The State Vocational Rehabilitation Services Program

SUMMARY: The Secretary amends the regulations governing The State

Vocational Rehabilitation Services Program. These regulations are

needed to implement section 12(d) of the Rehabilitation Act of 1973

(Act), as amended by the Rehabilitation Act Amendments of 1992 (1992

Amendments) and the Rehabilitation Act Amendments of 1993. Section

12(d) of the Act requires that the Secretary promulgate regulations

establishing requirements for the implementation of an order of

selection for the receipt of vocational rehabilitation services. An

order of selection is required under section 101(a)(5)(A) of the Act if

a designated State unit (DSU) determines that it is unable to provide

services to all eligible individuals who apply for services. If a DSU

establishes an order of selection, it must first provide services to

individuals with the most severe disabilities before serving other

eligible individuals. The regulations are necessary to ensure the

proper administration of the order of selection requirements by DSUs.

EFFECTIVE DATE: These regulations take effect on June 13, 1996.

FOR FURTHER INFORMATION CONTACT: Suzanne Tillman, U.S. Department of

Education, 600 Independence Avenue, S.W., Room 3220, Mary E. Switzer

Building, Washington, D.C. 20202-2735. Telephone: (202) 205-8303.

Individuals who use a telecommunications device for the deaf (TDD) may

call the Federal Information Relay Service (FIRS) at 1-800-877-8339

between 8 a.m. and 8 p.m., Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The State Vocational Rehabilitation Services

Program is a State-administered program that provides individualized

vocational rehabilitation (VR) services to eligible individuals with

disabilities. The purpose of the program is to assist States in

operating a comprehensive, coordinated, effective, efficient, and

accountable program for vocational rehabilitation designed to assess,

plan, develop, and provide VR services for individuals with

disabilities so that they may prepare for and engage in gainful

employment.

The program supports the National Education Goal that, by the year

2000, every adult American, including individuals with disabilities,

will possess the knowledge and skills necessary to compete in a global

economy and exercise the rights and responsibilities of citizenship.

On July 16, 1993, the Secretary published a notice of proposed

rulemaking (NPRM) in the Federal Register (58 FR 38482) to implement

section 12(d) of the Act, as amended by the 1992 Amendments (Pub. L.

102-569) and the Rehabilitation Act Amendments of 1993 (Pub. L. 103-

73), which requires that the Secretary issue regulations on the

requirements for implementing an order of selection by a DSU.

Analysis of Comments and Changes

In response to the Secretary's invitation in the NPRM, 45 parties

submitted comments on the proposed regulations. An analysis of the

comments and of the changes in the regulations since publication of the

NPRM follows.

Major issues are grouped according to subject under appropriate

sections of the regulations. Technical and other minor changes--and

suggested changes the Secretary is not legally authorized to make under

the applicable statutory authority--are not addressed. The Secretary

also has not addressed comments that relate to issues that are more

appropriately dealt with in other program regulations being developed

to implement the 1992 Amendments.

In addition, the proposed regulations have been reviewed and

revised in accordance with the Department's principles for regulating,

which were developed as part of the Administration's regulatory

reinvention initiative under the National Performance Review II. The

principles are designed to ensure that the Department regulates in the

most flexible, most equitable, and least burdensome way possible. As a

result of that review, several non-statutory paperwork requirements in

the proposed regulations have been eliminated or modified. These

changes are discussed in the following paragraphs and in the section-

by-section summary.

Section 101(a)(5)(A) of the Act requires a DSU to explain how it

will provide VR services to all eligible individuals or, if it cannot

provide services to all these individuals, to describe and justify the

order of selection the DSU will follow in serving eligible individuals,

with first priority being given to individuals with the most severe

disabilities. Accordingly, Sec. 361.36(a)(1) of the final regulations

requires DSUs that do not establish an order of selection to explain

how, on the basis of its projected fiscal and personnel resources and

its assessment of the rehabilitation needs of individuals with severe

disabilities within the State, the DSU will continue to serve all

individuals currently receiving services, provide assessment services

to all applicants and VR services to all individuals determined to be

eligible in the next fiscal year, and meet all other program

requirements.

The proposed regulations would have required each DSU that does not

establish an order of selection to provide detailed information to

support that decision, including its projected number of applicants,

eligible individuals, and qualified personnel, projected costs of

services and administration, and projected revenues. The Secretary

believes that requiring all DSUs to submit these projections is overly

burdensome and unnecessary for those States that have not experienced

problems in serving all eligible individuals in recent years. Thus, the

requirements in the final regulations are more narrowly tailored to

address the underlying problem of ensuring that DSUs do not improperly

avoid establishing an order of selection.

The final regulations establish two different information

requirements for DSUs that do not plan to establish an order of

selection: one for DSUs that have demonstrated the ability to serve all

eligible individuals and meet all program requirements and one for DSUs

that have not demonstrated this ability. The first information

requirement (Sec. 361.36(a)(2)) applies to DSUs whose past practice

demonstrates their ability to serve all eligible individuals without an

order of selection. DSUs will be subject to this requirement if they

have provided assessment services to all applicants, provided the full

range of services to all eligible individuals, made referral forms

widely available, conducted outreach efforts to identify and serve

those underserved in the past, and have not delayed the development of

individualized written rehabilitation programs (IWRPs) or the provision

of services for eligible individuals. This provision permits these DSUs

to submit a narrative explanation of their ability in the next year to

continue to serve everyone and meet all program requirements.

The second information requirement (Sec. 361.36(a)(3)) applies to

DSUs that have not demonstrated their ability to serve all eligible

individuals and meet all program requirements without an

[[Page 24391]]

order of selection. This more detailed information requirement would

apply to DSUs that--(1) Said in their State plans for the current or

past year that they could serve everyone, but, in fact, did not do so;

(2) Served all eligible individuals in the current or past year by not

meeting the requirements in Sec. 361.36(a)(2); or (3) Provided services

under an order of selection in the current or preceding fiscal year,

but believe that they can serve all eligible individuals in the next

fiscal year. These DSUs will be required to provide information,

including projections, similar to the information that would have been

required of all DSUs under the NPRM. Specifically, these DSUs must

describe the changed circumstances that will enable them to serve all

eligible individuals in the forthcoming fiscal year and must submit the

projections required under Sec. 361.36(a)(3) to support this

determination, including projected numbers of applicants, eligible

individuals, and qualified personnel, projected costs of services and

administration, and projected revenues. In addition, Sec. 361.36(a)(3)

requires these DSUs to provide, as relevant, comparable data for the

current or preceding fiscal year, or both years, of these projected

costs and resources.

These changes in the final regulations are intended to reduce

paperwork burdens on DSUs that have a demonstrated capacity to serve

all eligible individuals and, at the same time, to ensure that if a DSU

decides not to implement an order of selection, even though it has not

been able to serve all eligible persons in the past, that the decision

is supported in the State plan by sufficient data showing the DSU's

projected costs and resources.

Section 361.36(a)--General Provisions

Assurance of ability to serve all eligible individuals.

--Range of Services

Comments: Several commenters on Sec. 361.36(a)(1)(i) of the

proposed regulations requested that this provision specify that a DSU

is able to provide the full range of services listed in section 103(a)

of the Act. These commenters were concerned that a DSU could interpret

the wording ``able to provide services'' to mean that it may avoid

establishing an order of selection if it is able to provide some, but

not all, of the services listed in section 103(a) of the Act.

Discussion: The Secretary agrees with these commenters. A DSU that

assures that it is able to provide services to all eligible individuals

must be able to provide all of the services listed in section 103(a) of

the Act.

Changes: The Secretary has revised Sec. 361.36(a)(1)(i) to provide

that the State plan must contain an assurance that the DSU is able to

provide the full range of services listed in section 103(a) of the Act,

as appropriate, to all eligible individuals.

--Monitoring and review of assurances

Comments: Several commenters were concerned that the Secretary

would not adequately monitor compliance with the assurances provided by

a DSU. Several commenters recommended that the Secretary thoroughly

examine a DSU's decision not to implement an order of selection and

approve or disapprove that decision, as appropriate.

One commenter feared that, in order to avoid implementing an order

of selection, DSUs may expand counselor caseload sizes beyond the

capacity of counselors to serve eligible individuals in a meaningful

way. Caseload sizes could continue to grow but might not trigger an

order of selection.

One commenter suggested adding factors to measure a DSU's

compliance with these regulations. This commenter also suggested that

if a DSU is found in substantial noncompliance and fails to take

corrective action, it should be subject to financial sanctions.

Several commenters stated that a DSU should be required to evaluate

the impact of its order of selection to determine if there are any

unintended consequences or exclusions of specific groups of individuals

with disabilities.

Discussion: The Secretary ensures that a DSU is complying with its

assurances through annual reviews and periodic on-site monitoring of

State vocational rehabilitation programs required by sections

107(a)(3)(A) and 107(a)(4)(B) of the Act. Section 107(a)(3)(A) of the

Act requires the Secretary, as part of the monitoring process, to

conduct on-site visits, including on-site reviews of records, to verify

that a DSU is following requirements regarding order of selection.

Section 107(a)(4)(B) requires the Secretary to examine, in conducting

the review and monitoring, a DSU's provision of services, including, if

applicable, order of selection requirements.

Section 101(a)(7) of the Act requires a DSU to ensure, as part of

its comprehensive system of personnel development, that it has an

adequate supply of qualified personnel to provide vocational

rehabilitation services. The regulations require DSUs that do not

establish an order of selection to satisfy all VR program requirements,

including those relating to the comprehensive system of personnel

development. The Secretary also reviews and monitors compliance with

section 101(a)(7) of the Act.

The Secretary does not believe it is necessary to add factors to

measure a DSU's compliance with the order of selection requirements of

the State plan. A DSU's compliance with the order of selection

requirements will be monitored like any other State plan requirement,

and a DSU's noncompliance with these requirements will be dealt with

like any other finding of noncompliance with the State plan

requirements.

The Secretary believes that a DSU (along with the State

Rehabilitation Advisory Council (Council), if the DSU has a Council),

should evaluate the impact of its order of selection as part of its

administration of the program and would expect a discussion of this

impact in its annual evaluation of the program.

Changes: None.

Explanation of how a DSU will serve all eligible

individuals.

--Detailed nature of explanation

Comments: Several commenters opposed the proposed requirement that

a DSU provide a detailed explanation of the methods by which it will

provide services to all eligible individuals because they believe it is

overly burdensome. One commenter believed that the required projections

in Sec. 361.36(a)(1)(ii) of the proposed regulations might prevent

closer cooperation between consumer groups and DSUs because consumer

groups might believe that the incidence and prevalence of their

disability is greater than indicated in the statistical data used by

the DSU.

Several commenters believed that there is no practical way for a

DSU to make the required projections because of the uncertainty of

future funding levels and of the effect of the revised eligibility

requirements under the Act.

One commenter stated that if projections are required, the

Secretary should keep documentation to a minimum. This commenter

requested that a DSU be able to use existing data, e.g., Federal census

and population data, to make its projections.

Discussion: The legislative history accompanying the 1992

Amendments to the order of selection requirement indicates an

expectation on the part of the Congress that the Secretary will

promulgate regulations that will obligate States wishing to avoid

establishing an order of selection to prove that they are indeed able

to serve all eligible individuals. Nevertheless, the data

[[Page 24392]]

projections required in the proposed regulations have been

significantly reduced in accordance with the Department's principles

for regulating. Application of the remaining documentation requirements

is limited to--(1) Those DSUs that were unable to serve all eligible

individuals (including DSUs that established an order of selection) in

the current or preceding fiscal year, but contend they will be able to

do so in the next fiscal year; and (2) Those DSUs that were able to

serve all eligible individuals in the current or preceding fiscal year

only by not meeting the requirements in Sec. 361.36(a)(2). The

Secretary believes that the documentation requirements remaining in the

regulations to support a DSU's conclusion that it is able to serve all

eligible individuals, even though it has been unable to serve all

eligible persons in the past, is fully consistent with congressional

intent.

The Secretary believes that the required explanation will not

impose any additional data collection burdens on a DSU. The Secretary

believes that existing information in a DSU's required statewide

studies and annual evaluations, comprehensive statewide assessments of

the rehabilitation needs of individuals with severe disabilities,

comprehensive system of personnel development, and budget data would

enable a DSU to provide the required explanation without any need for

additional data collection.

The Secretary believes that a DSU should be able to predict funding

levels for the program during the upcoming fiscal year through use of

State and Federal budget data.

The Secretary believes that Federal census and population data

alone are not sufficient for a DSU to make the required projections.

These data are not updated often enough for a DSU to rely solely on

these sources in making its projections, but may be useful in

conjunction with information from a DSU's statewide studies,

comprehensive statewide assessments, comprehensive system of personnel

development, and budget data.

Changes: The Secretary has revised Sec. 361.36(a)(1)(ii) of the

proposed regulations to reduce the data projections that a DSU must

provide as part of its explanation of how it is able to serve all

eligible individuals. This provision has been relocated to

Sec. 361.36(a)(3) of the final regulations and applies only to--(1)

DSUs that were unable to serve all eligible individuals during the

current or preceding fiscal year; and (2) DSUs that contend that they

served all eligible individuals in the preceding and current fiscal

years, but cannot attest to meeting the program requirements listed in

Sec. 361.36(a)(2) for both those years.

--Projections for serving all eligible individuals with disabilities

Comments: Several commenters suggested that the Secretary require a

DSU to provide separate projections for serving individuals with non-

severe, severe, and the most severe disabilities in providing the data

in Sec. 361.36(a)(1)(ii) (A) and (B) of the proposed regulations. These

commenters believed that the approach taken in the proposed regulations

would allow a DSU to average the costs of serving all populations, and

the commenters recommended that a DSU be required to break out the

costs of serving individuals with severe and the most severe

disabilities. Commenters contended that the average projected cost of

serving all individuals is substantially less than the cost of serving

the subgroup of individuals with the most severe disabilities because

of the variety of services and supports that individuals in this

category require. One of these commenters also believed that providing

specific data on each of these populations would help to determine the

extent to which a DSU has engaged in aggressive outreach efforts to

serve a greater number of individuals with the most severe

disabilities.

One commenter requested that, in making its projections, a DSU be

required to take into consideration the likelihood that more

individuals will be applying for services as a result of the revised

eligibility requirements established under the 1992 Amendments and that

more of these individuals will be individuals with the most severe

disabilities because of the expanded requirements to provide personal

assistance and rehabilitation technology services.

Discussion: As discussed previously, the Secretary has

significantly revised the proposed regulations to require DSUs to

submit projections as part of their State plan only in limited

circumstances. Specifically, Sec. 361.36(a)(3) requires DSUs that were

unable to serve all eligible individuals during the current or previous

fiscal year, but believe that they do not need to establish an order of

selection in the next fiscal year, to include in their State plans the

projected numbers of eligible individuals, the projected costs of

serving those individuals, the projected revenues, and the projected

number of qualified personnel. (These State plan requirements also

apply to DSUs that do not establish an order of selection but cannot

provide the assurances in Sec. 361.36(a)(2).) However, any DSU that

does not establish an order of selection must still consider the

rehabilitation needs of individuals with severe disabilities as part of

its explanation under Sec. 361.36(a)(1)(i), even though the final

regulations do not require separate projections for individuals with

non-severe, severe, and most severe disabilities under

Sec. 361.36(a)(3).

The Secretary agrees that averaging the costs of serving all

eligible individuals would not provide an accurate estimate of the

costs of serving individuals with severe and the most severe

disabilities if a State relied solely on cost data for years prior to

the enactment of the 1992 Amendments in making its projections. The

Secretary believes that in making projections with respect to the cost

of serving all eligible individuals, a DSU must consider the costs of

serving individuals with severe disabilities.

The Secretary agrees that more individuals with severe disabilities

and individuals with the most severe disabilities have become eligible

to receive services under the revised eligibility requirements in the

1992 Amendments. However, the Secretary believes that any significant

expansion in the number of eligible individuals that is attributable to

the revised eligibility criteria has already taken place. Consequently,

the Secretary believes there is no need to require DSUs under

Sec. 361.36(a)(3) to provide separate projections for serving

individuals with non-severe, severe, and most severe disabilities as

long as the projected number of all eligible individuals and the

projected costs of serving those individuals is provided.

Changes: The Secretary has revised Sec. 361.36(a)(1)(ii) of the

proposed regulations to reduce the amount of data and related

explanations that must be submitted as part of the State plan. In

addition, the regulations require that this data be included as part of

the State plan only if--(1) The DSU was unable to serve all eligible

individuals in the current or preceding fiscal year; or (2) The DSUs

did not meet the requirements in Sec. 361.36(a)(2) in serving all

eligible individuals in the current and preceding fiscal years. This

provision has been relocated to Sec. 361.36(a)(3) in the final

regulations.

--Cost-containment

Comments: Several commenters suggested that a DSU be required to

control costs before implementing an order of selection. One commenter

suggested adding a new requirement to the regulations that a DSU, prior

to

[[Page 24393]]

implementing an order of selection, implement methods to control costs,

including, but not limited to, rigorous administrative controls and

oversight, aggressively pursuing comparable services and benefits,

paying vendors based on performance outcomes, developing equitable

financial need policies, and establishing collaborative program funding

through interagency agreements that will enable the DSU to provide

services to all eligible persons.

Another commenter requested that a DSU that is unable to secure its

full Federal allotment for the program due to insufficient State match

be required to demonstrate efforts to obtain the full match in order to

be able to implement an order of selection. This commenter also

requested that the Secretary question or not approve a DSU's decision

to implement an order of selection if it is unable to fill vacant

counselor positions due to a statewide freeze on hiring, since

counselor salaries are primarily funded by Federal funds.

On the other hand, several commenters requested that a DSU be

prohibited from establishing inappropriate, arbitrary, or groundless

policy restrictions on the provision of services that are intended to

avoid implementation of an order of selection. Some of these commenters

recommended that the Secretary establish an appeal process to the

Rehabilitation Services Administration (RSA) Regional Offices so that

parties may challenge these types of restrictions.

Discussion: The Secretary agrees that a DSU should undertake all

efforts to control costs before it opts to establish an order of

selection. Some of the means suggested by commenters for controlling

costs are already Federal requirements (e.g., program costs must be

reasonable and necessary and DSUs must pursue comparable services and

benefits before providing most services), while others are State

options (e.g., paying vendors based on performance outcomes, developing

equitable financial need policies, and establishing collaborative

program funding through interagency agreements). The Secretary

encourages DSUs to use these State options whenever possible to contain

costs.

In conjunction with a DSU's determination of whether it needs to

establish an order of selection, a DSU should consider whether the

adoption of certain cost containment measures would enable the DSU to

serve all eligible individuals. Adoption of cost containment measures,

therefore, should be considered both at the time the DSU develops its

State plan submission on order of selection prior to the beginning of

the fiscal year and whenever changed circumstances during the fiscal

year warrant reevaluation of the need to establish an order of

selection in accordance with Sec. 361.36(b). If a DSU undertakes cost

containment strategies and is still unable to serve all eligible

individuals, it is required to establish an order of selection for

services.

The Secretary does not believe there is authority to establish a

link between a DSU's ability to meet its full matching requirement--and

therefore earn its entire allotment--and its right to implement an

order of selection. In fact, the inability of a DSU to obtain its full

matching contribution may be a factor in its need to establish an order

of selection, since a DSU would have fewer program funds available

because of insufficient State dollars and the loss of some Federal

funds.

As previously noted, the Secretary agrees that DSUs need to proceed

carefully in establishing an order of selection. Therefore, the

Secretary requires, under Sec. 361.36(e)(1), that a DSU consult with

and seriously consider the advice of the Council regarding the need to

establish an order of selection. The Secretary does not believe it is

necessary or advisable to establish an appeal process that is

specifically for order of selection compliance issues. Section 107(c)

of the Act provides a general appeals process for substantial

noncompliance with any State plan requirement under this program.

Changes: None.

--Assessment of rehabilitation needs of individuals with severe

disabilities

Comments: One commenter requested that the provision in

Sec. 361.36(a)(1)(ii)(B)(1) of the proposed regulations requiring a DSU

to assess the rehabilitation needs of ``individuals with severe

disabilities'' within the State be changed to require a DSU to assess

the needs of ``individuals with the most severe disabilities.'' The

commenter believed that this change would be consistent with section

101(a)(5)(A) of the Act.

Discussion: Section 101(a)(5)(A) of the Act provides that the State

plan shall contain the plans, policies, and methods to be followed in

carrying out the State plan and in its administration and supervision,

including the results of a comprehensive, statewide assessment of the

rehabilitation needs of ``individuals with severe disabilities''

residing within the State. Therefore, Sec. 361.36(a)(1)(i) of the final

regulations correctly tracks the language in section 101(a)(5)(A) of

the Act. The Secretary notes, however, that the broad category of

``individuals with severe disabilities'' would include as a subcategory

``individuals with the most severe disabilities.''

Changes: None.

--Interagency cooperative agreements

Comments: One commenter requested that the provision in

Sec. 361.36(a)(1)(ii)(B)(4) of the proposed regulations, which

highlighted or emphasized the consideration of cooperative agreements

serving certain groups of individuals with disabilities, be changed to

read ``including individuals served by the Individuals with

Disabilities Education Act, * * * and any other cooperative

agreements'' in order to ensure that equal weight is given to all

cooperative arrangements.

One commenter recommended that the Secretary require a DSU to

include in its projections estimates of the number of individuals with

severe disabilities that will be provided services under the

interagency cooperative arrangement with programs that rely on Javits-

Wagner-O'Day Act (JWOD Act) set-asides.

Discussion: The Secretary believes that requiring in the State plan

separate estimates of the number of individuals with disabilities to be

served under interagency cooperative arrangements is overly burdensome.

As long as the DSU considers these agreements when ascertaining the

projected numbers of eligible individuals and the projected costs of

administering its program, there is no need to provide a separate

breakdown of the number of applicants or eligible individuals receiving

services under each type of agreement.

Changes: In accordance with the Department's principles for

regulating, the Secretary has revised the proposed regulations to

eliminate the requirement that the DSU include estimates of the number

of individuals to be served under interagency cooperative agreements as

part of its projected costs of administering the program.

--Development of order of selection as a contingency plan

Comments: Several commenters requested that a DSU be required to

develop an order of selection regardless of whether it needs to be

implemented in the current fiscal year. These commenters believed it is

important for each DSU to have an order of selection available as a

contingency measure.

Discussion: There is no statutory authority to require a DSU to

develop an order of selection if a DSU determines it is presently able

to serve all eligible individuals and will be able to do so throughout

the fiscal year. Section 101(a)(5)(A) of the Act requires a DSU

[[Page 24394]]

to establish an order of selection only if it is unable to serve all

eligible individuals.

A DSU could, however, choose to develop the priority categories in

an order of selection in anticipation of possible future need, but

would still be required at the time of implementation of the order of

selection to meet the public participation requirements of section

101(a)(23) of the Act, including consultation with the Council.

Changes: None.

Order of selection.

--Applicability of order of selection to funds not included in State

match or Federal allotment

Comments: One commenter requested that the order of selection

requirement not apply to service funds that are not included in the

State match or Federal allotment.

Discussion: The order of selection requirement applies to all

expenditures under the State plan, including expenditures made with

Federal funds and DSU expenditures made with non-Federal funds that are

necessary to meet a DSU's matching and maintenance-of-effort

requirements.

Changes: None.

--Outcome and service goals

Comments: One commenter suggested adding a paragraph to

Sec. 361.36(a)(2) of the proposed regulations requiring a DSU to show

the outcome and service goals and the time in which they may be

achieved for individuals. The commenter believed that this reporting

requirement should be added to ensure that the Secretary will know with

specificity the types of services and service outcomes being provided,

either if a DSU elects to establish and implement an order of selection

or if a DSU assures that it is able to serve all eligible individuals.

According to the commenter, if a DSU establishes an order of selection

for services, it will be very important for evaluation purposes to

define the mix of services, goals, and timelines for providing services

to individuals with the most severe disabilities.

Discussion: The Secretary agrees with the change suggested by the

commenter. Section 101(a)(5)(A) of the Act requires a DSU to show the

outcomes and service goals, and the time within which they may be

achieved, for individuals provided services under an order of selection

established by a DSU. Section 101(a)(10)(A) of the Act requires a DSU

to include in its State plan the outcomes, service goals, and service

costs for individuals under each priority category in a DSU's order of

selection.

Changes: The Secretary has revised Sec. 361.36(a)(2) of the

proposed regulations to provide that a DSU's order of selection must

include the order to be followed in selecting eligible individuals to

be provided services, a justification of that order of selection, and a

description of the outcome and service goals and service costs for

individuals with disabilities in each priority category within the

order and the time within which these goals may be achieved. This

provision has been relocated to Sec. 361.36(a)(1)(ii) of the final

regulations.

Section 361.36(b)--Time for Determining Need for and Implementation of

an Order of Selection

--Implementation of an order of selection and opening and closing of

priority categories during the fiscal year

Comments: One commenter recommended requiring a DSU to periodically

review whether it needs to establish an order of selection. This

commenter also recommended requiring a DSU to periodically update its

projections under Sec. 361.36(a)(1) of the proposed regulations so that

the DSU, with advice and input from the Council (if the DSU has a

Council), can make decisions with current information.

One commenter recommended that the regulations require a DSU to

reevaluate its decision not to establish an order of selection at some

regular interval identified in the regulations, rather than permit the

DSU to determine the timing of its reevaluation. Otherwise, the

commenter feared that many DSUs would delay reevaluation and likely be

forced to implement an order of selection on an emergency basis.

One commenter suggested that a DSU submit reports to the Secretary

and to the Council comparing the actual costs and numbers of

individuals served with its projections under Sec. 361.36(a)(1) of the

proposed regulations and any adjustments to the projections.

Other commenters suggested that a DSU be required, no later than 45

days after the end of each quarter, to submit a report on how service

and expenditure levels for that quarter and cumulatively for the fiscal

year compare to the projections made by the DSU under Sec. 361.36(a)(1)

of the proposed regulations. These commenters believed that this type

of reporting would allow the Secretary to track the accuracy of a DSU's

projections. Other commenters recommended requiring a DSU to submit

quarterly reports to the Secretary on the accuracy of a DSU's

projections and the need to establish an order of selection.

One commenter inquired whether a DSU may implement an order of

selection during the fiscal year, rather than at the beginning of the

fiscal year. This commenter believed that requiring a DSU to establish

an order of selection at the beginning of each fiscal year might cause

a DSU to be overly conservative and to close more priority categories

than is necessary.

One commenter inquired whether a DSU may adjust, during the fiscal

year, which priority categories are open and closed.

Discussion: The Secretary considers DSU reevaluation of the need to

establish an order of selection necessary to the proper management of

the program. However, the Secretary does not believe that requiring

reevaluation at regular intervals during the course of each fiscal year

is necessary. A requirement of this type would be overly burdensome and

would apply an inflexible standard to determinations that are best

governed by a DSU's individual circumstances. The regulations,

therefore, require a DSU to reevaluate its decision not to implement an

order of selection for services, in consultation with the Council,

whenever changed circumstances, such as a decrease in its fiscal or

personnel resources or an increase in program costs, indicate that it

may no longer be able to provide the full range of services to all

eligible individuals. In addition, documentation related to

reevaluations is to be provided to the Council, as well as to the

Department during RSA's monitoring and review of the order of selection

requirement under sections 107(a)(3)(A) and 107(a)(4)(B) of the Act.

A DSU is required to determine the need for an order of selection

prior to the beginning of the fiscal year and to reevaluate that need

during the year under Sec. 361.36(b) if circumstances change after the

beginning of the fiscal year. If changed circumstances warrant

establishing an order of selection during the fiscal year, a DSU may

implement an order of selection at that time. The Secretary prefers,

however, for a DSU to implement an order of selection at the beginning

of the fiscal year if it foresees any circumstances that may affect its

ability to serve all eligible individuals throughout the year. The

preparations needed to establish and implement an order of selection

take time. During this time, resources may be further strained. Thus,

the Secretary believes that a conservative approach toward implementing

an order of selection and opening priority categories is preferable so

that sufficient resources are available

[[Page 24395]]

throughout the year to serve all individuals with severe disabilities,

including individuals with the most severe disabilities.

If a DSU implements an order of selection during the fiscal year,

rather than at the outset, and thereafter cannot serve all individuals

with severe and the most severe disabilities, it would be out of

compliance with the order of selection requirement.

The Secretary believes that a DSU may use its discretion as to the

timing for opening and closing priority categories as long as the order

of categories is maintained. When considering whether to open a

category, a DSU should evaluate not only current resources but also the

impact that continuing to serve these eligible individuals under this

category will have on resources expected to be available in the next

fiscal year, or possibly beyond.

Changes: The Secretary has revised Sec. 361.36(e)(1) to provide

that the DSU shall consult with and seriously consider the advice of

the Council regarding the need to establish an order of selection,

including any reevaluation of the need to establish an order of

selection under Sec. 361.36(b)(2).

Section 361.36(c)--Establishing an Order of Selection.

--Further guidance on factors to be considered in establishing an order

of selection

Comments: Several commenters recommended that the Secretary provide

further guidance on what factors a DSU should use in establishing an

order of selection. One of these commenters suggested adding five

factors that a DSU should consider in establishing an order of

selection: Lower levels of educational achievement; longer lengths of

unemployment, under-employment, or lower level jobs; lower levels of

self-esteem and self-worth; need for two or more services; and need for

services for a longer length of time.

One commenter requested that a statement be added to Sec. 361.36(c)

indicating that the criteria for determining which individuals are

individuals with the most severe disabilities must be equally

applicable to, and not lead to the exclusion of, transitioning

students. This commenter was concerned that a DSU may define an

``individual with the most severe disability'' by using factors, such

as an employment history of repeated failures, that may exclude youth

with severe disabilities.

Discussion: In establishing an order of selection a DSU can only

consider severity of disability. The Secretary believes that an order

of selection must be based on the factors or criteria contained in the

definition of an ``individual with a severe disability'' in section

7(15)(A) of the Act. An ``individual with a severe disability'' is

defined as an individual with a disability (1) who has a severe

physical or mental impairment that seriously limits one or more

functional capacities (such as mobility, communication, self-care,

self-direction, interpersonal skills, work tolerance, or work skills)

in terms of employment outcome; (2) whose vocational rehabilitation can

be expected to require multiple vocational rehabilitation services over

an extended period of time; and (3) who has one or more physical or

mental disabilities, as identified in section 7(15)(A) of the Act, or

any other disability or disabilities that cause comparable substantial

functional limitation.

In determining which individuals with severe disabilities are

individuals with the most severe disabilities, for purposes of

providing them with the highest priority in an order of selection, a

DSU cannot merely apply the criteria in this definition. Because

individuals with the most severe disabilities are a subgroup of

individuals with severe disabilities, the Secretary believes that a DSU

must refine these criteria to identify this subgroup.

A DSU may refine these factors, for example, by basing its order of

selection on the number and degree of functional limitations, the

amount of time vocational rehabilitation services would be needed, and

the number of vocational rehabilitation services needed. When refining

these factors, a DSU may choose to refine one factor or a combination

of factors. The purpose of refining these factors is to link the nature

and depth of the individual's functional limitations with the need for

multiple and complex services that require an extended period of time

for completion.

A DSU could refine the first criterion by requiring that an

individual demonstrate limitations in three or more functional

capacities, such as mobility, communication, self-care, self-direction,

interpersonal skills, work tolerance, or work skills. Alternatively, a

DSU could specify the degree of functional limitations within one or

more functional capacities by requiring that an individual demonstrate

a minimum number of specific functional limitations, such as five

specific functional limitations, within one or more functional

capacities.

Possible examples of specific functional limitations within the

functional capacity of self-direction include--(1) Purposeless shifting

from one activity to another; (2) Inability to follow through with and

complete assignments; (3) Problems related to time management; (4)

Making decisions impulsively without consideration for previous plans

or experience; (5) Limitations in gathering, organizing, and analyzing

information; (6) Difficulties in adapting to changing work

requirements; and (7) Inability to monitor work performance and to

adjust behaviors and activities if the current performance is not

adequate.

A DSU could refine the second criterion by specifying the minimum

number of vocational rehabilitation services required by the individual

or by specifying the extended period of time required for the provision

of services. For example, in order to link the complexity or

substantiality of the services provided to the severity of functional

limitations, a DSU could establish a criterion that an individual

require 2 or more major services that will be at least 12 months in

duration. Major services could be defined as those services described

in section 103(a) of the Act, excluding diagnostic services; supportive

services, such as maintenance and transportation, that complement the

provision of major services; and the counseling, guidance, and service

coordination provided to every eligible individual.

A DSU could base the minimum time period required for the provision

of multiple vocational rehabilitation services on a DSU's experience

with the length of time necessary for individuals with severe

disabilities to achieve an employment outcome. This extended period of

time could be defined as the period of time at the upper end of the

range required for individuals with severe disabilities to achieve an

employment outcome, after eliminating any exceptional cases.

Socioeconomic factors, such as levels of educational achievement or

length of unemployment or underemployment, and personal traits, such as

levels of self-esteem, however, cannot be used in establishing an order

of selection because these factors are not measures of severity of

disability or even measures of disability. For example, using a factor

such as low level of educational achievement would tend to include

individuals whose disabilities were acquired at birth or during the

developmental years while excluding individuals whose disabilities were

acquired after having completed high levels of education, even though

both groups of individuals might demonstrate equal substantial

[[Page 24396]]

functional limitations and have an equal need for multiple services

over an extended period of time. Using a factor such as an employment

history of repeated failures would have the effect of excluding youth

who may have little or no employment history.

Changes: The Secretary has revised Sec. 361.36(c) by adding a new

paragraph (1) that states that an order of selection must be based on a

refinement of the three criteria in the definition of ``individual with

a severe disability'' in section 7(15)(A) of the Act.

Priority for individuals with the most severe

disabilities.

--Federal criteria for defining individuals with the most severe

disabilities

Comments: Several commenters expressed concern about the potential

for an individual to be denied services if the individual moves to a

State in which the DSU uses different criteria for determining which

individuals have the most severe disabilities. One commenter inquired

as to whether there will be a consistent procedure for determining

severity of disability, and other commenters requested that the

regulations include appropriate criteria for defining ``most severe.''

Discussion: There is no statutory authority for the Secretary to

establish Federal criteria to determine which individuals are

individuals with the most severe disabilities. Section 101(a)(5) of the

Act mandates that each DSU has the responsibility to develop its own

criteria in this regard.

Changes: None.

--Functional limitations

Comments: One commenter requested that the Secretary clarify that a

DSU may base an order of selection on limitations of functional

capacities in addition to those listed in the statutory definition of

``individual with a severe disability'' in section 7(15)(A)(i) of the

Act.

Another commenter suggested that the Secretary encourage DSUs to

determine which individuals are the most severely disabled based on the

types of functional limitations specified in the definition of

``developmental disability'' in section 6001(5) of the Developmental

Disabilities and Bill of Rights Act (DD Act). ``Developmental

disability'' is defined, in part, as a severe, chronic disability that

results in substantial functional limitations in three or more of the

following areas of major life activity: (1) Self-care. (2) Receptive

and expressive language. (3) Learning. (4) Mobility. (5) Self-

direction. (6) Capacity for independent living. (7) Economic self-

sufficiency.

Discussion: A DSU may base an order of selection on limitations of

functional capacities in addition to those functional capacities listed

in section 7(15)(A)(i) of the Act. This listing is not all-inclusive

because it is preceded by the words ``such as.'' However, functional

limitations under this program must affect the achievement of an

employment outcome. The DD Act definition specifies functional

limitations that affect major life activities. Under The State

Vocational Rehabilitation Services Program, some of the functional

areas specified in the DD Act, such as economic self-sufficiency and

capacity for independent living, would not necessarily be considered a

functional limitation that impedes the achievement of an employment

outcome, but rather would be considered a potential outcome or benefit

of the VR program. Therefore, they could not be used as a factor in

determining severity of disability under the VR program. As part of a

review of a DSU's criteria for identifying individuals with the most

severe disabilities, the Secretary would assess the appropriateness of

using particular different functional capacities.

Changes: None.

Factors that cannot be used in determining order of

selection of eligible individuals.

--Applying eligibility restrictions to order of selection decisions

Comments: Several commenters opposed applying eligibility

restrictions to order of selection decisions. These commenters stated

that the eligibility and order of selection requirements are intended

to stand alone under the Act.

Discussion: The Secretary agrees that the eligibility requirements

and the order of selection requirements are separate requirements.

Eligibility determinations can be based only on the statutory

eligibility criteria in section 102(a)(1) of the Act. Determinations of

the order of serving eligible individuals can be based only on severity

of disability in accordance with section 101(a)(5)(A) of the Act.

Neither determination can be based on any of the factors in

Sec. 361.36(c)(2).

Changes: None.

--Residency prohibition

Comments: One commenter believed that the residency prohibition

needed to be clarified because, as worded in the NPRM, it would

encourage individuals who live in one State to apply for services in

another State.

Discussion: The Secretary's intention was to prohibit an order of

selection from being based on any particular durational residency

requirement as long as the individual is present in the State and can

complete a program of services. The Secretary did not intend to address

the issue of the ability of residents of one State to receive VR

services in another State.

Changes: The Secretary has revised Sec. 361.36(c)(1)(i) of the

proposed regulations to prohibit an order of selection from being based

on any duration of residency requirement, provided the individual is

present in the State. This provision has been relocated to

Sec. 361.36(c)(2)(i) of the final regulations.

--Type of disability prohibition

--Individuals who are blind or visually-impaired

Comments: One commenter urged the Secretary to ensure that State

rehabilitation agencies that serve only individuals who are blind or

visually impaired be permitted to continue to serve these individuals

if those agencies are operating under an order of selection. In

addition, this commenter recommended that State rehabilitation agencies

that serve all individuals with disabilities be required to recognize

blindness as a severe disability for purposes of order of selection.

Discussion: If a DSU that serves only individuals who are blind or

visually impaired is unable to serve all eligible individuals, it must

prioritize according to severity of disability.

An individual who is blind or visually impaired must be assessed

like all other eligible individuals with disabilities according to the

three criteria in the definition of an ``individual with a severe

disability'' in section 7(15)(A) of the Act. A DSU may not determine

that an individual who is blind or visually impaired automatically

meets this definition, i.e., that every individual who is blind or

visually impaired is an individual with a severe disability or an

individual with a most severe disability. An individual who is blind,

however, would automatically satisfy the third element in the

definition because ``blindness'' is included among the listing of

physical or mental disabilities that the Act recognizes as causing

substantial functional limitation.

In addition, if an individual is determined blind pursuant to Title

II or Title XVI of the Social Security Act, section 102(a)(2) of the

Rehabilitation Act considers that individual to have a severe physical

or mental impairment that seriously limits one or more functional

capacities in terms of an employment outcome, thus satisfying the first

criterion in the definition of an

[[Page 24397]]

``individual with a severe disability.'' There is no basis in the Act,

however, for automatically determining that an individual who is blind

or visually impaired would require multiple vocational rehabilitation

services over an extended period of time.

Changes: None.

--Individuals with disabilities of alcoholism and other drug abuse

Comments: One commenter was concerned that individuals with

disabilities of alcoholism and other drug abuse would not receive fair

consideration under an order of selection. In order to ensure fair

consideration for these individuals, the commenter requested that

criteria be added that require a DSU to include among individuals with

the most severe disabilities those individuals with chronic relapsing

conditions.

Discussion: Section 105(a)(5)(A) requires a DSU, not the Secretary,

to establish criteria for determining which individuals with severe

disabilities are individuals with the most severe disabilities. Any

criteria established by a DSU for identifying individuals with the most

severe disabilities should apply equally to individuals with chronic

and individuals with acute disabling conditions. Many individuals with

chronic relapsing conditions, such as alcohol or drug abuse, may

experience substantial functional limitations and require multiple

vocational rehabilitation services over an extended period of time.

However, an assessment of whether a particular individual with a

disability meets these criteria, including an assessment of an

individual who is disabled because of alcohol or drug abuse, must be

done on a case-by-case basis.

Changes: None.

--Source of referral prohibition

Comments: One commenter inquired whether the emphasis on

interagency cooperative arrangements in the Act allows a DSU to

establish a priority under an order of selection for eligible

individuals referred by school systems under the Individuals with

Disabilities Education Act (IDEA) or the Carl D. Perkins Vocational and

Applied Education Act (Perkins Act).

Discussion: A DSU may not establish a priority under an order of

selection for eligible individuals referred by school systems under

IDEA or the Perkins Act because the source of referral is not

necessarily an indicator of severity of disability. While some of these

individuals might be individuals with severe or the most severe

disabilities, all individuals referred by schools under these programs

may not necessarily meet these criteria. This determination must be

made on an individual basis.

Changes: None.

--Prohibition against using type of expected employment outcome

Comments: Several commenters opposed this prohibition. Several

commenters contended that the purpose of the Title I program is to

assist individuals with disabilities to enter into gainful employment,

and, therefore, the type of expected employment outcome should be used

as a factor in establishing an order of selection. One commenter

contended that one of the evaluation standards for the program to be

developed by the Secretary under section 106(a)(2) of the Act may

relate to the achievement of competitive employment outcomes and an

increase in post-placement earnings. The commenter believed it is

unfair to evaluate a DSU on the level of earnings of the individuals it

places in employment if it cannot use type of employment and amount of

earnings as a factor in establishing an order of selection.

Finally, one commenter inquired whether, given the increased

emphasis in the Act on supported employment, a DSU should be permitted

to establish a priority in its order of selection for eligible

individuals whose employment outcome is in a supported employment

setting.

Discussion: Individuals with multiple functional limitations and a

need for multiple services over an extended period of time will have

varying expected employment outcomes, including competitive employment,

supported employment, and other types of employment. Thus, type of

expected employment outcome and level of post-placement earnings are

not indicative of severity of disability and cannot be used as criteria

for determining the level of severity of disability.

Although an individual whose employment outcome is in a supported

employment setting would be included in the group of individuals with

the most severe disabilities because supported employment services

under the Act can only be provided to individuals with the most severe

disabilities, a DSU cannot give individuals whose employment outcome is

in a supported employment setting priority over other individuals with

the most severe disabilities who have different employment outcome

goals.

Changes: None.

--Prohibition against considering the particular service needs of an

individual or anticipated cost of services required by an individual

Comments: Several commenters opposed these prohibitions. Several

commenters questioned the logic of prohibiting consideration of service

needs when establishing an order of selection because the need for

multiple services is part of the definition of ``individual with a

severe disability.'' One commenter also pointed out that this

restriction is contrary to previous RSA sub-regulatory guidance that

has allowed DSUs to use service needs and costs in establishing

priority categories for individuals with non-severe disabilities.

Finally, one commenter inquired whether it is consistent with the Act

for a DSU to establish a priority in its order of selection for

eligible individuals who require rehabilitation technology devices and

services.

Several commenters believed that the Secretary should revise the

regulations to allow a DSU to develop an IWRP for only non-purchased

services if resources are not available to also provide purchased

services. These commenters requested that a DSU that has established an

order of selection for services be allowed to provide a priority to

persons who do not have a severe or most severe disability and who need

only non-purchased services as long as adequate resources are available

to serve first those individuals who are the most severely disabled.

Discussion: The Secretary agrees that clarification is needed. This

provision is intended to prohibit a DSU from giving priority to an

individual who has one or more specific service needs over another

individual who has different service needs. For example, a DSU is

prohibited from giving priority to individuals who require physical

restoration services over individuals who require vocational training.

A DSU is also prohibited from giving priority to individuals who

require rehabilitation technology devices and services, as raised by

one commenter, over any other individual who requires a different

service.

One of the examples provided in the preamble to the proposed

regulations to illustrate this provision may have caused confusion. The

example stated that a DSU is prohibited from establishing an order of

selection that gives priority to individuals who require short-term

services over individuals who require long-term services. Since a DSU

is required to consider, in establishing its order of selection, an

individual's need for vocational rehabilitation services over an

extended period of time under the second factor of the definition of

``individual with a

[[Page 24398]]

severe disability,'' the use of the words ``short-term'' and ``long-

term'' was inappropriate. The example was intended to illustrate the

principle that the cost of services cannot be a factor in an order of

selection and that DSUs cannot give priority to individuals who need

short-term, less costly services over individuals who need longer term

and more costly services.

The Secretary believes that there is no basis under the Act for

exempting from the order of selection requirement the provision of non-

purchased services. The Act does not draw any distinction between the

provision of purchased and non-purchased vocational rehabilitation

services with respect to a DSU's determination of the order in which it

will provide services to eligible individuals if it cannot serve all

eligible individuals. The order must be predicated, as section

101(a)(5)(A) requires, on severity of disability: Individuals with the

most severe disabilities must be served first.

This means, for example, that if a DSU has established three

service categories for serving eligible individuals (i.e., individuals

with the most severe disabilities, individuals with severe

disabilities, and individuals with non-severe disabilities), then it

must be able to provide all needed services, whether purchased or not,

to all individuals with the most severe disabilities before serving any

individuals with severe disabilities. In addition, it must be able to

provide all needed services to all individuals with severe disabilities

before serving any individuals in the last category who have less than

severe disabilities. An individual's need for only non-purchased

services cannot override this order.

Thus, the Secretary believes that a DSU cannot establish a priority

category anywhere in its order of selection that provides solely for

the provision of non-purchased services, even among individuals with

non-severe disabilities. This interpretation represents a policy

reversal by RSA of its position in subregulatory guidance (RSA-MT-92-

17, March 20, 1992), which permitted a DSU to give a service priority

to non-severely disabled individuals whose rehabilitation needs do not

require the expenditure of case service funds (i.e., individuals who

need only counseling, guidance, and placement services that can be

provided by DSU staff) over other non-severely disabled individuals.

To address the concern of some DSUs on this issue, the Secretary

has proposed regulations for this program in 34 CFR 361.37(c) that were

published in the Federal Register on December 15, 1995 (60 FR 64476)

and that would provide a limited exception to this prohibition. These

proposed regulations would authorize any DSU that has implemented an

order of selection to establish an expanded information and referral

program that includes the provision of job referral services to

eligible individuals who are not being served under a DSU's order of

selection, provided that certain State plan requirements are met. These

requirements include a description in the State plan of the level of

commitment of staff and other resources for this purpose and an

assurance that funds to carry out this program will supplement and not

supplant funds available for providing VR services to eligible

individuals who are able to be served under the DSU's order of

selection.

Changes: The Secretary has clarified Sec. 361.36(c)(1)(vi) of the

proposed regulations by providing that the need for specific services

by an individual cannot be the basis for an order of selection. This

provision has been relocated to Sec. 361.36(c)(2)(vi) of the final

regulations.

--Income level of the individual or the individual's family

Comments: Several commenters recommended that a DSU be permitted to

give priority to persons on public assistance in its order of selection

because these individuals have a greater need for services than those

who have larger incomes.

Discussion: A DSU may not give priority to persons on public

assistance under its order of selection because use of public

assistance is a socioeconomic factor that may not necessarily be

related to the presence of a disability or to the severity of that

disability. Individuals who are on public assistance and who are

included in a priority category currently being served by a DSU can

receive services. As noted in the preamble to the NPRM, however, the

income level of an individual or the individual's family can be a

factor only in determining whether an individual is required by a DSU

to pay part of the cost of a service. This is a State option permitted

under current regulations in 34 CFR 361.47(a).

Changes: None.

--Transitioning students

Comments: One commenter believed the intent of section

101(a)(24)(A) (i), (ii), and (iii) of the Act is to ensure that all

eligible students receive services in a timely manner and to ensure

that there is no gap in services between the school system and the

vocational rehabilitation system.

One commenter inquired how a DSU will handle transitioning special

education students if an order of selection is implemented.

Specifically, the commenter inquired whether a student who is receiving

vocational rehabilitation services would continue to receive services

if the student falls outside of the priority categories being served

under an order of selection established by a DSU.

Another commenter was concerned that transitioning students would

be placed on waiting lists for services. This commenter recommended

requiring a DSU operating under an order of selection to include in its

State plan the plans, policies, and procedures to identify how the DSU

will work with education officials and others to meet the needs of

transitioning youth and to otherwise fulfill their obligations under

the Act concerning the provision of transition services.

Discussion: Even though section 101(a)(24)(A) (i), (ii), and (iii)

of the Act strengthen the provisions for transition services to

students with disabilities, a student who is determined eligible for

services after a DSU implements an order of selection will be served

only if the student is among those individuals included in a priority

category that is currently being served under the DSU's order of

selection.

Section 361.36(d)(3), however, provides that a DSU must ensure that

it will continue to provide all needed services under an IWRP to any

eligible individual who has begun to receive services prior to the

effective date of the order of selection, irrespective of the severity

of the individual's disability. Thus, for example, if a transitioning

student with severe disabilities is receiving vocational rehabilitation

services under an IWRP prior to the effective date of the order of

selection, the student will continue to receive all needed services

even if the DSU is able under its order of selection to initiate

services only to individuals with the most severe disabilities.

Transitioning students who are not included in a priority category

that is currently being served under a DSU's order of selection will be

placed on a waiting list unless services were begun prior to the

implementation of the order of selection.

Changes: None.

--Individuals with less severe disabilities

Comments: One commenter inquired whether individuals with less

severe disabilities will be systematically left out of the process in

those DSUs that implement an order of selection. This

[[Page 24399]]

commenter feared that the proposed regulations permit a DSU to refuse

services to an individual because his or her disability is not severe

enough.

One commenter inquired whether a DSU may limit the number of

individuals with non-severe disabilities who may be served under an

order of selection so that there will be funds available to serve

individuals with a severe disability who may apply for services.

Discussion: The order of selection requirement mandates that

services be provided first to individuals with the most severe

disabilities before serving other eligible individuals. This means that

individuals with the most severe disabilities are served before

individuals with severe disabilities and individuals with non-severe

disabilities. A DSU that implements an order of selection may be unable

to serve eligible individuals with non-severe disabilities.

The Secretary urges DSUs operating under an order of selection to

be conservative in assessing their ability to serve individuals other

than those with the most severe disabilities before opening additional

priority categories. This approach is needed to ensure that sufficient

resources are available throughout the year to serve individuals under

higher priority categories (i.e., individuals with most severe

disabilities and individuals with severe disabilities) who apply for

services and become eligible after the beginning of the fiscal year. As

stated previously, the Secretary prefers this conservative approach

since a potential increase in the number of applicants with severe

disabilities might affect the DSU's ability to comply with the order of

selection requirements throughout the year.

Changes: None.

Section 361.36(d)--Administrative Requirements

--Identify the order of selection as a State-imposed requirement

Comments: One commenter recommended deleting this requirement. The

commenter stated that the only legally permissible reason for

implementing an order of selection policy is resource limitations.

Since funding for the program is a shared responsibility of State and

Federal governments, the commenter believed there was no reason to

attribute resource shortfalls exclusively to a State.

Discussion: The Secretary believes that the commenter

misinterpreted this provision of the proposed regulations. The intent

of the provision was for a DSU to identify its particular order of

selection policy as a State-imposed requirement (not the order of

selection requirement itself, which is a Federal requirement) since

this policy is a State rule or policy relating to the administration or

operation of the program under section 17 of the Act. Nevertheless, the

Secretary believes that there is no reason to particularly highlight

this one State-imposed requirement in the regulations over other State-

imposed requirements, such as a State's financial needs test. The

Secretary intends to address State-imposed requirements in general in

other regulations for this program.

Changes: The Secretary has deleted the requirement in

Sec. 361.36(d)(2) of the proposed regulations that a DSU identify its

order of selection policy as a State-imposed requirement.

--Written policies

Comments: Several commenters suggested that written policies for an

order of selection include requirements that the policies must provide

that affected individuals are notified of the State's particular order

of selection, the priority category to which they have been assigned,

and their right to appeal assignment to a particular priority category.

One commenter suggested revising Sec. 361.36(d)(3) of the proposed

regulations to provide that a DSU must establish written policies

related to the development, establishment, and administration of the

order of selection that should include, but not be limited to, the

following: (1) Consultation with the Council. (2) Staff orientation and

training. (3) Notification to individuals applying for services, or in

an appropriate case, the parent, family member, guardian, advocate, or

authorized representative of such an individual. (4) Monitoring

procedures. (5) Caseload management. (6) Evaluation of effectiveness of

the order of selection. The commenter believed that these policies

should be required since they include important accountability

elements.

Discussion: The Secretary agrees that a DSU must ensure that each

eligible individual is informed of the priority categories that have

been established in a DSU's order of selection, of the particular

priority category to which he or she has been assigned, and of his or

her right to appeal assignment to a particular priority category under

the State's procedures for reviewing rehabilitation counselor or

coordinator determinations. The Secretary believes these are basic

procedural rights that eligible individuals have under this program.

These notification requirements are specified in Sec. 361.36(d)(2).

In accordance with the Department's principles for regulating,

however, the Secretary has eliminated the requirement in the proposed

regulations that DSUs establish written policies related to the

development, establishment, and administration of its order of

selection. The Secretary believes that requiring DSUs to establish

written policies covering all aspects of the implementation of an order

of selection is overly burdensome. Nevertheless, the Secretary

encourages a DSU to develop policies, as needed, to ensure proper

administration of its order of selection, including policies in areas

such as staff orientation and training, monitoring procedures, caseload

management, and evaluation and management of the order of selection.

Changes: The Secretary has revised Sec. 361.36(d)(3) of the

proposed regulations to require a DSU to notify all eligible

individuals of the priority categories in a DSU's order of selection,

their assignment to a particular category, and their right to appeal

assignment to a particular priority category. This provision has been

relocated to Sec. 361.36(d)(2) of the final regulations.

--Continuity of services

Comments: One commenter requested clarification of this provision.

The commenter noted that a person could have a completed and signed

IWRP, but not yet have begun to receive services under the IWRP. This

commenter requested that the regulations be revised to provide that

anyone with a completed and signed IWRP must continue to receive

services in accordance with their approved IWRP, irrespective of the

severity of their disability. Another commenter inquired whether the

continuity of services requirement entitles an individual who is

receiving services under one DSU's order of selection to receive

services from a DSU in another State if that individual moves and falls

outside of the priority categories being served by the DSU in the

second State.

Discussion: The continuity of services requirement ensures that an

eligible individual who has begun to receive services under an IWRP

prior to the effective date of a DSU's order of selection will continue

to receive all needed services, including services that may be

necessary because of amendments to the IWRP, irrespective of the

severity of that individual's disability.

An eligible individual who has a completed IWRP, but who has not

begun to receive services under that

[[Page 24400]]

IWRP, would not be covered by this requirement. This means that the

continuity of services requirement does not apply to any services

provided in developing an eligible individual's IWRP. This requirement

takes effect at the point in the rehabilitation process when services

leading to an employment outcome have been initiated under an IWRP.

Finally, the continuity of services requirement is DSU-specific and

does not entitle an individual who is receiving services under one

DSU's order of selection to receive services under another DSU's order

of selection if the individual is not included among the individuals

being served under the second DSU's order of selection.

Changes: The Secretary has revised Sec. 361.36(d)(4) of the

proposed regulations to ensure that a DSU continues to provide all

services needed by any eligible individual who has begun to receive

services ``under an IWRP'' prior to the effective date of the order of

selection, irrespective of the severity of the individual's disability.

This change is necessary to clarify that it is the receipt of services

under an IWRP that triggers the continuity of services requirement.

This provision has been relocated to Sec. 361.36(d)(3) of the final

regulations.

--Third-party funding arrangements

Comments: One commenter recommended that the Secretary permit

third-party funding arrangements that conflict with a DSU's order of

selection if these arrangements reflect priorities in national or State

policy. Another commenter feared that requiring DSUs to renegotiate

third-party arrangements will result in a considerable reduction in

resources to serve individuals with disabilities.

One commenter recommended that the Secretary provide a further

explanation of how a DSU can ensure that its third-party arrangements

are ``consistent'' with its order of selection for services. This

commenter also requested that the Secretary take into consideration the

practical difficulties for a provider of renegotiating a contract

midstream. Another commenter inquired whether cooperative arrangements,

like third-party arrangements, must be consistent with a DSU's order of

selection.

One commenter questioned whether a DSU may select a category of

individuals for priority under its order of selection because that

category is funded by targeted funds from another agency.

Discussion: The Secretary believes that a DSU's funding

arrangements for providing services, such as third-party arrangements

and cooperative arrangements, cannot override its order of selection if

those funds are used under the State plan. For example, a DSU that

receives third-party funding to serve individuals with mental illness

may not serve individuals with mental illness who fall outside of the

priority categories being served under the order of selection. This is

necessary to ensure that an order of selection is applied fairly and

evenly to all individuals regardless of whether funding arrangements

are in place to serve individuals from particular disability groups. If

a funding arrangement is inconsistent with a DSU's order of selection,

a DSU must renegotiate these arrangements so that individuals are

served in a manner consistent with the DSU's order of selection.

Changes: The phrase ``under the State plan'' has been added to

Sec. 361.36(d)(4) to clarify that any funding arrangements that are

used by a DSU to provide services under the State plan must be

consistent with a DSU's order of selection.

--Other requirements

Comments: Several commenters were concerned that there is an

inadequate number of counselors qualified to properly evaluate severity

of disability. These commenters suggested that the Secretary ensure

that qualified counselors are available to evaluate individuals to

determine whether they will receive services under an order of

selection.

Discussion: Section 101(a)(7) of the Act requires a DSU to develop

a comprehensive system of personnel development to ensure that an

adequate supply of qualified State rehabilitation professional and

paraprofessionals is available in the State. The Secretary believes

that this provision mandates that staff in sufficient numbers be

qualified to properly evaluate functional limitations for purposes of

determining severity of disability. The Secretary believes that all

DSUs operating under an order of selection must provide staff with

appropriate training to be able to make these determinations.

Changes: None.

Section 361.36(e)--State Rehabilitation Advisory Council

Comments: One commenter recommended that the Secretary highlight

the responsibility of the DSU to seek and seriously consider the advice

of the Council on DSU criteria for determining which individuals are

individuals with the most severe disabilities.

Several commenters suggested that a DSU that has implemented an

order of selection be required to consult other advisory boards,

service providers, advocacy organizations, consumers, family members,

and rehabilitation vendors, in addition to the Council, regarding the

content of the order of selection. One of these commenters stated that

this consultation is necessary because the composition of the Council

may not ensure sufficient or equal representation by persons of

different disabilities, such as persons with mental illness.

Several commenters recommended that the Secretary add a new

Sec. 361.36(f) stating that the client assistance program and other

parties must be consulted, under section 101(a)(23)(C) of the Act,

before revisions are made to a DSU's order of selection.

Discussion: The Secretary does not believe that it is necessary to

further highlight the responsibility of a DSU to seek and seriously

consider the advice of the Council when developing the criteria for

determining which individuals are the most severely disabled. The

Secretary believes that Sec. 361.36(e)(3) sufficiently highlights this

responsibility.

The Secretary agrees with the commenters who suggest that advisory

boards, other than the Council, service providers, advocacy

organizations, consumers, family members, rehabilitation vendors, and

the director of the client assistance program (CAP) are valuable

sources of information and should be consulted by a DSU in determining

the content of its order of selection. The Secretary believes that

consultation with these and other groups as to the content of the DSU's

order of selection is sufficiently addressed under sections 101(a)(18),

101(a)(23), and 105(b)(1) of the Act. These statutory provisions

provide for broad public participation in the development of the State

plan and of policies governing the provision of vocational

rehabilitation services under the plan.

Changes: None.

Additional comment

--Development of IWRP

Comments: Several commenters requested that a DSU not be required

to develop an IWRP for all individuals eligible for vocational

rehabilitation services under the Act if the DSU cannot serve all

eligible individuals and is providing services under an order of

selection. These commenters stated that requiring a DSU that has

implemented an order of selection to develop IWRPs for all eligible

individuals, regardless of

[[Page 24401]]

whether the individual could currently be served, would result in

unnecessary work for vocational rehabilitation counselors and would

give false hope to individuals who fall outside of the categories being

served.

Discussion: The Secretary understands the concern expressed by

these commenters and is addressing this issue in other vocational

rehabilitation program regulations. The proposed regulations concerning

development of an IWRP for this program published in the Federal

Register on December 15, 1995 (60 FR 64476, proposed Sec. 361.45(a))

would require a DSU that has implemented an order of selection to

develop an IWRP only for each eligible individual that it is able to

serve.

Changes: None.

Executive Order 12866

Assessment of Costs and Benefits

These final regulations have been reviewed in accordance with

Executive Order 12866. Under the terms of the order the Secretary has

assessed the potential costs and benefits of this regulatory action.

The potential costs associated with the final regulations are those

resulting from statutory requirements and those determined by the

Secretary to be necessary for administering this program effectively

and efficiently.

In assessing the potential costs and benefits--both quantitative

and qualitative--of these regulations, the Secretary has determined

that the benefits of the regulations justify the costs.

The Secretary has also determined that this regulatory action does

not unduly interfere with State, local, and tribal governments in the

exercise of their governmental functions.

Summary of Potential Benefits Relative to Potential Costs of the

Regulatory Provisions Discussed Previously in This Preamble

The Secretary believes that the final regulations represent the

least burdensome way to implement the statutory requirement that a DSU

explain the methods by which it will serve all eligible individuals for

VR services or, in the alternative, establish and justify the order of

selection it shall follow in serving first those individuals with the

most severe disabilities. In addition, the Secretary believes that the

regulations present the most effective means of ensuring that DSUs do

not improperly avoid establishing an order of selection (i.e., failing

to establish an order of selection even though the DSU cannot serve all

eligible individuals). Reduction of burden on DSUs and other benefits

resulting from the final regulations are discussed in the following

paragraphs of this section and throughout the analysis of comments and

changes section of the preamble.

Reduction of Paperwork Burden on Grantees

As stated previously in this preamble, review of the final

regulations in accordance with the Department's principles for

regulating resulted in two major, burden-reducing changes from the

proposed regulations. First, under the final regulations, DSUs that

have successfully served all eligible individuals in the past are not

required to include detailed projections (e.g., projected number of

eligible individuals, projected program costs and revenues) as part of

their explanation of how they will continue to serve everyone and meet

all other program requirements in the next year. As long as a DSU can

provide the assurances required in the regulations to confirm its past

ability to serve all eligible individuals, the DSU's explanation under

Sec. 361.36(a)(1) is not subject to minimum content requirements.

Second, the regulations reduce the number of data projections and

related demonstrations that must be included as part of the explanation

for DSUs that have been unable to serve all eligible individuals in the

past. The remaining projections are needed to indicate whether a DSU

that has been unable to serve all eligible individuals previously can

serve everyone in the next year.

Evaluation of Need to Establish an Order of Selection

Once a DSU decides, prior to the beginning of the fiscal year, that

it does not need to establish an order of selection, the final

regulations require the DSU to reevaluate this decision whenever

changed circumstances indicate that it may no longer be able to serve

all eligible individuals. DSUs, therefore, are responsible for

determining whether they need to implement an order of selection after

the start of the year. The Secretary prefers this flexible approach

rather than imposing in the regulations a specific time when all DSUs

must reevaluate the need to establish an order of selection, as some

commenters on the proposed regulations suggested.

Instructions for Establishing an Order of Selection

Section 361.36(c) provides, for DSUs unable to serve all eligible

individuals, clear directives on how to establish an order of selection

for providing services. In addition, this section includes specific

factors that cannot be used in developing an order of selection. Many

commenters on the proposed regulations had requested clarification as

to whether these factors could be considered in formulating specific

priority categories under an order of selection.

Additional Benefits

The final regulations include provisions intended to enhance the

protection of individuals with disabilities by DSUs operating under an

order of selection. For example, the regulations require DSUs to notify

all eligible individuals of the priority categories in the State's

order of selection, as well as their assignment to a particular

category. Additionally, the regulations require DSUs to continue to

serve any eligible individual who has begun to receive services under

an IWRP prior to the effective date of the order of selection,

irrespective of the severity of the individual's disability.

Paperwork Reduction Act of 1995

Under the Paperwork Reduction Act of 1995, no persons are required

to respond to a collection of information unless it displays a valid

OMB control number. The valid OMB control number assigned to the

collection of information in these final regulations is displayed at

the end of the affected section of the regulations.

Intergovernmental Review

This program is subject to the requirements of Executive Order

12372 and the regulations in 34 CFR Part 79. The objective of the

Executive order is to foster an intergovernmental partnership and a

strengthened federalism by relying on processes developed by State and

local governments for coordination and review of proposed Federal

financial assistance.

In accordance with the order, this document is intended to provide

early notification of the Secretary's specific plans and actions for

this program.

Assessment of Educational Impact

In the notice of proposed rulemaking, the Secretary requested

comments on whether the proposed regulations would require transmission

of information that is being gathered by or is available from any other

agency or authority of the United States.

Based on the response to the proposed regulations and on its own

review, the Department has determined that the

[[Page 24402]]

regulations in this document do not require transmission of information

that is being gathered by or is available from any other agency or

authority of the United States.

List of Subjects in 34 CFR Part 361

Administrative practice and procedures, Grant programs--education,

Grant programs--social programs, Reporting and recordkeeping

requirements, Vocational rehabilitation.

(Catalog of Federal Domestic Assistance Number 84.126--The State

Vocational Rehabilitation Services Program)

Dated: March 4, 1996.

Richard W. Riley,

Secretary of Education.

The Secretary amends Part 361 of Title 34 of the Code of Federal

Regulations as follows:

PART 361--THE STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

1. The authority citation for Part 361 continues to read as

follows:

Authority: 29 U.S.C. 711(c), unless otherwise noted.

2. Section 361.36 is revised to read as follows:

Sec. 361.36 Ability to serve all eligible individuals; order of

selection for services.

(a) General provisions.

(1) The State plan must contain--

(i) An assurance that the designated State unit is able to provide

the full range of services listed in section 103(a) of the Act, as

appropriate, to all eligible individuals. The assurance must be

supported by an explanation that satisfies the requirements of

paragraph (a)(2) or (a)(3) of this section and describes how, on the

basis of the designated State unit's projected fiscal and personnel

resources and its assessment of the rehabilitation needs of individuals

with severe disabilities within the State, it will--

(A) Continue to provide services to all individuals currently

receiving services;

(B) Provide assessment services to all individuals expected to

apply for services in the next fiscal year;

(C) Provide services to all individuals who are expected to be

determined eligible in the next fiscal year; and

(D) Meet all program requirements; or

(ii) The order to be followed in selecting eligible individuals to

be provided services, a justification of that order of selection, and a

description of the outcome and service goals and service costs to be

achieved for individuals with disabilities in each category within the

order and the time within which these goals may be achieved.

(2) For those designated State units that provided assurances in

their State plans for the current fiscal year and the preceding fiscal

year that they are able to provide the full range of services, as

appropriate, to all eligible individuals, the explanation required by

paragraph (a)(1)(i) of this section must include a statement that,

during the current fiscal year and the preceding fiscal year, the DSU

has in fact--

(i) Provided assessment services to all applicants and the full

range of services, as appropriate, to all eligible individuals;

(ii) Made referral forms widely available throughout the State;

(iii) Conducted outreach efforts to identify and serve individuals

with disabilities who have been unserved or underserved by the

vocational rehabilitation system; and

(iv) Not delayed, through waiting lists or other means,

determinations of eligibility, the development of individualized

written rehabilitation programs (IWRPs) for individuals determined

eligible, or the provision of services for eligible individuals for

whom IWRPs have been developed.

(3) For those designated State units unable to provide the full

range of services to all eligible individuals during the current or

preceding fiscal year, or unable to provide the statement required in

paragraph (a)(2) of this section, the explanation required by paragraph

(a)(1)(i) of this section must include--

(i) A description of the circumstances that have changed that will

allow the DSU to meet the requirements of paragraph (a)(1)(i) of this

section in the next fiscal year, including a description of--

(A) The estimated number of and projected costs of serving, in the

next fiscal year, individuals with existing IWRPs;

(B) The projected number of individuals with disabilities who will

apply for services and will be determined eligible in the next fiscal

year and the projected costs of serving those individuals;

(C) The projected costs of administering the program in the next

fiscal year, including, but not limited to, costs of staff salaries and

benefits, outreach activities, and required statewide studies; and

(D) The projected revenues and projected number of qualified

personnel for the program in the next fiscal year;

(ii) Comparable data, as relevant, for the current or preceding

fiscal year, or for both years, of the costs listed in paragraphs

(a)(3)(i) (A) through (C) of this section and the resources identified

in paragraph (a)(3)(i)(D) of this section and an explanation of any

projected increases or decreases in these costs and resources; and

(iii) A demonstration that the projected revenues and the projected

number of qualified personnel for the program in the next fiscal year

are adequate to cover the costs identified in paragraphs (a)(3)(i) (A)

through (C) of this section so as to ensure the provision of the full

range of services, as appropriate, to all eligible individuals.

(b) Time for determining need for an order of selection.

(1) The designated State unit shall determine, prior to the

beginning of each fiscal year, whether to establish and implement an

order of selection.

(2) If the designated State unit determines that it does not need

to establish an order of selection, it shall reevaluate this

determination whenever changed circumstances during the course of a

fiscal year, such as a decrease in its fiscal or personnel resources or

an increase in its program costs, indicate that it may no longer be

able to provide the full range of services, as appropriate, to all

eligible individuals.

(c) Establishing an order of selection.

(1) Basis for order of selection. An order of selection must be

based on a refinement of the three criteria in the definition of

``individual with a severe disability'' in section 7(15)(A) of the Act.

(2) Factors that cannot be used in determining order of selection

of eligible individuals. An order of selection may not be based on any

other factors, including--

(i) Any duration of residency requirement, provided the individual

is present in the State;

(ii) Type of disability;

(iii) Age, gender, race, color, creed, or national origin;

(iv) Source of referral;

(v) Type of expected employment outcome;

(vi) The need for specific services or anticipated cost of services

required by an individual; or

(vii) The income level of an individual or an individual's family.

(3) Priority for individuals with the most severe disabilities. The

State plan must assure that those individuals with the most severe

disabilities are selected for service before other individuals with

disabilities. The designated State unit shall establish criteria for

determining which individuals are individuals with the most severe

disabilities. The criteria must be consistent with the definition of

[[Page 24403]]

``individual with a severe disability'' in section 7(15)(A) of the Act

and the requirements in paragraphs (c)(1) and (2) of this section.

(d) Administrative requirements. In administering the order of

selection, the designated State unit shall--

(1) Implement the order of selection on a statewide basis;

(2) Notify all eligible individuals of the priority categories in a

State's order of selection, their assignment to a particular category,

and their right to appeal their category assignment;

(3) Continue to provide all needed services to any eligible

individual who has begun to receive services under an IWRP prior to the

effective date of the order of selection, irrespective of the severity

of the individual's disability;

(4) Ensure that its funding arrangements for providing services

under the State plan, including third-party arrangements and awards

under the establishment authority, are consistent with the order of

selection. If any funding arrangements are inconsistent with the order

of selection, the designated State unit shall renegotiate these funding

arrangements so that they are consistent with the order of selection.

(e) State Rehabilitation Advisory Council. The designated State

unit shall consult with and seriously consider the advice of the State

Rehabilitation Advisory Council regarding the--

(1) Need to establish an order of selection, including any

reevaluation of the need under paragraph (b)(2) of this section;

(2) Priority categories of the particular order of selection;

(3) Criteria for determining individuals with the most severe

disabilities; and

(4) Administration of the order of selection.

(Approved by the Office of Management and Budget under control

number 1820-0500.)

(Authority: Secs. 7(15)(A); 12(d); 17; 101(a)(4); 101(a)(5)(A);

101(a)(7); 101(a)(11)(A); 101(a)(15)(D); 101(a)(24); 101(a)(30);

101(a)(36)(A)(ii); 107(a)(4)(B); and 504(a) of the Act; 29 U.S.C.

706(15)(A), 711(d), 716, 721(a)(4), 721(a)(5)(A), 721(a)(7),

721(a)(11)(A), 721(a)(15)(D), 721(a)(24), 721(a)(30),

721(a)(36)(A)(ii), 727(a)(4)(B), and 794(a))

[FR Doc. 96-11808 Filed 5-13-96; 8:45 am]

BILLING CODE 4000-01-P