Intent To Repay to the State of Ohio Rehabilitation Services Commission Funds Recovered as a Result of a Preliminary Department Decision

SUMMARY: Under section 459 of the General Education Provisions Act

(GEPA), 20 U.S.C. 1234h (1994), the U.S. Secretary of Education intends

to repay to the State of Ohio Rehabilitation Services Commission

(ORSC), under a grantback arrangement, an amount equal to 75 percent of

the principal amount of funds recovered by the U.S. Department of

Education (Department) as a result of a preliminary departmental

decision (PDD). This notice describes the ORSC's plan for the use of

the repaid funds and the terms and conditions under which the Secretary

intends to make those funds available. This notice invites comments on

the proposed grantback.

DATES: We must receive your comments on or before November 5, 1999.

ADDRESSES: Address all comments about the proposed grantback to Syed M.

Asghar, U.S. Department of Education, 400 Maryland Avenue, SW., room

3215, Switzer Building, Washington, DC, 20202-6132. If you prefer to

send your comments through the Internet, use the following address:

[email protected]

FOR FURTHER INFORMATION CONTACT: Syed M. Asghar. Telephone: (202) 205-

3015. If you use a telecommunications device for the deaf (TDD), you

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

8339.

Individuals with disabilities may obtain this document in an

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

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

paragraph.

SUPPLEMENTARY INFORMATION:

A. Background

The Department has recovered $227,400 from the ORSC for claims

arising from the audit conducted by the State of Ohio under the State

of Ohio Single Audit covering State fiscal year 1990 (i.e., the one-

year period beginning July 1, 1989 and ending June 30, 1990).

The claims involved the ORSC's administration of the State

Vocational Rehabilitation (VR) Services Program (Federal Grant

H126A00052). This program is authorized by the Rehabilitation Act of

1973, as amended (Act), 29 U.S.C. 701 et seq. The Act authorizes grants

to assist States to meet the current and future needs of individuals

with disabilities so that those individuals may prepare for and engage

in gainful employment to the extent of their capabilities.

The June 24, 1993 PDD of the Regional Commissioner of Region V of

the Rehabilitation Services Administration (RSA) found, in part, that

the ORSC was required to refund $227,400 to the Department because it

did not use program funds appropriately during fiscal year 1990.\1\

Specifically, the ORSC used program funds to satisfy a judgment entered

pursuant to a settlement agreement of a lawsuit brought against the

ORSC by a former employee who claimed to have been wrongfully

discharged some years earlier. The ORSC's charging of $227,400 in costs

to the State Vocational Rehabilitation Services Program represented a

violation of OMB Circular A-87, Attachment A, Section C(1)(a), which

required that to be allowable under a grant program, costs must be

necessary and reasonable. Since no services were provided by the former

ORSC employee, it was determined that these costs were neither

necessary nor reasonable for the VR program.

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\1\ This PDD, which contained several other issues of

noncompliance, requested repayment of $883,517, and a second PDD

requested repayment of $10,798.

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The ORSC appealed the PDD on September 30, 1993 to the U.S.

Department of Education, Office of Administrative Law Judges (OALJ). In

a settlement agreement between the Department and the ORSC signed on

March 3, 1995, under Docket Nos. 93-76-R and 93-120-R, the parties

agreed to settle all of the issues in the cases with the exception of

finding #19, in 93-76-R, in the amount of $227,400, which the parties

agreed to litigate. On July 14, 1995, the OALJ ruled in favor of the

Department and ordered the ORSC to repay the sum of $227,400. On

September 12, 1995, the OALJ's decision became the Final Decision of

the Department.

The ORSC then appealed this decision to the circuit court. On

November 14, 1996, the United States Court of Appeals for the Sixth

Circuit ruled in favor of the Department by denying the petition filed

by the ORSC (State of Ohio, Rehabilitation Services Commission v.

United States Department of Education. No.95-4213, 6th Cir. 1996). As a

result of this decision, the ORSC submitted payment of $227,400 to the

Department in February 1997 in full settlement of all claims arising

from this audit issue.

On March 20, 1998, the ORSC requested a grantback of $170,550,

which represents 75 percent of these recovered funds.

B. Authority for Awarding a Grantback

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

the Secretary has recovered funds following a PDD with respect to an

applicable program, the Secretary may consider those funds to be

additional funds available for the program and may arrange to repay to

the grantee affected by that determination an amount not to exceed 75

percent of the recovered funds. The Secretary may enter into this

grantback requested by the ORSC if the Secretary determines that the--

(a) Practices and procedures of the ORSC that resulted in the PDD

have been corrected, and the State agency is, in all other respects, in

compliance with the requirements of the applicable programs;

(b) ORSC has submitted to the Secretary a plan for the use of the

funds to be awarded under the grantback arrangement that meets the

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

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

misexpenditures that resulted in the PDD; and

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

accordance with the ORSC's plan would serve to achieve the purposes of

the program under which the funds were originally granted.

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

Pursuant to section 459(a)(2) of GEPA, the ORSC has applied for a

grantback totaling $170,550, which is 75 percent of the principal

amount of the recovered funds, and has submitted a plan for use of the

grantback funds. The agency will use the funds to increase field access

to the automated case management system by expanding the licensing

agreement from a product license for a single server to an enterprise

server license. The additional user licenses are needed to handle the

increased use of the product, which occurred when the ORSC implemented

a new automated case management system in June 1998. This management

system allows the ORSC field counselors to directly access the

statewide rehabilitation computer system from remote locations,

including laptop computers. According to the ORSC, this increased

system access will result in more timely information processing,

increased efficiency in entering Individualized Plan for Employment

(IPE) and authorization

[[Page 54445]]

information, and a higher level of service to the ORSC consumers.

The procedural violation, which led to the judgment against the

ORSC, has been corrected. In addition, the ORSC has clarified to RSA

that it now has procedures in place to prohibit the use of Federal

funds to satisfy any judgment resulting from employment litigation. In

the years subsequent to this finding, there have been no other

occurrences of a similar nature.

D. The Secretary's Determinations

The Secretary has carefully reviewed the plan submitted by the

ORSC. Based upon that review, the Secretary has determined that the

conditions under section 459(a) of GEPA have been met.

These determinations are based upon the best information available

to the Secretary at the present time. If this information is not

accurate or complete, the Secretary is not precluded from taking

appropriate administrative action. In finding that the conditions of

section 459(a) of GEPA have been met, the Secretary makes no

determination concerning any pending audit recommendations or PDDs.

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

Arrangement

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

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

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

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

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

that the Secretary intends to make funds available to the Ohio

Rehabilitation Services Commission under a grantback arrangement. The

grantback award would be in the amount of $170,550, which is 75

percent--the maximum percentage authorized by statute--of the principal

amount recovered as a result of the PDD.

F. Terms and Conditions Under Which Payments Under a Grantback

Arrangement Would Be Made

The ORSC agrees to comply with the following terms and conditions

under which payments under a grantback arrangement would be made:

(a) The funds awarded under the grantback must be spent in

accordance with--

(1) All applicable statutory and regulatory requirements;

(2) The plan that the ORSC submitted and any amendments to the plan

that are approved in advance by the Secretary; and

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

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

(b) All funds received under the grantback arrangement must be

obligated by September 30, 2000, in accordance with section 459(c) of

GEPA.

(c) The ORSC must, not later than January 1, 2001, submit a report

to the Secretary that--

(1) Indicates that the funds awarded under the grantback have been

spent in accordance with the proposed plan and any amendments that have

been approved in advance by the Secretary; and

(2) Describes the results and effectiveness of the project for

which the funds were spent.

(d) Separate accounting records must be maintained documenting the

expenditures of funds awarded under the grantback arrangement.

(e) Before funds will be repaid pursuant to this notice, the ORSC

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

into a repayment agreement for those debts.

Electronic Access to This Document

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

Education documents published in the Federal Register, in text or Adobe

Portable Document Format (PDF) on the Internet at either of the

following sites:

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

http://www.ed.gov/news.html To use the PDF you just 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 (GPO), toll free, at 1-888-293-

6498; or in Washington, DC, area at (202) 512-1530.

Note: The official version of this document is the document

published in the Federal Register. Free Internet access to the

official edition of the Federal Register and the Code of Federal

Regulations is available on GPO Access at:

http://www.access.gpo.gov/nara/index.html

(Catalog of Federal Domestic Assistance Number 84.126 The State

Vocational Rehabilitation Services Program)

Dated: October 1, 1999.

Judith E. Heumann,

Assistant Secretary for Special Education and Rehabilitative Services.

[FR Doc. 99-26095 Filed 10-5-99; 8:45 am]

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