Intent To Repay to the Connecticut Board of Education and Services for the Blind Funds Recovered as a Result of a Final Audit Determination

SUMMARY: Notice is given that under section 459 of the General

Education Provisions Act (GEPA), 20 U.S.C. 1234h, the U.S. Secretary of

Education (Secretary) intends to repay to the State of Connecticut

Board of Education and Services for the Blind (State agency), under a

grantback arrangement, an amount equal to 75 percent of the funds

recovered by the U.S. Department of Education (Department) as a result

of a final action taken by the Department on March 17, 1993 on an audit

determination. This notice describes the State agency's plans for the

use of the repaid funds and the terms and conditions under which the

Secretary intends to make those funds available. This notice invites

comments on the proposed grantback.

DATES: All comments must be received on or before March 18, 1996.

ADDRESSES: Comments concerning the grantback should be addressed to Peg

Covello, U.S. Department of Education, 600 Independence Avenue SW.,

Room 3223, Switzer Building, Washington, D.C. 20202-2735.

FOR FURTHER INFORMATION CONTACT: Peg Covello. Telephone: (202) 205-

9357. 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:

A. Background

The Department has recovered $168,940 (the $159,755 disallowance

plus interest) from the State of Connecticut Board of Education and

Services for the Blind in response to a claim arising from an audit

conducted by the Connecticut Office of Auditors of Public Accounts. The

audit period was July 1, 1985 through June 30, 1987.

The claim involved the State agency's administration of the State

Vocational Rehabilitation Services Program (CFDA No. 84.126), the

Independent Living Services for Older Individuals Who Are Blind program

(CFDA No. 84.177), and the Education of Children with Disabilities in

State Operated or Supported Schools (Chapter 1 Handicapped program)

(CFDA No. 84.009).

The final audit determination of the Regional Commissioner and the

Assistant Secretary, which was issued on September 29, 1992, found that

during the audit period the State agency had--

(a) Overexpended $110,085 in payroll costs associated with funds

under section 110 of the Rehabilitation Act of 1973, as amended (the

Act), for the Federal fiscal year (FY) that ended September 30, 1986.

Although State funds were available to adjust grant charges to the

proper funding levels between Federal and State match accounts, the

State Office of Policy and Management would not permit the charging of

Federal program salaries to State budgeted appropriation accounts. As a

result, the agency carried forward the $110,085 in payroll costs and

reported them as expenditures for the Federal fiscal year that ended

September 30, 1987. For these Federal fiscal years, grantees were

required to expend Federal funds for programs authorized by section 110

of the Act, which do not include reallotted funds, in the same Federal

fiscal year for which they were appropriated by Congress. In addition,

34 CFR 76.707 requires that obligations for personal services by an

employee of the State must be made when the services are performed.

Because the State agency had no authority to charge salaries and wages

of employees earned in one Federal fiscal year to a subsequent Federal

fiscal year, the Department sought recovery of $88,068 (the Federal 80

percent share of the $110,085);

(b) Rolled over an unexpended and unobligated balance of $32,687 in

Independent Living Services for Older Individuals Who Are Blind program

funds for the Federal fiscal year that ended September 30, 1987, into

the Federal fiscal year that ended September 30, 1988, for expenditure

without proper Federal authorization. The Education Department General

Administrative Regulations (EDGAR), 34 CFR 75.703, states that a

grantee may use grant funds only for obligations it makes during the

grant period. Because the State agency expended these FY 1987 funds in

FY 1988, the Department sought recovery of the $32,687; and

(c) Charged to the Chapter 1 Handicapped program the total salary

for one mobility instructor without the substantiation of time and

effort reporting. Section 435(b)(5) of GEPA requires the State to use

fiscal control and fund accounting procedures that will ensure proper

disbursement of, and accounting for, Chapter 1 Handicapped program

funds. Moreover, section 437(a) of GEPA requires each recipient of

Federal funds under any applicable program to keep records that fully

disclose the amount and disposition by the recipient of those funds,

the total cost of the activity for which the funds are used, the share

of that cost provided from other sources, and any other records that

will facilitate an effective audit. The Department sought return of

those unsupported expenditures of $39,000 within the statutory period.

The final determination sought the recovery of a total of $159,755

from the State agency.

The State agency appealed the final determination to the

Department's Office of Administrative Law Judges (OALJ) (Application of

the State of Connecticut: Docket No. 92-120-R) on November 9, 1992, 10

days after expiration of the 30-day appeal limit. In an Initial

Decision issued January 29, 1993, the OALJ dismissed the application

because of failure to file the Application for Review on time. On March

17, 1993 the Secretary of Education affirmed the Initial Decision. On

March 9, 1995 the State agency made the final repayment for a total

recovery, with interest, of $168,940.

The Connecticut Board of Education and Services for the Blind has

submitted a request for a grantback of $119,816 (75 percent of the

$159,755 recovered by the Department of Education). In its request the

State agency provided documentation of the actions taken to correct the

practices that resulted in the final audit determination. In October

1994, the Department conducted a comprehensive on-site State Agency

Financial Administrative Review (SAFAR) of the State agency. The review

confirmed that all of the audit recommendations had been implemented

and that the agency was in full compliance with the applicable laws and

regulations.

B. Authority for Awarding a Grantback

Section 459(a) of GEPA, 20 U.S.C. 1234h(a), provides that, whenever

the Secretary has recovered program funds following a final audit

determination with respect to an applicable program, the Secretary may

consider those funds to be additional funds available for the program

and may arrange to repay to the State agency affected by that

determination an amount not to exceed 75 percent of the recovered

funds. The Secretary may enter into this so-called ``grantback''

arrangement if the Secretary determines that the--

(1) Practices or procedures of the State agency that resulted in

the final audit determination have been corrected, and

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the State agency is, in all other respects, in compliance with

requirements of the applicable program;

(2) State agency has submitted to the Secretary a plan for the use

of the funds to be awarded under the grantback arrangement that meets

the requirements of the program and, to the extent possible, benefits

the population that was affected by the failure to comply or by the

misexpenditures that resulted in the audit exception; and

(3) Use of funds to be awarded under the grantback arrangement in

accordance with the State agency's plan would serve to achieve the

purposes of the program under which funds were originally granted.

C. Plan for Use of Funds Awarded Under a Grantback Arrangement

In accordance with section 459(a)(2) of GEPA, the State agency

submitted a plan for the proposed use of the funds in its April 10,

1995 request for a grantback. In its plan, the State agency proposes to

use the grantback of $66,051 plus the required State matching funds in

the amount of $17,877 to supplement current State Vocational

Rehabilitation Services Program activities.

Over the last two years new intake procedures have been instituted

that have resulted in an increase in intakes, clients being served, and

individuals being placed in competitive jobs. In FY 1992, 701 clients

were served, with 108 placed into competitive jobs. In FY 1993, 1,014

individuals were served, with 170 placed into competitive jobs. In FY

1994, 1,098 were served, with 177 placed into competitive jobs. Over

this same three-year period the agency has received level or marginal

funding increases at both the State and Federal levels. At the same

time, program costs have increased each year in the areas of: (1)

Adaptive technology, 31 percent of the FY 1995 budget commitments, with

an 11 percent increase in costs over FY 1994; (2) College training, 21

percent of the FY 1995 budget commitments, with a 35 percent increase

in costs over FY 1994; (3) Employment related training, 20 percent of

the FY 1995 budget, with an 81 percent increase in costs over FY 1994;

and (4) Personal adjustment training, which shows a 200 percent

increase over FY 1994. All of these factors combined have strained the

available funds to meet program goals, and a grantback authorization

would have a very positive impact on the agency's ability to continue

increasing its number of competitive placement outcomes.

In its plan the State agency proposes to use the grantback of

$24,515 plus the required State matching funds in the amount of $2,724

to supplement current Independent Living Services for Older Individuals

Who are Blind activities. The grantback funds would be used

specifically to design, pilot-test, and print a train-the-trainer

guide.

The guide would be used by key service providers, senior center

staff, day care staff, independent living staff, and other community

services personnel. Emphasis would be placed on improving the daily

independence of older visually impaired individuals.

The State agency would direct its outreach activities toward older

individuals who are unserved and underserved by traditional agencies in

the field of blindness.

In its plan the State agency proposes to use the grantback of

$29,250 (no State match required) to supplement current activities

authorized under Part B of IDEA that were previously authorized and

funded under the Chapter 1 Handicapped program, which was terminated

effective FY 1995. The funds will be used specifically to provide

Computer Camp and Social and Recreational Camp experiences for legally

blind children in State operated or supported schools. The children

will learn applications of advanced technology to produce braille,

large print, and synthesized speech. The summer camps also provide

recreational and social skill development, low-vision evaluations, aids

and devices, and follow-up training.

D. The Secretary's Determinations

The Secretary has reviewed the State agency's request for a

grantback of funds, the State agency's plan (as outlined in the

preceding section of this notice), and other information submitted by

the State agency. Based upon that review, the Secretary has determined

that the conditions contained in section 459 of GEPA have been met.

The determinations are based upon the best information available to

the Secretary at the present time. If, at a later date, this

information is discovered to have been inaccurate or incomplete, the

Secretary will not be precluded from taking appropriate administrative

action at that time. In finding that the conditions of section 459 of

GEPA have been met, the Secretary makes no determination concerning any

pending audit recommendation or final audit determination.

E. Notice of the Secretary's Intent To Enter Into a Grantback

Arrangement

Section 459(d) of GEPA requires that, at least 30 days prior to

entering into an arrangement to award funds under a grantback, the

Secretary publish in the Federal Register a notice of intent to do so,

and the terms and conditions under which the payment will be made.

In accordance with section 459(d) of GEPA, notice is hereby given

that the Secretary intends to make funds available to the Connecticut

Board of Education and Services to the Blind under a grantback

arrangement, as authorized by section 459. The grantback award will be

in the amount of $119,816. This amount is 75 percent--maximum

percentage authorized by section 459--of the amount of funds recovered

by the Department. The Secretary's intent to award the maximum amount

of grantback funds possible under section 459 is based upon the

determinations outlined in section D of this notice.

F. Terms and Conditions Under Which Payments Under a Grantback

Arrangement Will Be Made

The State agency agrees to comply with the following terms and

conditions under which payments under a grantback arrangement will be

made:

(a) The funds awarded under the grantback and the required State

matching funds must be expended in accordance with--

(1) All applicable statutory and regulatory requirements of The

State Vocational Rehabilitation Services Program, including those

provisions relating to an order of selection if such an order is in

effect during the grantback period, the Independent Living Services for

Older Individuals Who Are Blind program, and Part B of IDEA, as

appropriate;

(2) The plan and the request for the grantback that were submitted

on April 10, 1995, and any other amendments to that plan that are

approved in advance of the grantback award by the Secretary; and

(3) The budget that was submitted with the plan and any amendments

to the budget that are approved in advance by the Secretary.

(b) Pursuant to section 459(c) of GEPA, all funds received under

this grantback arrangement must be obligated no later than September

30, 1996.

(c) The State agency must submit two annual reports (not later than

December 31, 1995 and December 31, 1996 respectively) to the Secretary

that--

(1) Indicate how the funds awarded under the grantback and the

State matching funds have been expended in accordance with the proposed

plan; and

(2) Describe the results and effectiveness of the project for which

the funds were expended.

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(d) The State matching funds expended under the grantback

arrangement in accordance with The State Vocational Rehabilitation

Services Program will be counted for maintenance of effort purposes

under The State Vocational Rehabilitation Services Program.

(e) Separate accounting records must be maintained documenting the

expenditure of all funds under the grantback arrangement.

(f) Before funds will be repaid pursuant to this notice, the State

agency must repay to the Department any debts that become overdue or

enter into a repayment agreement for those debts.

(Catalog of Federal Domestic Assistance Numbers 84.126 The State

Vocational Rehabilitation Services Program; 84.177 Independent

Living Services for Older Individuals Who Are Blind; and 84.027

Assistance to States for Education of Children With Disabilities)

Dated: February 9, 1996.

Howard R. Moses,

Acting Assistant Secretary for Special Education and Rehabilitative

Services.

[FR Doc. 96-3451 Filed 2-14-96; 8:45 am]

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