Grants for State and Community Programs on Aging; Proposed Rule DEPARTMENT OF HEALTH AND HUMAN SERVICES

SUMMARY: This Notice of Proposed Rulemaking (NPRM) requests comments

from the public on proposed changes to rules concerning grants for

State and community programs on aging. These changes are required to

clarify and implement Older Americans Act (Act) Sections 305(a)(2)(C),

305(a)(2)(D), 307(b)(1), 307(c), 307(d), and 307(e) as amended by the

1992 amendments to the Act. The Act now requires the Commissioner on

Aging to review and approve each State's intrastate formula for the

distribution of funds under Title III of the Act, and requires the

State to specify the bases and impact of its intrastate funding formula

on each Planning and Service Area (PSA) in its State plan.

DATES: In order to be considered, comments on this proposed rule must

be received on or before May 16, 1994.

ADDRESSES: Please address comments to: Edwin Walker, Associate

Commissioner, Office of State and Community Programs, Administration on

Aging, room 4737, 330 Independence Avenue SW., Washington, DC 20201.

Beginning 14 days after close of the comment period, comments will

be available for public inspection in room 4740, 330 Independence

Avenue SW., Washington, DC 20201, Monday through Friday between the

hours of 9 a.m. and 4 p.m.

FOR FURTHER INFORMATION CONTACT:

David Bunoski, (202) 260-0669.

SUPPLEMENTARY INFORMATION:

I. Program Background and Purpose

The Older Americans Act was first enacted in 1965 and was amended

eleven times between 1965 and 1992. The President signed the Older

Americans Act Amendments of 1992 (Pub. L. 102-375) on September 30,

1992.

On February 23, 1993, the Secretary of the Department of Health and

Human Services, Donna E. Shalala, pursuant to the authority permitted

by section 2 of Reorganization Plan No. 1 of 1953, 42 U.S.C. 3501, and

5 U.S.C. 301, designated the position of Assistant Secretary for Aging

to perform the duties and functions of the Commissioner of Aging. The

term ``Commissioner'' will be used in these regulations, however, in

order to comport with Public Law 102-375, which retains the title of

Commissioner for the head of the Administration on Aging.

The 1992 amendments to the Older Americans Act reemphasize the

intention of the Congress to target services and resources on the needs

and problems of those older individuals identified as having the

greatest economic need, the greatest social need, and those who are

low-income minority. These amendments, for the first time, require that

approval of the State plan be dependent on approval of the intrastate

funding formula. The basis of these regulations are those provisions of

the 1992 amendments to the Act that directly affect a State's

intrastate funding formula and which:

Require the Commissioner on Aging under section 304(c) of

the Act to approve a State's intrastate funding formula prior to the

release of Title III funds;

Require State agencies under section 307(a)(33) of the Act

to include descriptive statements about the intrastate funding

formula's assumptions, goals, and outcomes based on the allocation of

funds to each Planning and Service Area; and

Require the Commissioner on Aging under section

305(a)(2)(C) to assist States in the development of their intrastate

funding formulas by providing them with guidelines.

II. Purpose of the NPRM

The Administration on Aging (AoA) is proposing to revise the

current rules governing the State agencies' development and submission

of an intrastate funding formula by providing new guidance and to amend

the current rules affecting State plans and State plan submissions.

These revisions are designed to be consistent with those provisions in

the 1992 amendments to the Act that require greater targeting on those

older individuals in greatest economic need, greatest social need, and

low-income minority older individuals.

The 1992 amendments to the Older Americans Act (Pub. L. 102-375)

now require States to submit their intrastate funding formulas to the

Commissioner on Aging for approval, rather than only for review and

comment, as was the case prior to the 1992 amendments. The amendments

also require the Commissioner to provide guidance to States in the

development of their intrastate funding formulas. AoA has interpreted

the amendments to require that this guidance be in addition to the

language contained in section 305(a)(2)(C) of the statute which

requires State agencies to take into account the geographic

distribution, greatest economic and greatest social need of older

individuals in the development of their intrastate funding formulas. If

the Commissioner does not approve the intrastate funding formula, a new

requirement under section 304(c) requires the Commissioner to withhold

the State's allotment of funds.

In order to comply with these new statutory requirements as well as

address the intent of Congress that targeting services and resources on

the needs and problems of those older individuals identified as having

the greatest economic need, the greatest social need, and those who are

low-income minority be accomplished through the intrastate funding

formula, the Commissioner has developed standards for review and

provided directions to a State agency on how to evaluate whether its

formula meets those standards. The proposed regulations are designed to

provide a State agency with flexibility to either maintain its current

formula or, if necessary to allow for the development of a modified or

new formula that addresses the requirements set out by Congress in

section 305(a)(2)(C) of the Older Americans Act. These proposed

regulations require that careful consideration be given to the

geographic distribution of older individuals in the State, and the

distribution among the planning and service areas of older individuals

with greatest economic need and older individuals with greatest social

need, with particular attention to low-income minority individuals.

Section 304(c) now requires the Commissioner to withhold funds if

the Commissioner does not approve a State's intrastate funding formula.

In the course of developing these intrastate funding formulas, States

are now required, under sections 305(a)(2)(C) and 305(d), to publish

their intrastate funding formulas for review and comment by the public.

This publication for review and comment must include: ``(1) A

descriptive statement of the formula's assumptions and goals, and the

application of the definitions of greatest economic or social need; (2)

a numerical statement of the actual funding formula to be used; (3) a

listing of the population, economic, and social data to be used for

each planning and service area in the State; and (4) a demonstration of

the allocation of funds, pursuant to the funding formula, to each

planning and service area in the State.'' In addition, section

307(a)(33) now requires the State plan to include the statement and the

demonstration required by paragraphs (2) and (4) of section 305(d), and

provides that the Commissioner may not approve the State plan unless

the Commissioner approves the statement and demonstration.

In light of these new requirements, AoA believes it is of critical

importance that States have as much time as possible to review their

current intrastate funding formulas, and, if necessary, modify them or

develop new formulas; to consult with area agencies as required in

section 305(a)(2)(C); to publish their plans for review and comment as

required in section 305(d); and to seek and obtain legislation or

legislative approval prior to submitting the formulas for approval, if

necessary. To ensure that States have the time to accomplish these

steps, AoA is publishing this NPRM separately from, and in advance of,

its notice of other rules being developed in response to the 1992

amendments to the Act.

III. Summary of the Provisions of the NPRM

Section 1321--Grants to State and Community Programs on Aging

1321.3 Definitions--The term ``low-income'' is added in order to

clarify its direct relationship to the new definition of poverty added

to Title I by the 1992 amendments to the Act, and to assist State

agencies in targeting resources when they develop their intrastate

funding formulas.

The term ``medically underserved areas,'' as used in

Sec. 1321.37(g) of this proposed rule, is added to clarify where funds

should be targeted in developing a method to allocate funds provided

under section 303(f) of the Act.

The term ``minority'' as defined in 28 CFR, subpart F, Sec. 42.402

(e) is added in order to clarify who is a minority for the purposes of

assisting States to determine who is a low-income minority older

individual in developing their targeting strategies and activities as

well as developing intrastate funding formulas.

The term ``periodic,'' as used in sections 306(a)(6) and 307(a)(8)

of the Act and part 1321 with respect to evaluations of, reports on,

and public hearings on, activities carried out under State and area

plans, is added to clarify that the term means, at a minimum, once each

fiscal year (annually).

The term ``rural area'' is defined as required by section

307(a)(37) of the Act, to clarify the definition of rural area within a

planning and service area, and to assist States in identifying actual

and projected additional costs of providing services in rural areas as

required under section 307(a)(37) as well as in the development of

their intrastate funding formulas.

1321.17 Content of State plan--this subjection is amended to

reflect and clarify additional requirements in the 1992 amendments to

the Act, to remove those sections and paragraphs that are now

unnecessary because they are set forth in the Act under the 1992

amendments, and to assure that States provide adequate descriptions and

exhibits in the State plan to assist the public in understanding

changes required by the 1992 amendments. The NPRM proposes to remove

the assurances now required under current Sec. 1321.17(f)(1)-(3), (8)-

(10), (13), and (15) as unnecessary because they are now reflected in

the 1992 amendments to the Act. The following new requirements are

proposed pursuant to the 1992 amendments:

(1) Section 1321.17(c)(1)-(4) is amended to require the State to

show the distribution of Title III funds using the intrastate funding

formula developed under section 305(a)(2)(C) of the Act, including--

A description of how the State will meet the rural

expenditure requirements under seciton 307(a)(3)(B) of the Act,

An exhibit that details how the State meets the

requirements of 307(a)(37) of the Act to identify total actual and

projected costs of providing services in rural areas,

A comparison between the current intrastate funding

formula and the proposed one using the best available demographic data,

the Commissioner's guidelines, the geographic distribution of older

individuals, and of those older individuals in greatest economic and

greatest social need with particular attention to low-income minority

older individuals, as required by section 305(a)(2)(C) of the Act

including:

A numerical statement comparing the current intrastate

funding formula to the proposed one under section 305(a)(2)(C);

A comparison of the population, economic, and social data

for each planning and service area used for the current and for the

proposed formulas; and

A comparison and demonstration of the allocation of Title

III funds allocated to each planning and service area under the current

intrastate funding formula and the one proposed;

(2) Section 1321.17(c)(5) is added to assist AoA in monitoring and

assessing the State's progress in meeting the new requirements under

section 307(a)(37) of the Act which require that State plans identify,

for each fiscal year of the plan, the actual and projected additional

costs for providing services to older individuals residing in rural

areas. In addition, the information obtained under this section will

assist AoA in carrying out the requirements of section 202(b)(27)(A) of

the Act which requires the Commissioner to ``conduct a study to

determine ways in which Federal funds might be more effectively

targeted to low-income minority older individuals, and older

individuals residing in rural areas, to better meet the needs of States

with a disproportionate number of older individuals with greatest

economic need and older individuals with greatest social need.'' It is

our expectation that providing this information in the State plan will

greatly reduce the paperwork burden that would be incurred with a

separate national study conducted solely for this purpose. Accordingly,

using the definition of rural areas in Sec. 1321.3 of this NPRM, we

propose that each State plan include a table displaying planning and

service areas (PSA's) ranked by the proportion of rural older

individuals in each as a percentage of the rural population in the

State; showing the distribution of Title III funds in each PSA under

the current intrastate funding formula and under the proposed

intrastate funding formula (IFF); and the source of the distribution

information (which must by law be the best available data).

Example

------------------------------------------------------------------------

Distribution of

PSA's ranked Distribution of title III

by percentage title III allocation to

PSA's of rural allocation to rural rural areas under

population in areas under current proposed IFF

the State IFF (assume no change

in allocation)

------------------------------------------------------------------------

PSA-A 20%#3 Placer County--$2 Placer County--$2

million; Census million; Census

tracts 2 and 3-- tracts 2 and 3--

$1.5 million. $1 million.

PSA-B 4%#6 Rosemount City-- Rosemount City--

$300,000; Census $300,000; Census

tract 7--$700,000. tract 7--

$700,000.

PSA-C 30%#1 Census tracts 11, Census tracts 11,

16, 19--$4 16, 19--$4

million; Auburn million; Auburn

township--$2 township--$2

million; Tuluga million; Tuluga

County--$3 million. County--$3

million.

PSA-D 6%#5 Entire PSA--$1.5 Entire PSA--$1

million. million.

PSA-E 15%#4 Empire County--$1.5 Empire County--

million; Census $1.5 million;

tracts 21, 32, 11, Census tracts 21,

& 47--$1.5 million. 32, 11, & 47--1.5

million.

PSA-F 25%#2 Yolo County--$2 Yolo County--$2

million; Lake million; Lake

County--$3 County--$3

million; Census million; Census

tracts 53, 44, 39-- tracts 53, 44,

$2 million; Blythe 39--$2 million;

County--$1 million. Blythe County--$2

million.

--------------------------------------------------------

Total 100% $26 million........ $26 million.

------------------------------------------------------------------------

In the above hypothetical example, the table shows the effect on

rural areas of a proposed intrastate funding formula which would reduce

the funds allocated to PSA-A and PSA-D, and increase the funds

allocated to PSA-F.

(3) Section 1321.17(f)(9)(i) (previously 1321.17(f)(14)(i)) is

revised to clarify when a State agency may permit an area agency to use

Title III service dollars to fund program development and coordination

activities. Under current policy, AoA provides State and area agencies

with the flexibility to explore new and alternative methods for

providing supportive and nutrition services through a comprehensive and

coordinated delivery system by permitting the expenditure of service

dollars, under section 304(d)(1)(D), for that purpose. During the past

five years, State and area agencies have raised issues about whether

section 1321.17(c)(14)(i) of the current rule clearly establishes the

threshold at which State agencies may allow area agencies to so use

section 304(d)(1)(D) service funds is based on the total allotment of

Title III dollars awarded a State, including State plan administration,

or based on the total amount of Title III dollars awarded to area

agencies for the provision of supportive and nutrition services under

section 304(d)(1)(D) of the Act.

This regulation makes clear that a State agency may not fund

program development and coordinated activities as a cost of supportive

services until the State agency has funded area plan administration to

a level of at least 10 percent of the Title III funds in section

304(d)(1)(D), with the exception of those funds provided for in section

303(b)(3) and section 303(f), which are not distributed through the

State's IFF.

(4) Section 1321.17(f)(10) is added to require a new assurance that

States provide the Commissioner with a periodic update of the plan to

reflect the actual and projected additional costs of providing services

in rural areas, as required by the new section 307(a)(37) of the Act;

(5) Section 1321.17(f)(11) is added to require a new assurance that

the State agency, in consultation with each area agency, will set

specific objectives for the provision of Title III funded services to

low-income minority older individuals, and assure that such objectives

are included in the area plan; and

(6) Section 1321.17(f)(12) is added to require a new assurance that

the State will support area plan objectives by undertaking specific

program development, advocacy, and outreach efforts focused on the

needs of low-income minority older individuals and provide the

Commissioner with a written description of its activities to be

included in the Commissioner's annual report to the Congress.

(7) Section 1321.17(g) is added to clarify and set out those

requirements that States which are designated Single Planning and

Service Areas must meet to receive a grant under Title III of the Act.

1321.21 Submission of the State plan or plan amendments to the

Commissioner for approval--this section is revised by requiring States

to submit their State plans or plan amendments for approval at least 90

days prior to the effective date of the plan or plan amendment rather

than the current 45 days. This change was made in order to facilitate

simultaneous review and technical assistance, if needed, by the AoA

Regional Office. The additional 45 days also provides the State agency

with additional time to discuss any deficiencies the Regional Office

may find in the State plan or the intrastate funding formula and for

the State to correct them. It is AoA's intention that this additional

time during the pre-approval period will assist States and AoA in

assuring that State plans and intrastate funding formulas are approved

in a timely manner.

1321.37 Intrastate funding formula--this section is revised to

comply with the 1992 amendments to the Act that require the

Commissioner to provide guidelines to State agencies in the development

of their intrastate funding formulas, and to approve each State's

intrastate funding formula as a condition of approving the State plan.

The Commissioner's guidelines are intended to provide State

agencies with criteria for developing intrastate funding formulas that

target the needs of those in greatest economic and social need, and

low-income minorities within each PSA. The guidelines also provide area

agencies, service providers, older individuals, units of general

purpose local government, and the pubic with a method by which to

assess the State's proposed intrastate funding formula impact in each

planning and service area. We anticipate that the public hearing

process at both the State and local levels will provide groups,

organizations, and individuals that may be affected with as much

information as possible about the actual impact the formula will have

on current and projected plans and services within the PSA's.

AoA is aware that there may be changes in the allocation of Title

III funds to PSA's if State agencies determine that it is necessary to

modify current or develop new intrastate funding formulas in response

to changes in demographics, or in compliance with the Commissioner's

guidelines in these regulations. Whether the formula remains the same,

is modified or a new formula is developed, it is essential that the

process of targeting older individuals in greatest economic and social

need with particular emphasis on low-income minority individuals have a

demonstrable outcome.

The 1992 Amendments strengthen the targeting provisions of the OAA

through a number of requirements relating to State Units on Aging

(SUAs), area agencies on aging (AAAs) and service providers. The

Amendments require SUAs to set specific objectives and describe actions

used to increase participation of low-income minority older individuals

(Section 305(a)(2)(G)); require SUAs to provide technical assistance to

minority service providers (Section 305(a)(1)(D)); require area plans

to include specific service objectives for minority targeting (Section

306(a)(5)(A)(i)); provide assurances that providers serve low-income

minority individuals in accordance with their need for services

(Section 306(a)(5)(A)(ii)); and require that all AAA activities must

include a focus on the needs of low-income minority older individuals

(Section 306(a)(5)(C)).

In determining how funds available under Title III are to be

distributed to implement these objectives, the 1992 Amendments make it

clear that States must base the distribution of funds on an intrastate

funding formula that takes into account the distribution of older

individuals, and of older individuals with greatest economic need and

older individuals with greatest social need, with particular attention

to low-income minority older individuals. The Amendments also require

that the SUA submit its formula to the Commissioner for approval.

The guidelines proposed here in accordance with section

305(c)(2)(C) having the following objectives:

To provide flexibility for the States to develop a

formula, based on the provisions of the Act, which is appropriate to

the conditions in each State; and

To provide criteria for approval by the Commissioner

which are outcome rather than process oriented and meet a standard

of administrative simplicity.

The criteria developed in these guidelines are based on the

principle that funds and services should be targeted on older

individuals in greatest economic need and older individuals in greatest

social need, with particular attention to low-income minority older

individuals.

There are two criteria for approval of the formula:

(1) to be approved, the formula may not allocate less funds to

each PSA with a high concentration of low-income minority older

individuals than would have been allocated to each of these PSA's by

application of the current formula to the most recent decennial U.S.

census data or the best available data.

In view of the provisions in the Act which require particular

attention to low-income minority older individuals, this criterion is

intended to ensure that the proposed formula will not divert funds from

PSA's with the highest concentrations of such individuals, when applied

to the same population data as the old formula.

(2) to be approved, the formula may not allocate less funds,

from the total amount subject to allocation, to each PSA with a high

concentration of low-income minority older individuals that would be

allocated to each of these PSA's if the formula submitted for

approval were based solely on the factors of age, i.e., 60+, and

greatest economic need, i.e., the proportion of older individuals

below the poverty line.

In view of the provisions in the Act which require particular

attention to low-income minority older individuals, the introduction of

social need factors in the formula should, if anything, increase funds

distributed to PSA's with the highest concentrations of low-income

minority older individuals to an amount no less than would go to the

PSA based only on age and economic need. In no event may the

introduction of social need factors decrease such funds.

A standard procedure is proposed for identifying the PSA's with the

highest concentrations of low-income minority older individuals. After

the State ranks the PSA's based on the proportion of low-income

minority older individuals to all older individuals in the PSA, those

PSA's with the highest proportion of low-income minority individuals

which, taken together, contain 51 percent of all low-income minority

older individuals in the State shall be, for the purposes of this rule,

considered the PSA's with the highest concentrations of low-income

minority older individuals.

BILLING CODE 4150-04-M

TP17MR94.000

BILLING CODE 4150-04-C

In the example above, PSA's A and B constitute the PSAs with the

highest concentration of low-income minority older individuals (see

column 4) and have a combined total of 76% of the State's total low-

income minority elderly population (see column 6), which meets the 51%

requirement.

This example represents a hypothetical State's proposed formula

that meets the proposed criteria for approval in that PSA's A and B

would not receive less funds under the proposed formula (col. 9 ) than

either would have received by application of the current formula to the

most recent decennial U.S. census data (col. 7), and neither PSA would

receive less funds under the formula (col. 9) than it would if funds

were distributed solely on the basis of age and greatest economic need

(col. 8). Finally, this example shows that when more than one PSA is

required to accumulate 51 percent of the low-income minority older

individuals in the State, the distribution to each such PSA must

satisfy both specified criteria.

AoA has developed the criteria for approval of an intrastate

funding formula so as to ensure that social need factors do not result

in decreased funding to PSA's with the highest concentration of low-

income minority older individuals.

We note that the proposed guidelines do not speak to the

distributional effects on PSA's which contain the other 49 percent of

the low-income minority older individuals in the State (which may also

contain a significant number of older individuals in greatest economic

need, greatest social need, and low-income minority older individuals).

However, it should be observed that the law requires that SUAs, area

agencies on aging, and service providers utilize effective methods of

targeting services to older individuals who are in the greatest

economic need and the greatest social need, with particular attention

to low-income minority older individuals in all PSA's. Thus,

irrespective of the distribution of Title III funds, the SUA's, AAA's,

and service providers are required to comply with the targeting

requirements in the Act, using such Title III funds and other sources

as are available to support services to individuals in targeted groups.

1321.76 Appeal process to the Commissioner--this subsection is

added to Subpart E to reflect the Commissioner's new responsibilities

under section 305(b)(5)(C)(i) of the 1992 amendments to the Act.

We anticipate that some Title III funds may shift among PSA's if

intrastate funding formulas are modified or changed in accordance with

these proposed regulations. Although the 1992 amendments to the Act and

these proposed rules do not require a change in PSA boundaries, section

305(a)(1)(E) of the Act requires States to consider the total number of

older individuals 60+, older individuals in greatest economic need, and

older individuals in greatest social need, with particular attention to

low-income minority older individuals residing in the State, in

dividing the State into distinct PSA's. As a result of the 1990 census,

States may elect to change some PSA boundaries in order to reflect

changes in demographics and geographic locations of particular groups

of older individuals based on the 1990 census. AoA is proposing this

new rule to provide parties adversely affected by a State's decision to

change PSA boundaries with an opportunity to appeal to the

Commissioner, pursuant to section 305(b)(5)(C) of the Act.

1321.77 Scope--this subsection is revised to allow for alternative

methods of dispute resolution, and to reflect the requirements of the

1992 amendments to the Act which allow an appeal to the Secretary of

HHS after the Commissioner has disapproved a State's plan, plan

amendment or intrastate funding formula. AoA includes these revisions

in these proposed rules in order to clarify appeals procedures that are

to apply when the Commissioner does not approve the intrastate funding

formula under section 305(a)(2)(C) or otherwise finds that a State plan

has failed to meet the requirements of Section 307.

1321.79 When a decision is effective--this subsection is revised to

include a State's right to appeal to the Secretary.

1321.81 How the State may appeal--this subsection is revised to

describe how a State may appeal to the Secretary.

Impact Analysis

Executive Order 12866

Executive Order 12866 requires that regulations be reviewed to

ensure that they are consistent with the priorities and principles set

forth in the Executive Order. The Department of Health and Human

Services has determined that this rule is consistent with these

priorities and principles. An assessment of the costs and benefits of

available regulatory alternatives (including not regulating)

demonstrated that the approach taken in the regulation is the most

cost-effective and least burdensome while still achieving the

regulatory objectives.

Regulatory Flexibility Act of 1980

The Regulatory Flexibility Act of 1980, Pub. L. 96-354, requires

that an agency prepare a regulatory flexibility analysis for a proposed

or final rule if the rule would have significant economic impact on a

substantial number of ``small entities'', i.e. small businesses, small

non-profit organizations, or small governmental jurisdictions.

The responsibility for meeting the requirements of the regulations

proposed in this NPRM is on the State agencies and to a lesser extent

on area agencies. Actual delivery of services may be provided in some

circumstances by proprietary, public, and not-for-profit agencies or

organizations under grants or contracts from State or area agencies.

Although area agencies and most service delivery agencies and

organizations are ``small entities'' within the meaning of the Act,

this rule will impose no significant burdens on State agencies, area

agencies or other affected parties and will provide flexibility to

State and area agencies in implementing the provisions of the Act. For

these reasons, the Secretary hereby certifies that these regulations

will not have a significant economic impact on a substantial number of

small entities.

Paperwork Reduction Act

This proposed rule contains information collection requirements

which are subject to review by the Office of Management and Budget

(OMB) under the Paperwork Reduction Act of 1980. The title,

description, and respondent description of the information collection

are shown below with an estimate of the time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Title: Grants for State and Community Programs on Aging.

Description: The 1992 amendments to the Older Americans Act (Pub.

L. 102-375) now require States to submit their intrastate funding

formulas to the Commissioner on Aging for approval, rather than only

for review and comment, as was the case prior to the 1992 amendments.

The amendments also require the Commission to provide guidance to

States in the development of their intrastate funding formulas. AoA has

interpreted the amendments to require that this guidance be in addition

to the language contained in section 305(a)(2)(C) of the statute which

requires State agencies to take into account the geographic

distribution, greatest economic and greatest social need of older

individuals, with particular attention to low-income minority

individuals, in the development of their intrastate funding formulas.

If the Commissioner does not approve the intrastate funding formula, a

new requirement under section 304(c) requires the Commissioner to

withhold the State's allotment of supportive and nutrition funds under

Title III of the Act.

In order to comply with these new statutory requirements as well as

address the intent of Congress, the Commissioner has developed

regulatory standards, and provided directions for each State agency on

how to evaluate whether its formula meets those standards. The proposed

regulations are designed to provide a State agency with flexibility to

either maintain its current formula or, if necessary, to allow for the

development of a modified or new formula that addresses the

requirements set out by Congress in section 305(a)(2)(C) of the Act.

These proposed regulations require that careful consideration be given

to the geographic distribution of older individuals in the State, and

the distribution among the planning and service areas of older

individuals with greatest economic need and older individuals with

greatest social need, with particular attention to low-income minority

individuals.

Because section 304(c) now requires the Commissioner to withhold

funds if the Commissioner does not approve a State's intrastate funding

formula, States cannot reasonably be expected to develop intrastate

funding formulas that can be approved, unless they receive regulatory

guidelines. Further, in the course of developing their intrastate

funding formulas, States are required, under sections 305(a)(2)(C) and

305(d), to publish their intrastate funding formulas for review and

comment by the public. This publication for review and comment must

include: ``(1) A descriptive statement of the formula's assumptions and

goals, and the application of the definitions of greatest economic or

social need; (2) a numerical statement of the actual funding formula to

be used; (3) a listing of the population, economic, and social data to

be used for each planning and service area in the State; and (4) a

demonstration of the allocation of funds, pursuant to the funding

formula, to each planning and service area in the State.'' In addition,

section 307(a)(33) now requires the State plan to include the statement

and the demonstration required by paragraphs (2) and (4) of section

305(d) of the Act. The Commissioner may not approve the State plan

unless the Commissioner approves the statement and demonstration. These

proposed regulations provide States with guidelines on how to make an

acceptable numerical statement and an acceptable demonstration of the

allocation of funds.

Description of Respondents: State or local governments and non-

profit institutions.

Estimated Annualized Burden

[Reporting burden associated with the regulations]

----------------------------------------------------------------------------------------------------------------

Respondents Responses Total Hours/ Total

Regulation section per year per year Respondents Respondents burden

----------------------------------------------------------------------------------------------------------------

1321.17(c)--Intrastate funding formula

development.................................. 11 1 11 80 880

1321.17(d)--Intrastate funding formula

approval..................................... (11) 1 11 8 88

1321.17(e)--Intrastate formula publication for

review and comment........................... (11) 1 11 30 330

1321.17(g)--Determination of medically under

served and separate allocation............... 11 1 11 20 220

1321.17(h)--Demonstration of targeting by

single planning and service areas............ 4 1 4 25 100

----------------------------------------------------------------------------------------------------------------

Total reporting burden 1618.

Basis for estimates: The statute allows States to submit their

State plans every two, three, or four years. Our estimates are based on

the average number of State plan submissions per year during the four

year periods between Older Americans Act reauthorizations. We estimate

that 11 State agencies will incur regulatory burdens in complying with

the requirements under proposed sections 1321.17 (c), (d), and (e); 11

State agencies will incur regulatory burdens in complying with proposed

section 1321.17(g); and 4 State agencies and trust territories will

incur regulatory burdens in complying with proposed section 1321.17(h).

Because some States have chosen two or three year State plans, they

will either submit new plans or amend approved plans more than once

during the four years between reauthorizations. The table above

projects our estimate that on average 26 of the 57 State agencies and

trust territories will incur burdens on complying with these proposed

requirements once a year.

We have submitted a copy of this proposed rule to OMB for its

review of these information collections. Send comments regarding this

burden estimate or any other aspect of this collection of information,

including suggestions for reducing this burden to Allison Eydt, HHS

Desk Officer, Human Resources and Housing, OMB, and to the Office of

Information and Regulatory Affairs, OMB, Washington, DC 20503.

List of Subjects in 45 CFR Part 1321

45 CFR Part 1321

Administrative practice and procedure, Aged, Grant programs--

Indians, Grant programs--social programs, Indians, Legal services,

Nutrition, Reporting and recordkeeping requirements.

Dated: February 22, 1994.

Fernando M. Torres-Gil,

Commissioner on Aging, Assistant Secretary for Aging.

Approved:

Dated: March 2, 1994.

Donna E. Shalala,

Secretary of Health and Human Services.

For the reasons set forth in the preamble, 45 CFR part 1321 is

proposed to be amended as follows:

PART 1321--GRANTS TO STATE AND COMMUNITY PROGRAMS ON AGING

1. The authority for part 1321 continues to read as follows:

Authority: 42 U.S.C. 3001 et seq.; title III of the Older

Americans Act, as amended.

Subpart A--Introduction

2. Section 1321.3 is amended by revising the definition of

``Periodic'' and adding definitions in alphabetical order as follows:

Sec. 1321.3 Definitions.

* * * * *

Low-income means below the official poverty guidelines (as defined

by the Office of Management and Budget, and adjusted by the Secretary

(HHS) in accordance with subsection 673(2) of the Community Services

Block Grant Act (42 U.S.C. 9902(2)).

* * * * *

Medically underserved areas, as used in Sec. 1321.37(g), are those

areas within planning and service areas which are identified by the

State as having low ratios, relative to other areas in the State, of

primary care physicians per 1,000 individuals age 60 and over.

Minority, as used in this Part, are confined to the following

designations:

(1) Black, not of Hispanic Origin. A person having origins in any

of the black racial groups of Africa.

(2) Hispanic. A person of Mexican, Puerto Rican, Cuban, Central or

South American or other Spanish culture or origin, regardless of race.

(3) Asian or Pacific Islander. A person having origins in any of

the original peoples of the Far East, Southeast Asia, the Indian

Subcontinent, or the Pacific Islands. This area includes, for example,

China, Japan, Korea, the Philippine Islands, and Samoa.

(4) American Indian or Alaskan Native. A person having origins in

any of the original peoples of North America, and who maintain cultural

identification through tribal affiliation or community recognition.

* * * * *

Periodic, as used in sections 306(a)(6) and 307(a)(8) of the Act

with respect to evaluations of, reports on, and public hearings on,

activities carried out under State and area plans, means, at a minimum,

once each fiscal year (annually).

Rural area, as used in this part, means any area that is not

defined as urban. Urban areas comprise:

(1) Urbanized areas (incorporated places and adjacent densely

settled territory with a combined minimum population of 50,000) and

(2) All other places with 2,500 or more inhabitants.

Subpart B--State Agency Responsibilities

3. Section 1321.17 is revised to read as follows:

Sec. 1321.17 Content of State plan.

To receive a grant under this part, a State shall have an approved

State plan as prescribed in section 307 of the Act. In addition to

meeting the requirements of section 307, a State plan shall include:

(a) Identification by the State of the sole State agency that has

been designated to develop and administer the plan.

(b) Statewide program objectives to implement the requirements

under Title III of the Act and any objectives established by the

Commissioner through the rulemaking process.

(c) A resource allocation plan which indicates the proposed use of

all Title III funds administered by a State agency, and the

distribution of Title III funds to each planning and service area using

the intrastate funding formula developed under section 305(a)(2)(C),

and published in accordance with the requirements of section 305(d);

contains a descriptive narrative explaining how the State will meet the

requirements of section 307(a)(3)(B); and contains an exhibit that

details how the State will meet the requirements of section 307(a)(37)

of the Act, including:

(1) A descriptive statement and comparison of the current

intrastate funding formula's assumptions and goals and those of the

proposed formula developed as required under section 305(a)(2)(C) for

the Commissioner's approval;

(2) A numerical statement of the current intrastate funding formula

compared to the formula developed as required under section

305(a)(2)(C) for the Commissioner's approval;

(3) A listing of the population, economic, and social data to be

used for each planning and service area in the State;

(4) A comparison and demonstration (i.e., statement) of the

allocation of funds, pursuant to the current intrastate funding

formula, applied to the best available data, for each planning and

service area in the State compared to the allocation of funds for each

planning and service area using the formula developed as required under

section 305(a)(2)(C) for the Commissioner's approval; and

(5) In accordance with the definition of rural areas in

Sec. 1321.3, the State must submit the following supporting information

displayed in one table:

(i) The Planning and Service Areas (PSA's) ranked from high to low

based on the proportion of rural individuals age 60 years and over to

the total population age 60 years and over in each PSA;

(ii) The distribution of funds to rural areas in each of the PSA's

based on the current formula; and

(iii) The distribution of funds to rural areas in each of the PSA's

using the formula developed under section 305(a)(2)(C) for the

Commissioner's approval.

(d) Identification of the geographic boundaries of each planning

and service area and of the area agency on aging designated for each

planning and service area, if appropriate.

(e) For the preceding year, the number of low-income minority older

individuals and older individuals residing in rural areas, and a

description of the methods used to satisfy their service needs, as

required by sections 307(a) (23) and (29) of the Act.

(f) Each of the assurances and provisions required in sections 305

and 307 of the Act, and provisions that the State meets each of the

requirements under sections 1321.5 through 1321.83 of this part, and

the following assurances as prescribed by the Commissioner:

(1) Procedures exist to ensure that all services under this part

are provided without use of any means tests;

(2) All services provided under Title III meet any existing State

and local licensing, health and safety requirements for the provision

of those services;

(3) Older individuals are provided opportunities to voluntarily

contribute to the cost of services;

(4) Area plans shall specify as submitted, or be amended annually

to include, details of the amount of funds expended for each priority

service during the past fiscal year;

(5) The State agency shall develop policies in consultation with

the area agencies on aging governing all aspects of programs operated

under this part, including the manner in which the ombudsman program

operates at the State level and the relation of the ombudsman program

to area agencies on aging where area agencies on aging have been

designated;

(6) Area agencies on aging shall compile available information,

with necessary supplementation, on courses of post-secondary education

offered to older individuals with little or no tuition. The assurance

shall include a commitment by the area agencies on aging to make a

summary of the information available to older individuals at

multipurpose senior centers, congregate nutrition sites, and in other

appropriate places.

(7) Individuals with disabilities who reside in a non-institutional

household with and are accompanied by an individual eligible for

congregate meals under this part shall be provided a meal on the same

basis that meals are provided to volunteers pursuant to subsection

307(a)(13)(I) of the Act.

(8) Individuals with disabilities who reside in a non-institutional

household with an individual eligible for home delivered meals under

this part shall be provided a meal on the same basis that meals are

provided to volunteers pursuant to subpart 307(a)(13)(I) of this Act.

(9) (i) The State agency will not fund program development and

coordination activities as a cost of supportive services for the

administration of area plans until it has first spent 10 percent of the

total of its funds allotted under section 304(d)(1)(D) for the

administration of area plans;

(ii) State and area agencies on aging will, consistent with

budgeting cycles (annually, biennially, or otherwise), submit the

details of proposals to pay for program development and coordination as

a cost of supportive services, to the general public for review and

comment; and

(iii) The State agency certifies that any such expenditure by an

area agency on aging will have a direct and positive impact on the

enhancement of services for older individuals in the planning and

service area.

(10) The State agency will update the plan periodically to reflect

the actual and projected additional costs of providing services under

this title as required in section 307(a)(37) of the Act.

(11) The State agency shall set specific objectives, in

consultation with each of its area agencies on aging, for each planning

and service area for providing services funded under Title III to low-

income minority older individuals, and such objectives must be included

in the area plan.

(12) The State, in support of area plan objectives developed under

section 306(a)(1) of the Act, will undertake specific program

development, advocacy, and outreach efforts focused on the needs of

low-income minority older individuals and provide the Commissioner a

written description of its activities and accomplishments in an annual

report due not later than 60 days following the close of the fiscal

year.

(g) To receive a grant under this part, a State that is designated

a Single Planning and Service Area must have an approved State plan as

prescribed in section 307 of the Act, with the exception of sections

307(a)(3)(B), 305(a)(2)(C) and 305(d) as cross referenced in section

307. The State plan must also meet the provisions of this rule as set

out in:

(1) Section 1321.17(a);

(2) Section 1321.17(b);

(3) Section 1321.17(c) using other appropriate geographical

designations as appropriate in place of planning and service areas, and

excluding Secs. 1321.17(c)(1) through 1321.17(c)(4);

(4) Section 1321.17(c)(5) using other appropriate geographical

designations as appropriate in place of planning and service areas;

(5) Section 1321.17(e); and

(6) Section 1321.17(f) with the exception of those sections of the

Act as noted in Secs. 1321.17(c) and 1321.17(f)(9). States will use

single planning and service area in place of area agency wherever it

appears.

4. Section 1321.21 is revised to read as follows:

Sec. 1321.21 Submission of the State plan or plan amendment to the

Commissioner for approval.

Each State plan or plan amendment which requires approval of the

Commissioner shall be signed by the Governor or the Governor's designee

and submitted to the Commissioner for approval at least 90 calendar

days before the proposed effective date of the plan or plan amendment.

5. Section 1321.37 is revised to read as follows:

Sec. 1321.37 Intrastate funding formula.

(a) The State agency, after consultation with all area agencies on

aging in the State, shall, based on the requirements of section

305(a)(2) (C) and (E) of the Act, with the exception of those funds

provided for in section 303(b)(3) and section 303(f) of the Act,

develop and use one intrastate funding formula for the allocation to

all area agencies of all funds under section 304(d)(1)(D) of the Older

Americans Act.

(b) In developing its intrastate formula, the State agency shall

use the most current U.S. decennial census data or the best available

data.

(c) The State agency shall submit its formula to the Commissioner

for review and approval at least 90 days prior to the period for which

it will apply in the State. The State agency shall also submit at the

same time the following supporting information displayed in one table:

(1) The Planning and Service Areas (PSA's) ranked cumulatively from

high to low based on the proportion of low-income minority individuals

(as defined in Sec. 1321.3) age 60 years and over (as defined in

section 102(38) of the Act) to the total population age 60 years and

over in the PSA;

(2) The distribution of funds to each of the PSA's as applied to

the best available data under the current formula;

(3) The distribution of funds to each of the PSA's based on a

formula with population age 60 and over and population age 60 and over

in greatest economic need (as defined in section 102(29) of the Act) as

the only factors and using the best available data; and

(4) The distribution of funds to each of the PSA's based on the

intrastate funding formula submitted to the Commissioner for approval.

(d) The Commissioner shall approve the intrastate funding formula

if the following criteria are satisfied when applied to each of the top

ranked PSA's which cumulatively contain fifty one percent of all low-

income minority older individuals in the State under paragraph (c)(1)

of this section, rounded to the nearest integer:

(1) No less funds are allocated to each PSA in the top fifty one

percent of all PSA's ranked cumulatively under paragraph (c)(1) of this

section than would be allocated to each of those PSA's by application

of the current formula to the most recent decennial census or the best

available data; and

(2) Each PSA in the top fifty one percent of all PSA's ranked

cumulatively under paragraph (c)(1) of this section is allotted no less

funds, from the total amount subject to allocation in section

304(d)(1)(D), under the formula submitted for approval than each of

these PSA's would have received under a formula with 60 years and over

and greatest economic need as the only factors.

(e) The State agency shall publish the formula for review and

comment by older individuals, other appropriate agencies and

organizations, and the general public.

(f) At least every two years the State agency shall review the most

recent U.S. decennial census or the best available data and shall,

based on any changes, allocate funds under section 304(d)(1)(D) through

its intrastate funding formula. The States shall submit a report to the

Commissioner detailing any changes in the distribution of funds by PSA

not later than 30 days after the allocation.

(g) The intrastate funding formula shall provide for a separate

allocation of funds received under subsection 303(f) for disease

prevention and health promotion. The State agency shall award such

funds to priority planning and service areas which the State agency

determines:

(1) Are medically underserved; and

(2) In which there are large numbers of individuals age 60 and

older in greatest economic need.

(h) State agencies in those States which have been designated as

single planning and service areas are not required to have an

intrastate funding formula but shall demonstrate in their State plan as

required in Sec. 1321.17(g) that the funds received under the Older

Americans Act are used in a manner which targets services to older

individuals in greatest economic need and older individuals in greatest

social need, with particular attention to low-income minority older

individuals.

Subpart E--Hearing Procedures for State Agencies, Area Agencies on

Aging, and Other Adversely Affected Parties

6. Section 1321.76 is added to subpart E to read as follows:

Sec. 1321.76 Appeal Process--for Changes in Planning and Service

Areas.

This section sets forth the procedures the Commissioner follows for

providing hearings to adversely affected parties under section

305(b)(5)(C).

(a) Any adversely affected party who has been provided a hearing

and a written decision by the State agency may appeal the decision to

the Commissioner in writing no later than 30 days following receipt of

the State's decision.

(b) The Commissioner, or the Commissioner's designee, will provide

the opportunity for a hearing; if a hearing is requested, the

Commissioner will issue a written decision within 60 days of the

hearing; and if a hearing is not requested, the Commissioner will issue

a written decision within 60 days of receipt of the items in paragraph

(c) of this section.

(c) When the Commissioner receives an appeal, the Commissioner will

request the State Agency to submit:

(1) A copy of the appellant's application for designation as a

planning and service area;

(2) A copy of the written decision of the State; and

(3) Any other relevant information the Commissioner may require.

(d) The Commissioner may:

(1) Deny the appeal and uphold the decision of the State agency;

(2) Grant the appeal and overturn the decision of the State agency;

or

(3) Take other appropriate action, including facilitating an

alternative method of dispute resolution such as mediation, or

remanding the appeal to the State agency after initial findings.

7. Section 1321.77 is revised to read as follows:

Sec. 1321.77 Scope.

(a) This section governs the procedures and opportunity for a

hearing on:

(1) Disapproval of a State plan or amendment;

(2) Determination that a State agency does not meet one or more

requirements of section 307 of the Act, including the intrastate

funding formula requirement under section 305 of the Act; and

(3) Determination that there is a failure in the provisions or the

administration of an approved plan to comply substantially with Federal

requirements, including failure to comply with any assurance required

under the Act or under this rule.

(b) Hearing procedures for State plan disapproval, as provided for

in section 307(c) and subsection 307(d) of the Act are subject to the

provisions of 45 CFR part 213 with the following exceptions:

(1) Section 213.1(a); Secs. 213.32(d); and 213.33 do not apply.

(2) Reference to ``SRS Hearing Clerk'' shall be understood to mean

``HHS Hearing Clerk.''

(3) References to ``Administrator'' shall be read to mean

``Commissioner on Aging'' or, on appeal from the Commissioner's final

decision, ``the Secretary.''

8. Section 1321.79 is revised to read as follows:

Sec. 1321.79 When a decision is effective.

(a) The State may appeal the Commissioner's decision to the

Secretary within 30 days of the date of the decision, as provided in

Sec. 1321.81. The Commissioner may set aside or otherwise modify the

decision before the State files such an appeal.

(b) If the State appeals the Commissioner's decision to the

Secretary, then the Commissioner's decision will not take effect. The

State may appeal the Secretary's decision to the United States Court of

Appeals for the Circuit in which the State is located not later than 30

days after such decision. The Secretary may set aside or modify the

decision before the filing of the record in the Court. The Secretary's

decision will become effective 31 days after the date of decision if

the State does not appeal. If the State appeals the Secretary's

decision, then it will become effective when the record is filed in the

Court.

(c) In lieu of appealing the Commissioner's decision to the

Secretary, the State may appeal directly to the United States Court of

Appeals for the Circuit in which the State is located within 30 days of

the Commissioner's decision. The Commissioner may set aside or

otherwise modify the decision before the filing of the record in the

Court.

(d) If the State appeals the Commissioner's decision to the United

States Circuit Court of Appeals, then the Commissioner's decision will

become effective on the date the appeal is filed. If the State does not

appeal the Commissioner's decision, then the decision will become

effective on the thirty-first day after the date of the decision.

9. Section 1321.81 is revised to read as follows:

Sec. 1321.81 How the State may appeal.

(a) A State may appeal the final decision of the Commissioner

disapproving the State plan or plan amendment, finding non-compliance,

or finding that a State agency does not meet one or more requirements

of sections 305 or 307 of the Act, to the Secretary, as follows:

(1) The State shall file the appeal to the Secretary, with a copy

to the Commissioner, not later than 30 days after the Commissioner's

final decision;

(2) The State's appeal shall include a copy of the Commissioner's

final decision, and the reason why the State claims it is incorrect;

(3) Within 30 days of receipt of the appeal the Commissioner shall

submit to the Secretary a copy of the record and a response to the

State's claim;

(4) The Secretary shall issue a written decision within 60 days of

receipt of the Commissioner's decision;

(5) The Secretary may:

(i) Deny the appeal and uphold the Commissioner's decision;

(ii) Grant the appeal and reverse the Commissioner's decision; or

(iii) Take other appropriate action, including, but not limited to,

facilitating an alternative method of dispute resolution such as

mediation, or remanding the case to the Commissioner for further

development of the record;

(6) The Secretary may designate an appropriate Departmental

employee to make a recommended decision before the Secretary issues a

final written decision.

(b) A State may appeal the final decision of the Commissioner or

the Secretary to the United States Court of Appeals for the Circuit in

which the State is located as provided in section 307(e) of the Act.

10. Section 1321.83 is revised to read as follows:

Sec. 1321.83 How the Commissioner may reallot the State's withheld

payments.

The Commissioner will disburse funds withheld from the State

directly to any public or nonprofit private organization or agency, or

political subdivision of the State that has the authority and capacity

to carry out the functions of the State agency and submits a State plan

which meets the requirements of this part and which contains an

agreement to meet the non-Federal share requirements.

[FR Doc. 94-6136 Filed 3-16-94; 8:45 am]

BILLING CODE 4150-04-M