSEP grant if the current State grantee fails to meet its core performance goals for three consecutive years. OAA § 513(d)(3)(B)(iii); § 641.490 of this part.

In addition, the 2006 OAA establishes new funding opportunities for pilot, demonstration, and evaluation projects (OAA § 502(e); § 641.600-640 of this part), expands the priority-for-service categories (OAA § 518(b); § 641.520 of this part), and modifies how the program determines income eligibility (OAA § 518(a)(3)(A); § 641.510 of this part).

Coordination between the SCSEP and the programs under the Workforce Investment Act of 1998 (WIA), 29 U.S.C. 2801

et seq.,

continues to be an important objective of the 2006 OAA. With the enactment of WIA in 1998, the SCSEP became a required partner in the workforce investment system. 29 U.S.C. 2841(b)(1)(B)(vi). In 2000, Congress amended the SCSEP to require coordination with the WIA One-Stop delivery system (Pub. L. 106-501, § 505(c)(1)), including reciprocal use of assessment mechanisms and Individual Employment Plans (Pub. L. 106-501, § 502(b)(4)). In 2006, Congress continued both the requirement to coordinate at OAA § 505(c)(1) and the reciprocal use of assessments at OAA § 502(b)(3)(B). The underlying notion of the One-Stop delivery system is the coordination of programs, services, and governance structures, so that the customer has access to a seamless system of workforce investment services.

Consistent with current SCSEP practice, both WIA and the 2006 OAA require any grantee operating a SCSEP project in a local area to negotiate a Memorandum of Understanding (MOU) with the Local Workforce Investment Board. WIA § 121; OAA § 511(b); see also OAA § 502(b)(1)(O). The MOU must detail the SCSEP project's involvement in the One-Stop delivery system. In particular, SCSEP grantees and sub-recipients must make arrangements to provide their participants, eligible individuals the grantees are unable to serve, as well as SCSEP-ineligible individuals, with access to services available in the One-Stop centers. OAA §§ 510, 511; §§ 641.210, 641.220, and 641.230 of this part.

II. Summary of the Comments

We have carefully reviewed all of the comments received in response to both the IFR and to the NPRM. We received 1,505 comments during the comment periods, of which 364 were unique, 959 were duplicates or “form” letters, and one was a petition with 182 signatures. The commenters fell into a variety of

categories that reflect the broad range of constituencies for the SCSEP program, including State and national grantees, program non-profit host agencies, area agencies on aging, WIA providers, and program participants.

A number of commenters requested additional time to review and submit comments on the changes proposed in the NPRM. Many of these commenters requested an additional 60 days to determine the impact on SCSEP stakeholders and participants. Several commenters mentioned that many who will be impacted by the proposed changes are not yet even aware of them. Others mentioned that they have had insufficient time to contact host agencies and obtain their input. One commenter pointed out that the SCSEP system is a diverse and complex network of agencies, and said that insufficient time had been allowed to seek input from this network. One commenter said additional time was required to evaluate the impact of the recent economic downturn on SCSEP participants. A few others suggested that the Department put the proposed regulations aside and work collaboratively with the grantee community and with the Administration on Aging to draft new regulations.

We reviewed these requests and concluded that they presented no novel or difficult issues justifying an extension of the comment period or a withdrawal of the proposed rule In this case, the Department provided 60 days for notice and comment. We believe the time allotted was more than sufficient to review this regulation given that most of the rule simply reflects changes required by the 2006 OAA, or is a continuation of policies that were published in the 2004 Final Rule. Accordingly, the Department did not extend the comment period.

The more substantive comments touched on almost every section of the proposed regulation. These comments are discussed in Section III below. In addition, the Department has made technical changes to the regulatory text for clarity and consistency. Provisions that were not the subject of a comment or that were not revised for technical reasons have been adopted as proposed and are not discussed in Section III.

III. Section-by-Section Review

In this section, we discuss the comments, our responses to them and any changes to the regulations that we made as a result of comments. In the course of reviewing the NPRM, we have made some technical or grammatical changes to the regulatory text, which are not intended to change the meaning or intent of the regulatory provisions. Generally, we do not discuss these types of changes in this section.

Subpart A—Purpose and Definitions

What is the SCSEP? (§ 641.110)

This section of the final rule describes the SCSEP as it is defined by the 2006 OAA. We received several comments on this provision. Those commenters expressed concern about using the term “employment” in the phrase “community service employment assignment” as referenced in §§ 641.110 and 641.120 of the rule. A few commenters found that adding the term “places undue confusion on both grantees and participants.” As a result, these commenters recommended that the regulation only refer to “employment” in the context of unsubsidized employment. Other commenters stated that changing the name would reverse grantee efforts to promote SCSEP as a training program rather than an employment program.

The Department accepts this comment. The regulation has been revised to use the term “community service assignment” throughout. The term “community service employment” in the rule is consistent with the term as it is defined in the 2006 OAA at § 518(a)(2). To remedy any potential confusion, the Department notes that the terms “community service assignment” and “community service employment assignment” are the same in that they both represent part-time, temporary job training through a work experience that is paid with grant funds. Therefore, the Department recommends that grantees continue to clarify the nature of the community service assignment with participants, which should alleviate any potential confusion.

One final comment came from a program participant who stated that the program should allow for more than part-time hours so that participants are able to further develop and improve their skills. We are unable to accommodate the participant's request, because the OAA at § 518(a)(2) defines “community service employment” as “part-time, temporary employment.” We are pleased to receive comments from our program participants, including this commenter, and note that developing and improving skills does not have to end with SCSEP. There are other no-cost training resources available to seniors (including, in some cases, through the One-Stop delivery system) that we hope program participants utilize.

What are the purposes of the SCSEP? (§ 641.120)

This section of the rule outlines the purpose of the SCSEP. We received a significant number of comments on this section. A majority of the commenters expressed concern that the Department is minimizing the community service aspects of the program and placing a higher priority on the unsubsidized placement goal in this regulation. Many of the commenters stated that the NPRM does not conform to the 2006 OAA because they perceived the Department as elevating the importance of unsubsidized employment at the expense of community service. Several commenters referenced the intent of Congress when it passed the legislation. Those commenters referenced section 516 of the 2006 OAA, which provides:

It is the sense of Congress that—

(1) The older American community service employment program described in this title was established with the intent of placing older individuals in community service positions and providing job training; and

(2) 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.

Those commenters relied on the placement of the words “community service” before “job training” to make the case that Congress intended for community service to have a higher priority than job training. Further, some of these commenters asserted that “self-sufficient” in this context implies emotional and other types of self-sufficiency, and not just economic self-sufficiency. In support of this position, the commenters describe the importance of placing an older individual into a community service assignment as a means of improving the person's sense of financial as well as emotional and social well-being, while providing a useful and needed service in the community. Therefore, these commenters found that the regulations ignore the value of community service both to the participant and to the community at large. A few commenters stressed the importance of working with the non-profit sector because they rely on the program participants when they do not have enough funds to hire staff for their organizations. One commenter commended the Department for stressing the importance of the

program's goal to foster economic self-sufficiency.

In addition, some commenters focused on other language in the 2006 OAA. In addition to § 516, these commenters referenced § 502(a), “Establishment of Program” and § 518(a), which defines “community service employment.” These commenters stated that these provisions “reinforce[] the primary purpose of community service employment, along with its dual purpose of placing workers into unsubsidized employment.” One of the commenters noted that the Department misinterpreted the 2006 OAA when it attempted to “meld together” four disparate provisions “to support an exclusive focus on job placement” in the proposed rule.

The Department appreciates the commenters' concern about the perceived changes in the program. However, the Department finds that the dual purposes of the program—community service and appropriate employment objectives for participants—with its related performance goals, are not inconsistent. We fully embrace these dual purposes of the SCSEP as envisioned by the Congress. We recognize the importance of the community service aspect of the SCSEP. But we do not think that the regulation should overemphasize either aspect of the program. We have, therefore, written this regulation to strike an appropriate balance between community service and unsubsidized employment. Therefore, we have not changed this section.

What definitions apply to this part? (§ 641.140)

This section provides specific or contextual definitions for the terms used in this part. We received numerous comments on this section with suggestions on how to better clarify, amend, or define the following ten (10) definitions: “co-enrollment,” “employment,” “equitable distribution report,” “host agency,” “individual employment plan,” “other participant costs,” “state plan,” “sub-recipient,” “supportive services,” and “unemployed.” In addition, commenters asked the Department to add definitions for “community service employment” and “job ready.”

As indicated in the preamble to the proposed rule, the definition of “co-enrollment” was eliminated because it related to private sector 502(e) projects which are no longer authorized. This definition was specific to the 502(e) projects and had no bearing on SCSEP participants co-enrolling into other federally funded programs. Upon further reflection, however, the Department realized that although this definition is no longer applicable to the 502(e) projects from the 2004 regulation, it is still applicable to define the status of participants who are enrolled in WIA or other employment and training programs since SCSEP is a mandatory partner in the One-Stop system. Therefore, we have reinstated this definition with some changes to reflect that the participants must be enrolled in those other programs to be considered co-enrolled.

Commenters suggested two substantial changes to the definition of “equitable distribution report.” First, the commenters suggest the Department allow grantees to use other reputable and reliable population data in order to determine the optimum number of participant positions for equitable distribution purposes. The Department understands the limits of census data when determining equitable distribution of positions, given that Census data is updated only every 10 years. The Department also agrees that more timely information would help the grantees make better decisions for program efficiencies (

i.e.,

equitable distribution of SCSEP positions), which would allow more eligible individuals to participate in the program. Furthermore, by relaxing the limitations on grantees on the data they may use for equitable distribution of positions, grantees will be able to respond to major changes in their programs, such as in the case of a natural disaster or other unforeseen demographic shifts. Therefore, the Department agrees to allow the use of other data for equitable distribution purposes, as long as that information is from a reliable source, comparable in quality to the Census data, and grantees document the source of the information.

Other commenters took issue with the change of words in the definition from “counties” to “jurisdiction.” We made this change to make the definition more inclusive of potentially underserved incorporated cities. One commenter specifically suggested that the Department reverse the change of wording, and edit the definition to include the term “incorporated cities.” The Department accepts these commenters' suggestions and has expanded the definition of “equitable distribution report” to include these suggestions.

One commenter expressed concern with the addition of the word “training” within the definition of “host agency.” The commenter felt that this term added to the confusion participants experience when they accept a community service assignment. Although the Department appreciates the sentiments of this commenter, we disagree. We believe that the added term “training” helps to underscore the fact that the community service assignment provides an opportunity to train SCSEP participants for unsubsidized employment. Congress indicates in § 502(a)(1) of the 2006 OAA, that the SCSEP is designed to “[i]ncrease the number of persons who may enjoy the benefits of unsubsidized employment in both the public and private sectors.” Further in § 516 of the 2006 OAA, Congress indicates that the SCSEP program “was established with the intent of placing older individuals in community service positions and providing job training.” Thus, the Department has decided to retain the term “training” in the definition of “host agency.”

We received several comments on the definition of “individual employment plan or IEP.” One commenter requested that the Department include the term “mandatory” in place of the term “appropriate” to describe the employment goal included in the IEP. The Department agrees that one of the end goals of an IEP should be unsubsidized employment for many participants; however, making this a mandatory function of the IEP runs counter to the statutory language in § 502(b)(1)(N)(ii) of the 2006 OAA, which provides that the grantee “will provide training and employment counseling to eligible individuals based on strategies that identify appropriate employment objectives * * * developed as a result of [an] assessment and service strategy.” Thus, the use of the word “appropriate” further underscores the need to identify a strategy in the IEP that is tailored to the needs of each participant.

Additionally, commenters stated that the Department did not include community service in the definition of IEP. These commenters suggested the Department change the term IEP to “individual service employment program” or ISEP. Other suggestions included “ISS” for Individual Service Strategy and “ITP” for Individual Training Plan. There is no doubt that the community service assignment is an important aspect of the IEP, since it provides a work environment in which to obtain needed job skills. The goal of the IEP is to plot the participant's training plan that will lead to an appropriate employment objective, which includes more than just community service. Read together, paragraphs (i) and (ii) of § 502(b)(1)(N) focus on a strategy aimed at employment, and thus the IEP is appropriate. However, there is nothing

in the definition of IEP or elsewhere that prevents grantees from including a variety of other services and strategies not directly related to the employment goal as part of the IEP. For the reasons provided, the Department therefore finds this change unnecessary and did not alter this definition. However, in response to these comments we did add language to the definition to make it clear that, while the first IEP must contain an employment goal, later IEPs need not, if employment is not a feasible outcome for a participant.

Two commenters found that the term “other participant costs” contained much the same list of activities defined under “supportive services.” These commenters are correct. The Department has elected to keep both definitions because the definition of “other participant costs” contains a variety of activities in addition to those listed in the definition of “supportive services.” In addition, we have clarified the definition of “severely limited employment prospects” by substituting the words “substantial likelihood” for the words “substantially higher likelihood.”

One commenter noted that the definition of “sub-recipient,” caused general confusion by changing from the previously defined term, “subgrantee.” However, the Department was clear about why it changed the various definitions and the definition of “sub-recipient” in particular in the preamble to the proposed rule. The Department explained that the previous term, “subgrantee,” failed to take other recipients into account that may have grant management responsibilities. The term “sub-recipient,” therefore, is inclusive of subgrants as well as other types of funding awards. For this reason, the Department did not make any changes to this definition.

One commenter noted that the cost of incidentals was not included in the proposed definition of “supportive services,” even though incidentals are the most widely used supportive service. Although the Department used the definition in the OAA at § 518(a)(7), we have now modified the definition to more fully reflect the language on supportive services found in section 502(c)(6)(A)(iv).

We received a few comments on the definition of “unemployed.” One commenter disagreed with the Department's interpretation and found that the definition unnecessarily complicates a grantee's ability to make eligibility decisions. This commenter further stated that use of the words the “occasional employment” works against older individuals and particularly those who reside in rural areas who take part-time jobs. This definition tracks the statutory language, and it is sufficiently clear. Therefore, we have not changed the definition.

We also received recommendations from commenters to add two definitions to this section, and we have adopted both. An overwhelming number of commenters suggested that the Department add the term “community service employment” to this regulation. The term “community service employment” is included in § 518(a)(2) of the 2006 OAA and reads as follows:

The term “community service employment” means part-time, temporary employment paid with grant funds in projects described in section 502(b)(1)(D), through which eligible individuals are engaged in community service and receive work experience and job skills that can lead to unsubsidized employment.

The other definition we adopted in this final rule is “job ready” which pertains to the rule that prohibits the enrollment of job ready participants in §§ 641.512 and 641.535(c). The term “job ready” has been discussed in training and in conversations with grantees when the Department has provided technical assistance. The Department has generally meant the term to apply to an individual who requires no more than just job club or job search assistance to be employed. The Department discussed its policy in the 2004 regulations at 69 FR 19014 at 19031, 19032, and 19038, Apr. 9, 2004. To reiterate the Department's policy as announced in 2004, the purpose of the program is to “assure that grantees concentrate their efforts and limited funds on providing community service work assignments to those older [individuals] who are most in need” as opposed to those who are job ready. 69 FR 19014 at 19031. Therefore, a simple definition of “job ready” is now provided. It refers to “individuals who do not require further education or training to perform work that is available in his or her labor market.” Thus, it may include an individual who is already employed, even if only part-time, or was recently unemployed but has a skill set to fill the jobs available in his or her area; or who has received sufficient training from SCSEP or some other employment and training program to be able to perform work that is available in the labor market.

Subpart B—Coordination With the Workforce Investment Act

What is the relationship between the SCSEP and the Workforce Investment Act? (§ 641.200)

This section provides that SCSEP grantees are required to follow all applicable rules under WIA and its regulations. The WIA operational requirements generally do not apply to SCSEP operations. As required partners under WIA, grantees are obligated to be familiar with the WIA requirements when they are acting as a WIA/One Stop delivery system partner. The only proposed changes made in this section are to clarify that sub-recipients (and not just grantees) are included in the requirement to follow all applicable WIA rules and regulations, and to make certain technical corrections to the citations.

A number of commenters objected to the requirement that SCSEP follow all applicable rules under WIA and its regulations. The commenters cited various problems and experiences they perceive WIA has in serving older workers, and argued that SCSEP is a different type of program than WIA and should therefore not be required to comply with its rules, which they believe are burdensome on SCSEP grantees. Several commenters said that it is unclear which WIA rules and regulations are applicable to SCSEP and which are not. Several commenters asked that the requirement to follow applicable WIA rules be removed. Since both the OAA and WIA require SCSEP to be a One-Stop partner, we cannot make the suggested change.

These commenters also mentioned that WIA performance measures create a disincentive to serving older workers, and cited as evidence findings of an April 2008 Government Accountability Office report entitled “Most One-Stop Career Centers Are Taking Multiple Actions to Link Employers and Older Workers.” One commenter said the onus seems to be on SCSEP to initiate collaborative relationships with WIA. Another commenter suggested releasing a Training and Employment Guidance Letter (TEGL) to highlight the importance of coordination between WIA and SCSEP.

We appreciate the commenters' concerns about ways to improve SCSEP-WIA coordination but none of the comments received addressed the specific changes to this section proposed by the NPRM. The comments appear to reflect a concern that the coordination requirements of the 2006 OAA and WIA will have the effect of diluting or undercutting the focus and

mission of the SCSEP. As we stated in response to similar comments in the preamble to the 2004 Final Rule, we do not intend the regulations to convey this message. 69 FR 19017-19019. WIA envisions a coordinated workforce development system in which a variety of programs work more closely together to make access to workforce development services easier and more efficient. WIA includes a number of programs that serve special populations to be required partners and is very careful to assure that program boundaries are respected. None of the WIA requirements on SCSEP grantees have changed from those that applied in 2004, so we have not changed the SCSEP regulations that govern SCSEP-WIA coordination. The Department intends that the regulations will enable grantees and sub-recipients to concentrate better on the core missions of the SCSEP, providing community service assignments to hard-to-serve older individuals. The Department intends that the One-Stop delivery system be used to provide services both to older individuals who are not eligible for the SCSEP and to those who are eligible but need the intensive services that the SCSEP is unable to provide. The kinds of partnerships that the regulations envision will enable SCSEP grantees and sub-recipients to focus more of their efforts on the core population that the SCSEP is intended to serve. We did, however, add language to make it clear that the requirements of the section apply to SCSEP grantees and sub-recipients when they are acting in their capacities of required One-Stop partners.

What services, in addition to the applicable core services, must SCSEP grantees and sub-recipients provide through the One-Stop delivery system? (§ 641.210)

This section requires SCSEP grantees and sub-recipients to make arrangements to provide their participants, eligible individuals the grantees and sub-recipients are unable to serve, as well as SCSEP ineligible individuals, with access to other services available at One-Stop centers. We received comments on the second clarification made to this provision that SCSEP grantees and sub-recipients must also make arrangements through the One-Stop delivery system to provide eligible and ineligible individuals with referrals to WIA intensive and training services.

Several commenters objected to this requirement and asked that it be removed, while others noted problems with the requirement. One commenter said that it is not always feasible to make referrals to WIA intensive or training services because many participants live long distances from One-Stop centers and do not have transportation to access services. Another commenter noted the absence of One-Stop centers in rural areas. Another commenter said that even if referrals of older individuals for WIA services are made, the WIA program tends not to serve them. Still another commenter said that the One-Stop delivery system provides limited or no bi-lingual programs that target older workers and in many instances are not located in proximity to Hispanic and minority neighborhoods. Finally, a commenter said that the 2006 OAA does not require SCSEP to provide core services through the WIA One-Stop delivery system, but requires potential participants to be registered with One-Stop centers.

The Department acknowledges that access and referral to WIA services in rural areas may present particular challenges, as do addressing the special needs of older workers who are limited-English proficient. To address these challenges, the Department encourages coordination with other organizations, in addition to One-Stop centers, that may be more appropriate. This provision reminds grantees and sub-recipients that they are required to be part of the One-Stop delivery system and to participate when appropriate in providing access and referral to the other services that the One-Stop partners offer. Grantees may also decide to provide core services outside the One-Stop Career Centers.

Does title I of WIA require the SCSEP to use OAA funds for individuals who are not eligible for SCSEP services or for services that are not authorized under the OAA? (§ 641.220)

This section states that even in the One-Stop center environment, SCSEP projects are limited to serving SCSEP-eligible individuals with title V grant funds. The local Workforce Investment Board and the One-Stop partners, including SCSEP, should negotiate in the Memorandum of Understanding (MOU) arrangements for referral of individuals to WIA who are not eligible for SCSEP.

A single comment on this section suggested including language that if a Local Workforce Investment Board is a SCSEP sub-grantee, then no MOU is necessary because the contract between the grantee and sub-grantee already stipulates arrangements for administration of the SCSEP.

The Department disagrees that an MOU is not necessary when the local board is a SCSEP sub-grantee, although we acknowledge that this situation adds a degree of complexity to the relationship. As required of all partner relationships with the One-Stop delivery system, the requirement to have an MOU is statutory and therefore, still necessary. The relationship the local board would have as a sub-recipient only mandates services to participants under the grant agreement but does not ensure that there is a written policy for how services would be coordinated with the One-Stop center. Therefore, we did not make any change to this section.

Must the individual assessment conducted by the SCSEP grantee and the assessment performed by the One-Stop delivery system be accepted for use by either entity to determine the individual's need for services in the SCSEP and adult programs under title I-B of WIA? (§ 641.230)

The only proposed changes the Department made to this section were of a technical nature. We received two comments recommending the Department modify the section to include Aging Disability Resource Centers or other organizations that perform assessments in addition to WIA, to assist with the data validation requirements.

This section merely reflects the language of the 2006 OAA on the acceptance of each others' assessments by the SCSEP and One-Stop delivery system. The Department believes the SCSEP program will be better served if the regulations do not specify what other organizations perform assessments. The Department emphasizes that grantees are responsible for determining whether assessments performed by other organizations are sufficient for the grantee's and the participant's needs.

Subpart C—The State Plan

We received a large number of comments on this subpart, although a few were outside the scope of this rulemaking because they related to subpart G, which had a separate comment period from the proposed rule. Most of the comments were related to the 4-year strategy in the State Plan, although others discussed participation in developing the State Plan, community service needs, modifications to the State Plan, and equitable distribution. We received a few comments related to the cost and resources needed to complete the State Plan, which are addressed in the

Administrative Section of this final rule under Section D, Unfunded Mandates. We also received several comments that generally discussed the State Plan requirements or discussed the need for greater coordination with aging programs, which the Department has decided to address in this subpart on the State Plan requirements.

What is the State Plan? (§ 641.300)

This section describes the purpose and function of the State Plan. We made a number of changes to this section to reflect the new provision in the 2006 OAA, which requires State grantees to submit a four-year strategy to the Department.

A few commenters asked the Department to consider allowing the State grantees to combine the State SCSEP strategic plan with the State Unit on Aging strategic plan to further the goals and efforts of its SCSEP program. Some of those commenters specifically justified this request by stating that the Department allows the State grantees to submit the State Plan as a part of the WIA Unified Plan, but since SCSEP is an OAA program, submitting the State Plan with the other OAA programs should also be acceptable.

Although we appreciate the logic of these comments, it is not possible for the State Plans to be submitted with the other OAA strategic plans. According to 20 U.S.C. 9271, “a State may develop and submit to the appropriate Secretaries a State unified plan for 2 or more of the activities or programs” provided in a specific list, and the only part of OAA listed is Title V. Therefore, 20 U.S.C. 9271 does not authorize States to include a unified plan that includes OAA activities or programs that are authorized by a section of OAA other than Title V. Such programs are governed by their own planning requirements. Furthermore, SCSEP is unique in that it is the only program under the OAA that is administered by the Department of Labor. Section 503 of the 2006 OAA specifically requires each State to submit a State Plan to the Secretary of Labor to be eligible for grant funding under this program. The Department shares the State Plans with the Administration on Aging in an effort to coordinate with them on older American policies. However, if they so desire, we do not prevent State grantees from also submitting their SCSEP strategic plan with their OAA strategic plan.

Many commenters suggested that the Department develop regulations that require SCSEP grantees to coordinate with other programs under the 2006 OAA, such as State units and area agencies on aging, and with other Federal programs such as Foster Grandparents, Senior Companions, Vocational Rehabilitation and several others. A few even requested that the Administration on Aging and other SCSEP providers be involved in writing the regulations. These commenters did not submit their comments on any particular section of the regulation and, in fact, some commenters were “disappointed” because they found the regulations “silent” on this issue.

The regulations are not “silent” on the coordination requirement with other Federal agencies, and especially the other aging programs. There are several provisions in this regulation that require coordination with aging and other resources. The first is in § 641.315, which requires the State grantees to seek the advice and recommendation of representatives from State and area agencies on aging, social service organizations, and community-based organizations in § 641.315(a), and permits the State grantee to obtain the advice and recommendation of other interested organizations and individuals in § 641.315(b). In addition, § 641.302(i) requires the States to plan actions that coordinate activities of SCSEP grantees with other public and private entities and programs that provide services to older Americans. That the Department did not mention a specific social service or other program by name does not exclude it from being a worthy organization for collaboration. Given the large number of comments that addressed this particular concern, the Department hopes that grantees will now understand the importance of the State planning requirements that grantees will make a genuine effort to include those organizations during State planning meetings. The Department expects grantees to work with any and as many organizations as will help achieve the purpose of the program. The Department emphasizes that the grantees do not need explicit permission in the regulations to work with these organizations. Finally, at the Federal level, the Department will continue to coordinate with the Administration on Aging on State planning and other major policy concerns under the MOU that exists between the two Federal agencies.

What is the four-year strategy? (§ 641.302)

This section outlines the requirements for the four-year strategy. We received many comments on this section, largely in opposition to the various requirements. Two comments were of a more general nature.

One commenter was not in favor of the four-year strategy because he felt that “[p]lanning beyond funding periods exceed[ed] the parameters of the grantee” particularly in light of the requirements to resubmit the plans for modification. As discussed below, the State grantee is responsible for the higher-level oversight of activities in the State required by § 503 of the 2006 OAA. As a practical matter, however, a strategy is the pre-planning for what the program will accomplish over a period of time based on a forecast of events and not a mere short-term snapshot of activities or actual workload action items. The reality is that the State program operators provide continuity for the program, while other organizations may be transient. Therefore, the State grantee is in the best position to develop a thoughtful long-term plan for how activities will be provided statewide.

The other general commenter stated that, unlike their WIA program, they do not have an economist or the funds to hire an economist to provide the information that is required for a four-year strategy. Therefore, this commenter argues that the “[i]nformation submitted by the State SCSEP [grantees] are assumptions and not factual.”

The Department appreciates the desire to be as precise as possible, but it does not believe that an economist is needed to develop the four-year strategy for this program. It is true that it is important to have certain data, such as information on the growth of the eligible population; however, much of this information can already be found on-line from the Bureau of Labor Statistics or other resources, such as from the State workforce agency, which manages SCSEP in a growing number of States. One of the requirements of the four-year strategy is to describe the planned actions to coordinate with other programs, including WIA. The Department suggests that State grantees that are not workforce agencies coordinate with their workforce agencies first to find out what information is already available. Other information requirements are grantee-dependent, such as equitable distribution, which requires the type of collaboration with the national grantees discussed in §§ 641.300 and 641.365.

Several commenters suggested that the State Plan requirements go beyond what Congress intended in § 503 of the 2006 OAA, and found many of the requirements duplicative of other Department requirements and policies. As an example, these commenters cited § 641.302(f) because a “performance system and sanctions system is already

in place.” These commenters also noted that the regulations at § 641.302(a)(3), (c), and (d) overlapped with certain grant application requirements.

At the outset, the Department would like to point out that the State Plan is “statewide.” That is to say, it is designed to cover all program activities that will occur in the State, both those operated by the State and those operated by national grantees. It is for that reason that the State grantees, which have this oversight responsibility, are required to seek the advice and consultation of other organizations in the State, including the national grantees. To that extent, there are no other vehicles in the program that would provide this higher level of thoughtful planning for the betterment of program services in the State. As previously noted, a strategy is the pre-planning for what the program will accomplish over a period of time based on a forecast of events. The main reason for a State Plan is the recognition that the State grantees are in the best position to forge relationships that cross programs, communities, and organization silos. The best way for any State to provide services to its citizens is by working with all of the relevant partners to lead the State in a direction that will produce positive outcomes overall. Such coordination requires strategic planning. Therefore, a State's individual grant application, even if duplicative to some extent, represents the more immediate actions the State plans to take, which is only one small part of the overall strategy for providing services in the State.

We received a few comments on § 641.302(a) on equitable distribution and the requirement to address priority individuals, comments on § 641.302(f) on continuous increase in performance, and one comment on § 641.302(g) on coordination with WIA. With regard to § 641.302(a)(1), one commenter argued that, given the limited ability of the State to alter positions between the national grantees and the State, creating “a long range strategy beyond the scope of the Older Americans Act * * * reauthorization increases paper work without measurable benefits to program participants.” Another commenter mentioned that this paragraph “exclude[d] any mention of national grantees and the key role they play in the distribution process.” This commenter requested that the Department rewrite the section to say: “Moves positions from over-served to under-served locations within the State by working collaboratively with national grantees through a participatory process.”

In response to the first commenter, we disagree that a long range strategy increases paperwork without measurable benefit to program participants because of the limited ability of the State to alter positions. The four-year State Plan guides the annual adjustments that occur with the annual Equitable Distribution report, which itself insures positions are moved from over-served to under-served locations. This process helps ensure that positions are distributed in the most appropriate and least disruptive manner to participants and also to grantees. The 4-year plan outlines the principles for determining the need for moving positions and when “swaps” will occur. As to the point about the State's limited ability to alter positions, the language in § 641.365(f) gives the State the ability to influence the movement of positions. (“All grantees are required to coordinate any proposed changes in position distribution with the other grantees in the State, including the State project director, before submitting the proposed changes to the Department for approval. The request for the Department's approval must include the comments of the State project director, which the Department will consider in making its decision.”) The Department intends to give significant weight to the State project director's comments in deciding whether to approve any proposed changes in position distribution.

As to the second commenter, their concern about the exclusion of any mention of national grantees is addressed in §§ 641.360 and 641.365 on equitable distribution. As provided in those sections, the State grantees are responsible for submitting an equitable distribution report at the beginning of each fiscal year and that the report is the result of consultations with all the grantees (including the national grantees) in the State to discuss the location of their authorized positions. In addition to showing where the positions are currently located, the equitable distribution report reflects an agreement among the grantees for how positions will gradually shift over time to either align with changes in the population either through movement of the positions to underserved areas by the grantees, or through “swaps.” Those consultations by their nature already require grantees to do some forecasting about where positions should be located. Therefore, the four-year strategy is consistent with the goals and current practices for equitable distribution. When these provisions are read together, it is clear that the Department expects the national grantees to have a significant role in the equitable distribution process. Therefore, particularly since § 641.302(a)(1) specifically refers to § 641.365, the Department does not believe the regulation provision needs to be revised as suggested.

We received comments about § 641.302(f) of the proposed rule. One commenter stated that because the Department sets the minimum levels of performance each year, the States have minimal input in determining the performance levels and are not consulted when they are established. Another commenter found that the regulation provision, as written, implied that State grantees were responsible for performance of the national grantees. This commenter suggested that the Department amend the provision to read: “The State strategy, including input from national grantees regarding their own performance strategies, for continuous increase in the level of performance for entry into unsubsidized employment, and to achieve at a minimum, the levels * * *.”

In the Department's opinion, these commenters misunderstood the purpose of that provision and the role of the State grantee in shepherding the State Plan process. As noted in the preamble to the proposed rule, the four-year strategy is a long-term strategy for increasing the level of performance in the State. We further stated in the NPRM preamble that “[a]ll grantees should strive to continuously improve their performance levels to assist enrollees in becoming self-sufficient, make available opportunities for other individuals to enroll in SCSEP, and better fulfill the objectives of the program.” Therefore, the regulation does not make the State grantees responsible for ensuring that every national grantee that operates in the State meet its performance goal; rather, the State grantees are responsible for planning a strategy in collaboration with the national grantees to provide better services to participants overall, which will lead to higher performance for the State as a whole. We believe the rule, which requires in this section and § 641.315 that the State Plan must be developed in consultation with, among others, the national grantees in the State, is clear on these purposes and does not need to be amended.

Some commenters took issue with § 641.302(g) of the proposed rule. A few commenters stated that the programs under WIA “seem to focus on the younger generation” and full-time employment opportunities, which makes it difficult to set employment expectations for the older workers in

collaboration with WIA projects. Other commenters did not have an issue with the language but echoed these sentiments. These commenters wanted to know what the Department was doing to encourage similar collaborative efforts with the WIA programs, however, rather than leaving the onus on SCSEP to initiate partnering efforts.

We believe these commenters are reading the provision too narrowly. The point of the coordination requirement is no different from the expectations and requirements established in subpart B of this final rule. The type and degree of coordination will vary depending on the geographic location. This provision requires the State grantees to develop a long-term strategic plan for how those activities will be coordinated over a period of time for the benefit of the program. The Department further notes that WIA grantees have a responsibility to coordinate with the SCSEP program as well, but these regulations are not intended to apply to WIA-funded recipients. For example, State Workforce Investment Boards are required to develop linkages among One-Stop Partner programs such as SCSEP in order to assure coordination and avoid duplication of activities. 20 CFR 661.205(b)(1). For a more in depth discussion on the coordination requirements, see the discussion of subpart B of this final rule.

Finally, one commenter argued that § 641.302(k) is “overly prescriptive” in requiring the State to provide a long-term strategy because it “presumes the necessity for every state to make long-term program design changes in order to improve services to participants and communities.” The commenter argued that instead, the State “should have the latitude to plan strategically, within the framework of the OAA, for what works best * * *.” There is nothing in § 641.302(k) that prevents a State from planning strategically for what works best. Indeed, that is precisely what this provision assumes that the States will do. This provision does not require change for change's sake, rather, it requires that a State take a hard look at the SCSEP in the State, determine whether changes in the program will improve it and develop a plan to move toward those changes. Therefore, we disagree that § 641.302(k) is overly prescriptive, because as explained above, we believe that long-term, 4-year planning will improve services overall in the State.

May the Governor, or the highest government official, delegate responsibility for developing and submitting the State Plan? (§ 641.310)

Although we did not receive any comments on this section, we made technical amendments to this section by breaking it into paragraphs to make it easier to read.

Who participates in developing the State Plan? (§ 641.315)

This section describes the required participants to the State planning process. We received a few comments on this section.

One commenter stated that the requirement to seek the advice and recommendation of representatives of the various organizations involved too many people, and that it “would take an entire year just to coordinate those efforts.” This commenter requested that the Department limit the number of organizations required to provide input to the development of the State Plan.

This part of the proposed rule did not change from the 2004 regulations. In addition, the list of organizations and individuals is consistent with the § 503(a)(2) of the 2006 OAA. The Department commented on this issue in the 2004 regulations. At that time the Department stated: “[Although] obtaining information on coordination may be a bit more complicated whe[n] there are several national grantees in a State, we believe that if the Governor has set up a good consultation process, obtaining the information should not be difficult.” 69 FR 19014, 19022, Apr. 9, 2004.

Other commenters found this section to be inadequate as written because it does not address coordination requirements with aging programs. Specifically, one commenter noted that the SCSEP regulation should “enforce and reflect section 503(b) of the 2006 OAA, requiring coordination of SCSEP with other programs under the Older Americans Act, such as state units and area agencies on aging, and with other Federal programs such as Foster Grandparents, Senior Companions, and Vocational Rehabilitation.” We did not make any changes to these sections because the regulation lists aging organizations in paragraphs (1), (4), (5) and (7) and thus clearly requires coordination with aging organizations.

Must all national grantees operating within a State participate in a State planning process? (§ 641.320)

This provision explains that all national grantees are required to participate in the State planning process with the exception of grantees serving older American Indians or Pacific Island and Asian Americans. One commenter disagreed with this provision and stated that these entities should not be exempt from participation. As noted in the regulation text at paragraph (b), however, that exclusion is mandated by Congress at § 503(a)(8) of the 2006 OAA. That being said, the Department agrees that it would be helpful for these organizations to participate in the development of the State Plan, which is designed to improve services, and we believe they have done so in the past. Therefore, as noted in the regulation provision, the Department will continue to encourage these national grantees to participate in the State Plan process.

How should the State Plan reflect community service needs? (§ 641.330)

We received one comment on this section; however, because the substance of the comment was related to a lack of resources, it will be addressed in the Administrative section of the preamble under Section D, Unfunded Mandates.

How should the Governor, or the highest government official, address the coordination of SCSEP services with activities funded under title I of WIA? (§ 641.335)

We received several comments on this section. These commenters found this section inadequate as drafted to address coordination requirements with aging programs but failed to provide any specific regulatory suggestions other than to draft more regulations. The Department did not make any changes to these sections because, as mentioned in the discussion of § 641.315, the requirements to coordinate with aging groups are clear.

How often must the Governor, or the highest government official, update the State Plan? (§ 641.340)

This section discusses the situations when the State is required or encouraged to update the State Plan. We received one comment on this section. This commenter stated that requiring updates more frequently than every two years as specified by the 2006 OAA, would convert a long range strategy into an annual plan, which is the current requirement. Although updates are not required more frequently than every two years, they are encouraged and should be done when circumstances warrant, as noted in § 641.345. The State Plan process is not an exercise that should be done as an item on a “to do” list. Rather, it is a thoughtful instrument that is designed to lead the State forward to achieve positive outcomes. In order for

any plan to be effective, it must align with current circumstances. Over the course of two or four years, it is reasonable to think that there could be some major shifts in policy, local or national economy, employers, performance, or community social service organizations that may alter the State's direction described in the State Plan. Therefore, without monitoring and adjusting the State Plan, it would be easy for the State Plan to become obsolete. Therefore, the Department did not make any changes based on this comment. However, as a technical amendment, we did divide the section into two paragraphs to make it easier to read.

What are the requirements for modifying the State Plan? (§ 641.345)

We received several comments on this section. One commenter stated that modifying the State Plan according to § 641.345(b)(3) would require grantees to modify the State Plan every year, which is contrary to the four-year strategic planning document. This commenter stated that almost every State and national grantee failed to meet at least one goal, and because the Department requires grantees to submit a performance improvement plan each year when one or more goal is not met, that effectively results in annual modifications.

We appreciate this comment and upon further reflection have decided to delete this provision from the final rule. Although the assertions that most grantees fail to meet at least one goal each year and that they are required to submit a performance improvement plan each year is inaccurate, the Department does agree that the requirement is unnecessary for continuous improvement. As a consequence, proposed § 641.345(b)(3) has been deleted and § 641.345(b)(4) will be renumbered as § 641.345(b)(3).

Two other commenters reported contradictions: One found that paragraphs (c) and (d) contradicted each other and the other found that paragraph (d) contradicted OAA § 503(a)(3). We do not find a contradiction in either case.

Paragraph (c) requires the modified State Plan to be published for public comment, while paragraph (d) allows the grantees to make modifications to the plan without seeking the advice and recommendation of those entities and individuals listed in § 641.315. Paragraph (d) addresses the development of the modification while paragraph (c) addresses the post-development, pre-submission phase of the planning process. However, it appears that some State grantees have used the public comment period as the main mechanism for seeking the advice and recommendation of those organizations and individuals, which is not the intent of the statute. Section 503(a)(2) of the 2006 OAA requires State grantees to seek the advice and recommendations of those organizations and individuals while developing the plan. The public comment period occurs after the State Plan is developed. Although it is a time consuming process, as we have stated elsewhere in this preamble, the State Plan process is not an item on a “to do” list. The State Plan process requires the grantee to identify and assess the resources available in the State, to engage the key members of organizations providing those resources in the planning process, and to provide a roadmap for how the State will reach overall projected outcomes. Therefore, it is a critical document for helping the State provide continuously improving services to as many eligible individuals possible in that State. Thus, if the plan development or modification processes are being run correctly, there is no contradiction in the provisions on consultation and public comment.

The second commenter further stated that paragraph (d) negates the role of the national grantees in the modification process. This commenter recommended that the Department strike this provision and replace it with a provision that reads: “the Governor, or the highest [S]tate official, must seek advice and recommendations from each grantee operating a SCSEP within the State.”

The Department agrees with this comment and has modified the language to require the Governor or the highest State official to consult with the national grantees. In addition, given the commenter's rationale, the Department also considered whether this provision should be revised to require the full consultation of those entities listed at § 641.315 as well. The purpose of the State Plan is to draft a plan that will improve services across the State and this provision relates to major changes that will impact services to participants statewide, which suggests the importance of full consultation even when modifying the plan. On the other hand, we recognize that the State may need some flexibility about which organizations it seeks advice from during the modification planning process because the need for advice from particular organizations may vary, depending on the event that gave rise to the need for a modification. Therefore, while the Department strongly encourages State grantees to seek the advice and recommendation of each entity listed in § 641.315 when or if modifying the State Plan becomes necessary, we have decided not to require it except for the national grantees in the state.

How does the State Plan relate to the equitable distribution report? (§ 641.360)

This section describes the connection between the State Plan and the equitable distribution report. The Department made one substantive change to this section. The Department changed “Census data” to “Census or other reliable data” to be consistent with the changes made to the definition of “Equitable Distribution Report” in § 641.140.

A commenter stated that the State Plan should address competition and the authorized positions that could change. That commenter further argued that the Department should require a plan to involve State grantees in the finalization of the authorized positions to avoid disruptions, or the ability to make recommendations to better serve areas proportionately.

We agree with these concerns and it is for that reason that the 4-year strategy and the meetings on equitable distribution are so vitally important to the program, as discussed in other sections of this final rule. Further, § 641.480 addresses the commenter's other concern that States should have a role in determining where positions are located during a competitive process. Since the commenter's concerns are addressed in that provision, we did make any changes to this section.

How must the equitable distribution provisions be reconciled with the provision that disruptions to current participants should be avoided? (§ 641.365)

This section describes the Department's policy on the movement of positions for equitable distribution in the context of minimizing disruptions to participants. One commenter supported the proposed regulation because it included language that emphasized the coordination of all grantees within the State. Another commenter requested that the Department require national grantees to report to the State when they move positions within the State, and wanted us to allow the States to authorize these changes. This commenter felt that this change would ensure that “the maximum number of eligible individuals will have an opportunity to participate in the program and will allow States to demonstrate that they are making good

faith efforts to correct slot inequities and are on track to meet their state plan goals.”

We appreciate the comment in support of this proposed section as well as the sentiments of the commenter, who would like to see more State authority over any position movement within the State. Section 641.365(d) requires that national grantees notify the State of any position transfers before the transfers may be made. Not only are national grantees required to participate in the equitable distribution and State Plan processes, but they are also required to notify the State before any positions are transferred within the State. § 641.365(f). However, to ensure that national grantees coordinate with the State grantee before submitting a request to the Department to move positions, we are revising this section to require that the national grantee's request to DOL include a recommendation from the State grantee in which the affected positions are located and to indicate that the Department will consider those comments in reviewing the application. As a matter of practice, since the 2004 regulations, the Department has looked for the State's comments on any position relocation request from a national grantee and will continue to do so. This revision conforms the regulation to our established practice and ensures that the State's comment on the proposed transfer will be considered by the Department in the decision making process. Approval authority, however, will continue to remain with the Department consistent with the 2006 OAA.

The Department recognizes that it may have been difficult to follow this provision and, therefore, has divided the section into subparagraphs to make it easier to read. The requirements discussed above are now reflected in new §§ 641.365(a)-(f). The Department also made a few technical changes, which included changing “Federal Project Officer” to “the Department” to be more consistent with the statutory language; and editing “Census data” to read “Census or other reliable data” to be consistent with the changes to the definition of “Equitable Distribution Report” in § 641.140.

Subpart D—Grant Application and Responsibility Review Requirements for State and National SCSEP Grants

We received several comments on this subpart. Those comments were related to State competition, the use of past performance for selecting grantees, State involvement in the national competition, and the timing of a national competition.

What entities are eligible to apply to the Department for funds to administer SCSEP projects? (§ 641.400)

This section describes the entities that are eligible to apply for SCSEP grants. We received one comment on this proposed section on the funding to the State for conducting a competition. The commenter stated that the regulations do not address the funding provided to the State to conduct a competition. This commenter also stated that the Department “appear[ed] to define the State in two distinctly different definitions.”

The Department does not provide additional funding for the States to compete their grant program. States that compete their programs will have plenty of advance notice that they will have to compete because it takes a failure to meet performance standards for three consecutive years to trigger the competition requirement. States therefore will have time to plan for the possibility of competition and to set money aside to fund it. The Department suggests that grantees work with their Federal Project Officer to determine a sufficient amount for administrative management of a competitive process for State grantees that are required or desire to compete their programs.

In addition, we have amended § 641.420(d) to cross reference § 641.460, which provides that relevant past participation will be used as scoring criteria, as well as a factor for determining an applicant's eligibility.

How will the Department examine the responsibility of eligible entities? (§ 641.450)

We have amended this section to state that in reviewing records, the Department may consider “all relevant” information including the organization's history in “managing” other grants. These changes merely reflect the Department's standard practice in reviewing competitive grants.

What factors will the Department consider in selecting national grantees? (§ 641.460)

This section describes the factors the Department will consider when it competes the national grant funds. We received several comments on this proposed section. One commenter stated that § 641.460 appeared to be at odds with § 514(c)(4) of the 2006 OAA because the statutory language was intended “to prevent selection bias where past performance was meritorious.” The commenter compared the OAA to the NPRM language, in which the Department “propose[d] to drop the reference to past performance among the rating criteria [it] will consider.” That same commenter went on to request that the Department propose more comprehensive regulations to address the interrelated issues of past performance and the manner and timing of the competition for SCSEP grants. The commenter based this argument on his organization's experience with prior competitions and the 2006 Solicitation for Grant Applications. See 71 FR 10798, Mar. 2, 2006. This commenter stated that his organization believed the statute only provided the Department the authority to re-allocate positions from grantees that failed to meet national performance goals. Another commenter stated that written comments should be sought on this provision from the Governor or designee of the State.

We do not agree that the statute only provides the Department the authority to reallocate positions from grantees that failed to meet national performance goals. While OAA § 513(d)(2)(B)(iii) bars grantees which have failed to meet their performance goals for four consecutive years from participating in the next competition, we interpret OAA § 514(a)(1) to require an open competition; a competition in which all funds and slots available to national grantees are competed. As discussed in the preamble to the proposed rule, at 73 FR 47770, 47780, Aug. 14, 2008, the proposed change merely took past performance out of the rating criteria in the Solicitation for Grant Applications requirements because it is included already as an eligibility criterion under § 514(c)(4), as the commenters point out. However, upon further consideration, we believe that using past performance merely as an eligibility criterion is inadequate to give effect to the Congressional requirement. Grantees that fail to meet their aggregate level of performance for four consecutive years are precluded by statute from participating in the competition. This would still allow a grantee with totally unacceptable performance in the last three years to compete. Therefore, we have concluded that consideration of all relevant past performance should be part of the scoring mechanism and of the awarding criteria. Considering all relevant experience, and not just SCSEP experience, will protect against selection bias. What constitutes relevant experience and the specific weight given to past performance will be addressed in the Solicitation for Grant Applications published in the

Federal

Register

or other appropriate instrument.

Finally, written comments from the Governor or highest elected official are provided for under § 641.480, which outlines the process by which the Governor or highest elected official may participate in the national competition process.

When will the Department compete SCSEP grant awards? (§ 641.490)

This section outlines the circumstances that govern the Department's decision to compete the national grant funds. We received one comment on this section.

The commenter expressed concern that having an additional grant year for some grantees but not for all would create a complicated competitive grant cycle. The commenter also thought that such a process would remove the opportunity for new and incumbent organizations to compete with all the national organizations and “would only serve to exacerbate the difficulties of SCSEP participant transition [from] one provider to another.” The commenter recommended that the Department make a decision to hold a national SCSEP competition “using the national baseline for all organizations.”

The Department takes this comment to mean that a competition should be for all available national grant positions and that the extension of the grants for an additional year as permitted by § 514(a)(2) of the 2006 OAA, should be determined by how well all grantees are performing at the end of the four-year period referenced in § 514(a)(1).

Although we appreciate the commenter's concerns, we decline to address this issue in a regulation, but will take it under advisement. The 2006 OAA requires us to compete the program every four years but permits us to grant a one-year extension to any national grantee that has met its performance goals for each year of the four-year grant period. Although we cannot extend the grants of grantees that have failed to meet their expected levels of performance, the extension is otherwise discretionary. It is discretionary in the sense that we could decide to compete all of the grants after the fourth year, extend all of the grants if all the national grantees have met their expected levels of performance, or compete the funds of only those grantees that have failed to meet their expected levels of performance. We will decide how to structure the future competition after reviewing program performance toward the end of the four-year period, and will make the decision based on the best interests of the participants and our policy of avoiding disruptions to the extent possible.

Subpart E—Services to Participants

Who is eligible to participate in the SCSEP? (§ 641.500)

This section describes the eligible population for participation in the program. We received one comment on this section. That commenter recommended the Department lower the age limit of participants to 50 with continued priority to those who meet the most-in-need characteristics. We did not make this change because the requirement to serve individuals age who are at least 55 years of age is statutory. OAA § 502(a)(1). For clarity, the Department has added the phrase “at the option of the applicant” to the sentence about treating a person with a disability as a family of one at the end of this section. This change is consistent with the intent of the statutory provision, and conforms to the Department's long-standing interpretation of the provision.

How is applicant income computed? (§ 641.507)

This section describes the procedures grantees must follow when making income determinations for enrolling participants. Most of these requirements were previously in administrative guidance and were adopted with the 2006 OAA.

We received one comment on this section related to using either a 12-month period of income or a 6-month period of annualized income to determine participant eligibility. This commenter stated that the regulation appeared to require the grantee to use one or the other and requested that the Department allow grantees the flexibility to use whichever method was most favorable to the participant on a case-by-case basis.

The Department previously stated that grantees should use which method of calculating income is most favorable to the participant and for that reason, the preamble to the proposed rule acknowledged that we were adopting the procedures that were published in TEGL No. 12-06 (Dec. 28, 2006), which went into effect on January 1, 2007. See 73 FR 47770, 47781, Aug. 14, 2008. That section of the preamble specifically allowed grantees to calculate income based on either 12 months or 6 months annualized. Further, in that section, the Department encouraged grantees to “choose the computation method that is most favorable to each participant, on a case-by-case basis, for the broadest possible inclusion of the eligible applicants.” 73 FR at 47781. To reinforce this interpretation, the Department is changing the language of the regulation to remove the word “encourages” and to track the language of TEGL 12-06, which requires the grantee to use whichever period is more favorable to the participant.

What types of income are included and excluded for participant eligibility determinations? (§ 641.510)

This section generally describes what does and does not constitute income for purposes of determining participant eligibility. We received a few comments on this section expressing agreement with the provision. One of the commenters further stated that the regulation should specifically reference other income exclusions, such as income from training programs, SSI, Veterans benefits, and any other publicly subsidized program where the goal is self-sufficiency.

The Department declines to make the suggested change to this provision for the reasons stated in the preamble to the proposed rule at 73 FR 47781-47782, Aug. 14, 2008. The Department encourages grantees to read TEGL No. 12-06 (Dec. 28, 2007) for the most recent information on excludable income. The Department also notes that that TEGL includes the exclusions referenced by this commenter and is located on the SCSEP Web site at

http://www.doleta.gov/seniors

under Grantee Information, Technical Assistance. The income exclusions included in the regulation were only those exclusions required in the 2006 OAA. The issue of includable and excludable income is one that requires some measure of flexibility for good program management. It is for that reason that the details of the income requirements have always been in an administrative guidance, as authorized by § 641.510(c).

May grantees and sub-recipients enroll otherwise eligible job ready individuals and place them directly into unsubsidized employment? (§ 641.512)

This section prohibits grantees from enrolling job ready individuals, who can be directly placed into unsubsidized employment, as SCSEP participants. One commenter suggested the Department add a definition or criteria for “job ready,” which would help the providers determine the type of individual that is not eligible for SCSEP services. The Department agrees and has included a definition of “job ready” in § 641.140. As noted in that section of the preamble, in general terms, it is an individual who requires no more than

just job club or job search assistance to be employed. Therefore, the definition of “job ready,” as now defined at § 641.140, refers to an individual who does not require further education or training to perform work that is available in his or her labor market. For further clarity, we have added the word “job-ready” to the text of § 641.512 to describe those individuals “who can be directly placed into unsubsidized employment” and thus cannot be enrolled in SCSEP but should be directly referred to the One-Stop system.

How must grantees and sub-recipients recruit and select eligible individuals for participation in the SCSEP? (§ 641.515)

This section describes the criteria grantees must use when determining the eligibility of an individual to receive program services. We received a few comments on this section specifically related to proposed paragraph (b), on using the One-Stop delivery system for recruiting participants.

One commenter acknowledged the essential relationship that must exist between the One-Stop delivery system and the SCSEP. However, that commenter further stated that transferring the responsibility of recruitment and selection of all eligible participants to the One-Stop appears duplicative and eliminates the role of SCSEP in participant selection. Several other commenters stated that the provision is inconsistent with § 502(b)(1)(H). Those commenters reasoned that the statutory language did not require grantees to use the One-Stop delivery system to recruit or select eligible individuals because of the use of “will” rather than “must.” They wanted the regulation to reflect that there are other means to recruit and select participants.

We believe these commenters misinterpreted that section of the statute and the proposed rule. In the context of OAA § 502(b), the Department interprets the use of the word “will,” to be synonymous with the words “shall,” or “must.” Section 502(b)(1) requires the Secretary not to fund programs unless she determines that the programs “will” do all of the things listed in paragraphs (A)-(R). In that context, “will” means that the 18 activities listed in § 502(b)(1) must be done for a program to be funded. That being said, however, we do not believe the statute or the regulation implies a requirement for an exclusive use of the One-Stop delivery system as the means to recruit eligible participants, as required by § 641.515(b). Rather, it is one method that grantees must use to recruit eligible participants. Moreover, this requirement in the regulation is not new to SCSEP; it appeared in the 2004 regulations at 20 CFR 641.515(b). Therefore, the Department's interpretation is consistent with the 2006 OAA and the 2004 regulations and accompanying preamble discussion at 69 FR 19014, at 19029.

What services must grantees and sub-recipients provide to participants? (§ 641.535)

This section describes the types of services that are required, permitted, and prohibited in the program. We received a few comments on this section. One commenter requested language in proposed paragraph (a)(1)(ii), to ensure grantees have the flexibility to determine when a participant needed to be reassessed. The Department does not agree that additional language is necessary. The regulation text, as written, as well as the preamble discussion in the proposed rule, already allows for such flexibility so long as participants are assessed upon entry, and for a total of at least two times in a 12-month period.

In addition, two commenters stated that proposed § 641.535(a)(9), as well as §§ 641.540(f) and 641.565(a), appeared to require projects to pay participants for time spent in such training and orientation. In particular, one commenter stated that orientation activities can occur as part of the initial assessment process which may be before a community service assignment. The commenter notes that under the proposed rule, such a participant would not be required to receive wages, which appeared inconsistent with the proposed § 641.540(h), and therefore, disagreed with the proposed change.

We do not read this provision as narrowly as this commenter. Paragraph (a) of § 641.535 specifically states: “When individuals are selected for participation in the SCSEP” the grantee is responsible for the activities listed at paragraphs (1) through (11) of that section. Included on that list is paragraph (9) “Providing participants with wages and benefits for time spent in the community service employment assignment, orientation, and training.” The Department believes that the operative words in this paragraph are “selected for participation.” The point of the regulation is that when a person is formally enrolled in the program the enrollee must receive paid services. Therefore, it is possible, as the commenter described, that an individual may attend a general overview of the program or participate in a general assessment for eligibility before the individual is enrolled in the program. In that case, the individual, who is not yet a SCSEP participant, is not required to be paid SCSEP wages for attending that overview or assessment. However, once a participant is enrolled in the program, which means the individual has been found eligible, has been given a community service assignment, and is receiving a service, paragraph (a)(9) requires that the grantee must pay wages for time spent in orientation, training, assessment, or in receiving any other service. This requirement applies even if the participant has yet to start his or her assigned community service assignment at the host agency.

Further, as one commenter noted, participants may continue to receive self-development training outside of their participation in the SCSEP as provided in § 641.540(h). However, the regulation does not require grantees to pay wages when the participants are participating in training that they have selected and that is not identified in their IEP.

Another commenter stated that proposed paragraph (b) allows the Department to increase programmatic costs without funding and that, “utilizing the administrative guidelines appears to circumvent the rule making process.” The Department disagrees with this commenter for a number of reasons. Proposed paragraph (b) states that “[t]he Department may issue administrative guidance that clarifies the requirements of paragraph (a).” The Department is fully compliant with the notice and comment procedures for rulemaking under the Administrative Procedure Act (5 U.S.C. 551

et seq.

). The administrative guidance discussed in paragraph (b) will merely clarify the requirements of paragraph (a) and is not intended to create new rules or regulations. Such guidance would provide further explanation, as necessary, of the meaning and parameters of the various activities required by the regulation and functions as a type of technical assistance to grantees that sometime struggle to understand how they are expected to satisfy a regulation. The portion of the comment that is related to increasing programmatic costs without funding is addressed in the Administrative section of this preamble under Section D, Unfunded Mandates. However we also note that rather than increase programmatic costs, we anticipate that such guidance will actually decrease programmatic costs.

We have also changed the language in paragraph (a)(3) by adding a new subparagraph (iii) to clarify that the

requirement that an appropriate unsubsidized employment goal be part of the IEP for all participants applies only for the first IEP. Thereafter, if it becomes apparent that unsubsidized employment is not feasible for the participant, the IEP should be adjusted to reflect other appropriate goals for increased self-sufficiency, including the transition to other services, as required by § 641.570(a)(2). Since it is possible that some SCSEP participants will not achieve unsubsidized employment during or immediately following their enrollment in SCSEP, grantees must have the flexibility to design an IEP that will lead to maximum self-sufficiency for the participant and an enhanced quality of life after participation in SCSEP has ended.

Finally, we have removed the citation in paragraph (a)(1) to the 2006 OAA, since OAA § 502 does not specifically require a grantee or sub-recipient to provide orientation to the SCSEP. However, it is the Department's position that requiring the provision of orientation is consistent with the purpose of title V. Orientation adds great value to the participants' experience. Orientation is the ideal forum in which to provide participants with important information on the program; to address expectations and desired outcomes; and explain participant's rights and obligations, grievance procedures, safety issues, and any other information deemed necessary to ensure a positive experience.

What types of training may grantees and sub-recipients provide to SCSEP participants in addition to the training received at the community service assignment? (§ 641.540)

The purpose of this section is to describe the types and the timing of training services grantees may provide to participants. We received several comments on this section about on-line training and the Department's interpretation of training.

One commenter requested that the Department revise paragraph (b) to be more consistent with the 2006 OAA. That commenter interpreted § 502(c)(6)(A)(ii) of the 2006 OAA to allow training before or after an unsubsidized placement.

We understand how a reader could interpret the provision to allow training after a participant is placed in unsubsidized employment because that provision may not be clear; however, we do not agree with that interpretation. The relevant provision states: “participant training * * * which may be provided prior to or subsequent to placement and which may be provided on the job, in a classroom setting, or pursuant to other appropriate arrangements.” We interpret the term “placement” here to mean a placement in a community service assignment. We base our interpretation on the latter part of that provision, which indicates that the training may be provided on the job, in a classroom, or through other appropriate arrangements. In the Department's opinion, the examples listed go hand-in-hand with the types of training a grantee would provide while a participant is in a community service assignment, given that the community service assignment is an on-the-job type of training. The commenter's reading is not only inconsistent with the SCSEP's policy on services to exited participants, but is also inconsistent with the intent of the program to help most-in-need, older individuals find employment.

Given the program's limited resources, it is important that grantees use grant funds to help current participants achieve self-sufficiency. Grantees have a responsibility to provide training for the participants that will make them job ready. In appropriate cases, the grantees have an obligation to provide or assist participants to obtain supportive services to make sure the participant keeps that job, as the commenter notes. We do not, however, define supportive services to include training for a participant once he or she has exited the program. Although there is government support for incumbent worker training in WIA and TAA, SCSEP's funds cannot be used to provide training after unsubsidized employment has been attained. SCSEP's goal is to help participants become job-ready through community service and approved training; therefore, training may occur during enrollment but not after completion of the program. We have revised this provision to clarify that training may be provided “before or during” a community service assignment.

Other comments were about on-line training. One commenter expressed support for the approval to use on-line instruction for training as discussed in the preamble to the proposed rule at73 FR 47770, 47784, Aug. 14, 2008. Another commenter questioned how the Department expected grantees to calculate the participant's time toward on-line training for wage purposes and who would validate the time spent in this activity.

The Department does not expect on-line training to be handled any differently than any other training. On-line training is not new to SCSEP; it is not required, but is one of several options for how training may be provided. It has long been recognized as an approved training activity, although not expressly mentioned in the regulations. Grantees that have questions about how to implement on-line training should contact their Federal Project Officer for technical assistance.

Another commenter requested that the Department add the language “and any other costs deemed necessary” to the end of § 641.540(e). We decline to make this suggested change. The language follows the statutory language at 502(c)(6)(A)(ii) of the 2006 OAA and is sufficiently inclusive of all costs the Department considers part of training. Any allowable cost associated with training that is not included in § 641.540(e) will fall within the wages and other benefits listed in § 502(c)(6)(A)(i) of the 2006 OAA and participant supportive services costs which are addressed in § 641.540(g). Making the suggested change would likely lead to unnecessary confusion over whether the “other costs” associated with training fall within § 641.540(e) or § 641.540(g). Such confusion would be especially problematic because the statute excludes the cost of activities listed in § 641.540(e) from its general rule that 75% of costs go to wages, while the statute

includes

costs listed in § 641.540(g) within the “75% of grant funds go to wages” rule. OAA § 502(c)(6)(B)(i).

We make one technical change in paragraph (a) to clarify that the grantee “may” pay for appropriate skill training, in addition to that provided through the community service assignment, “that is realistic and consistent with the participant's IEP, that makes the most effective use of the participant's skills and talents, and that prepares them for unsubsidized employment.” The prior mandatory language, “must,” was meant to apply to the criteria that have to be met before the grantee may pay for such skill training. It was not meant to require the grantee to pay for such training for all participants. Grantees are encouraged to arrange or provide for such training when appropriate, but given the limited funds available for this purpose, they are not required to provide or pay for training when it is not appropriate.

What supportive services may grantees and sub-recipients provide to participants? (§ 641.545)

This section describes the types of supportive services grantees may provide to participants. We received a few comments on this section about the

proposed rule language that limits supportive services to those services that support an employment goal. Those commenters asserted that there are times when a participant may need services in order to be able to participate in the SCSEP, and therefore, providing those services should not be tied specifically to an employment goal. One other commenter requested that the Department add “temporary shelter” to the list of supportive services.

The regulation as drafted is consistent with the historical practice of providing supportive services in the program and specifically refers to supportive services “that are necessary to enable an individual to successfully participate in a SCSEP project.” The regulation's language is consistent with the comments about using supportive services to assist participants during their enrollment in the program. In the preamble discussion of 20 CFR 641.545 of the 2003 Notice of Proposed Rulemaking, the Department stated: “Grantees/subgrantees should seek to ensure that participants receive those supportive services necessary for them to participate in the program and to realize the goals set forth in their SCSEP IEPs.” 68 FR 22520, 22529, Apr. 28, 2003. The Department's position was later restated in the 2004 Final Rule preamble for 20 CFR 641.545:

To meet the needs of the seniors the SCSEP serves, grantees must make every effort to provide them the supportive services they need to be able to participate in their community service assignments. The Department recognizes that SCSEP grantees will not be able to provide all needed or desirable supportive services with grant funds * * *. But the Department expects grantees and subgrantees to make every reasonable effort to provide participants with the supportive services provided for in their IEPs. 69 FR 19014, 19032, Apr. 9, 2004.

We believe the commenters' concerns arise from the requirement in § 641.535(a)(6) for the supportive services to be consistent with the participant's IEP. Commenters seem to interpret that requirement to mean that grantees may not provide supportive services during a participant's community service assignment. The fact that the IEP, and particularly the initial IEP, is tied to an employment goal does not mean that the IEP is limited to only those services that advance the employment goal. The IEP may and should assess and consider all of the services the participant needs to successfully participate in SCSEP, and should address supportive services that may be required before assignment to community service, during assignment, and during the first 12 months of unsubsidized employment.

For all these reasons, we find no inconsistency between the rule and the way the commenters want to provide supportive services and thus have not changed the final rule.

On the issue of temporary shelter, we agree with the commenter. Accordingly, we are revising the regulatory text to be more inclusive by saying “housing, including temporary shelter.”

We have also changed the language of paragraph (a) to reinforce the idea that grantees must assess participants' need for supportive services and must assist participants in meeting those needs and grantees may directly pay for or arrange for supportive services as necessary. This change reconciles § 641.545(a) with § 641.535(a)(2) and (a)(6), and clarifies that, while paying for supportive services directly is optional, grantees must assess participants' supportive services needs and must make every effort to help participants to meet the needs so identified.

What responsibilities do grantees and sub-recipients have to place participants in unsubsidized employment? (§ 641.550)

This provision identifies the steps that grantees must take to assist participants to obtain unsubsidized employment. We received two comments about the emphasis on unsubsidized placements. The first commenter found the proposed rule's increased emphasis on placement in unsubsidized employment in conflict with self-directed job searches which, when appropriate, should “be an acceptable alternative for promoting placement in unsubsidized employment.”

The Department does not construe this change in emphasis to restrict the grantees from providing this type of assistance when it is appropriate. The grantees are still required to assess participants and to ensure they are following their IEP. If a grantee or sub-recipient determines that self-directed job searches are a reasonable method for seeking unsubsidized employment for certain participants, the grantee or sub-recipient may encourage or assist in such efforts in place of more intensive placement assistance, but they must still document it in the IEP and follow-up with the participant. In some cases, grantees may need to use a combination of methods to help participants locate and apply for unsubsidized employment. The regulation was not meant to prescribe how grantees may help participants find employment but rather to make it clear that they are expected to work with participants to help them find unsubsidized employment.

Another commenter disliked the changes from “reasonable” effort to “every reasonable effort” as it relates to a grantee's responsibility to place participants in unsubsidized employment. The commenter argued that a participant could claim that every effort was not provided to help him or her achieve unsubsidized placement. Thus, the commenter, argued, the participant could wait for the perfect unsubsidized placement and refuse the other opportunities. Therefore, the commenter concluded that “[r]easonable should be the standard.”

We agree that the language of § 641.550 could be read as imposing an obligation on grantees to provide unsubsidized employment for all participants, even those for whom unsubsidized employment is not a goal in their IEP, and could be interpreted as overstating the extent of reasonable effort required. Moreover, helping participants find unsubsidized employment is not required or possible until participants become job-ready. Therefore, consistent with the change in the language to § 641.535(a)(3), we agree with the recommendation. We have eliminated the requirement to “make every reasonable effort” and section 641.550 now provides that the obligation to help participants achieve unsubsidized employment only applies to those participants who have unsubsidized employment as a goal.

What policies govern the provision of wages and benefits to participants? (§ 641.565)

This section provides the requirements for wages and benefits that participants may receive. This section was updated from the 2004 regulations to reflect new statutory provisions. The Department received several comments on this section, largely related to compensation for Federal holidays. One commenter, however, noted that the acronym “WIA” was missing before the word intensive services in proposed paragraph (a)(1)(ii). The Department appreciates this comment and made the change to the regulation so it is now consistent with the rule as we described it in the preamble to the proposed rule.

One commenter noted that the limitation in proposed paragraph (b)(ii)(A) that the results of a physical examination be provided only to the participant hindered the grantee's ability to meet the Department's data validation requirements for determining disability if they were unable to require the physical examination results. The

commenter misunderstands the data validation requirement. Grantees merely need to document that a physical was offered. That can easily be accomplished without having the results of the physical. (If the offer is declined, grantees must obtain a written waiver from the participant.)

Furthermore, grantees should not use the physical examination results to document disability for the most-in-need performance requirement. The certification of the attending physician or official documentation of a disability is sufficient. To the extent that a participant declines to provide that information, the grantee will not be able to take credit for it. However, participants have an incentive to provide that information because documentation is required if a participant claims family of one status for eligibility purposes. To avoid any confusion about the use of the results of the physical and to clarify that the physical itself is a fringe benefit meant solely for the benefit of the participant, we have deleted the last sentence of subparagraph (b)(1)(ii)(A), which stated that the participant could provide the grantee a copy of the physical examination results. There are circumstances under which a grantee may request documentation of a disability or may even require all participants assigned to a particular community service position to take a physical examination. For example, documentation is required for family of one status, as well as where a participant claims an accommodation. A physical also can be required of all participants who are assigned to community service positions that require certain physical capability. However, those circumstances are entirely unrelated to the physical examination that must be offered to the participant as a fringe benefit under the statute.

The remainder of the comments related to the requirement that grantees provide compensation for participants when the scheduled workday in the program falls on a Federal holiday for the host agency. Almost all of these commenters requested that the Department allow flexibility in the regulation text to allow participants to make up the time. One commenter specifically requested that the language in the regulation more closely track the language of the 2006 OAA, which provides for “employer” closure for Federal holidays. Another commenter stated that having the flexibility to allow participants to make up the hours posed concerns when program policies could vary from grantee to grantee. This commenter was concerned that in one instance, a program may pay the participant for the Federal holiday and in another, the program may require the participant to make up the hours. This commenter also raised a concern about adjusting the timesheets and the difficulties it would cause for validating community service hours. The commenter did not address how the adjustment of timesheets would be a problem. Other commenters approved of the flexibility described in the preamble of the NPRM that allows the participants to make up the time rather than pay them for a day off. They believe it helps to distinguish the participants from being considered employees of the host agency.

The Department appreciates these commenters' concerns, which reflect a desire to maintain the participants' status as “trainees” rather than “employees” at the host agency. Upon further reflection, we find that the NPRM's regulation text provision of only two categories of participant benefits (required and prohibited) failed to reflect the flexibility the Department intended to provide for Federal holiday leave and sick leave. For both of these benefits, as indicated in the preamble to the NPRM, “(t)he Department broadly interprets the word `compensation' * * * to allow for a variety of practices * * * The intent of the Department here is to allow flexibility in administering the SCSEP * * *” Unlike the other benefits listed in the NPRM regulation text as “required,” the NPRM preamble noted that Federal holiday and sick leave benefits need not be paid in cash but must be provided in some fashion. Accordingly we have amended the regulation to clearly indicate that Federal holiday leave and sick leave “may be paid or in the form of rescheduled work time.”

These modifications and clarifications address the concern of perceived inequity mentioned by one commenter. It is not uncommon for programs to offer different services and benefits. We have written these regulations to permit each grantee to have the maximum available flexibility in the design of its benefit programs, as long as each grantee consistently applies the rules to all of its program participants as required in § 641.565(b)(1). We also do not see any issues with validating timesheets for program accuracy or data validation purposes. The timesheets are always based on the actual hours the participant spends in a community service assignment at the host agency. To the extent a participant makes up hours at the host agency, it will be reflected in the total number of hours the participant worked at the host agency in his or her assignment.

Finally, we interpret the word “employer” as meaning a “host agency” since that is the only context in which this provision would apply. Therefore, the Department has not made the change the commenter requested.

Is there a time limit for participation in the program? (§ 641.570)

The Department received a large number of comments about this section. The NPRM implemented the 48-month limitation on individual participation in the program as required by § 518(a)(3)(B) of the 2006 OAA. Paragraph (c) of this section addressed the average participation cap created by § 502(b)(1)(C) of the 2006 OAA. Paragraphs (d), (e), and (f) further implemented these limits on program participation.

The majority of comments on this section pertain to paragraph (b). The statute provides for increased periods of participation for individuals who meet one of the criteria listed in the statute. As explained in the NPRM, the Department proposed to implement the extension as a one-time, one-year extension to ensure that SCSEP participation is not indefinitely extended, thus preventing other eligible individuals from benefiting from the SCSEP, and to be generally consistent with the possible extension of the average participation cap which extends up to a maximum of only nine additional months.

Most commenters asserted that the limit on the extension of the individual participation limit to one-time and one-year “is both contrary to Congressional intent and counterproductive to assisting the most vulnerable older adults.” The commenters noted that Congress did not place an absolute time limit on individual participation. The commenters also argued that limiting the potential extension in this way is unnecessary to reduce the number of long-term SCSEP participants because there are several other program features, such as the performance measurement system, that effectively achieve that goal. The commenters also contended that restricting the extension to one-year, one-time would result in involuntary terminations from the program for older adults who are benefiting from the SCSEP and may be unable to find any other meaningful employment and training assistance from other programs. One commenter requested that the Department delay the implementation of this provision in order to consult with other Federal and State agencies on alternative programs

and resources for terminated participants. A few comments, including those from participants, noted that the time limit could be more costly to the government in the long-run and would create a financial hardship on participants who are on the verge of obtaining employment. A few commenters agreed generally with time limits in the program but disagreed with applying it to all participants.

After considering these comments, the Department has decided not to impose the proposed one-time, one-year restriction on the increased period of individual participation. We agree that Congress could have included an absolute limit on SCSEP participation in the 2006 OAA, but did not do so. We also are sympathetic to the assertion that grantees are in the best position to manage their programs to satisfy the various aspects of the 2006 OAA and this final rule, some of which impose other limitations on participation. Therefore, we agree that grantees require the flexibility to determine the needs of individuals, which necessarily means that some individuals may be in the program longer provided they meet one of the waiver factors listed in § 641.570(b), and will continue to receive services consistent with their IEP. As noted in paragraph (e), the Department will issue administrative guidance that describes the process for grantees to request increased periods of individual participation. We expect that grantees will make their determinations for requesting extensions for individual participants who meet the eligibility factors in a fair and equitable manner and in accordance with applicable civil rights laws. This process developed in the administrative guidance will reflect this expectation.

Given that the average participation in the program is approximately two years and that there are other requirements designed to limit participation in the program, we agree that it is not necessary to retain this requirement. However, as some commenters pointed out, grantees are cautioned that they are nevertheless responsible for satisfying the average participation cap described in paragraph (c) of this section as well as the expected levels of performance for the core performance measures.

In addition, we received a number of comments on the 27 month cap in paragraph (c). One commenter requested that the Department edit this regulation provision to more accurately reflect the law as written. Thus, this commenter requested that we revise the rule to read: “each grantee must comply with an average participation cap for eligible individuals (in the aggregate) of 27 months.” Other commenters requested that the grantees be consulted on the method used to determine the 27 month average participation cap. One commenter asked for clarification on whether the 27 month cap, like the 48 month time limit, was intended to be consecutive or not.

The Department does not agree that the language in the proposed rule paragraph (c) requires additional clarification. The Department opted to draft the language in this way to make it more reader-friendly. We do not believe there are any inconsistencies between the regulatory provision and the 2006 OAA, and therefore, did not make any changes to this section. Finally, the Department will work with grantees to implement the participation limits.

May a grantee or sub-recipient establish a limit on the amount of time its participants may spend at each host agency? (§ 641.575)

This section authorizes grantees to adopt a policy under which participants are rotated among community service assignments. We received several comments on this section. One commenter stated that moving participants around from host agency to host agency every 12 months has a negative impact on the program and considered it to be an arbitrary rule. This commenter further claimed that this provision did not consider the needs of the workers (participants). Other commenters echoed this concern in one way or another, mostly opposing the provision because they find it disruptive to the host agency when a participant leaves and then they are understaffed.

The Department appreciates these commenters' concerns; however, the rule does not require a grantee to adopt a rotation policy. Rather, it allows grantees to implement a rotation policy when the grantee believes it will make the program more effective and help program participants achieve economic self-sufficiency consistent with their IEP. This provision has been helpful to an increasing number of grantee organizations over the years, who find it difficult to persuade host agencies that they should not expect the SCSEP to augment their workforce. More importantly, grantee rotation policies have allowed participants to acquire more job skills, which increase their opportunities to find unsubsidized employment. However, we do agree that rotation of participants among host agencies may be disruptive and counter-productive if the participant is still effectively acquiring needed skills at his or her assignment. Therefore, we are revising the regulation to provide that no rotation policy will be approved that does not require an individualized determination that rotation is in the best interest of the participant and will further the acquisition of skills listed in the IEP.

Is there a limit on community service assignment hours? (§ 641.577)

We received a significant number of comments on this section. In the NPRM, the Department proposed a limit of 1,300 hours per year on participants' community service hours. The proposed limit is similar to a previous 1,300 hours per year limit on all participant paid hours.

Several commenters criticized the proposed 1,300 hour limit as “another example of an unnecessary restriction on a SCSEP grantee's capacity to meet the needs of individual participants and to respond to local conditions.” Although commenters acknowledged that participation in SCSEP is part-time, they asserted that the proposed 1,300 hour limit “sets an arbitrary cap on participation” and “disregards the * * * particular needs of a community (such as responding to a natural disaster).” The commenters further asserted that although the 1,300 hours is still a good benchmark, the restriction limits their ability to address the backgrounds, life challenges and other circumstances that make providing services to each participant a unique experience. Still other commenters found that a majority of participants work less than 1,100 hours because their higher State minimum wage prevents them from overspending their budget. One commenter stated that if participant staff are not allowed to exceed the 20-25 hours per week, the grantees' performance measures will suffer.

The Department has considered these comments and has decided to eliminate the 1,300 hour limit, as suggested by the commenters. We agree that the grantees need the flexibility to respond to downturns in the economy or natural disasters, for example. Therefore, we have changed this provision to read that the 1,300-hour requirement is not required but is still a benchmark and good practice that the Department strongly encourages grantees to follow. This language is consistent with the Department's position on this issue published in the preamble to the 2004 Final Rule, at 69 FR 19014, 19036, Apr. 9, 2004. The statute defines “community service employment” as “part-time” work and grantees must ensure that community service assignments are part-time positions. In addition, the

Department cautions grantees about allowing participant staff to exceed the part-time requirements, which is not permitted.

Under what circumstances may a grantee or sub-recipient terminate a participant? (§ 641.580)

This section describes a variety of circumstances in which a participant may or must be terminated from the program and the procedures by which terminations must be accomplished. We received several comments on this section. One commenter asked for an explanation of what “knowingly” means in paragraph (a). The common legal definition of “knowingly” is “[w]ith knowledge; consciously; intelligently; willfully; intelligently.” Black's Law Dictionary 4th Ed. (1957) West Publishing. The Department recommends a common-sense application of this definition. For example, if a participant provided false information in order to meet the eligibility requirements for the program and either knew or should have known that the information was false, then such provision was done “knowingly.”

We received two comments on paragraph (e) of this proposed section which deals with terminations when a participant has refused a reasonable number of job offers or referrals. One commenter requested that the Department add language to paragraph (e) allowing the grantee to terminate the participant for refusal to accept a reasonable number of job searches or job offers. The other commenter reminded the Department that in some cases, local, State, or Federal law and/or agency policy requires immediate termination for cause as described in the proposed rule at paragraph (e).

As to the first comment, the Department does not believe the commenter's proposed language is necessary. Paragraph (e) already states that if a participant refuses to accept a reasonable number of job offers or referrals to unsubsidized employment, the grantee may terminate the participant. The only word that appears to be different between the comment and the regulation is the word “searches.” It is the Department's opinion that “job searches” are included as part of the “job referral” process. Therefore, the Department did not make this change in the regulation.

The commenter that disagreed with “for cause terminations 30 days after written notice” may have confused this provision with another paragraph in this section. Paragraphs (a) and (d) did not contain the 30-day termination requirement that is found in paragraphs (b), (c), and (e) of this final rule. However, upon reconsideration, we believe that paragraphs (a) and (d) should also require 30 days notice before a termination for cause may be effective. Notice allows a participant time to contest the grantee's determination and to offer factors in mitigation. Notice is inherent in fundamental notions of fairness and is arguably more necessary in cases of alleged misconduct than in cases where a participant was mistakenly determined eligible. We already require notice in the case of terminations under paragraph (e), which is a type of termination for cause. We see no reason not to expand the notice to all cause terminations.

We note that the requirement for 30 days notice before termination does not require the grantee to permit a participant to remain assigned to the host agency where the offense is alleged to have occurred. In those cases where a statute or regulation requires the immediate removal of a participant for certain specified offenses, the grantee may remove the participant from the host agency and may assign the participant to another host agency (including the local project office) or to no host agency, depending on the circumstance, during the notice period.

We have made an additional change in the notice language in paragraphs (a), (d) and (e) to provide that the termination after notice is not required if additional facts or evidence shows that the basis for the termination is incorrect. The original intent of this provision was that termination could not be effected until 30 days had elapsed, not that termination was always required once 30 days had elapsed. Indeed, the notice requirement would be rendered largely meaningless if the grantee were required to terminate the participant at the end of the notice period regardless of what information the participant might have produced in the interval. We thus have added language to paragraphs (a)-(e) to make it clear that a grantee is not required to terminate a participant if the evidence shows that the grounds for termination were incorrect. We remind grantees, however, that if a participant has finally been determined to be ineligible (after being given 30 days to provide evidence of eligibility), the grantee must terminate the participant.

Another commenter questioned how the organization would know when a participant receives a written notice of termination as suggested by paragraphs (b), (c), and (e). This commenter requested that the language in the proposed rule only require grantees to provide written notice explaining the reasons for termination when the termination is the result of an adverse action.

Again, we believe the commenter is misreading the intention of these regulatory provisions. Each of these situations represents circumstances where a termination is necessary. However, the Department has made a change to the regulation to clarify the notice requirement. The purpose of the notice requirement is that the participant would be terminated in 30 days after either the day notice was provided to the participant in person, or the day the grantee mailed the termination notice. Given the propensity for confusion with the current language, the Department has revised paragraphs (b), (c), and (e) to read “and may terminate the participant 30 days after it has provided the participant with written notice.”

Another commenter criticized the termination process as “indicative of micromanagement.” This commenter further expressed disagreement with the single national approach to termination because it limited the discretion of grantees and sub-recipients.

In response, the Department notes that there are certain requirements to which grantees must adhere to in order to receive Federal funds. Uniform policies are necessary in some cases for a program of national scope to ensure all participants are treated in a fair and consistent manner. The issue of termination is one of those necessary policies. Grantees may not continue to spend grant funds on ineligible participants. The rule does allow for some flexibility, such as determining what constitutes cause for termination, which we recognize may vary among grantee organizations. Grantees also have flexibility to determine whether they want to terminate participants for failure to accept a reasonable number of job offers or referrals and, if they do, what constitutes a reasonable number.

One final commenter raised the issue of termination in the context of the performance measures and how terminations impact a grantee's ability to meet the performance measures. This comment is outside the scope of this rulemaking as it does not relate to the proposed rule.

What is the employment status of SCSEP participants? (§ 641.585)

This section discusses the employment status of program participants given that they receive work experience training. The Department received one comment on this section. This commenter requested

a ruling on the responsibility of the grantees and sub-recipients to conduct background checks on SCSEP applicants as part of the application process if they are not employees of the grantee or sub-recipient.

Although this comment is outside the scope of this rulemaking, the Department will reiterate its policy here. Grantees may take the responsibility of providing background checks before placing participants in community service assignments, provided that the background check is conducted because of the requirements of a specific community service assignment, rather than based on a particular participant, and is consistently applied to all applicants considered for that position. We stress that background checks are relevant to the assignment of participants to particular host agency positions only and cannot be used as a basis for denying eligibility. In addition, grantees should be careful to comply with EEOC and any state or local rules regarding the use of background checks.

Subpart F—Pilot, Demonstration, and Evaluation Projects

What is the purpose of the pilot, demonstration, and evaluation projects authorized under § 502(e) of the OAA? (§ 641.600)

This section describes the purpose of the new provisions implementing § 502(e) of the 2006 OAA. The Department received one comment that asked the Department to clarify whether On-the-Job Experience (OJE) projects would continue under the new section and whether the Department plans to introduce new pilot projects or expand and improve existing projects.

The Department is pleased that grantees have found the OJE program useful and will take that under advisement as we explore how best to exercise this new flexible authority, as we noted in the preamble to the NPRM. See 73 FR 47770, 47789, Aug. 14, 2008.

Should pilot, demonstration, and evaluation project entities coordinate with SCSEP grantees and sub-recipients, including area agencies on aging? (§ 641.640)

This section provides that the Department will collaborate with appropriate aging organizations when developing projects under this section and grantees of these projects must also consult with appropriate organizations. We received several comments related to this section. The comments mostly suggested that § 641.640, in concert with §§ 641.315 and 641.335, were inadequate to address the type of coordination that should occur between SCSEP and other aging programs. One commenter stated that the regulation should be written to “requir[e] coordination of SCSEP with other programs under the Older Americans Act, such as state units and area agencies on aging, and with other Federal programs.” Another commenter “suggest[ed] that the regulations reflect additional coordination requirements with disability networks, in order to better incorporate person-centered planning, Americans with Disability Act compliance, and independent living philosophy concepts into the provision of services.” Yet another commenter expressed a concern about where the funding for these projects would come from given that the revised funding allocations appear to decrease services to participants. That commenter cited recent Department actions to reserve $5,000,000 for program support activities under the Secretary's discretionary authority.

Section 641.640 has been written to follow the statutory language, with the addition of a clarification that SCSEP grantees and sub-grantees are among the entities that must be consulted with. To be more prescriptive in this section would limit the Department's and the grantees' ability to use the flexibility granted by the statute. Finally, comments about the possible effect of funding for the pilot, demonstration and evaluation projects on the funding of the “regular” program are outside the scope of this rulemaking.

Subpart G—Performance Accountability

On June 29, 2007, the Department published an IFR that implemented changes in the SCSEP performance measurement system in light of the OAA. This section discusses comments on the performance measurement system.

The OAA requires the SCSEP to track six

1

core indicators of performance

2

(also called “core performance indicators,” or just “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; and (6) most-in-need (the number of barriers per participant as listed in subsection (a)(3)(B)(ii) or (b)(2) of § 518 of the OAA. Core indicators are subject to goal-setting and corrective action. The statute also requires two additional indicators of performance (also called “additional performance indicators,” or just “additional indicators”): Retention in unsubsidized employment for one year; and satisfaction of participants, employers, and host agencies with their experiences and the services provided. Additional indicators are not subject to goal-setting and corrective action. The OAA gives the Department the authority to add other additional indicators that it determines to be appropriate to evaluate services and performance, but we are not adding any other additional indicators at this time.

1

Section 513(b)(1) of the 2006 OAA lists, “[t]he number of eligible individuals served, including the number of participating individuals described in subsection (a)(3)(B)(ii) or (b)(2) of section 518,” on performance, as a single core indicator. However, as discussed in the IFR, 72 FR 35836, June 29, 2007, the Department chose to divide it into two separate indicators—number of eligible individuals served, and number of most-in-need participants.

2

We use the terms “indicator” and “measure” interchangeably throughout this rule.

Under authority of the IFR, grantees have been using the common measures definitions for the three core indicators addressing unsubsidized employment. We received a number of comments raising concerns about whether the common measures are an appropriate way to measure participation in SCSEP. Changes in the core indicator definitions at this point will muddle the data we have collected for three program years using the existing definitions. The Department wants to have a consistent body of data over a multiyear period through which to be able to evaluate both the overall performance of the SCSEP, and the utility of the performance indicators. In addition, any changes would not be fully implemented until PY 2011.

As a result, the Department has concluded that to change the definitions of the core indicators at this time would create a significant administrative burden for grantees, which would outweigh any benefit of changing those definitions. With reauthorization of the SCSEP also on the horizon for 2011, it would be difficult to conduct evaluations of the program and collect data for doing so if the definitions were changed at this late stage. Moreover, a change in the measures at this late date would deprive the grantees of valuable baseline data that they are using for program management and improvement. The Department intends to maintain the existing definitions for the three core indicators on unsubsidized employment, under which grantees have been working for three years already.

Overview of Comments Received on Subpart G

The Department received eleven comments in response to the

performance accountability IFR. Some commenters urged changes to particular performance measures and/or asked specific questions about one or more of the measures. Such comments commonly expressed the view that the SCSEP is unique among workforce programs primarily because of its community service element, and therefore use of the common measures is neither appropriate nor desirable.

A second theme common to several of the comments is that an emphasis on performance accountability may lead to unintended consequences. In this view, SCSEP grantees and sub-recipients may feel pressure to serve individuals who are relatively easy to place in unsubsidized employment to meet performance goals. Such a focus, it was argued, would thwart a consistent tenet of the SCSEP, reflected in the 2006 OAA, that the program should prioritize individuals with multiple barriers to employment. Further, several commenters expressed concern that this pressure to attain good performance outcomes could result in fewer minorities being served by the SCSEP.

Because the definition of the most-in-need indicator changed significantly from the 2004 SCSEP final rule, the Department treated the 2007 Program Year as a baseline year for that indicator and did not set sanctionable goals for the most-in-need measure. Some commenters thought that the 2007 Program Year should be treated as a baseline year for all indicators; that is, they thought no goals should be set for any of the core indicators for the Program Year 2007.

Other commenters expressed concern with one or more of the indicators. One commenter requested that the Department decrease the number of core indicators and increase the number of additional indicators. A few commenters urged the Department to develop the remainder of the regulations before finalizing the performance accountability requirements. Finally, some commenters supported the creation of an interagency group to provide input on the SCSEP regulations.

We will discuss all of the comments below, beginning with the comments that broadly address the performance measurement system overall.

Broad Comments on the Performance Measurement System Overall

A few commenters urged the Department to develop the remainder of the regulations before finalizing the performance accountability requirements. Some commenters requested that we convene meetings on the performance measurement regulations before finalizing them. Several commenters supported the creation of an interagency group to provide input on the SCSEP regulations.

We agree with the commenters who urged the Department to develop the remainder of the regulations before finalizing the performance accountability requirements. To that end, we published an NPRM on August 14, 2008, that addressed all aspects of the SCSEP regulations other than performance measures. We were able to carefully consider the comments from both the IFR and the NPRM before proceeding with this final rule.

We also received some comments requesting that we convene meetings with grantees and other interested parties as we developed final regulations on the performance measurement system. We considered this suggestion but chose not to adopt it. All interested persons were invited to participate in the regulatory process by submitting comments on the IFR and the NPRM, and we considered those comments very seriously as we developed this rule.

In the IFR, we stated that we had “implemented an interagency group to oversee the strategy for implement[ing]” the performance measurement system required by the 2006 OAA. 72 FR 35845, June 29, 2007. Some commenters interpreted this to mean that the Department had convened a group that included the Administration on Aging, and those commenters applauded such efforts. In fact, the group to which we were referring was comprised of representatives from different agencies within the Department. Nevertheless, we acknowledge that several commenters urged greater coordination between the Department and the Administration on Aging. The 2006 OAA already requires the SCSEP to coordinate with area agencies on aging at the local level, and the Department endeavors to mirror that coordination at the national level. However, it is clear from these comments that some in the SCSEP network think that we have not done enough coordinating at the Federal level. We appreciate that even closer coordination may aid the SCSEP overall and its participants in particular. To that end, we will pursue strengthening our relationship with the Administration on Aging as we move forward.

We now respond to the comments on the IFR that pertain to particular regulatory sections within subpart G.

What performance measures/indicators apply to SCSEP grantees? (§ 641.700)

Several commenters criticized the performance measurement system implemented in the IFR generally, and the common measures in particular. Some of the commenters asserted that the SCSEP is unique among workforce programs primarily because of its community service element, and that use of the common measures is therefore neither appropriate nor desirable for the SCSEP. Other commenters maintained that an emphasis on performance accountability may lead to unintended, adverse consequences. These commenters argued that, in an effort to achieve the expected levels of performance for the core indicators, SCSEP grantees and sub-recipients may feel pressure to serve individuals who are relatively easy to place in unsubsidized employment. This incentive to “cream” from applicants contravenes a consistent and central theme of the SCSEP, reflected in the 2006 OAA, that the program serves individuals with barriers to employment. Of particular concern to some commenters was that a focus on performance outcomes would result in a reduction of services to disadvantaged and minority older adults.

In the IFR, as well as the NPRM, the Department specifically requested that the public submit comments addressing concerns that the performance measurement system implemented by the IFR compromises the ability of grantees to serve minority individuals. We particularly appreciate the comments we received on that topic.

The Department does not, however, view the performance measurement system required by the 2006 OAA and implemented in the IFR as inappropriate or undesirable for the SCSEP, or as adverse to the SCSEP's traditional focus on serving persons with barriers to employment or minority individuals. We hold a different view from the commenters who argued that this performance measurement system will lead to a reduction in services to persons with barriers to employment, including minority individuals. We will address these points in turn.

The Department fully acknowledges that community service is integral to the SCSEP. Congress gave voice to the importance of this aspect of the SCSEP in its “[s]ense of the Congress” provision in the 2006 OAA: “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.” OAA § 516(2). We also acknowledge that the 2006 OAA's requirement that grantees spend a minimum of 65-75 percent of their funds on participant wages and benefits is a unique program feature, and one that clearly assists persons with otherwise low incomes. Providing an opportunity for low-income older adults in need of job training to work at community service organizations that need operational support is a “win-win” situation.

Some commenters asserted that the SCSEP should not align with other workforce programs in its use of common measures because the SCSEP retains this unique community service element, and that the common measures are limited in providing full evidence of the SCSEP's performance. We also received comments noting that initially there were plans for common performance measures to be applied across a wide array of Federal agencies and programs. These commenters suggest that the scope of the common measures has been reduced to “[F]ederal job training and employment programs that share similar goals” (emphasis omitted), and that the SCSEP does not share sufficiently similar goals with other Federal job training and employment programs to make the common measures appropriate.

Other commenters claimed that Congress “overwhelmingly rejected” a focus by the SCSEP on unsubsidized employment outcomes. These commenters argued that the Department is contravening Congressional intent by requiring performance measures that focus on unsubsidized employment outcomes.

Congress made both community service and its potential to lead to unsubsidized employment important goals. Congress required the use of specified core indicators in the 2006 OAA, including the entry into employment, retention in employment for six months, and earnings indicators. Along with providing valuable community service, then, the SCSEP is a training program for low-income persons who have not been able to obtain employment on their own. Congress was well aware of the unique nature of the SCSEP, and could have chosen separate outcome measures unique to the SCSEP as it did in the 2000 Amendments to the OAA. Instead, it specifically mandated that the program report on certain core indicators, three of which measure employment outcomes; therefore, the Department must implement those indicators as stated in the 2006 OAA to achieve the dual purpose of ensuring community service opportunities, but also making unsubsidized employment possible where appropriate for exiting SCSEP participants. Furthermore, the language Congress used in the 2006 OAA to mandate the implementation of the three core indicators on employment outcomes mirrored the common measures. It therefore seemed sensible to define these three core indicators using common measures definitions.

The 2006 OAA requires the Department to implement the three core indicators on employment outcomes. This requires us to gather consistent data on program performance to inform reauthorization. Without a body of consistent performance data over a reasonable number of years, we will not be able to determine whether those indicators as defined are or are not effective performance measures. In addition, grantees would be deprived of meaningful baseline data for making improvements in services, which is the primary purpose behind measurement. As discussed above, therefore, the administrative burden of changing these definitions would outweigh the policy value of changing them before a good body of consistent data has been gathered to inform the program reauthorization anticipated in 2011. This is particularly so since the Department anticipates proposing another SCSEP additional indicator for volunteer work performed after exit from the program, which would further reinforce the Department's support for community service and volunteer work.

In addition, several commenters asserted that the common measures are limited in providing full evidence of the SCSEP's performance, and we agree. The common measures do not accurately portray the entirety of the SCSEP program or its successes. These three core measures, which currently use common measures definitions (entry, six-month retention, and earnings), relate most closely to the SCSEP's goal of unsubsidized employment. However, Congress also required three other core measures (number of persons served, most-in-need, and community service), and they relate most closely to the community service goal of the SCSEP. Accordingly, we acknowledge that the common measures do not “tell the whole SCSEP story.” However, we remain convinced that in light of the need to gather data for reauthorization and our consideration of another additional indicator, for now these definitions are most sensibly kept as a method to capture important data on the success of participants in meeting the goals deemed appropriate for their personal circumstances, as laid out in their IEPs.

We turn now to the commenters' argument that implementing the performance measurement system described in the IFR will lead to a reduction in services to persons with barriers to employment, including minority individuals. Some of these commenters asserted that the introduction of common measures in other workforce programs has led to a decrease in the number of low-income participants and participants with barriers to employment in those programs. These commenters claim that such programs have selected participants based on the participants' potential to achieve positive indicator outcomes. They contend that, faced with the same common measures, SCSEP program operators will “cream” by selecting those participants who are easiest to serve. In this view, persons with barriers to employment, including minority individuals, will be disfavored by SCSEP program operators. Some commenters asserted that “creaming” is contrary to Congressional intent, because in the 2006 OAA Congress intended the SCSEP to serve low-income persons and persons with other barriers to employment. Several commenters cited a study of WIA indicating that, following the introduction of common measures in WIA, there was a decline in the number of WIA participants with low incomes or who had barriers to employment, and suggested that implementing the common measures in the SCSEP would lead to similar results.

For reasons discussed already, the Department will continue to implement the core indicators of performance. We take the commenters' argument to be effectively limited to the core indicators, as additional indicators of performance are not subject to sanctionable goal-setting. The Department is required to implement the indicators mandated in the 2006 OAA; we disagree that such indicators will lead to “creaming,” or a reduction in SCSEP services to low-income individuals or individuals with barriers to employment. We agree with the commenters' assertion that Congress clearly intended for the SCSEP to serve low-income individuals and to prioritize persons most-in-need. Moreover, Congress designed the SCSEP to have two goals—community service and an appropriate employment objective for participants whose experience in the SCSEP may lead to unsubsidized employment. But it is not possible for SCSEP program operators to reduce the numbers of low-income

participants in the SCSEP because, unlike WIA, only low-income persons are eligible for the SCSEP. Regardless of the population characteristics of other workforce programs, the SCSEP is specifically designed to serve lower income older persons with barriers to employment. The 2006 OAA requires program operators to prioritize persons who have barriers to employment such as those who have a disability, low employment prospects, or limited English proficiency. Moreover, SCSEP has a counter-balance to any creaming that the employment indicators might engender because another of the core indicators measures, the average number of most-in-need characteristics per participant. The Department's view is that the SCSEP performance measurement system will not disfavor people with barriers to employment when one of the measures is designed to give effect to the statute's requirement that program operators prioritize those most in need of SCSEP services. In fact, studies for PY 2006 and PY 2007 show that minorities are served by SCSEP in greater proportions than their incidence in the population and have employment outcomes no different from those of non-minority participants.

Finally, one commenter requested that the Department switch several of the core indicators to become additional indicators. We are bound by the 2006 OAA to implement the core and additional indicators of performance required in the statute; we do not have the discretion to reclassify core indicators as additional indicators.

How are the performance indicators defined? (§ 641.710)

In this section the Department defines each of the indicators. A few commenters suggested that the Department use data available from unemployment insurance wage records to capture data for such indicators as entry, retention, and earnings. Some commenters stated that it can be difficult to obtain this data from employers and exited participants.

The Department agrees that unemployment insurance wage records are a potentially advantageous method of collecting performance data, and we are actively pursuing the use of such records by the SCSEP. For the reasons already stated, however, we have decided to retain the performance indicator definitions in their current form.

Entry Into Unsubsidized Employment

One commenter disagreed with the existing definition of entry into unsubsidized employment as each participant who is employed during the first quarter after the exit quarter. The traditional SCSEP entry indicator treated as entered employment any participant who worked 30 days within the 90 days following their program exit. This commenter argued that the current definition will make it harder to count an exited participant as having entered employment because of the later qualifying period (the first 90 days after exit versus the quarter following the exit quarter).

It is clear that using this definition over the past six years has not resulted in fewer exited participants being counted as having entered unsubsidized employment. While the qualifying period under the current definition occurs later in time than the qualifying period under the traditional SCSEP entry measure, the former SCSEP entry indicator required 30 days of employment, but this definition does not specify an employment period. A participant could be employed for significantly fewer than 30 days during the relevant quarter, and that person would be counted as having entered unsubsidized employment under the existing definition of entry. In this way, the existing definition actually makes it more likely that an exited participant will be counted as a positive entry outcome. Indeed, during each of the three years when outcomes for both the SCSEP placement measure and the existing entry indicator were reported, the average entry outcome under the existing definition was higher than the average SCSEP placement outcome.

Retention in Unsubsidized Employment for Six Months

We received one comment proposing that we revert to the former, SCSEP-specific retention indicator, which measured retention for six months at 180 days after program exit. The current definition measures retention for six months based on employment in the second and third quarters after the exit quarter. This commenter asserted that the longer qualifying period for this indicator increases the difficulty of obtaining the information.

We do not question the commenter's assertion that it can sometimes be difficult to obtain this retention information. Nevertheless, grantees and sub-recipients have been submitting data using the current definition since the first quarter of Program Year 2005, although as an additional rather than a core indicator in the early years. We are confident that grantees and sub-recipients will be able to continue obtaining those data in the future. Also, as noted previously, we are actively pursuing the use of unemployment insurance wage records; these records would provide significant retention data.

Earnings

We received one comment on the definition of the earnings indicator. This commenter urged the use of a simpler indicator that captured wages at the time of program exit rather than the current indicator definition which averages the earnings received during the second and third quarters after the exit quarter. However, this always has been a core indicator and the current definition is that used by all of ETA. The commenter also asked a few questions about the description of the earnings indicator in TEGL 17-05. This commenter asked whether the term “exited participants” refers to all exited participants, or only those who achieved unsubsidized employment. If the term “exited participants” refers to all exited participants, the commenter wondered whether that would dilute the average earnings figure.

The term, “exited participants,” refers to the pool of individuals who satisfy the six months retention indicator, not the entire pool of persons who left the SCSEP for a variety of reasons during the relevant quarter. As implemented, the three core indicators may be viewed as building upon each other. To arrive at the entry outcome, one considers how many persons, of the total number who exited the SCSEP during the relevant exit quarter, were employed during the first quarter after the exit quarter. To arrive at the retention in six months outcome, one considers how many persons, of those who satisfied the entry indicator, were employed during the second and third quarters after the exit quarter. To arrive at the earnings outcome, one considers what was earned by those persons who were included the six months retention indicator.

The previous earnings measures counted the earnings of exiters who achieved entered employment, whether or not they were employed in the reporting period, and that did have the effect of distorting 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. Under this final rule, however, only the wages of exiters who entered employment

and

who were employed during both quarters of the reporting period are included in the earnings measure.

Most-in-Need

We received several comments about the definition of most-in-need. The “most-in-need” population is based on the fifth core indicator in 2006 OAA § 513(b): “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.” One commenter advocated reducing and simplifying the list of most-in-need characteristics. The regulatory definition cannot be reduced or simplified any more than it already is, because it is taken directly from the statute.

Several commenters were distressed that the revised definition of most-in-need “no longer includes any reference to racial minority status.” Another commenter took issue with the characteristic, “has failed to find employment after utilizing services provided under title I of [WIA].” This commenter asserted that most SCSEP participants are not even considered for services under title I of WIA, and proposed that instead the characteristic should be, “[w]ere not considered for services under [t]itle I of WIA and/or failed to find employment after utilizing services under [t]itle I of WIA.”

The 2006 OAA omitted the characteristic of “greatest social need” from the list of characteristics that comprise the “most-in-need” indicator. OAA §§ 513(b)(1)(E), 518(a)(3)(B)(ii), and 518(b)(2). Whatever the relative merits of considering other groups to be most in need, Congress defined most in need with great specificity, and we have no authority to change the statutory definition.

The 2006 OAA does require the Department to annually report to Congress on the levels of participation and performance outcomes of minority individuals by grantees, by service area and in the aggregate. OAA § 515. The analyses conducted for both PY 2006 and PY 2007 indicate that minorities are served in greater numbers than their incidence in the population and that minorities achieve employment outcomes equal to those of non-minorities. Therefore, we have not changed the definition of the most-in-need indicator.

Retention for One Year

We received one comment on the definition of retention for one year. In the IFR, we defined this indicator to align with the WIA one-year retention indicator, which measures retention at the end of the fourth quarter after the exit quarter. This commenter recommended that we instead capture retention data at 360 days following program exit.

The Department has considered this comment but has decided to retain the definition of retention for one-year as published in the IFR for the reasons already stated.

Satisfaction of the Participants, Employers, and Host Agencies With Their Experiences and the Services Provided

We received one comment on this indicator. The commenter asserted that sub-recipients should not have to be involved in gathering data for this indicator, including mailing cover letters to encourage survey participation.

The Department already provides very substantial assistance in obtaining the data for this indicator. We request that program operators—whether a grantee or a sub-recipient—deliver the employer survey, which we supply, and which ideally is done in person. For the participant and host agency surveys, we create the survey instrument as well as a cover letter explaining the survey and requesting its completion; draw the samples of those who will be asked to complete the survey; and mail it to those persons. We ask program operators to mail pre-survey letters to those participants selected to complete the survey to request cooperation with the survey, and we provide the pre-survey letter text and the mailing list. We have considered the commenter's request and have decided not to make any changes to the customer satisfaction survey process at this time. Given the substantial amount of the burden that we already shoulder, we ask very little of grantees, sub-recipients and host agencies. The work we ask them to perform is work that we cannot do and that we need grantees, sub-recipients, and host agencies to manage.

How will the Department and grantees initially determine and then adjust expected levels of performance for the core performance measures? (§ 641.720)

We received several comments about the expected levels of performance that were set for Program Year 2007. In general, such concerns must be raised during the process of setting the expected levels of performance and are not appropriate for the regulatory comment process as they relate to the specifics of each grantee's situation. We will, however, respond to those aspects of these comments that have general applicability.

One commenter asserted that the statutorily-mandated minimum expected level of performance for the entry indicator would be difficult for sub-grantees to achieve using the current definition of entry. The Department does not have the discretion to set the expected levels of performance below those required by statute. Further, we hold grantees accountable for achieving the expected levels of performance, but we do not set goals at the sub-recipient level. Having said that, we do conduct training sessions that are open to all program operators and offer technical assistance to both grantees and sub-recipients that are experiencing difficulty in any aspect of program administration. Finally, we note that the nationally-averaged outcome for the entry indicator at the end of Program Year 2007 was 52.4 percent, greatly in excess of the statutorily-mandated goal. Only three individual grantees with adequate data to permit accurate measurement failed to meet at least 80% of their negotiated goal, and 62 grantees exceeded 100% of their negotiated goal.

Other commenters suggested that the expected levels of performance for the entry and earnings indicators for Program Year 2007 were too high. These commenters noted that the median expected level of performance for the entry indicator was higher than the statutory minimum. They also asserted that the earnings and entry indicator levels were set so high that program operators would be encouraged to “cream,” which would lead to fewer minority participants.

Although the § 513(a)(2)(E)(ii) of the statute sets a minimum percentage for the entry indicator, i

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