The State Vocational Rehabilitation Services Program

DEPARTMENT OF EDUCATION

34 CFR Part 361

RIN 1820-AB14

The State Vocational Rehabilitation Services Program

AGENCY: Office of Special Education and Rehabilitative Services,

Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the regulations governing The

State Vocational Rehabilitation (VR) Services Program. These amendments

are needed to implement changes in the Rehabilitation Act of 1973, as

amended (Act). The proposed regulations would establish evaluation

standards and performance indicators for The State VR Services Program.

DATES: Comments must be received by the Department on or before

November 30, 1998.

ADDRESSES: All comments concerning these proposed regulations should be

addressed to Fredric K. Schroeder, Commissioner, Rehabilitation

Services Administration (RSA), U.S. Department of Education, 600

Independence Avenue, SW., Room 3028, Mary E. Switzer Building,

Washington, DC 20202-2531. Comments transmitted by facsimile should be

sent to (202) 205-9772 or (202) 260-7527. Comments may also be sent

through the Internet to: [email protected].

You must include the term ``VR Standards'' in the subject line of

your electronic message.

Electronic transmission of comments will facilitate the analysis of

comments. Also, comments should be specific and identified by proposed

regulatory citation. RSA is not required to consider comments received

after the due date for comments noted previously.

Comments that concern information collection requirements must be

sent to the Office of Management and Budget (OMB) at the address listed

in the Paperwork Reduction Act section of this preamble. A copy of

those comments may also be sent to the Department representative named

in this section.

FOR FURTHER INFORMATION CONTACT: Beverlee Stafford, Policy, Planning

and Evaluation Service, Rehabilitation Services Administration, U.S.

Department of Education, 600 Independence Avenue, SW., Room 3014 Mary

E. Switzer Building, Washington, DC 20202-2550. Telephone: (202) 205-

8831. Individuals who use a telecommunications device for the deaf

(TDD) may call the Federal Information Relay Service (FIRS) at 1-800-

877-8339 (in the Washington, DC area, telephone (202) 708-9300) between

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

Individuals with disabilities may obtain this document in an

alternate format (e.g., Braille, large print, audiotape, or computer

diskette) on request to the contact person listed in the preceding

paragraph.

For fiscal year (FY) 1996 performance data reports on individual

DSUs, please contact Harold Kay, Policy, Planning and Evaluation

Service, Rehabilitation Services Administration, Room 3014 Mary E.

Switzer Building, 600 Independence Avenue, SW., Washington, DC 20202-

2550. Telephone: (202) 205-9883. Internet: Harold__K[email protected].

SUPPLEMENTARY INFORMATION:

Invitation to Comment:

Interested persons are invited to submit comments and

recommendations regarding these proposed regulations. To ensure that

public comments have maximum effect in developing the final

regulations, the Department urges commenters to identify clearly the

specific section or sections of the proposed regulations that each

comment addresses and to arrange comments in the same order as the

proposed regulations.

All comments submitted in response to these proposed regulations

will be available for public inspection, during and after the comment

period, in Room 3214, 330 C Street, SW., Washington, DC, between the

hours of 8:30 a.m. and 4:00 p.m., Eastern time, Monday through Friday

of each week except Federal holidays.

On request the Department supplies an appropriate aid, such as a

reader or print magnifier, to an individual with a disability who needs

assistance to review the comments or other documents in the public

rulemaking docket for these proposed regulations. An individual with a

disability who wants to schedule an appointment for this type of aid

may call (202) 205-8113 or (202) 260-9895. An individual who uses a TDD

may call the Federal Information Relay Service at 1-800-877-8339,

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

To assist the department in complying with the specific

requirements of Executive Order 12866 and its overall requirement of

reducing regulatory burden, the Secretary invites comments on whether

there may be further opportunities to reduce any regulatory burdens

found in these proposed regulations.

General

These proposed regulations would amend the regulations in Part 361

of the Code of Federal Regulations governing The State Vocational

Rehabilitation Services Program (VR program) by adding a Subpart E to

implement certain requirements of the Rehabilitation Act Amendments of

1992 (1992 Amendments), Pub. L. 102-569, and the Rehabilitation Act

Amendments of 1998 (1998 Amendments), as specified in Title IV of the

Workforce Investment Act of 1998 (Workforce Act), Pub. L. 105-220,

August 7, 1998. The 1992 Amendments added section 106 to Part A of

Title I of the Rehabilitation Act of 1973, as amended, which authorizes

the VR program. Title IV of the Workforce Act, which contains the 1998

Amendments, modifies section 106 of the Act to require that, to the

maximum extent practicable, the VR standards and indicators be

consistent with the core indicators of performance (Core Indicators)

established under section 136(b) of the Workforce Act. Section 106 also

requires, among other things, the following: (1) The Secretary

establishes and publishes in the Federal Register evaluation standards

and performance indicators for the VR program. (2) The evaluation

standards and performance indicators must include outcome and related

measures of program performance that facilitate and in no way impede

the accomplishment of the purpose and policy of the program. (3) The

evaluation standards and performance indicators must be developed with

input from designated State units (DSUs) for VR, related professional

and consumer organizations, recipients of VR services, and other

interested parties. (4) Each DSU shall report to the Secretary after

the end of each fiscal year the extent to which it is in compliance

with the evaluation standards and performance indicators. (5) The

Secretary provides technical assistance to any DSU that performs below

the established evaluation standards and develops jointly with a DSU a

program improvement plan outlining specific actions to be taken by a

DSU to improve program performance. (6) If a DSU that performs below

the established evaluation standards fails to enter into a program

improvement plan, or is not complying substantially with the terms and

conditions of such a program improvement plan, the Secretary reduces or

makes no further payments to the DSU until the DSU has entered into an

approved program improvement plan or is complying substantially with

the terms and conditions of such a

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program improvement plan. (7) RSA provides a report to Congress

containing an analysis of program performance, including relative State

performance, based on the evaluation standards and performance

indicators.

These proposed regulations would implement those requirements in

section 106.

Executive Order 12866 encourages Federal agencies to facilitate

meaningful participation in the regulatory development process.

Accordingly, the U.S. Department of Education (Department) has widely

consulted with the rehabilitation community during the development of

the current proposed evaluation standards and performance indicators.

On February 19, 1993, the Department published a notice of intent to

regulate in the Federal Register (58 FR 9458) to solicit comment on the

development of the proposed evaluation standards and performance

indicators. The Department also held a public meeting on September 23,

1993, to discuss several issues relating to the development of proposed

evaluation standards and performance indicators. Since that time, the

Commissioner of RSA has discussed the development of the proposed

indicators on many occasions with various members of the rehabilitation

community. These proposed regulations contain proposed evaluation

standards and performance indicators that reflect the input received

through these efforts.

The proposed regulations contain two evaluation standards, each of

which has at least two or more implementing performance indicators by

which to measure DSU performance. The proposed regulations also contain

specific performance levels for each indicator that identify the

minimum level of performance that a DSU would need to achieve in order

to pass a given indicator. Under these proposed regulations, a DSU

would have to pass a minimum of five of the seven performance

indicators, including at least two of the three primary indicators, for

Evaluation Standard 1, and both performance indicators for Evaluation

Standard 2.

The Secretary plans to propose other evaluation standards in

addition to the two standards included in these proposed regulations,

once appropriate data-gathering instruments and methods for measuring

compliance with the additional standards have been developed and

tested. The Secretary is considering three additional standards and

implementing performance indicators. These ``draft proposed standards

and indicators'' are identified and discussed in a separate section of

this preamble. The Secretary solicits public comment on issues

regarding the validity and feasibility of implementing these draft

proposed evaluation standards and performance indicators. The Secretary

also requests comments on identifying available data-gathering

instruments and methods for measuring compliance with the draft

proposed performance indicators. Based on the public comments received

and on the results of the data gathering, the Secretary intends to

revise these draft proposed standards and indicators and publish them

for comment in a future notice of proposed rulemaking (NPRM).

Proposed Evaluation Standards 1 and 2

Background

The following is a brief overview of the evaluation standards and

performance indicators included in these proposed regulations

(Evaluation Standards 1 and 2; Performance Indicators 1.1 through 1.7

and 2.1 through 2.2), including a discussion of the role of the

standards and indicators in the oversight of the VR program.

Accountability for the VR program is established primarily through

the Government Performance and Results Act (GPRA), the Title I

evaluation standards and performance indicators, DSU State Plans, and

program monitoring. GPRA requires that U.S. Government programs provide

annual plans that include program outcome indicators. RSA has proposed

national aggregate outcome indicators to meet GPRA requirements, and

the Title I evaluation standards and performance indicators are closely

related to the GPRA indicators. The Title I evaluation standards and

performance indicators measure performance at the DSU level, while the

GPRA indicators measure the aggregate performance of all DSUs.

Each DSU submits a State Plan containing assurances and specific

information demonstrating compliance with the requirements of section

101 of the Act. The 1998 Amendments revised section 101(a)(15) of the

Act to require DSUs to use the results of a comprehensive statewide

assessment of rehabilitation needs and the Title I evaluation standards

and performance indicators as bases for developing DSU goals and

priorities. In addition, under section 107(a)(1) of the Act, RSA

conducts monitoring to ``determine whether, in the administration of

the State Plan, a State is complying substantially with the provisions

of such plan and with evaluation standards and performance indicators

established under section 106 [of the Act].'' Thus, the Title I

evaluation standards and performance indicators are considered a

crucial part of a comprehensive, integrated system of accountability

for the VR program.

Proposed Evaluation Standard 1, which measures employment outcomes,

includes seven performance indicators. Because the Secretary considers

three of these performance indicators particularly representative of

the central purposes of the VR program, these three performance

indicators would be identified as ``primary'' indicators.

Primary indicators address the areas the Secretary considers most

significant in evaluating a DSU's success in assisting individuals with

disabilities, including individuals with significant disabilities, to

achieve high-quality employment outcomes. The first of these primary

indicators would measure the percentage of all individuals determined

to have achieved an employment outcome who exit the VR program into

competitive, self-, or ``Business Enterprise Program'' (BEP) employment

with earnings equivalent to at least the minimum wage (Performance

Indicator 1.3). The second primary indicator would measure individuals

with significant disabilities as a percentage of all individuals who

exit the VR program into competitive, self-, or BEP employment with

earnings equivalent to at least the minimum wage (Performance Indicator

1.4). The third primary indicator would measure the average hourly

earnings of all individuals who exit the VR program in competitive,

self-, or BEP employment with earnings levels equivalent to at least

the minimum wage as a ratio to the State's average hourly earnings for

all individuals in the State who are employed (as derived from the

Bureau of Labor Statistics report ``State Average Annual Pay'' for the

most recent available year) (Performance Indicator 1.5). The four

remaining performance indicators under Evaluation Standard 1 would

measure the number of employment outcomes (Performance Indicator 1.1),

the percentage of cases with employment outcomes (Performance Indicator

1.2), self-sufficiency resulting from employment (Performance Indicator

1.6), and employment outcomes with medical insurance plans that cover

hospitalization (Performance Indicator 1.7). A DSU would have to pass

two of the three primary indicators and a total of at least five of the

seven performance indicators to meet the performance requirements for

Evaluation Standard 1.

These proposed performance indicators are designed to ensure that

DSUs assist adequate numbers and proportions of individuals with

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disabilities to obtain employment outcomes, gain access to medical

insurance plans that cover hospitalization, and become self-sufficient.

The proposed performance indicators also emphasize high quality

competitive employment outcomes with adequate earnings, particularly

for individuals with significant disabilities.

The Secretary recognizes that high performance on some of these

proposed performance indicators could result in lower performance on

others. The performance indicators have been designed to support those

results in appropriate instances. For example, if a DSU decides to

focus more of its resources on assisting persons with significant

disabilities to achieve high-quality competitive employment outcomes

(which would enhance performance on Performance Indicator 1.4), fewer

persons with less significant disabilities would be served and the

total number of persons achieving employment outcomes (Performance

Indicator 1.1) would likely decline. The proposed regulations,

therefore, designate Performance Indicator 1.4 (and not Performance

Indicator 1.1) as primary in recognition of the difficulty in

satisfying both. Designating Performance Indicator 1.4 as primary is

also appropriate since it reflects two central purposes of the VR

program: addressing the needs of individuals with significant

disabilities and facilitating competitive employment outcomes.

A DSU would have to pass both of the performance indicators for

proposed Evaluation Standard 2, which measures equality of access to

rehabilitation services. The first performance indicator for proposed

Evaluation Standard 2 would compare service rates for minorities and

non-minorities. The second indicator for proposed Evaluation Standard 2

would compare the percentage of minorities with significant

disabilities who exit the VR program after receiving services under an

Individualized Plan for Employment (IPE) as a ratio to the percentage

of minorities in the State who have reported that a disability prevents

them from working.

As required by section 106(a)(1)(C) of the Act, the standards and

indicators developed under the VR program must be consistent, to the

maximum extent practicable, with the four Core Indicators established

under section 136(b) of the Workforce Act. Accordingly, the proposed

performance indicators under proposed Evaluation Standard 1 (Employment

Outcomes) reflect the first Core Indicator (Core Indicator I--entry

into unsubsidized employment) established under section

136(b)(2)(A)(i)(I) of the Workforce Act. In particular, performance

indicators 1.3 (percentage of individuals obtaining competitive

employment) and 1.4 (percentage of individuals with significant

disabilities obtaining competitive employment) are consistent with Core

Indicator I since performance indicators 1.3 and 1.4 represent the

proportions of individuals and individuals with significant

disabilities who obtain competitive employment. ``Competitive

employment'' is considered equivalent to ``unsubsidized employment,''

the term used in the Workforce Act to refer to instances in which an

individual is self-employed or is paid directly by the individual's

employer rather than through a separate source or entity that is

subsidizing the employment. On the other hand, performance indicators

1.1 and 1.2 measure the extent to which individuals achieve

``employment outcomes'' generally, which would include both competitive

employment outcomes and other outcomes that are not considered

unsubsidized employment (e.g., unpaid homemaker or unpaid family

worker). Thus, although performance indicators 1.1 and 1.2 are

necessary to address the full scope of employment outcomes achieved by

participants in the VR program, those indicators are not entirely

consistent with Core Indicator I of the Workforce Act. Finally,

performance indicators 1.5, 1.6, and 1.7 refer to other key factors

associated with a successful VR program--earnings, employment as the

main source of support, and employment benefits, respectively--and,

therefore, are not necessarily aligned with Core Indicator I.

The core indicators in the Workforce Act do not address equal

access to services (Evaluation Standard 2 in the proposed regulations),

consumer satisfaction (draft proposed Evaluation Standard 3 in this

preamble), or the adequate use of resources (draft proposed Evaluation

Standard 5 in this preamble). Thus, although the Secretary believes

these measures are (or in the case of the draft proposed standards,

could be) important factors to a successful VR program, the performance

indicators for each of these standards are not based on the Workforce

Act. Draft proposed Evaluation Standard 3 and its attendant performance

indicators, however, are related to the customer satisfaction indicator

in section 136(b)(2)(B) of the Workforce Act since both measure the

satisfaction of service recipients under applicable programs.

The draft proposed performance indicators under draft proposed

Evaluation Standard 4 (retention of employment and earnings), which are

described in a separate section of this preamble, are consistent with

Core Indicators II and III under section 136(b)(2)(A)(i)(II) and (III)

of the Workforce Act. Core Indicators II and III measure retention of

unsubsidized employment and earnings over a 6-month period, whereas the

draft proposed performance indicators would measure retention of

competitive employment outcomes (the equivalent of unsubsidized

employment), including earnings, over both a 6-and 12-month period in

order to address the difficulties experienced by individuals with

disabilities in retaining employment over time. The 12-month review

under the draft proposed indicator is also based on section

136(d)(2)(D) of the Workforce Act, which requires States to report on

participants' retention of employment and earnings received in

unsubsidized employment 12 months after entry into employment.

None of the proposed evaluation standards or performance indicators

reflect Core Indicator IV under section 136(b)(2)(A)(4) of the

Workforce Act (attainment of a recognized credential relating to

achievement of educational or occupational skills) since attaining a

recognized credential for achieving a skill has not been a stated goal

of the VR program. Performance under the VR program is currently based

solely on the extent to which individuals achieve and maintain

employment. However, for some individuals, attainment of appropriate

credentials is a necessary step in achieving their employment goals.

Therefore, the Secretary invites comment on the appropriateness of

including Core Indicator IV as a key measure of success in meeting the

goals of the VR program. If commenters believe that such an indicator

would be appropriate, suggestions on how such an indicator might be

implemented are invited.

The proposed evaluation standards and performance indicators would

be implemented beginning in FY 1999, and DSU data would be due at the

end of FY 1999. The data that are necessary to measure compliance with

the proposed indicators are currently being collected under existing

reporting requirements. Specifically, information contained in the Case

Service Report (RSA-911 report), which DSUs submit annually to RSA,

will be used to demonstrate performance under proposed Evaluation

Standard 1 (Employment outcomes) and

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proposed Evaluation Standard 2 (Equal access to services).

Proposed Subpart E also would require that each DSU report selected

data to the Secretary after the end of each fiscal year so that the

Secretary could determine whether the DSU is in compliance with the

proposed evaluation standards and performance indicators. If the

performance of any DSU falls below required levels, the Secretary would

provide technical assistance to the DSU, and the DSU and the Secretary

would jointly develop a program improvement plan outlining the specific

actions to be taken by the DSU to improve program performance.

The Secretary would review a DSU's compliance with its program

improvement plan on a biannual basis, and, if necessary, the Secretary

would request that a DSU make further revisions to the plan to improve

performance. If the Secretary establishes new performance levels while

a program improvement plan is in effect, the Secretary and the DSU

would jointly modify the program improvement plan to meet the new

performance levels. Reviews would continue and requests for revisions

would be made until the DSU achieved satisfactory performance based on

current performance levels over a period of more than one year.

If the Secretary determines that a DSU with less than satisfactory

performance has failed to enter into a program improvement plan or

comply substantially with the terms and conditions of such a program

improvement plan, the Secretary reduces or makes no further payments to

the DSU under this program until the DSU has met one of these two

requirements or raised its subsequent performance to meet the current

overall minimum satisfactory level on the compliance indicators.

Section-by-Section Analysis

Section 361.80--Purpose

Proposed Sec. 361.80 states that the purpose of this new subpart is

to establish evaluation standards and performance indicators for The

State VR Services Program.

Section 361.81--Applicable Definitions

Proposed Sec. 361.81 contains definitions of terms that apply to

the evaluation standards and performance indicators in this new

subpart. In addition to the definitions identified in this proposed

section, the definitions in Sec. 361.5, including the definitions of

``competitive employment'' and ``employment outcome,''

Sec. 361.5(b)(10) and (15), respectively, apply to the proposed

evaluation standards and performance indicators.

The proposed term ``average hourly earnings,'' which is used in

proposed Performance Indicator 1.5, Sec. 361.84(c)(1)(v), under

Evaluation Standard 1, would be determined by dividing the ``weekly

earnings at closure'' data element by the ``hours worked at closure''

data element from the RSA-911 report. An eligible individual's average

hourly earnings would be calculated for the week prior to the

individual's exiting the VR program after achieving a competitive

employment outcome.

The term ``Business Enterprise Program (BEP)'' would be defined as

an employment outcome in which an individual with a significant

disability operates a vending facility or other small business under

the management and supervision of a DSU. This definition would apply

only to the individual operating the enterprise under the management

and supervision of the DSU and would not apply to wage-earners or other

employees who work for the business. This term is used in proposed

Performance Indicators 1.3, 1.4, 1.5, and 1.6, Sec. 361.84(c)(1)(iii),

(iv), (v), and (vi), respectively, under proposed Evaluation Standard 1

(Employment outcomes), Sec. 361.82(c)(1).

The proposed definition of ``exit the VR program'' is based on the

service record closure categories in the RSA-911 report and would apply

whenever an individual's record of services is closed because the

individual was determined ineligible for VR services; achieved an

employment outcome; received services under an IPE but did not achieve

an employment outcome; or was determined eligible but did not receive

services under an IPE. This term is used in all performance indicators

under proposed Evaluation Standard 1 and in Performance Indicator 2.2,

Sec. 361.84(c)(2)(ii), under proposed Evaluation Standard 2 (Equal

access to services), Sec. 361.82(c)(2).

The proposed definition of ``full-time employment'' is an

employment outcome in which an eligible individual worked for a minimum

of 35 hours in the week before closure. This term is used in proposed

Performance Indicator 1.7, Sec. 361.84(c)(1)(vii), under Evaluation

Standard 1.

The proposed definition of ``general or combined DSU'' is a DSU

that does not exclusively serve individuals with visual impairments or

blindness. This term is used in proposed Sec. 361.86(b)(1) and (2).

The proposed definition of ``individuals from a minority

background'' is derived from RSA-911 reporting categories and is

consistent with governmentwide classifications of race and ethnicity.

This term is used in both performance indicators, Sec. 361.84(c)(2)(i)

and (ii), under proposed Evaluation Standard 2, Sec. 361.82(c)(2).

The proposed definition of ``minimum wage'' is the Federal or State

minimum wage, whichever is higher. Pursuant to Sec. 361.5(b)(10),

``competitive employment'' is employment in an integrated setting, at

or above the minimum wage, but not less than the customary wage and

level of benefits paid by the employer for the same or similar work

performed by non-disabled individuals. If a State minimum wage is

higher than the Federal, then employment in that State would not be

considered competitive if the individual's wage did not equal or exceed

the State minimum wage. This term is used in proposed Performance

Indicators 1.3, 1.4, 1.5, and 1.6, Sec. 361.84(c)(1)(iii), (iv), (v),

and (vi), respectively.

The proposed definition of ``non-minority individuals'' means those

individuals who report their race as White. This term is used in

proposed Performance Indicator 2.1, Sec. 361.84(c)(2)(i).

The proposed definition of ``performance period'' is the period of

time for which a DSU's performance is measured. For general and

combined DSUs, that period would be one year and performance data would

be aggregated over a one-year period commencing in FY 1999. However,

the number of individuals in any single year who exit a program

administered by a DSU that serves only individuals with visual

impairments or blindness is generally too small to serve as a reliable

and valid measure of performance. Thus, for DSUs that serve only

individuals with visual impairments or blindness, the performance

period would be two years. These DSUs would be required to report two

consecutive years of performance data; the first report would include

FY 1998 and FY 1999 data. At the end of FY 2000, the general and

combined DSUs would report FY 2000 data, and the DSUs that serve only

individuals with visual impairments or blindness would report

aggregated FY 1999 and FY 2000 data.

The proposed definition of ``primary indicator'' is used to

identify those performance indicators that place particular emphasis on

the extent to which State VR programs assist individuals, particularly

individuals with significant disabilities, to achieve competitive,

self-, or BEP employment with earnings equivalent to the minimum wage

or higher; and the

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average hourly earnings of individuals who exit the VR program in

competitive, self-, or BEP employment with earnings equivalent to the

minimum wage or higher relate to the State's average hourly earnings

for all employed individuals. As discussed previously, the significance

accorded these indicators is based on the emphasis the Act places on

competitive employment and on serving individuals with significant

disabilities.

In addition, emphasizing achievement of competitive, self-, and BEP

employment at earnings that are comparable to those achieved by

individuals without disabilities is intended as a means of addressing

the high unemployment and poverty levels experienced by individuals

with disabilities. The Secretary believes achieving these goals would

foster increased economic independence and integration into the

workforce for individuals receiving services under the VR program. The

three proposed ``primary'' indicators are designed to provide an

accurate measure of how well a State's VR program addresses these

goals. The term ``primary indicator'' is used in proposed 361.86(b)(1).

The proposed definition of ``RSA-911'' is the Case Service Report

that DSUs provide to RSA on each individual exiting the VR program. The

Case Service Report includes data on employment outcomes, demographic

characteristics, and services received by individuals eligible for VR

services. This term is used in proposed Sec. 361.88, ``Reporting

requirements.''

The proposed definition of ``self-employment'' is consistent with

the ``self-employment'' reporting element on the RSA-911 report and is

used in proposed Performance Indicators 1.3, 1.4, 1.5, and 1.6.

The proposed definition of ``service rate'' is the number of

eligible individuals who exit a VR program after receiving one or more

services under an IPE as a percentage of all individuals exiting the

program. This term is used in proposed Performance Indicator 2.1.

The proposed term ``State's Average Hourly Earnings'' means the

average hourly earnings of all persons in the State in which the DSU is

located. Average hourly earnings would be derived by dividing the

State's average annual pay, as reported in the Bureau of Labor

Statistics report, ``State Average Annual Pay,'' by 2,000--the average

number of working hours in a year. This term is used in proposed

Performance Indicator 1.5, Sec. 361.84(c)(1)(v), under Evaluation

Standard 1.

Section 361.82--Evaluation Standards

Proposed Sec. 361.82 contains the evaluation standards for the VR

program. These proposed evaluation standards are based upon the

requirement in section 106 of the Act that the evaluation standards and

performance indicators facilitate the accomplishment of the policy and

purpose of the VR program. Proposed Sec. 361.82(b) would require that a

DSU achieve successful performance on both Evaluation Standards 1 and

2.

Proposed Evaluation Standard 1 (Employment outcomes)

Proposed Evaluation Standard 1, Sec. 361.82(c)(1), would require a DSU

to assist eligible individuals with disabilities, including individuals

with significant disabilities, to obtain, maintain, or regain high

quality employment outcomes. The quality of an employment outcome is

based on whether the outcome is consistent with the individual's

vocational choices; is in competitive, self-, or BEP employment;

maintains or increases the individual's earnings; and provides medical

insurance plans covering hospitalization.

In adopting the 1992 Amendments to the Act, Congress emphasized the

need for individuals with disabilities, including individuals with

significant disabilities, to become gainfully employed through work

that they are both capable of, and interested in, performing. Hence,

the Act specifies, in a number of instances, that individuals receiving

support under the Act should be able to pursue employment that is

consistent with their unique abilities (e.g., sections 100(a)(1)(F) and

102(b)(3)(A)) and their informed choice (e.g., sections 100(a)(3)(C),

101(a)(19), and 102(d)). The Act also places particular emphasis on

competitive employment (e.g., in the definition of ``employment

outcome'' in section 7(11) and in the annual review of extended

employment placements required by section 101(a)(14)). The Secretary

believes that these provisions indicate that the success of the VR

program is based in large part on the ability of eligible individuals

with disabilities to become self-sufficient by working in the

competitive labor market. Thus, proposed Evaluation Standard 1 would

assess a DSU's success in assisting individuals with disabilities,

including individuals with significant disabilities, to achieve

employment outcomes with an emphasis on competitive employment outcomes

(which includes self-employment and BEP outcomes) in integrated

settings.

Proposed Evaluation Standard 2 (Equal access to services).

Proposed Evaluation Standard 2, Sec. 361.82(c)(2), would require a DSU

to ensure that individuals from minority backgrounds have equal access

to VR services. This standard was developed in recognition of

congressional findings of past inequities between the treatment

received by minorities and non-minorities under the VR program. In

addition, the Secretary believes that measuring DSU performance in

serving minority populations is consistent with the obligation of a DSU

to demonstrate, pursuant to section 21 of the Act, how it will address

the needs of individuals with disabilities from minority backgrounds.

Section 361.84--Performance Indicators

Proposed Sec. 361.84 lists the performance indicators that measure

minimum compliance with the evaluation standards. There are nine

performance indicators, three of which (proposed performance indicators

1.3, 1.4, and 1.5) are primary indicators.

Employment Outcomes

Proposed Performance Indicator 1.1. Proposed Performance

Indicator 1.1, Sec. 361.84(c)(1)(i), would compare the total numbers of

individuals obtaining an employment outcome during the current and

previous performance periods.

Proposed Performance Indicator 1.2. Proposed Performance

Indicator 1.2, Sec. 361.84(c)(1)(ii), would measure the number of

persons obtaining an employment outcome as a percentage of all persons

exiting the program after receiving VR services. This percentage would

indicate the proportion of eligible individuals who obtain an

employment outcome.

Proposed Performance Indicator 1.3. Proposed Performance

Indicator 1.3, Sec. 361.84(c)(1)(iii), would measure the number of

persons obtaining a competitive, self-, or BEP employment outcome as a

percentage of all persons obtaining any type of employment outcome.

This indicator would demonstrate a DSU's success in assisting

individuals to obtain competitive, self-, and BEP outcomes. These types

of outcomes generally provide individuals with disabilities far greater

earnings, economic independence, and social integration into the

community than do other available outcomes, such as extended

employment, homemaker, or unpaid family worker. As discussed

previously, the Secretary recognizes that achieving a high performance

on this indicator may lower a DSU's performance on other indicators

(e.g., Performance Indicators 1.1 or 1.2). For that reason,

[[Page 55297]]

and because this indicator reflects the Act's emphasis on competitive

employment, this indicator would be designated as a primary indicator.

Proposed Performance Indicator 1.4. Proposed Performance

Indicator 1.4, Sec. 361.84(c)(1)(iv), would measure the percentage of

competitively employed individuals who have significant disabilities.

Given the challenges associated with competitive work, it is generally

more difficult and expensive for DSUs to assist individuals with

significant disabilities, as opposed to individuals with non-

significant disabilities, to obtain competitive,

self, or BEP employment. Therefore, Performance Indicator 1.4 also

would be designated as a primary indicator to account for DSUs that

make trade-offs in other activities to enhance their performance on

this indicator.

Proposed Performance Indicator 1.5. Proposed Performance

Indicator 1.5, Sec. 361.84(c)(1)(v), would measure the average hourly

earnings of all individuals who exit the VR program in competitive,

self-, or BEP employment with earnings levels equivalent to at least

the minimum wage as a ratio to the State's average hourly earnings for

all individuals in the State who are employed. This performance

indicator, also a primary indicator, would reflect the additional time,

money, and effort required to assist individuals with disabilities to

obtain earnings that are comparable to the earnings of non-disabled

persons in the State.

Proposed Performance Indicator 1.6. Proposed Performance

Indicator 1.6, Sec. 361.84(c)(1)(vi), would measure the difference

between the percentage of individuals who exit the VR program in

competitive, self-, or BEP employment with earnings equivalent to at

least the minimum wage who report their own income as their largest

single source of economic support and the percentage of individuals in

that employment who reported their own income as their largest single

source of support at the time they applied for VR services. This

indicator would apply to all persons who obtain competitive, self-, or

BEP employment at or above the minimum wage and would measure gains in

self-sufficiency. As an example in applying this indicator, if 10

percent of competitively employed individuals relied on their own

income at the time of application for VR services and 70 percent relied

on their own income at the time of closure, the difference between the

percentages would be 60 percent. This indicator would demonstrate a

DSU's success in assisting individuals with disabilities to become more

economically independent as a result of their employment.

Proposed Performance Indicator 1.7. Proposed Performance

Indicator 1.7, Sec. 361.84(c)(1)(vii), would measure the extent to

which DSUs assist individuals with disabilities to obtain full-time

competitive employment with medical insurance plans that cover

hospitalization. Many U.S. employers offer their workers a wide variety

of medical insurance plans. However, because these plans vary greatly

among employers, measuring them in a consistent, non-burdensome manner

is very difficult. Persons who obtain self-or BEP employment or who

work less than 35 hours per week would not be included in this

performance indicator because individuals who work for themselves,

operate a business under the management and supervision of a DSU, or

work part-time are less likely to secure employer-paid medical

insurance plans.

The Secretary invites comment on whether this indicator is a fair

measure of a DSU's performance in assisting individuals to obtain

successful employment outcomes.

Data for Performance Indicators 1.1 through 1.7. The

employment outcomes covered under Performance Indicator 1.1 and in

Performance Indicators 1.3 through 1.6 are reported under ``employment

status at closure'' in the RSA-911 report. The employment outcomes

covered under Performance Indicator 1.2 are reported under ``type of

closure'' in the RSA 911. However, competitive, self-, and BEP

employment outcomes, as used in Performance Indicators 1.3 through 1.6,

apply only to individuals earning at least the minimum wage. An

individual's earnings would be determined first by dividing the

``weekly earnings at closure'' RSA-911 data element by the ``hours

worked at closure'' RSA-911 data element and then by comparing the

resultant hourly earnings with the relevant Federal or State minimum

wage.

``Own income as the major source of support'' is currently reported

in the RSA-911 report as ``personal income,'' which is an element under

``Primary source of support at application and primary source of

support at closure.''

The availability of medical insurance that covers hospitalization

also is currently reported in the RSA-911 report. Consistent with the

RSA-911 reporting instructions, a DSU would not be required to

determine--(a) whether the individual has enrolled or will enroll in

such a plan; (b) whether the individual has to pay for all, some, or

none of the plan premiums; or (c) how adequate the plan is for the

individual's needs. A DSU need only report that such an employment-

based plan exists and that the individual exiting the VR program has

the option of enrolling in a medical insurance plan that covers

hospitalization through his or her employer.

Equal Access to Services

Proposed Performance Indicator 2.1. Proposed Performance

Indicator 2.1, Sec. 361.84(c)(2)(i), would measure whether individuals

from minority backgrounds have been provided services at the same rate

as non-minority individuals. However, if a DSU did not meet the

performance level for Performance Indicator 2.1, it would satisfy this

indicator by demonstrating that it had made adequate efforts to ensure

that individuals from minority backgrounds have equal access to VR

services. A DSU that did not meet the performance level for Performance

Indicator 2.1 would have to demonstrate that its procedures, policies,

and practices, particularly with regard to eligibility determinations

and service provision, were not discriminatory. This indicator does not

require DSUs to establish numerical quotas for serving individuals from

minority backgrounds.

The Secretary solicits comment on this indicator and seeks examples

of criteria or methods that might be used to determine whether a DSU's

policies, practices, or procedures discriminate against minorities.

Proposed Performance Indicator 2.2. Proposed Performance

Indicator 2.2, Sec. 361.84(c)(2)(ii), would compare minorities as a

percentage of individuals with significant disabilities exiting the VR

program after receiving VR services under an IPE to minorities as a

percentage of individuals in the State's working age population

(individuals age 16 to 64) reporting a disability that prevents them

from working. This indicator would demonstrate a DSU's success in

providing VR services under an IPE to individuals from minority

backgrounds in proportion to the population of minorities with

significant disabilities in the State. However, if a DSU does not meet

the performance level of Performance Indicator 2.2, it would meet this

indicator by demonstrating that it has undertaken outreach and

recruitment activities to ensure that individuals from minority

backgrounds have equal access to VR services. This indicator does not

require DSUs to establish numerical quotas for serving individuals from

minority backgrounds.

Data for Performance Indicators 2.1 and 2.2. The

information that is

[[Page 55298]]

necessary for reporting on proposed Evaluation Standard 2 would be

obtained from the race and ethnicity data element of the RSA-911

report. The RSA-911 reporting categories for race and ethnicity used

for Evaluation Standard 2 are compatible with U.S. Census data

categories and have been approved by OMB. In addition, U.S. Census data

on the number of minority working age persons in a State who report

that their disability prevents them from working make it possible to

identify an in-State comparison group to indicate whether minorities

with disabilities are underserved in the VR program relative to their

percentage in a State's general population.

However, the Secretary notes that the U.S. Bureau of the Census may

eliminate from the 2000 Census Survey the current census question

related to individuals possessing a disability that prevents them from

working. Therefore, the Secretary invites comments identifying

alternative measures that could be used to determine compliance with

Performance Indicator 2.2. The Secretary also seeks suggested examples

of criteria or methods that could be used to evaluate a DSU's outreach

and recruitment activities related to individuals from minority

backgrounds.

Section 361.86--Establishment of Performance Levels

Proposed Sec. 361.86 would establish compliance levels for the

performance indicators. Many commenters urged the Secretary to

establish different performance levels for DSUs that serve only

individuals who are visually impaired or who are blind. Because these

DSUs serve a particular population of individuals with significant

disabilities, their level of performance typically differs markedly

from that of general or combined DSUs. Past performance data from these

agencies support this conclusion. The Secretary, therefore, agrees that

separate performance levels for DSUs that serve only individuals who

are visually impaired or blind, as proposed in Sec. 361.86(b)(1), are

generally warranted. With regard to Performance Indicator 1.1 (under

which a DSU has only to equal or exceed previous performance) and

Performance Indicators 2.1 and 2.2 (under which a DSU has to provide

equal access to minority and non-minority individuals), however, both

general and combined DSUs and DSUs that serve only individuals who are

visually impaired or blind would be required to meet the same

performance levels.

Combined DSUs (i.e., those that serve individuals with blindness,

visual impairments, and other non-visual disabilities) suggested that

separate performance levels should apply to them as well. However,

analysis of existing data indicates that the presence of individuals

who are blind has little impact on the overall performance of combined

DSUs as compared to the overall performance of general DSUs (i.e.,

those that do not serve the visually impaired). Accordingly, general

and combined DSUs would be subject to the same performance levels.

Some DSUs that operate under an order of selection pursuant to

Sec. 361.36(a)(1)(ii) also suggested that separate performance levels

be established under Evaluation Standard 1 for those agencies. Again,

analysis of existing data indicates that an order of selection has

little impact on the overall performance of DSUs on the performance

indicators for Evaluation Standard 1. Thus, the NPRM does not include

separate performance levels for DSUs operating under an order of

selection.

Proposed Sec. 361.86(a)(2) would allow the Secretary to establish

new performance levels through the regulatory process after obtaining

public comment. The Secretary plans to increase performance levels over

time based on experience and considers the performance levels proposed

in Sec. 361.86(b)(1) and (2) as only the first step in ensuring

improved DSU performance.

Proposed performance levels for Evaluation Standard 1 are presented

in Sec. 361.86(b)(1). Each of the proposed levels for the Performance

Indicators 1.1 through 1.7 identify the minimum level of performance

necessary to pass a given indicator. The Secretary believes that these

levels would accurately reflect whether a DSU is successfully assisting

individuals with disabilities to achieve employment outcomes consistent

with the Act's purposes. To achieve successful performance on

Evaluation Standard 1, a DSU would have to meet or exceed the

performance levels on at least two of the three primary indicators

(1.3, 1.4 and 1.5) and a total of at least five of the seven

performance indicators (1.1 through 1.7).

The proposed levels for each of the proposed performance indicators

that will be used for determining compliance with the proposed

evaluation standards were developed in recognition of the fact that

DSUs typically focus their efforts on certain VR program-related areas

(e.g., assisting individuals with significant disabilities; maximizing

competitive employment outcomes). The proposed regulations also would

require DSUs to concentrate, to some extent, on the proposed ``primary

indicators'' (indicators 1.3, 1.4, and 1.5), which the Secretary

considers the most critical measures of a successful VR program.

Consequently, the Secretary expects that DSUs will greatly exceed many

of the proposed levels, particularly the levels for those indicators

that reflect a DSU's priority areas. As a whole, the levels represent

only the minimum level of performance that the Secretary believes is

appropriate for each indicator, regardless of whether the DSU focuses

most of its efforts elsewhere. In other words, although a DSU can, and

to some extent is required to, focus on the purposes reflected in

certain indicators (e.g., increasing competitive employment outcomes),

the DSU should still be able to perform at the proposed level for the

remaining indicators. The specified performance levels were developed

following extensive analyses of past DSU performance in each of the

areas addressed by the indicators. The Secretary believes that DSUs

that fail to satisfy the proposed levels (for two of the three primary

indicators or five of the seven indicators total) likely have

significant systemic deficiencies and are in need of assistance to

improve their program. The proposed minimum levels are designed

specifically to identify those DSUs.

Proposed Sec. 361.86(b)(2) would require each DSU to meet the

performance level of .80 for both Performance Indicators 2.1 and 2.2,

or, in the alternative, describe the actions it has taken and policies

it has implemented to ensure that individuals with disabilities from

minority backgrounds have equal access to VR services. The Secretary

proposes the .80 level, as opposed to the 1.0 full parity level, to

reflect the fact that minor deviations in service rates may not be

related to any discriminatory policy or practice followed by the DSU.

On the other hand, the Secretary believes that the proposed level

represents a significant disparity in service rates for minority and

non-minority individuals (or in the proportion of minority individuals

with significant disabilities receiving VR services relative to their

population) and that the existence of such a disparity should result in

the DSU's reexamination of its policies and practices to ensure that

they do not have a discriminatory effect on individuals from minority

backgrounds.

Under Sec. 361.86(b)(2)(i), a DSU would have to demonstrate that it

had adopted policies and taken steps to ensure that individuals with

disabilities from minority backgrounds have equal access to VR services

if its performance did not meet the performance level for proposed

[[Page 55299]]

Performance Indicator 2.1. The Secretary proposes to provide this

alternative to meeting the performance level to clarify that numerical

quotas are not required. In addition, a DSU would have to make the same

demonstration if the denominator of a service rate (i.e., individuals

exiting the VR program) represents less than 100 cases. If fewer than

100 individuals exit the VR program, slight changes in the number of

individuals receiving services would have an inordinate effect on the

service rate and would not permit accurate assessment of the DSU's

performance.

Under Sec. 361.86(b)(2)(ii), a DSU would have to demonstrate that

it had undertaken appropriate actions to ensure, through outreach and

recruitment activities, that individuals with disabilities from

minority backgrounds have equal access to VR services if the DSU did

not meet the performance level for proposed Performance Indicator 2.2.

This demonstration requirement also would apply if the denominator of

the calculation in the performance indicator represents less than 100

cases in order to ensure that only statistically reliable calculations

are used to measure performance.

Section 361.88--Reporting Requirements

Proposed Sec. 361.88 contains DSU reporting requirements related to

the proposed evaluation standards and performance indicators. Proposed

Sec. 361.88(a) would require each DSU to report, within 60 days after

the end of each fiscal year, the extent to which it is in compliance

with the evaluation standards and performance indicators and also

report the raw performance data (contained in the RSA-911 report)

specified in Sec. 361.88(a)(1) through (13). Proposed Sec. 361.88(a)(1)

through (13) describe the performance data DSUs would be required to

report.

In lieu of the report required under Sec. 361.88(a), proposed

Sec. 361.88(b) would permit a DSU to submit its raw RSA-911 performance

data on tape, diskette, or any alternative electronic format that is

compatible with RSA's capability to process such an alternative. In

most instances, a DSU will report raw data to RSA through the RSA-911

report, which is also due 60 days after the end of each fiscal year.

RSA will make the appropriate calculations to determine DSU

performance. RSA also will collect the relevant census and earnings

data for those performance indicators that rely on that data to

determine DSU performance. This census and earnings data will be

available for review upon request.

Proposed Sec. 361.88(c) would require that the data reported by a

DSU be valid, accurate, and in a consistent format. A DSU that fails to

submit data that is valid, accurate, and in a consistent format within

the 60-day period would be required to develop a program improvement

plan pursuant to proposed Sec. 361.89(a).

Section 361.89--Enforcement Procedures

Proposed Sec. 361.89 contains procedures for the enforcement of the

evaluation standards and performance indicators. The proposed

enforcement procedures, including reduction in or loss of funding, are

consistent with section 106(b) and (c) of the Act.

Under proposed Sec. 361.89(a), a DSU that fails to meet the

performance level required on both evaluation standards would be

required to develop jointly with the Secretary a program improvement

plan outlining the specific actions to be taken by the DSU to improve

program performance.

Proposed Sec. 361.89(b) would require that the Secretary examine

all available, relevant information in connection with the development

of a program improvement plan.

Proposed Sec. 361.89(c) would require that program improvement

plans be reviewed at least biannually to determine whether the desired

performance improvements have occurred or are likely to occur. If

necessary, the Secretary would request that the plan be modified to

improve performance. In addition, a program improvement plan would have

to be modified by the DSU to address any new performance levels

established by the Secretary during the time in which the plan is in

effect. This requirement is intended to ensure that DSUs meet current,

rather than outdated, performance levels. Reviews would continue and

requests for revisions would be made until the DSU sustains

satisfactory performance over a period of more than one year.

Under proposed Sec. 361.89(d), if the Secretary determines that a

DSU with less than satisfactory performance has failed to enter into a

program improvement plan or comply substantially with the terms and

conditions of such a program improvement plan, the Secretary,

consistent with the procedures specified in Sec. 361.11, would reduce

or suspend funding to the DSU under the VR program until the DSU has

met one of these two requirements or raised its subsequent performance

to meet the current overall minimum satisfactory level on the

compliance indicators.

Draft Proposed Standards and Indicators on Which the Secretary

Seeks Public Comment

Background

In addition to inviting public comment on each of the proposed

evaluation standards and performance indicators included in this NPRM,

the Secretary also seeks public comment on three draft proposed

evaluation standards and their concomitant draft proposed indicators.

The Secretary particularly seeks comment on the validity and

feasibility of implementing these draft proposed evaluation standards

and draft proposed indicators. Further, the Secretary seeks assistance

in identifying available instruments and methods that can be used to

gather the data necessary to measure performance under these draft

proposed evaluation standards and draft proposed indicators and in

determining how these data-gathering instruments and methods may be

developed. These draft proposed evaluation standards would measure a

DSU's performance in three areas: consumer satisfaction with the VR

program, retention of employment and earnings by those exiting the VR

program after achieving an employment outcome, and the adequate use of

VR program resources to support direct services for individuals with

disabilities. The Secretary is not proposing to include these draft

proposed measures as part of the proposed regulations in this NPRM.

Rather, the Secretary is identifying these measures in the preamble in

order to obtain public comment on their potential use and

appropriateness in measuring the success of the VR program. The

Secretary is in the process of developing valid data collection methods

and instruments for measuring compliance with the draft proposed

performance indicators and seeks input from commenters in identifying

instruments that are accurate, reliable, and the least costly to DSUs.

Once necessary instruments have been developed, and subsequent tests

confirm their reliability, the Secretary will address these evaluation

standards and performance indicators in a future rulemaking. The draft

proposed evaluation standards and performance indicators are stated and

discussed below.

Draft Proposed Evaluation Standard 3 (Consumer

Satisfaction): A DSU shall ensure a high level of consumer

satisfaction.

Draft proposed Evaluation Standard 3 is based on several provisions

of the Act, including sections 101(a)(21)(A)(ii)(III) and 105(c)(4)of

the

[[Page 55300]]

Act, which require the use of consumer satisfaction surveys as a way of

assessing DSU effectiveness. In addition, many individuals in the

disability community have commented on the need for an evaluation

standard and related performance indicators that measure consumer

satisfaction, particularly satisfaction with the level of informed

choice afforded consumers during the VR process.

Draft Proposed Evaluation Standard 4 (Retention of

Employment and Earnings): A DSU shall assist individuals to achieve

competitive,

self, or BEP employment outcomes that enable them to maintain their

employment and earnings over time.

The Secretary believes that a successful employment outcome is one

in which the individual maintains employment and earnings for at least

six months after exiting the program. As discussed previously, this

standard is consistent with Core Indicators II (retention in

unsubsidized employment six months after entry into employment) and III

(earnings received in unsubsidized employment six months after entry

into the employment) under section 136(b) of the Workforce Act. This

standard is also consistent with the reporting requirements in section

101(a)(10)(C) (iii) and (iv) of the Act (employment and earnings of

individuals 6 months and 12 months after ending participation in the VR

program) and in section 136(d)(2)(D) of the Workforce Act (retention of

employment and earnings received in unsubsidized employment 12 months

after entry into employment). Thus, under draft proposed Evaluation

Standard 4, retention of employment and earnings for individuals who

achieved an employment outcome with assistance from a DSU would be

evaluated following periods of 6 and 12 months. The Secretary is

particularly interested in receiving suggestions on how accurate and

reliable data could be collected in a consistent format to measure a

DSU's performance on this draft proposed evaluation standard.

Draft Proposed Evaluation Standard 5 (Adequate Use of

Resources): A DSU shall focus its Federal VR and State matching funds

on direct services for individuals with disabilities.

Draft proposed Evaluation Standard 5 would measure the extent to

which a DSU uses its Federal VR and State matching funds to pay for

direct services (i.e., VR services authorized under Sec. 361.48(a) and

Sec. 361.49(a), except for the construction of facilities) for

individuals with disabilities. Section 100(b)(1) of the Act authorizes

appropriations for the purpose of making grants ``to assist States in

meeting the costs of vocational rehabilitation services.'' The

Secretary maintains that the success of the VR program is based on the

DSU's ability to provide VR services that enable individuals with

disabilities to work. For that reason, draft proposed Evaluation

Standard 5 would measure DSU effectiveness in focusing its resources on

the direct service needs of individuals with disabilities.

Draft Proposed Performance Indicators

The Secretary plans to propose three performance indicators for

draft proposed Evaluation Standard 3, two performance indicators for

draft proposed Evaluation Standard 4, and one performance indicator for

draft proposed Evaluation Standard 5. Again, data collection methods

and instruments have yet to be developed and tested for these

performance indicators. Thus, the Secretary is not proposing to

establish performance levels for, nor measure compliance with, these

draft proposed performance indicators at this time.

Consumer Satisfaction

Draft Proposed Performance Indicator 3.1: Of all

individuals receiving VR services, the percentage who are satisfied

with their own level of participation in decision-making throughout the

development and implementation of their IPE.

Draft proposed Performance Indicator 3.1 would address the extent

to which a DSU implements the statutory policy of facilitating informed

choice. That policy is reflected, for example, in section 100(a)(3)(C)

of the Act, which states that eligible individuals and applicants

``must be active and full partners in the vocational rehabilitation

process, making meaningful and informed choices during assessments * *

* and in the selection of employment outcomes * * *, services needed to

achieve the outcomes, entities providing such services, and the methods

used to secure such services.''

Draft Proposed Performance Indicator 3.2: Of all

individuals receiving services, the percentage who are satisfied with--

(1) The appropriateness, timeliness, quality, and extent of the

services they received;

(2) Their interactions with providers of those services; and

(3) Their interactions with VR counselors and other DSU staff.

Draft proposed Performance Indicator 3.2 is based on statutory

requirements that call for consumer satisfaction surveys to be used as

measures of DSU effectiveness (e.g., section 105(c)(4) of the Act

requiring that State Rehabilitation Councils survey the satisfaction of

individuals receiving VR services). Also, section 136(b)(2)(B) of the

Workforce Act requires an indicator of ``customer satisfaction of * * *

participants with services received'' to be developed for each State.

Draft Proposed Performance Indicator 3.3: Of all

individuals who obtain employment, the percentage who are satisfied

with their employment.

Draft proposed Performance Indicator 3.3 is based upon the

regulatory requirements in Sec. 361.56 that govern whether an

individual is considered to ``have achieved an employment outcome.'' In

particular, Sec. 361.56(e) of the regulations requires that ``the

individual and the rehabilitation counselor or coordinator consider the

employment outcome to be satisfactory'' as a condition of determining

that the individual has achieved an employment outcome. The Secretary

seeks public comment on how this type of consumer satisfaction data

could be collected reliably and accurately in a manner that is the

least burdensome and costly to DSUs and invites commenters to submit

examples of existing State consumer satisfaction surveys and collection

methods.

Retention of Employment and Earnings

Draft Proposed Performance Indicator 4.1: Of all

individuals who have achieved a competitive, self-, or BEP employment

outcome with earnings equivalent to at least the minimum wage, the

percentage who have maintained competitive employment, including

earnings equivalent to at least the minimum wage, 6 months and 12

months after exiting the VR program.

Retention of employment is an essential issue for both the

individual and the VR program that corresponds directly to the

employment-related purposes of the VR program. Draft proposed

Performance Indicator 4.1 would measure retention 6 months and 12

months after exit from the VR program, which the Secretary views as an

appropriate indicator of whether the individual is likely to maintain

employment over time.

Draft Proposed Performance Indicator 4.2: Individuals with

significant disabilities who have maintained competitive employment,

including earnings equivalent to at least the minimum wage, 6 months

and 12 months after exiting the VR program as a percentage of all

individuals with significant disabilities who achieved a

[[Page 55301]]

competitive, self-, or BEP employment outcome with earnings equivalent

to at least the minimum wage.

Draft proposed Performance Indicator 4.2 was developed in

recognition of the greater barriers to long-term employment retention

faced by individuals with significant disabilities.

Adequate Use of Resources

Draft Proposed Performance Indicator 5.1: Of the total

amount of all Federal VR and State matching funds spent in support of

activities described in the State Plan under section 101 of the Act,

the percentage of Federal VR and State matching funds spent on direct

services to consumers, including services provided directly by the

staff of a DSU.

Draft proposed Performance Indicator 5.1 would address a DSU's

success in operating an effective and efficient VR program. The

indicator would compare the level of Federal VR and State matching

funds that a DSU spends directly on services to individuals with

disabilities as a percentage of all Federal VR and State matching funds

that it expends for other purposes (e.g., administrative costs). RSA is

currently examining reliable methods for identifying direct services

costs that do not impose excessive reporting burdens on DSUs.

Goals 2000: Educate America Act

The Goals 2000: Educate America Act (Goals 2000) focuses the

Nation's education reform efforts on the eight National Education Goals

and provides a framework for meeting them. Goals 2000 promotes new

partnerships to strengthen schools and expands the Department's

capacities for helping communities to exchange ideas and obtain

information needed to achieve the goals.

These proposed regulations would address 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. These proposed regulations would

further the objectives of this Goal because the development and

implementation of evaluation standards and performance indicators will

enhance the accountability and effectiveness of The State Vocational

Rehabilitation Services Program, which assists States in operating a

comprehensive, coordinated, effective, efficient, and accountable

program for vocational rehabilitation designed to assess, plan,

develop, and provide vocational rehabilitation services for individuals

with disabilities so that they may prepare for and engage in gainful

employment.

Executive Order 12866

1. Potential Costs and Benefits

These proposed 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 proposed regulations are

those resulting from statutory requirements and those determined by the

Secretary to be necessary for administering this program effectively

and efficiently. Burdens specifically associated with information

collection requirements are identified and explained elsewhere in this

preamble under the heading Paperwork Reduction Act of 1995.

In assessing the potential costs and benefits--both quantitative

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

determined that the benefits of the proposed 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.

To assist the Department in complying with the specific

requirements of Executive Order 12866, the Secretary invites comment on

whether there may be further opportunities to reduce any potential

costs or increase potential benefits resulting from these proposed

regulations without impeding the effective and efficient administration

of the program.

The potential costs and benefits of these proposed regulations are

discussed elsewhere in this preamble under the following headings:

``Supplementary Information'' and ``Paperwork Reduction Act of 1995.''

2. Clarity of the Regulations

Executive Order 12866 requires each agency to write regulations

that are easy to understand.

The Secretary invites comments on how to make these proposed

regulations easier to understand, including answers to questions such

as the following: (1) Are the requirements in the proposed regulations

clearly stated? (2) Do the regulations contain technical terms or other

wording that interferes with their clarity? (3) Does the format of the

proposed regulations (grouping and order of sections, use of headings,

paragraphing, etc.) aid or reduce their clarity? Would the proposed

regulations be easier to understand if they were divided into more (but

shorter) sections? (A ``section'' is preceded by the symbol ``Sec. ''

and a numbered heading; for example, Sec. 361.81 Applicable

definitions.) (4) Is the description of the proposed regulations in the

``Supplementary Information'' section of this preamble helpful in

understanding the proposed regulations? How could this description be

more helpful in making the proposed regulations easier to understand?

(5) What else could the Department do to make the proposed regulations

easier to understand?

A copy of any comments that concern how the Department could make

these proposed regulations easier to understand should be sent to

Stanley M. Cohen, Regulations Quality Officer, U.S. Department of

Education, 600 Independence Avenue, SW. (Room 5121, FB-10B),

Washington, D.C. 20202-2241.

Regulatory Flexibility Act Certification

The Secretary certifies that these proposed regulations would not

have a significant economic impact on a substantial number of small

entities.

Because these proposed regulations would affect only States and

State agencies, the regulations would not have an impact on small

entities. States and State agencies are not defined as ``small

entities'' in the Regulatory Flexibility Act.

Paperwork Reduction Act of 1995

Sections 361.82, 361.84, 361.88, and 361.89 contain information

collection requirements. As required by the Paperwork Reduction Act of

1995 (44 U.S.C. 3507(d)), the Department of Education has submitted a

copy of these sections to OMB for its review.

Collection of Information: The State Vocational Rehabilitation Services

Program

States are eligible to apply for grants under these proposed

regulations. The information to be collected includes data reported to

assess compliance with established evaluation standards and performance

indicators for the VR program. The Department needs and uses the

information to comply with the provisions of section 106 of the Act

that mandates the establishment of evaluation standards and performance

indicators for the program.

All information is to be collected and reported annually. Annual

reporting and recordkeeping burden for this collection of information

is estimated to average one hour for each response for

[[Page 55302]]

one respondent, including the time for reviewing instructions searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collection of information. Thus, the total

annual reporting and recordkeeping burden for this collection is

estimated to be one hour.

Note: The burden is estimated as one hour because the remaining

burden hours are accounted for under a separate OMB control number

1820-0508, which is called the RSA 911 Case Service Report.

Organizations and individuals desiring to submit comments on the

information collection requirements should direct them to the Office of

Information and Regulatory Affairs, OMB, Room 10235, New Executive

Office Building, Washington, DC. 20503; Attention: Desk Officer for

U.S. Department of Education.

The Department considers comments by the public on these proposed

collections of information in--

Evaluating whether the proposed collections of information

are necessary for the proper performance of the functions of the

Department, including whether the information will have practical use;

Evaluating the accuracy of the Department's estimate of

the burden of the proposed collections of information, including the

validity of the methodology and assumptions used;

Enhancing the quality, usefulness, and clarity of the

information to be collected; and

Minimizing the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technological collection

techniques or other forms of information technology; e.g., permitting

electronic submission of responses.

OMB is required to make a decision concerning the collections of

information contained in these proposed regulations between 30 and 60

days after publication of this document in the Federal Register.

Therefore, a comment to OMB is best assured of having its full effect

if OMB receives it within 30 days of publication. This does not affect

the deadline for the public to comment to the Department on the

proposed 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 Department's specific plans and actions for

this program.

Assessment of Educational Impact

The Secretary particularly requests comments on whether the

proposed regulations in this document would require transmission of

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

agency or authority of the United States.

Electronic Access to This Document

Anyone may view this document, as well as all other Department of

Education documents published in the Federal Register, in text or

portable document format (pdf) on the World Wide Web at either of the

following sites:

http://gcs.ed.gov/fedreg.htm

http://www.ed.gov/news.html

To use the pdf you must have the Adobe Acrobat Reader Program with

Search, which is available free at either of the previous sites. If you

have questions about using the pdf, call the U.S. Government Printing

Office toll free at 1-888-293-6498.

Anyone may also view these documents in text copy only on an

electronic bulletin board of the Department. Telephone: (202) 219-1511

or, toll free, 1-800-222-4922. The documents are located under Option

G--Files/Announcements, Bulletins and Press Releases.

Note: The official version of this document is the document

published in the Federal Register.

List of Subjects in 34 CFR Part 361

Reporting and recordkeeping requirements, State-administered grant

program--education, Vocational rehabilitation.

Dated: June 2, 1998.

Richard W. Riley,

Secretary of Education.

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

Vocational Rehabilitation Services Program)

The Secretary proposes to amend Title 34 of the Code of Federal

Regulations by adding a new Subpart E to Part 361 to read as follows:

PART 361--THE STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

* * * * *

Subpart E--Evaluation Standards and Performance Indicators

Sec.

361.80 Purpose.

361.81 Applicable definitions.

361.82 Evaluation standards.

361.84 Performance indicators.

361.86 Performance levels.

361.88 Reporting requirements.

361.89 Enforcement procedures.

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

* * * * *

Subpart E--Evaluation Standards and Performance Indicators

Sec. 361.80 Purpose.

The purpose of this subpart is to establish evaluation standards

and performance indicators for The State Vocational Rehabilitation (VR)

Services Program.

(Authority: 29 U.S.C. 726(a))

Sec. 361.81 Applicable definitions.

In addition to those definitions in Sec. 361.5(b), the following

definitions apply to this subpart:

Average hourly earnings means the average per hour earnings in the

week prior to exiting the VR program of an eligible individual who has

achieved a competitive employment outcome.

Business Enterprise Program (BEP) means an employment outcome in

which an individual with a significant disability operates a vending

facility or other small business under the management and supervision

of a designated State unit (DSU). This term includes home industry,

farming, and other enterprises.

Exit the VR program means that a DSU has closed the individual's

record of VR services in one of the following categories:

(1) Ineligible for VR services.

(2) Received services under an individualized plan for employment

(IPE) and achieved an employment outcome.

(3) Received services under an IPE but did not achieve an

employment outcome.

(4) Eligible for VR services but did not receive services under an

IPE.

Full-time employment means an employment outcome in which an

eligible individual worked for pay for a minimum of 35 hours in the

week before closure.

General or combined DSU means a DSU that does not serve exclusively

individuals with visual impairments or blindness.

Individuals from a minority background means individuals who report

their race or ethnicity as Black,

[[Page 55303]]

American Indian, Alaskan Native, Asian, Pacific Islander, or of

Hispanic origin.

Minimum wage means the higher of the rate specified in section

6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1))

(i.e., the Federal minimum wage) or applicable State minimum wage law.

Non-minority individuals means individuals having ethnicity or race

reported as White.

Performance period is the reporting period during which a DSU's

performance is measured. For Evaluation Standards 1 and 2, performance

data must be aggregated and reported for each fiscal year commencing

with fiscal year 1999. However, DSUs that exclusively serve individuals

with visual impairments or blindness shall report each year aggregated

data for the two previous years for Performance Indicators 1.1 through

1.7; the second year must coincide with the performance period for

general or combined DSUs.

Primary indicators means Performance Indicators 1.3, 1.4, and 1.5,

which are specifically designed to measure--

(1) The achievement of competitive, self-, or BEP employment with

earnings equivalent to the minimum wage or higher, particularly by

individuals with significant disabilities; and

(2) The ratio between the average hourly earnings of individuals

who exit the VR program in competitive, self-, or BEP employment with

earnings equivalent to the minimum wage or higher and the State's

average hourly earnings for all employed individuals.

RSA-911 means the Case Service Report that is submitted annually by

a DSU as approved by the Office of Management and Budget (OMB).

Self-employment means an employment outcome in which the individual

works for profit or fee in his or her own business, farm, shop, or

office, including sharecroppers.

Service rate means the result obtained by dividing the number of

individuals who exit the VR program after receiving one or more

services under an IPE during any reporting period by the total number

of individuals who exit the VR program (as defined in this section)

during that reporting period, including individuals who were determined

ineligible for services.

State's average hourly earnings means the average hourly earnings

of all persons in the State in which the DSU is located.

(Authority: 29 U.S.C. 726(a))

Sec. 361.82 Evaluation standards.

(a) The Secretary establishes two evaluation standards to evaluate

the performance of each DSU that receives funds under this part. The

evaluation standards assist the Secretary and each DSU to evaluate a

DSU's performance in serving individuals with disabilities under the

State VR Services Program.

(b) A DSU shall achieve successful performance on both evaluation

standards during each performance period.

(c) The evaluation standards for The State VR Services Program

are--

(1) Evaluation Standard 1--Employment outcomes. A DSU shall assist

any eligible individual, including an individual with a significant

disability, to obtain, maintain, or regain high-quality employment.

(2) Evaluation Standard 2--Equal access to services. A DSU shall

ensure that individuals from minority backgrounds have equal access to

VR services.

(Authority: 29 U.S.C. 726(a))

Sec. 361.84 Performance indicators.

(a) The performance indicators establish what constitutes minimum

compliance with the evaluation standards.

(b) The performance indicators require a DSU to provide information

on a variety of factors to enable the Secretary to measure compliance

with the evaluation standards.

(c) The performance indicators are as follows:

(1) Employment outcomes.

(i) Performance Indicator 1.1. The number of individuals exiting

the VR program who achieved an employment outcome during the current

performance period compared to the number of individuals who exit the

VR program after achieving an employment outcome during the previous

performance period.

(ii) Performance Indicator 1.2. Of all individuals who exit the VR

program after receiving services, the percentage who are determined to

have achieved an employment outcome.

(iii) Performance Indicator 1.3. Of all individuals determined to

have achieved an employment outcome, the percentage who exit the VR

program in competitive, self-, or BEP employment with earnings

equivalent to at least the minimum wage.

(iv) Performance Indicator 1.4. Of all individuals who exit the VR

program in competitive, self-, or BEP employment with earnings

equivalent to at least the minimum wage, the percentage who are

individuals with significant disabilities.

(v) Performance Indicator 1.5. The average hourly earnings of all

individuals who exit the VR program in competitive, self-, or BEP

employment with earnings levels equivalent to at least the minimum wage

as a ratio to the State's average hourly earnings for all individuals

in the State who are employed (as derived from the Bureau of Labor

Statistics report ``State Average Annual Pay'' for the most recent

available year).

(vi) Performance Indicator 1.6. Of all individuals who exit the VR

program in competitive, self-, or BEP employment with earnings

equivalent to at least the minimum wage, the difference between the

percentage who reported their own income as the largest single source

of economic support at exit and the percentage who reported their own

income as the largest single source of support at application.

(vii) Performance Indicator 1.7. Of all individuals exiting the VR

program in full-time competitive employment, the percentage exiting the

VR program in full-time competitive employment who can enroll in a

medical insurance plan that covers hospitalization and is made

available through the individual's place of employment.

(2) Equal access to services.

(i) Performance Indicator 2.1. The service rate for all individuals

with disabilities from minority backgrounds as a ratio to the service

rate for all non-minority individuals with disabilities.

(ii) Performance Indicator 2.2. The percentage of individuals with

significant disabilities who exit the VR program after receiving

services under an IPE who are minorities as a ratio to the percentage

of individuals in the State's working age population (individuals age

16 to 64) reporting a disability that prevents them from working (as

reported in U.S. Bureau of Census, Public Use Microdata System (PUMS),

1990 Decennial Census) who are minorities.

(Authority: 29 U.S.C. 726(a))

Sec. 361.86 Performance levels.

(a) General. (1) Paragraph (b) of this section establishes

performance levels for--

(i) General or combined DSUs; and

(ii) DSUs serving exclusively individuals who are visually impaired

or blind.

(2) The Secretary may establish, by regulations, new performance

levels.

(b) Performance levels for each performance indicator. (1) To

achieve successful performance on Evaluation Standard 1 (Employment

outcomes), a DSU must meet or exceed the performance levels established

for five of the seven performance indicators in the evaluation

standard, including

[[Page 55304]]

meeting or exceeding the performance levels for two of the three

primary indicators (Performance Indicators 1.3, 1.4 and 1.5). The

performance levels for Performance Indicators 1.1 through 1.7 are--

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

Performance level by type of DSU

Performance indicator ----------------------------------------

General/combined Blind

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

1.1............................ Equal or exceed

previous performance

period.

1.2............................ 55.8%................. 68.9%

1.3............................ 72.6%................. 35.4%

1.4............................ 62.4%................. 89.0%

1.5............................ .52 (Ratio)........... .59

1.6............................ 53.0 (math. 30.4

difference).

1.7............................ 50.6%................. 49.3%

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

(2) To achieve successful performance on Evaluation Standard 2

(Equal access), DSUs must meet or exceed the performance level

established for Performance Indicator 2.1 or meet the performance

requirement in paragraph (b)(2)(i) of this section. DSUs must also meet

or exceed the performance level established for Performance Indicator

2.2 or meet the performance requirement in paragraph (b)(2)(ii) of this

section. The performance levels for Performance Indicators 2.1 and 2.2

are--

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

Performance

Performance indicator levels

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

2.1 (Ratio)................................................ .80

2.2 (Ratio)................................................ .80

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

(i) If a DSU's performance does not meet or exceed the performance

level required for Performance Indicator 2.1, or if a DSU has less than

100 cases in the denominator of a service rate, the DSU shall describe

the policies it has adopted and the steps it has taken to ensure that

individuals with disabilities from minority backgrounds have equal

access to VR services.

(ii) If a DSU's performance does not meet or exceed the performance

level required for Performance Indicator 2.2, or if a DSU has less than

100 cases in the denominator of the calculation, a DSU shall describe

the outreach and recruitment activities it has undertaken and the

policies and other practices it has adopted to ensure that individuals

with disabilities from minority backgrounds have equal access to VR

services.

(Authority: 29 U.S.C. 726(a))

Sec. 361.88 Reporting requirements.

(a) The Secretary requires that each DSU report within 60 days

after the end of each fiscal year the extent to which the State is in

compliance with the evaluation standards and performance indicators and

include in this report the following RSA-911 data:

(1) The number of individuals who exited the VR program in each

closure category as specified in the definition of ``Exit the VR

program'' under Sec. 361.81.

(2) The number of individuals who exited the VR program in

competitive, self-, or BEP employment with earnings at or above the

minimum wage.

(3) The number of individuals with significant disabilities who

exited the VR program in competitive, self-, or BEP employment with

earnings at or above the minimum wage.

(4) The weekly earnings and hours worked of individuals who exited

the VR program in competitive, self-, or BEP employment with earnings

at or above the minimum wage.

(5) The number of individuals who exited the VR program in

competitive, self-, or BEP employment with earnings at or above the

minimum wage whose primary source of support at application was

``personal income.''

(6) The number of individuals who exited the VR program in

competitive, self-, or BEP employment with earnings at or above the

minimum wage whose primary source of support at closure was ``personal

income.''

(7) The number of individuals exiting the VR program in full-time

competitive employment.

(8) The number of individuals exiting the VR program in full-time

competitive employment who have health insurance that covers

hospitalization available through their job.

(9) The total number of individuals exiting the VR program who are

individuals from a minority background.

(10) The total number of non-minority individuals exiting the VR

program.

(11) The total number of individuals from a minority background

exiting the VR program after receiving services under an IPE.

(12) The total number of non-minority individuals exiting the VR

program after receiving services under an IPE.

(13) The number of individuals from a minority background who are

individuals with significant disabilities and exit the VR program after

receiving services under an IPE.

(b) In lieu of the report required in paragraph (a) of this

section, a DSU may submit its RSA-911 data on tape, diskette, or any

alternative electronic format that is compatible with RSA's capability

to process such an alternative, as long as the tape, diskette, or

alternative electronic format includes the data that--

(1) Are required by paragraph (a)(1) through (13) of this section;

and

(2) Meet the requirements of paragraph (c) of this section.

(c) Data reported by a DSU must be valid, accurate, and in a

consistent format. A DSU's failure to submit data that are valid,

accurate, and in a consistent format within the 60-day period will

require the DSU to develop a program improvement plan pursuant to

Sec. 361.89(a).

(Authority: 29 U.S.C. 726(b))

Sec. 361.89 Enforcement procedures.

(a) If a DSU fails to meet the established performance levels on

both evaluation standards as required by Sec. 361.82(b), the Secretary

and the DSU jointly develop a program improvement plan that outlines

the specific actions to be taken by the DSU to improve program

performance.

(b) In developing the program improvement plan, the Secretary

considers all available and relevant data and information related to

the DSU's performance.

(c) When a program improvement plan is in effect, review of the

plan is conducted on a biannual basis. If necessary, the Secretary

requests that a DSU make further revisions to the plan to improve

performance. If the Secretary establishes new performance levels under

Sec. 361.86(a)(2), the Secretary and the DSU jointly shall modify the

program improvement plan based on the new performance levels. The

Secretary continues reviews and requests revisions until the DSU

sustains satisfactory performance based on the

[[Page 55305]]

current performance levels over a period of more than one year.

(d) If the Secretary determines that a DSU with less than

satisfactory performance has failed to enter into a program improvement

plan or comply substantially with the terms and conditions of the

program improvement plan, the Secretary, consistent with the procedures

specified in Sec. 361.11, reduces or makes no further payments to the

DSU under this program until the DSU has met one of these two

requirements or raised its subsequent performance to meet the current

overall minimum satisfactory level on the compliance indicators.

(Authority: 29 U.S.C. 726(b) and 726(c))

[FR Doc. 98-27421 Filed 10-13-98; 8:45 am]

BILLING CODE 4000-01-P