Pre-Employment Transition Services Laws, Regulations and Policies

• Pre-Employment Transition Services (§361.5(c)42)
• Student with a Disability (§361.5(c)51)
• Transition Services (§361.5(c)55)
• Youth with a Disability (§361.5(c)58)

Pre-Employment Transition Services (§361.5(c)42) Regulation:

The Term "Pre-Employment Transition Services" - means the required activities and authorized activities specified in §361.48(a)(2) and (3). (Authority: Sections 7(30) and 113(b) and (c) of the Rehabilitation Act of 1973, as amended; 29 U.S.C. 705(30) and 733(b) and (c)).

Pre-Employment Transition Services (§361.5(c)42) Preamble Discussion:

Scope of Definition found in the  preamble Final VR Regulations at 81 FR 55682-55683, (August 19, 2016) -

• The definition of "pre-employment transition services" in final §361.5(c)(42) is consistent with the statutory definition in section 7(30) of the Act because it refers to the required and authorized activities specified in detail in final §361.48(a), which are the only services permitted.

  Coordination activities are necessary for arranging and providing pre-employment transition services. However, coordination activities are more akin to the related activities performed by vocational rehabilitation counselors and other vocational rehabilitation personnel during the course of providing pre-employment transition services rather than the services themselves. As such, pre-employment transition coordination activities [are included] under the implementation of pre-employment transition services in final §361.48(a), but not included as part of the definition of "pre-employment transition services."

  Pre-employment transition services are provided in collaboration with state and local education agencies to students with disabilities who need those services to achieve competitive integrated employment, and are eligible or potentially eligible for VR services.

  "Potentially Eligible" defined in 34CFR361.48(a) means all students with disabilities who satisfy the definition in 34CFR361.5(c)(51), regardless of whether they have applied, and been determined eligible, for the VR program. The term "potentially eligible" is applicable only when implementing the requirements governing pre-employment transition services in final §361.48(a).

Definitions for Required Activities found in the preamble Final VR Regulations at 81 FR 55683,55694-55695 (August 19, 2016) -

• By not defining the required activities, we maintain flexibility for States and allow the use of creative and innovative strategies that are State specific and tailored to meet the needs of students with disabilities. Examples of the five "required" activities and how they may be provided in either a group or individualized setting include, but are not limited to, the following:
  1. General job exploration counseling may be provided in a classroom or community setting and include information regarding in-demand industry sectors and occupations, as well as non-traditional employment, labor market composition, administration of vocational interest inventories, and identification of career pathways of interest to the students. Job exploration counseling provided on an individual basis might be provided in school or the community and include discussion of the student's vocational interest inventory results, in-demand occupations, career pathways, and local labor market information that applies to those particular interests.
  2. Work-based learning experiences in a group setting may include coordinating a school-based program of job training and informational interviews to research employers, work-site tours to learn about necessary job skills, job shadowing, or mentoring opportunities in the community. Work-based learning experiences on an individual basis could include work experiences to explore the student’s area of interest through paid and unpaid internships, apprenticeships (not including pre-apprenticeships and Registered Apprenticeships), short-term employment, fellowships, or on-the-job trainings located in the community.

     These services are those that would be most beneficial to an individual in the early stages of employment exploration during the transition process from school to post-school activities, including employment.

     Should a student need more individualized services (e.g., job coaching, orientation and mobility training, travel expenses, uniforms or assistive technology), he or she would need to apply and be determined eligible for vocational rehabilitation services and develop and have an approved individualized plan for employment.

  3. Counseling on opportunities for enrollment in comprehensive transition or postsecondary educational programs at institutions of higher education in a group setting may include information on course offerings, career options, the types of academic and occupational training needed to succeed in the workplace, and postsecondary opportunities associated with career fields or pathways. This information may also be provided on an individual basis and may include advising students and parents or representatives on academic curricula, college application and admissions processes, completing the Free Application for Federal Student Aid (FAFSA), and resources that may be used to support individual student success in education and training, which could include disability support services.
  4. Workplace readiness training may include programming to develop social skills and independent living, such as communication and interpersonal skills, financial literacy, orientation and mobility skills, job-seeking skills, understanding employer expectations for punctuality and performance, as well as other "soft" skills necessary for employment. These services may include instruction, as well as opportunities to acquire and apply knowledge. These services may be provided in a generalized manner in a classroom setting or be tailored to an individual’s needs in a training program provided in an educational or community setting.
  5. Instruction in self-advocacy in a group setting may include generalized classroom lessons in which students learn about their rights, responsibilities, and how to request accommodations or services and supports needed during the transition from secondary to postsecondary education and employment. During these lessons, students may share their thoughts, concerns, and needs, in order to prepare them for peer mentoring opportunities with individuals working in their area(s) of interest. Further individual opportunities may be arranged for students to conduct informational interviews or mentor with educational staff such as principals, nurses, teachers, or office staff; or they may mentor with individuals employed by or volunteering for employers, boards, associations, or organizations in integrated community settings. Students may also participate in youth leadership activities offered in educational or community settings.

The wide variety of pre-employment transition services described in these examples is designed to be an early start at job exploration for students with disabilities. DSUs are not to use these activities as assessment services for the purpose of determining whether additional vocational rehabilitation services are needed, or if the individual will be successful in employment.

In response to commenters' requests for clarification of the difference between employment assistance under pre-employment transition services and transition services, see more detailed descriptions of the distinctions between the two types of services in the Transition Services (section 361.5(c)(55)) and Scope of Pre-Employment Transition Services and Use of the Reserve sections earlier in this section.

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Student with a Disability (§361.5(c)51) Regulation:

The Term "Student with a Disability" – means, in general, an individual with a disability in a secondary, postsecondary, or other recognized education program who -

(A)(1) Is not younger than the earliest age for the provision of transition services under section 614(d)(1)(A)(i)(VIII) of the Individuals with Disabilities Education Act (20 U.S.C. 1414(d)(1)(A)(i)(VIII)); or (2) If the State involved elects to use a lower minimum age for receipt of pre-employment transition services under this Act, is not younger than that minimum age; and

(B)(1) Is not older than 21 years of age; or (2) If the State law for the State provides for a higher maximum age for receipt of services under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.), is not older than that maximum age; and

(C)(1) Is eligible for, and receiving, special education or related services under Part B of the Individuals with Disabilities Education Act (20 U.S.C. 1411 et seq.); or (2) Is a student who is an individual with a disability, for purposes of section 504. (Authority: Sections 7(37) and 12(c) of the Rehabilitation Act of 1973, as amended; 29 U.S.C. 705(37) and 709(c))

Preamble Discussion:

Scope of Definition found in the preamble Final VR Regulations at 81 FR 55683-55684 (August 19, 2016) -

The term itself-- "student with a disability"–-describes a population that encompasses only individuals with disabilities who are participating in educational programs.

The definitions of "student with a disability" in section 7(37) of the Act and final §361.5(c)(51) allow for a certain degree of flexibility in the age range of students with disabilities. States may elect to use a lower minimum age for receipt of pre-employment transition services than the earliest age for the provision of transition services under section 614(d)(1)(A)(i)(VIII) of the IDEA.

• The section applies beginning with the first individualized education program (IEP) to be in effect when a child with a disability turns 16, or younger if determined appropriate by the IEP Team, and updated annually thereafter.
• Pursuant to 34 CFR 300.320(b) of the IDEA regulations, transition services may be provided for students with disabilities younger than age 16, if determined appropriate by the IEP Team. Furthermore, a "student with a disability" may not be older than 21, unless a State law provides for a higher maximum age for the receipt of special education and related services under the IDEA.

Educational Programming - The definition of a "student with a disability" in final §361.5(c)(51), for purposes of the VR program, should be interpreted as applying to students also enrolled in educational programs outside secondary school, including postsecondary education programs, so long as the students satisfy the age requirements set forth in final §361.5(c)(51).

• Furthermore, as was set forth in the NPRM, the Secretary believes that the definition applies to secondary students who are homeschooled, as well as students in other non-traditional secondary educational programs.  These individuals remain covered by the definition of a "student with a disability" in final 361.5(c)(51).
• Postsecondary education students may benefit from certain pre-employment transition services set forth in section 113 of the Act, as amended, and final §361.48(a), all of which are limited to "students with disabilities."
• This broader interpretation of the definition will increase the potential for DSUs to maximize the use of funds reserved for the provision of pre-employment transition services by increasing the number of students who can receive these services.  Therefore, we have revised the definition of "student with a disability" in final §361.5(c)(51) to include students in secondary, postsecondary, and other recognized education programs.

However, this broader interpretation does not expand the list of required or authorized activities in section 113 of the Act, as amended by WIOA, and final §361.48(a).  A DSU can use the reserved funds to provide pre-employment transition services, as set forth in final §361.48(a), to students with disabilities in postsecondary education or other educational programs who meet the age requirements of the definition. 

• For example, a DSU may provide work-based learning activities such as internships to an individual with a disability in a postsecondary education program who otherwise satisfies the definition of a "student with a disability," but may not use the reserved funds (dedicated to the provision of pre-employment transition services under final §361.48(a)) to provide services and activities not specifically included in section 113 of the Act and final §361.48(a).
• In other words, a DSU may not use the funds reserved for pre-employment transition services to pay for tuition and other costs of attending postsecondary education, since this is not among those activities that are required or authorized under section 113 of the Act and final §361.48(a).  These and other necessary services, however, may be provided with VR funds not reserved for the provision of pre-employment transition services so long as they are provided pursuant to an approved individualized plan for employment under section 103(a) of the Act and final §361.48(b) of these final regulations.

Section 113 of the Act, as amended by WIOA, requires DSUs to coordinate pre-employment transition services with local educational agencies.  This applies to students with disabilities in educational programs administered by local educational agencies.

• DSUs should coordinate the pre-employment transition services provided to students who are not participating in programs administered by local educational agencies with the public entities administering those educational programs, as described in section 101(a)(11)(C) of the Act, as amended by WIOA, and final 361.24.

Students who have applied or been determined eligible for Vocational Rehabilitation Services found in the preamble Final VR Regulations at 81 FR 55685 (August 19, 2016) -

The definition in final §361.5(c)(51) is consistent with section 7(37) of the Act, which does not limit the definition to applicants and eligible individuals of the VR program. 

To impose such a limitation would be contrary to the Department's interpretation of "potentially eligible," students with disabilities, as used in section 113 of the Act, as amended by WIOA, and final §361.48(a). All "students with disabilities," regardless of whether they have submitted an application or been determined eligible for vocational rehabilitation services, may receive pre-employment transition services under final §361.48(a).

Upon further Departmental review of this issue, the Secretary has determined that other conforming changes are needed throughout final part 361 to ensure these students, who may not have applied or been determined eligible for the VR program, would still be protected by fundamental rights under the VR program, namely the protection of their personal information under final §361.38 and the right to exercise informed choice under final §361.52.

We have revised final §361.38 and final §361.52 to refer to "recipients of services" rather than "eligible individuals," thereby ensuring that students and youth with disabilities who may receive pre-employment transition services or transition services to groups, as applicable, are still protected by requirements governing confidentiality and informed choice even if they have not applied or been determined eligible for the VR program.

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Transition Services (§361.5(c)55) Regulation:

This part of the website has been updated to reflect the Notice of Interpretation in the Federal Register.

Although WIOA deleted the definition from the Act, the Department maintained the definition of transition services (§361.5(c)(55)) and revised it to include: "Students or youth with disabilities"; and Outreach to and engagement of parents or, as appropriate, the representatives of students or youth with disabilities.

Regulation:

Transition services means a coordinated set of activities for a student or youth with a disability -

(i) Designed within an outcome oriented process that promotes movement from school to post-school activities, including postsecondary education, vocational training, competitive integrated employment, supported employment, continuing and adult education, adult services, independent living, or community participation;

(ii) Based upon the individual student's or youth’s needs, taking into account the student’s or youth’s preferences and interests;

(iii) That includes instruction, community experiences, the development of employment and other post-school adult living objectives, and, if appropriate, acquisition of daily living skills and functional vocational evaluation;

(iv) That promotes or facilitates the achievement of the employment outcome identified in the student’s or youth's individualized plan for employment; and

(v) That includes outreach to and engagement of the parents, or, as appropriate, the representative of such a student or youth with a disability. (Authority: Sections 12(c) and 103(a)(15) and (b)(7) of the Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c) and 723(a)(15)

Preamble Discussion:

Scope of Pre-Employment Transition Services and Transition Services found in the preamble Final VR Regulations at 81 FR 55685 (August 19, 2016) -

• Vocational rehabilitation services are provided on a continuum, with pre employment transition services being the earliest set of services available to students with disabilities.

  Pre-employment transition services, authorized by section 113 of the Act, as amended by WIOA, and implemented by final § 361.48(a), are designed to help students with disabilities to begin to identify career interests that will be further explored through additional vocational rehabilitation services, such as transition services.

  Furthermore, pre employment transition services are only those services and activities listed in section 113 of the Act, as amended by WIOA, and final § 361.48(a). Job placement assistance is not included among the listed pre-employment transition services, but it could constitute a transition service under section 103(a)(15) of the Act and final § 361.48(b).

  Finally, pre-employment transition services are available only to students with disabilities, whereas transition services may be provided to a broader population - both students and youth with disabilities.

  Following the continuum, transition services represent the next set of vocational rehabilitation services available to students and youth with disabilities. They are outcome-oriented and promote movement from school to post-school activities, including postsecondary education, vocational training, and competitive integrated employment. As such, transition services may include job-related services, such as job search and placement assistance, job retention services, follow-up services, and follow along services, based on the needs of the individual.

  Individualized transition services under section 103(a)(15) of the Act and final § 361.48(b) must be provided to students who have been determined eligible for the VR program and in accordance with an approved individualized plan for employment.

  Transition services also may be provided in group settings to students and youth with disabilities under section 103(b)(7) of the Act, as amended by WIOA, and final § 361.49(a)(7). Although these group services are not individualized, they can still be beneficial for job exploration, including presentations from employers in the community and group mentoring activities.

  Section 113 of the Act, as amended by WIOA, and final §361.48(a) set out a list of pre-employment transition services that must be made available to all students with disabilities who are eligible or potentially eligible for vocational rehabilitation services ("required" activities), as well as those that may be provided ("authorized" activities). Under section 113(a) of the Act, the funds required to be reserved for pre-employment transition services must be used solely for providing pre-employment transition services. Therefore, the Department has no statutory authority to expand or limit the pre-employment transition services listed in section 113 of the Act, as amended by WIOA.

  Furthermore, if a student with a disability needs any additional individualized vocational rehabilitation services, including those necessary for participating in pre-employment transition services, such as those provided under final §361.48(b), the student must apply and be determined eligible for vocational rehabilitation services and develop an individualized plan for employment that includes the additional necessary services. These additional services must be charged as a vocational rehabilitation expenditure separate from the funds reserved for providing pre-employment transition services.

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Youth with a Disability (§361.5(c)58):

Regulation:

• Youth with a disability-

  (i)Youth with a disability means an individual with a disability who is not-

  (A)  Younger than 14 years of age; and

  (B)  Older than 24 years of age.

  (ii)Youth with disabilities means more than one youth with a disability. (Authority:  Section 7(42) of the Rehabilitation Act of 1973, as amended; 29 U.S.C. 705(42)) Subpart B - State Plan and Other Requirements for Vocational Rehabilitation Services.

Preamble Discussion:

Distinction between Student With a Disability and Youth With a Disability found in the preamble Final VR Regulations at 81 FR 55685-55686 (August 19, 2016)-

...the Act, as amended by WIOA, defines the terms "student with a disability" and "youth with a disability" differently. Moreover, the Act and these final regulations use the terms differently, depending on the context. For example, only students with disabilities can receive pre employment transition services under section 113 of the Act and final § 361.48(a), but both students with disabilities and youth with disabilities can receive transition services under section 103 of the Act and final §§ 361.48(b) and 361.49(a). The definitions set forth in these final regulations are consistent with the statute, and we have no statutory authority to consolidate the two definitions or to delete one of them because to do so would be inconsistent with the statute.

The age range in the definition of "youth with a disability" in final§ 361.5(c)(58) is broader than that for "student with a disability" in final § 361.5(c)(51). Therefore, a student with a disability always meets the definition of a "youth with a disability" because a student with a disability has an age range that fits within the age range prescribed by the definition of a "youth with a disability." However, a youth with a disability may not necessarily meet the definition of a "student with a disability." A youth with a disability could also be a student with a disability if the individual meets the age range in the definition of "student with a disability" and participates in an educational program (see the earlier discussion of educational programming under Student with a Disability section § 361.5(c)(51)). On the other hand, a youth with a disability who is outside the age range for a student with a disability or is not participating in an educational program does not meet the definition of a "student with a disability."

Coordination with Education Officials (§361.22) Regulation:

Plans, policies, and procedures (361.22 (a))

(1)The vocational rehabilitation services portion of the Unified or Combined State Plan must contain plans, policies, and procedures for coordination between the designated State agency and education officials responsible for the public education of students with disabilities that are designed to facilitate the transition of students with disabilities from the receipt of educational services, including pre-employment transition services, in school to the receipt of vocational rehabilitation services under the responsibility of the designated State agency.

(2)These plans, policies, and procedures in paragraph (a)(1) of this section must provide for the development and approval of an individualized plan for employment in accordance with § 361.45 as early as possible during the transition planning process and not later than the time a student with a disability determined to be eligible for vocational rehabilitation services leaves the school setting or, if the designated State unit is operating under an order of selection, before each eligible student with a disability able to be served under the order leaves the school setting.

Formal interagency agreement (361.22 (b))

The vocational rehabilitation services portion of the Unified or Combined State Plan must include information on a formal interagency agreement with the State educational agency that, at a minimum, provides for -

(1) Consultation and technical assistance, which may be provided using alternative means for meeting participation (such as video conferences and conference calls), to assist educational agencies in planning for the transition of students with disabilities from school to post-school activities, including pre-employment transition services and other vocational rehabilitation services;

(2) Transition planning by personnel of the designated State agency and educational agency personnel for students with disabilities that facilitates the development and implementation of their individualized education programs (IEPs) under section 614(d) of the Individuals with Disabilities Education Act;

(3) The roles and responsibilities, including financial responsibilities, of each agency, including provisions for determining State lead agencies and qualified personnel responsible for transition services and pre-employment transition services;

(4) Procedures for outreach to and identification of students with disabilities who are in need of transition services and pre-employment transition services. Outreach to these students should occur as early as possible during the transition planning process and must include, at a minimum, a description of the purpose of the vocational rehabilitation program, eligibility requirements, application procedures, and scope of services that may be provided to eligible individuals;

(5) Coordination necessary to satisfy documentation requirements set forth in 34 CFR part 397 with regard to students and youth with disabilities who are seeking subminimum wage employment; and

(6) Assurance that, in accordance with 34 CFR 397.31, neither the State educational agency nor the local educational agency will enter into a contract or other arrangement with an entity, as defined in 34 CFR 397.5(d), for the purpose of operating a program under which a youth with a disability is engaged in work compensated at a subminimum wage.

Preamble Discussion:

Coordination with Education Officials (361.22) found in the preamble Final VR Regulations at 81 FR 55686 (August 19, 2016) -

We have revised §361.22(b)(1) to state that the formal interagency agreement must include collaboration between the DSU and the State educational agency for providing pre-employment transition services to students with disabilities. We have also revised §§361.22(b)(3) and (b)(4) to similarly cover pre-employment transition services when identifying personnel responsible for providing services and when developing procedures for outreach to and identification of students with disabilities

Coordination of Pre-Employment Transition Services Financial and Programmatic Responsibilities found in the preamble Final VR Regulations at 81 FR 55686 -55687 (August 19, 2016) -

As discussed in the preamble of the NPRM, over the years many individuals have sought clarification and posed questions about the financial responsibilities of schools and DSUs when services fall under the purview of both entities.  For example, pre-employment transition services and transition services can be both vocational rehabilitation services under the VR program and special education or related services under the IDEA.  While neither the Act, as amended by WIOA, nor the IDEA is explicit as to which entity--the DSU or the State educational agency and, as appropriate, the local educational agency--is financially responsible for providing pre-employment transition services and transition services, both final §361.22(c) and 34 CFR 300.324(c)(2) provide that neither the DSU nor the local educational agency may shift the burden for providing services, for which it otherwise should be responsible, to the other entity.  It is essential that section 101(c) of the Act, as amended by WIOA, and section 612(a)(12) of the IDEA, along with their implementing regulations in §361.22(c) and 34 CFR 300.154, are read in concert to avoid any inconsistency or conflict between the two requirements.

Section 113(a) of the Act, as amended by WIOA, requires the DSU to provide, or arrange for the provision of, pre-employment transition services in collaboration with local educational agencies.  Therefore, decisions as to which entity will be responsible for providing services that are both special education services and vocational rehabilitation services must be made at the State and, as appropriate, local level as part of the collaboration between the DSU, State educational agencies, and, as appropriate, the local educational agencies.

We agree that the formal interagency agreement should facilitate the transition of students with disabilities receiving special education services to receiving vocational rehabilitation services without delay or disruption.  Since the decisions about financial responsibility for providing pre-employment transition services and transition services must be made at the State and local level during collaboration and coordination of services, a formal interagency agreement or other mechanism for interagency coordination can explicitly address all aspects of these issues.  As suggested in the NPRM, the agreement criteria could address criteria such as:

1. The purpose of the service. Is it related more to an employment outcome or education?  That is, is the service usually considered a special education or related service, such as transition planning necessary for the provision of a free appropriate public education?
2. Customary Services.  Is the service one that the school customarily provides under part B of the IDEA?  For example, if the school ordinarily provides job exploration counseling or work experiences to its eligible students with disabilities, the mere fact that those services are now authorized under the Act as pre-employment transition services does not mean the school should cease providing them and refer those students to the VR program.  However, if summer work experiences are not customarily provided by a local educational agency, the DSU and local educational agency may collaborate to coordinate and provide summer work-based learning experiences.
3. Eligibility.  Is the student with a disability eligible for transition services under the IDEA?  The definition of a “student with a disability” under the Act and these final regulations is broader than under the IDEA because the definition in the Act includes those students who are individuals with disabilities under section 504 of the Act.  It is possible that students receiving services under section 504 do not have individualized education programs under the IDEA because they are not eligible to receive special education and related services under the IDEA.  As a result, DSUs are authorized to provide transition services under the VR program to a broader population under WIOA than local educational agencies are authorized to provide under the IDEA.

The Secretary believes that these criteria may assist DSUs, State educational agencies, and local educational agencies as they collaborate and coordinate the provision of transition services, including pre-employment transition services, to students with disabilities.  We strongly encourage that formal interagency agreements have clearly defined parameters for collaborating and coordinating the delivery of pre-employment transition services and transition services and clearly defined responsibilities for each entity.  However, there is no statutory basis for the Department to establish service delivery or financial responsibilities.  Those decisions must be made at the State level while developing an interagency agreement and considering the population, available resources, and needs of the students and youth.  Consequently, States have maximum flexibility to develop these interagency agreements in a manner that best meets the unique needs and capacities of both the DSUs and educational agencies.

• Contracting with Sub-Minimum Wage Programs  Subpart § 397.2 is found in the preamble Final VR Regulations at 81 FR 55687-55688 (August 19, 2016) -
  • • ...Under 361.22(b)(6), both proposed and final, requires the interagency agreement between the DSU and the State educational agency to include an assurance that, in accordance with 34 CFR 397.31, neither the State educational agency nor the local educational agency will enter into a contract or other arrangement with an entity, as defined in 34 CFR 397.5(d), for the purpose of operating a program for a youth with a disability under which work is compensated at a subminimum wage. 

      Moreover, new requirements in section 511 of the Act, as amended by WIOA, and in final 34 CFR part 397 place additional limitations on the use of subminimum wages for individuals with disabilities, especially youth with disabilities.  For example, final 34 CFR 397.10 requires the DSU, in coordination with the State educational agency, to develop a process that ensures youth with disabilities receive documentation demonstrating their completion of the various required activities.

    • What is the Department of Education’s jurisdiction under this part?

(a) The Department of Education has jurisdiction under this part to implement guidelines for -

(1) Documentation requirements imposed on designated State units and local educational agencies, including designated State unit must develop in consultation with the State educational agency;

(2) Requirements related to the services that designated State units must provide to individuals regardless of age who are employed at subminimum wage; and

(3) Requirements under § 397.31.

(b) Nothing in this part will be construed to grant to the Department of Education, or its grantees, jurisdiction over requirements set forth in the Fair Labor Standards Act, including those imposed on entities holding special wage certificates under section 14(c) of that Act, which is administered by the Department of Labor.

Coordination and Outreach to Parents and Representatives

Preamble Discussion:

Coordination and Outreach to Parents and Representatives is found in the preamble Final VR Regulations at 81 FR 55688 (August 19, 2016)

Discussion: While there is no statutory basis in section 101(a)(11)(D) of the Act to require outreach to parents, we agree that family members, caregivers, and representatives play a critical role in the transition process. We believe that for pre-employment transition services and transition services to be meaningful and to lead to successful outcomes for students and youth with disabilities, their family members, caregivers, and representatives must be aware of the services and benefits offered by DSUs and be involved in the transition process. Although DSUs may conduct outreach to parents and representatives, this activity may be affected by State laws governing the age of majority. Under section 615(m) of the IDEA and 34 CFR 300.520, a State may transfer all rights accorded to parents under Part B of the IDEA to the student when he or she reaches the age of majority under State law that applies to all children. If rights under the IDEA transfer to the student, a student may have the right to make his or her own education, employment, and independent living decisions under the IDEA. DSUs may conduct outreach directly to these students. Parental consent to participate in pre-employment transition services and transition services should be obtained pursuant to State law, as well as policies of the educational programs and the DSU. We further emphasize here that the Department funds programs and projects that advise and assist parents and representatives of students and youth with disabilities as their children prepare for adult life. The Department awarded grants to more than 65 Parent Training and Information Centers funded by the Office of Special Education Programs and seven Parent Information and Training Programs funded by RSA during FY 2015. Find additional resources regarding age of majority at Center for Parent Information & Resources: Getting Ready for When Your Teen Reaches the Age of Majority: A Parent’s Guide.

Dispute Resolution

Preamble Discussion:

Dispute Resolution is found in the preamble Final VR Regulations at 81 FR 55688 - 55689 (August 19, 2016)

Discussion: Section 101(a)(11)(D) of the Act, as amended by WIOA, which provides the statutory authority for final § 361.22(b), does not require that States create a grievance procedure for disputes under the agreements, in general, or, more specifically, about the provision of pre-employment transition services or transition services. Likewise, section 101(a)(11)(D) of the Act does not require the interagency agreement to identify a process for resolving disputes between an individual with a disability and the DSU, State educational agency, or local educational agency about pre-employment transition services and transition services, or to include information about the CAP. We believe final § 361.22 is consistent with the Act, and it provides States maximum flexibility to develop the interagency agreements in a manner that best meets their unique needs and circumstances. However, there is nothing in the Act or these final regulations that prohibits States from including in the formal interagency agreement a grievance procedure (e.g., similar to the one in section 101(a)(8) of the Act) to resolve disputes between the DSU and the State educational agency, or the local educational agency, as appropriate, as well as procedures to resolve disputes between an individual with a disability and the DSU, State educational agency or local educational agency, and information about the CAP. We encourage States to include these procedures and information in their interagency agreements.

Section 20 of the Act requires all programs providing services under the Act, including the VR program, to inform applicants and recipients of services of the availability and purpose of the CAP. Therefore, regardless of whether the formal interagency agreement between the DSU and the State educational agency addresses the CAP, all students and youth with disabilities receiving vocational rehabilitation services, including pre-employment transition services and transition services, will be informed about it. In addition, an applicant for, or eligible individual under, the VR program who is dissatisfied with a decision made by vocational rehabilitation personnel, including those about pre-employment transition services and transition services, may request a review of that decision under section 102(c) of the Act.

Upon further Departmental review, the Secretary has realized that the statute has created an unintended inconsistency among sections 20, 102(c), 103(b)(7), 12(a), and 113. Specifically, section 20 requires programs funded under the Act to inform applicants for and recipients of those services about the CAP. There is no requirement that the recipients be determined eligible for those services in order to receive information about the CAP. Section 103(b)(7) of the Act permits the DSU to provide transition services to youth and students with disabilities in a group setting, regardless of whether those students or youth have applied for or been determined eligible for vocational rehabilitation services. Section 112(a) specifically authorizes the CAP to assist students with disabilities receiving pre-employment transition services. Section 113 makes clear that students with disabilities are eligible to receive pre-employment transition services regardless of whether they have applied or been determined eligible for the VR program. All of these provisions, read in concert, make clear that due process rights under the Act would be available to students and youth with disabilities receiving pre-employment transition services and transition services even if they have not yet applied for or been determined eligible for the VR program. However, section 102(c) refers only to "applicants and eligible individuals," thus creating an internal inconsistency within the Act.

Because it is clear that students and youth with disabilities are able to receive certain services without having applied or been determined eligible for vocational rehabilitation services and they are eligible for advocacy assistance from the CAP, the Secretary has determined it is necessary to amend final § 361.57 throughout to make clear that "recipients" of vocational rehabilitation services may exercise due process rights when disagreements arise during the receipt of pre-employment transition services and transition services. We have also made conforming changes throughout final part 361, such as with the definition of "impartial hearing officer" in § 361.5(c)(24) and "qualified and impartial mediator" in 361.5(c)(43). The student or youth with a disability, or the individual’s parent, as appropriate, will be informed of the CAP. Disputes or disagreements between parents and educational personnel are beyond the scope of the Act and these final regulations.

Changes: We have revised final § 361.57 throughout to replace "eligible individuals" with "recipients." We also made conforming changes to the definitions of "impartial hearing officer" and "qualified and impartial mediator" in final § 361.5(c).

Cooperation and Coordination with Other Entities (§361.24)

Regulation:

(a) Interagency cooperation. The vocational rehabilitation services portion of the Unified or Combined State Plan must describe the designated State agency's cooperation with and use of the services and facilities of Federal, State, and local agencies and programs, including the State programs carried out under section 4 of the Assistive Technology Act of 1998 (29 U.S.C. 3003), programs carried out by the Under Secretary for Rural Development of the Department of Agriculture, non educational agencies serving out-of school youth, and State use contracting programs, to the extent that such Federal, State, and local agencies and programs are not carrying out activities through the statewide workforce development system.

(b) Coordination with the Statewide Independent Living Council and independent living centers. The vocational rehabilitation services portion of the Unified or Combined State Plan must assure that the designated State unit, the Statewide Independent Living Council established under title VII, chapter 1, part B of the Act, and the independent living centers established under title VII, Chapter 1, Part C of the Act have developed working relationships and coordinate their activities.

(c) Coordination with Employers. The vocational rehabilitation services portion of the Unified or Combined State Plan must describe how the designated State unit will work with employers to identify competitive integrated employment opportunities and career exploration opportunities, in order to facilitate the provision of -

(1) Vocational rehabilitation services; and

(2) Transition services for youth with disabilities and students with disabilities, such as pre-employment transition services.

(d) Cooperative agreement with recipients of grants for services to American Indians

(1) General. In applicable cases, the vocational rehabilitation services portion of the Unified or Combined State Plan must assure that the designated State agency has entered into a formal cooperative agreement with each grant recipient in the State that receives funds under part C of the Act (American Indian Vocational Rehabilitation Services).

(2) Contents of formal cooperative agreement. The agreement required under paragraph (d)(1) of this section must describe strategies for collaboration and coordination in providing vocational rehabilitation services to American Indians who are individuals with disabilities, including -

(i) Strategies for interagency referral and information sharing that will assist in eligibility determinations and the development of individualized plans for employment;

(ii) Procedures for ensuring that American Indians who are individuals with disabilities and are living on or near a reservation or tribal service area are provided vocational rehabilitation services;

(iii) Strategies for the provision of transition planning by personnel of the designated State unit, the State educational agency, and the recipient of funds under part C of the Act, that will facilitate the development and approval of the individualized plan for employment under § 361.45; and

(iv) Provisions for sharing resources in cooperative studies and assessments, joint training activities, and other collaborative activities designed to improve the provision of services to American Indians who are individuals with disabilities.

(e) Reciprocal referral services between two designated State units in the same State. If there is a separate designated State unit for individuals who are blind, the two designated State units must establish reciprocal referral services, use each other's services and facilities to the extent feasible, jointly plan activities to improve services in the State for individuals with multiple impairments, including visual impairments, and otherwise cooperate to provide more effective services, including, if appropriate, entering into a written cooperative agreement.

(f) Cooperative agreement regarding individuals eligible for home and community-based waiver programs. The vocational rehabilitation services portion of the Unified or Combined State Plan must include an assurance that the designated State unit has entered into a formal cooperative agreement with the State agency responsible for administering the State Medicaid plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) and the State agency with primary responsibility for providing services and supports for individuals with intellectual disabilities and individuals with developmental disabilities, with respect to the delivery of vocational rehabilitation services, including extended services, for individuals with the most significant disabilities who have been determined to be eligible for home and community-based services under a Medicaid waiver, Medicaid State plan amendment, or other authority related to a State Medicaid program.

(g) Interagency cooperation. The vocational rehabilitation services portion of the Unified or Combined State Plan shall describe how the designated State agency will collaborate with the State agency responsible for administering the State Medicaid plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), the State agency responsible for providing services for individuals with developmental disabilities, and the State agency responsible for providing mental health services, to develop opportunities for community-based employment in integrated settings, to the greatest extent practicable.

(h) Coordination with assistive technology programs. The vocational rehabilitation services portion of the Unified or Combined State Plan must include an assurance that the designated State unit, and the lead agency and implementing entity (if any) designated by the Governor of the State under section 4 of the Assistive Technology Act of 1998 (29 U.S.C. 3003), have developed working relationships and will enter into agreements for the coordination of their activities, including the referral of individuals with disabilities to programs and activities described in that section.

(i) Coordination with ticket to work and self-sufficiency program. The vocational rehabilitation services portion of the Unified or Combined State Plan must include an assurance that the designated State unit will coordinate activities with any other State agency that is functioning as an employment network under the Ticket to Work and Self-Sufficiency Program established under section 1148 of the Social Security Act (42 U.S.C. 1320b–19).

Preamble Discussion:

Non-Educational Agencies found in the preamble Final VR Regulations at 81 FR 55662 (August 19, 2016) -

Discussion: Section 101(a)(11)(C) of the Act, as amended by WIOA, and final § 361.24(a) require the DSU to describe in the VR services portion of the Unified or Combined State Plan its cooperation with, and use of, a variety of entities, including non-educational agencies serving out-of-school youth. In response to the commenter, the Act does not define non-educational agencies. Therefore, the Act and these final regulations maximize flexibility because the DSU is not limited to a list that may or may not be applicable in any given State. However, we believe that non educational agencies could include public systems such as welfare services, foster care, and the juvenile or criminal justice systems serving out-of-school youth. Non-educational agencies also could include those State or local agencies that administer the youth formula grant program authorized under title I of WIOA.

Requirements for Third-Party Cooperative Arrangements In-Kind Contributions (§361.28)

Regulation:

Third-party cooperative arrangements involving funds from other public agencies.

(a) The designated State unit may enter into a third-party cooperative arrangement for providing or contracting for the provision of vocational rehabilitation services with another State agency or a local public agency that is providing part or all of the non-Federal share in accordance with paragraph (c) of this section, if the designated State unit ensures that -

(1) The services provided by the cooperating agency are not the customary or typical services provided by that agency but are new services that have a vocational rehabilitation focus or existing services that have been modified, adapted, expanded, or reconfigured to have a vocational rehabilitation focus;

(2) The services provided by the cooperating agency are only available to applicants for, or recipients of, services from the designated State unit;

(3) Program expenditures and staff providing services under the cooperative arrangement are under the administrative supervision of the designated State unit; and

(4) All requirements of the vocational rehabilitation services portion of the Unified or Combined State Plan, including a State's order of selection, will apply to all services provided under the cooperative arrangement.

(b) If a third party cooperative arrangement does not comply with the state wideness requirement in § 361.25, the State unit must obtain a waiver of state wideness, in accordance with § 361.26.

(c) The cooperating agency's contribution toward the non-Federal share required under the arrangement, as set forth in paragraph (a) of this section, may be made through:

(1) Cash transfers to the designated State unit;

(2) Certified personnel expenditures for the time cooperating agency staff spent providing direct vocational rehabilitation services pursuant to a third-party cooperative arrangement that meets the requirements of this section. Certified personnel expenditures may include the allocable portion of staff salary and fringe benefits based upon the amount of time cooperating agency staff directly spent providing services under the arrangement; and

(3) other direct expenditures incurred by the cooperating agency for the sole purpose of providing services under this section pursuant to a third-party cooperative arrangement that -

(i) Meets the requirements of this section;

(ii) Are verifiable as being incurred under the third-party cooperative arrangement; and

(iii) Do not meet the definition of third-party in-kind contributions under 2 CFR 200.96.

Preamble Discussion:

Students Who Are Eligible or Potentially Eligible for Services found in the preamble Final VR Regulations at 81 FR 55664 (August 19, 2016) -

Discussion: Under final § 361.28(a)(2), which remains unchanged from prior regulations, vocational rehabilitation services provided under a third-party cooperative arrangement are only available to applicants for, or recipients of, services from the VR program. Given amendments to the Act made by WIOA, particularly new provisions in section 103(b)(7) regarding transition services to groups of students and youth with disabilities and section 113 regarding the provision of pre-employment transition services to students with disabilities, it is possible that some of these services will be provided to youth or students with disabilities who have not yet applied or been determined eligible for vocational rehabilitation services.

This means that these students and youth with disabilities would be considered a "recipient" of vocational rehabilitation services for purposes of final § 361.28. As such, DSUs could enter into third-party cooperative arrangements for the provision of these group transition services or pre-employment transition services so long as all requirements of final § 361.28 are satisfied.

Statewide Assessment; Annual Estimates; Annual State Goals and Priorities; Strategies; and Reports of Progress (§361.29)

Regulation:

(a) Comprehensive statewide assessment.

(1) The vocational rehabilitation services portion of the Unified or Combined State Plan must include -

(i) The results of a comprehensive, statewide assessment, jointly conducted by the designated State unit and the State Rehabilitation Council (if the State unit has a Council) every three years. Results of the assessment are to be included in the vocational rehabilitation portion of the Unified or Combined State Plan, submitted in accordance with the requirements of §361.10(a) and the joint regulations of this part. The comprehensive needs assessment must describe the rehabilitation needs of individuals with disabilities residing within the State, particularly the vocational rehabilitation services needs of -

(A) Individuals with the most significant disabilities, including their need for supported employment services;

(B) Individuals with disabilities who are minorities and individuals with disabilities who have been unserved or underserved by the vocational rehabilitation program carried out under this part;

(C) Individuals with disabilities served through other components of the statewide workforce development system as identified by those individuals and personnel assisting those individuals through the components of the system; and

(D) Youth with disabilities, and students with disabilities, including

(1) Their need for pre-employment transition services or other transition services; and

(2) An assessment of the needs of individuals with disabilities for transition services and pre-employment transition services, and the extent to which such services provided under this part are coordinated with transition services provided under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.) in order to meet the needs of individuals with disabilities.

...(d) Strategies

The vocational rehabilitation services portion of the Unified or Combined State Plan must describe the strategies the State will use to address the needs identified in the assessment conducted under paragraph (a) of this section and achieve the goals and priorities identified in paragraph (c) of this section, including -

(1) The methods to be used to expand and improve services to individuals with disabilities, including how a broad range of assistive technology services and assistive technology devices will be provided to those individuals at each stage of the rehabilitation process and how those services and devices will be provided to individuals with disabilities on a statewide basis;

(2) The methods to be used to improve and expand vocational rehabilitation services for students with disabilities, including the coordination of services designed to facilitate the transition of such students from the receipt of educational services in school to postsecondary life, including the receipt of vocational rehabilitation services under the Act, postsecondary education, employment, and pre-employment transition services;

(3) Strategies developed and implemented by the State to address the needs of students and youth with disabilities identified in the assessments described in paragraph (a) of this section and strategies to achieve the goals and priorities identified by the State to improve and expand vocational rehabilitation services for students and youth with disabilities on a statewide basis;

(4) Strategies to provide pre-employment transition services;

(5) Outreach procedures to identify and serve individuals with disabilities who are minorities and individuals with disabilities who have been unserved or underserved by the vocational rehabilitation program;

(6) As applicable, the plan of the State for establishing, developing, or improving community rehabilitation programs;

(7) Strategies to improve the performance of the State with respect to the evaluation standards and performance indicators established pursuant to section 106 of the Act and section 116 of Workforce Innovation and Opportunity Act; and

(8) Strategies for assisting other components of the statewide workforce development system in assisting individuals with disabilities....

Preamble Discussion:

Additional Vocational Rehabilitation Program Provisions VR Services Portion of the Unified or Combined State Plan regarding the CSNA found in the preamble Final VR Regulations at 81 FR 55734 (August 19, 2016) -

...Section 101(a) of the Act, as amended by WIOA, requires DSUs to include additional descriptive information in the VR services portion of the Unified or Combined State plan. Therefore, final §361.29 requires DSUs to describe in the VR services portion of the Unified or Combined State plan:

(1) The results of the comprehensive statewide needs assessment with respect to the needs of students and youth with disabilities for pre-employment transition services and other transition services, as appropriate;

(2) goals and priorities to address these needs; and

(3) strategies for the achievement of these goals….

Final §361.24(c) also requires that the VR services portion of the Unified or Combined State plan include a description of how the DSU will work with employers to identify competitive integrated employment and career exploration opportunities, in order to facilitate the provision of VR services, including pre-employment transition services and transition services for youth and students with disabilities, as applicable.

Requirements for Third-Party Cooperative Arrangements In-Kind Contributions (§361.28)

Regulation:

Third-party cooperative arrangements involving funds from other public agencies.

(a) The designated State unit may enter into a third-party cooperative arrangement for providing or contracting for the provision of vocational rehabilitation services with another State agency or a local public agency that is providing part or all of the non-Federal share in accordance with paragraph (c) of this section, if the designated State unit ensures that -

(1) The services provided by the cooperating agency are not the customary or typical services provided by that agency but are new services that have a vocational rehabilitation focus or existing services that have been modified, adapted, expanded, or reconfigured to have a vocational rehabilitation focus;

(2) The services provided by the cooperating agency are only available to applicants for, or recipients of, services from the designated State unit;

(3) Program expenditures and staff providing services under the cooperative arrangement are under the administrative supervision of the designated State unit; and

(4) All requirements of the vocational rehabilitation services portion of the Unified or Combined State Plan, including a State's order of selection, will apply to all services provided under the cooperative arrangement.

(b) If a third party cooperative arrangement does not comply with the state wideness requirement in § 361.25, the State unit must obtain a waiver of state wideness, in accordance with § 361.26.

(c) The cooperating agency's contribution toward the non-Federal share required under the arrangement, as set forth in paragraph (a) of this section, may be made through:

(1) Cash transfers to the designated State unit;

(2) Certified personnel expenditures for the time cooperating agency staff spent providing direct vocational rehabilitation services pursuant to a third-party cooperative arrangement that meets the requirements of this section. Certified personnel expenditures may include the allocable portion of staff salary and fringe benefits based upon the amount of time cooperating agency staff directly spent providing services under the arrangement; and

(3) other direct expenditures incurred by the cooperating agency for the sole purpose of providing services under this section pursuant to a third-party cooperative arrangement that -

(i) Meets the requirements of this section;

(ii) Are verifiable as being incurred under the third-party cooperative arrangement; and

(iii) Do not meet the definition of third-party in-kind contributions under 2 CFR 200.96.

Preamble Discussion:

Students Who Are Eligible or Potentially Eligible for Services found in the preamble Final VR Regulations at 81 FR 55664 (August 19, 2016) -

Discussion: Under final § 361.28(a)(2), which remains unchanged from prior regulations, vocational rehabilitation services provided under a third-party cooperative arrangement are only available to applicants for, or recipients of, services from the VR program. Given amendments to the Act made by WIOA, particularly new provisions in section 103(b)(7) regarding transition services to groups of students and youth with disabilities and section 113 regarding the provision of pre-employment transition services to students with disabilities, it is possible that some of these services will be provided to youth or students with disabilities who have not yet applied or been determined eligible for vocational rehabilitation services.

This means that these students and youth with disabilities would be considered a "recipient" of vocational rehabilitation services for purposes of final § 361.28. As such, DSUs could enter into third-party cooperative arrangements for the provision of these group transition services or pre-employment transition services so long as all requirements of final § 361.28 are satisfied.

Innovation and Expansion Activities (§361.35)

Regulation:

(a)(1) For the development and implementation of innovative approaches to expand and improve the provision of vocational rehabilitation services to individuals with disabilities, particularly individuals with the most significant disabilities, including transition services for students and youth with disabilities and pre-employment transition services for students with disabilities, consistent with the findings of the comprehensive statewide assessment of the rehabilitation needs of individuals with disabilities under §361.29(a) and the State's goals and priorities under §361.29(c);...

Ability to Serve all Eligible Individuals; Order of Selection for Services (§361.36)

Regulation:

...(e) Administrative requirements. In administering the order of selection, the designated State unit must -

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

(2) Notify all eligible individuals of the priority categories in a State's order of selection, their assignment to a particular category, and their right to appeal their category assignment;

(3) Continue to provide services to any recipient who has begun to receive services irrespective of the severity of the individual’s disability as follows -

(i) The designated State unit must continue to provide pre-employment transition services to students with disabilities who were receiving such services prior to being determined eligible for vocational rehabilitation services; and

(ii) The designated State unit must continue to provide to an eligible individual all needed services listed on the individualized plan for employment if the individual had begun receiving such services prior to the effective date of the State’s order of selection; and

(4) Ensure that its funding arrangements for providing services under the vocational rehabilitation services portion of the Unified or Combined State Plan, including third party arrangements and awards under the establishment authority, are consistent with the order of selection. If any funding arrangements are inconsistent with the order of selection, the designated State unit must renegotiate these funding arrangements so that they are consistent with the order of selection.

Reports; Evaluation Standards and Performance Indicators (§361.40)

Regulation:

(a) Reports

(1) The vocational rehabilitation services portion of the Unified or Combined State Plan must assure that the designated State agency will submit reports, including reports required under sections 13, 14, and 101(a)(10) of the Act -

(i) In the form and level of detail and at the time required by the Secretary regarding applicants for and eligible individuals receiving services, including students receiving pre-employment transition services in accordance with 361.48(a); and

(ii) In a manner that provides a complete count (other than the information obtained through sampling consistent with section 101(a)(10)(E) of the Act) of the applicants and eligible individuals to -

(A) Permit the greatest possible cross classification of data; and

(B) Protect the confidentiality of the identity of each individual.

(2) The designated State agency must comply with any requirements necessary to ensure the accuracy and verification of those reports.

(b) [Reserved]

Preamble Discussion:

Pre-Employment Transition Services found in the preamble Final VR Regulations at 81 FR 55669 (August 19, 2016)

Discussion: We appreciate the concerns expressed regarding the new data reporting requirements in final § 361.40(a) related to the provision of pre-employment transition services to students with disabilities. We agree with commenters that it is reasonable to anticipate an increase in the number of individuals that will need to be reported through the RSA–911. Prior to the enactment of WIOA, DSUs could only serve, and thus report, individuals who were applicants or eligible individuals under the VR program. However, section 113 of the Act, as added by WIOA, requires DSUs to provide pre employment transition services to all students potentially eligible for vocational rehabilitation services who need such services, regardless of whether they have applied and been determined eligible for vocational rehabilitation services. This change is likely to result in a significant increase in the number of individuals reported under the RSA-911.

Students with disabilities who are not yet served under an individualized plan for employment and who receive pre-employment transition services are not considered "participants" as that term is defined under the joint final regulations for performance accountability purposes published elsewhere in this issue of the Federal Register. However, students with disabilities receiving pre-employment transition services are considered "reportable individuals" for RSA–911 reporting and WIOA performance purposes, regardless of whether they have applied for vocational rehabilitation services or are receiving these services under an individualized plan for employment. This does not, however, preclude a DSU from serving an eligible student with a disability under an individualized plan for employment. Once the student has begun receiving services under a signed individualized plan for employment, he or she will be counted as a participant and included in the applicable performance indicator calculations. At the point the student with a disability becomes a participant, all the applicable RSA-911 data elements will be collected and reported in the individual’s RSA-911 case record.

We have identified and defined the specific data elements needed for all students with disabilities receiving pre-employment transition services in the RSA–911 instructions. We believe this will reduce collection and reporting burden to the maximum extent possible, and prevent a requirement for collecting specific information that would otherwise result in an application for services for students with disabilities who have not intended to apply for these services.

In addition to the tracking necessary to demonstrate compliance with the requirement to reserve at least 15 percent of the State’s VR allotment for providing pre-employment transition services, under section 110(d) of the Act, as amended by WIOA, and final § 361.65(a)(3), section 101(a)(10) of the Act requires DSUs to have a mechanism to report the number of students with disabilities receiving these services. We recognize the burden this will place on DSUs and we have included a specific, but limited, set of data elements in the RSA–911 to enable DSUs to report the number of students with disabilities receiving these services, including both those who have been determined eligible for vocational rehabilitation services and those who have not applied for vocational rehabilitation services.

For further information regarding the specific data elements DSUs are required to report regarding students receiving pre-employment transition services, see the RSA–911 data collection instrument published elsewhere in this issue of the Federal Register. We believe DSUs should use these data, along with other information (such as that obtained through the comprehensive statewide needs assessment required under section 101(a)(15)(A) of the Act, as amended by WIOA, and final § 361.29(a)), when developing the VR services portion of the Unified or Combined State Plan, including the goals and strategies related to the provision of pre-employment transition services under sections 101(a)(15)(C) and (D) of the Act, as amended by WIOA, and final § 361.29(c) and (d).

Reports; Standards and Indicators found in the preamble Final VR Regulations at 81 FR 55735 (August 19, 2016)

Final §361.40 implements changes to reporting requirements in section 116(b) in title I of WIOA and section 101(a)(10) of the Act, as amended by WIOA. Final 361.40 does not list the actual data to be reported, rather, it requires the collection and reporting of the information specified in sections 13, 14, and 101(a)(10) of the Act. New requirements under section 101(a)(10) include the reporting of data on the number of: individuals with open service records and the types of services these individuals are receiving (including supported employment services); students with disabilities receiving pre-employment transition services; and individuals referred to the State VR program by one-stop operators and individuals referred to such one-stop operators by DSUs.

Reporting Burden found in the preamble Final VR Regulations at 81 FR 55671 (August 19, 2016)

Discussion: We recognize that proposed new data collection and reporting requirements, including data on students with disabilities receiving pre-employment transition services, will have an impact on the financial and personnel resources of the agency. However, the collection and reporting of such data are required by the amendments made by WIOA to section 101(a)(10) of the Act. In addition, the collection and reporting of data regarding the number of students with disabilities receiving pre-employment transition services and the costs of these services will enable the Department and the States to better track the use of VR program funds that must be reserved for the provision of these services.

Development of the Individualized Plan for Employment (§361.45)

Regulation:

…(d) Mandatory procedures. The designated State unit must ensure that -

...(9) An individualized plan for employment for a student with a disability is developed -

(i) In consideration of the student's individualized education program or 504 services, as applicable; and

(ii) In accordance with the plans, policies, procedures, and terms of the interagency agreement required under § 361.22.

Preamble Discussion:

Timeframe for developing the Individualized Plan for Employment found in the preamble Final VR Regulations at 81 FR 55676 (August 19, 2016)

...Despite the 90-day time frame, these plans must be of sufficient quality to incorporate mandatory components in section 102(b)(4) of the Act, and meet requirements under §361.46(a)(1), which requires the individualized plan for employment to be consistent with the individual's unique strengths, resources, priorities, concerns, abilities, capabilities, career interest, and informed choice consistent with the general goal of competitive integrated employment (except that in the case of an eligible individual who is a student or a youth with a disability, the description may be a description of the individual's projected post-school employment outcome)....

Content of the Individualized Plan for Employment (§361.46)

Regulation:

a) Mandatory components. Regardless of the approach in §361.45(c)(1) that an eligible individual selects for purposes of developing the individualized plan for employment, each individualized plan for employment must -

(1) Include a description of the specific employment outcome, as defined in § 361.5(c)(15), that is chosen by the eligible individual and is consistent with the individual’s unique strengths, resources, priorities, concerns, abilities, capabilities, career interests, and informed choice consistent with the general goal of competitive integrated employment (except that in the case of an eligible individual who is a student or a youth with a disability, the description may be a description of the individual’s projected post-school employment outcome);

(2) Include a description under § 361.48 of -

(i) These specific rehabilitation services needed to achieve the employment outcome, including, as appropriate, the provision of assistive technology devices, assistive technology services, and personal assistance services, including training in the management of those services; and

(ii) In the case of a plan for an eligible individual that is a student or youth with a disability, the specific transition services and supports needed to achieve the individual’s employment outcome or projected post-school employment outcome.

(3) Provide for services in the most integrated setting that is appropriate for the services involved and is consistent with the informed choice of the eligible individual;

(4) Include timelines for the achievement of the employment outcome and for the initiation of services;

(5) Include a description of the entity or entities chosen by the eligible individual or, as appropriate, the individual’s representative that will provide the vocational rehabilitation services and the methods used to procure those services;

(6) Include a description of the criteria that will be used to evaluate progress toward achievement of the employment outcome; and

(7) Include the terms and conditions of the individualized plan for employment, including, as appropriate, information describing -

(i) The responsibilities of the designated State unit;

(ii) The responsibilities of the eligible individual, including -

(A) The responsibilities the individual will assume in relation to achieving the employment outcome;

(B) If applicable, the extent of the individual’s participation in paying for the cost of services; and

(C) The responsibility of the individual with regard to applying for and securing comparable services and benefits as described in § 361.53; and

(iii) The responsibilities of other entities as the result of arrangements made pursuant to the comparable services or benefits requirements in § 361.53.

(b) Supported employment requirements. An individualized plan for employment for an individual with a most significant disability for whom an employment outcome in a supported employment setting has been determined to be appropriate must -

(1) Specify the supported employment services to be provided by the designated State unit;

(2) Specify the expected extended services needed, which may include natural supports;

(3) Identify the source of extended services or, to the extent that it is not possible to identify the source of extended services at the time the individualized plan for employment is developed, include a description of the basis for concluding that there is a reasonable expectation that those sources will become available;

(4) Provide for periodic monitoring to ensure that the individual is making satisfactory progress toward meeting the weekly work requirement established in the individualized plan for employment by the time of transition to extended services;

(5) Provide for the coordination of services provided under an individualized plan for employment with services provided under other individualized plans established under other Federal or State programs;

(6) To the extent that job skills training is provided, identify that the training will be provided on site; and

(7) Include placement in an integrated setting for the maximum number of hours possible based on the unique strengths, resources, priorities, concerns, abilities, capabilities, interests, and informed choice of individuals with the most significant disabilities.

(c) Post-employment services. The individualized plan for employment for each individual must contain, as determined to be necessary, statements concerning -

(1) The expected need for postemployment services prior to closing the record of services of an individual who has achieved an employment outcome;

(2) A description of the terms and conditions for the provision of any postemployment services; and

(3) If appropriate, a statement of how post-employment services will be provided or arranged through other entities as the result of arrangements made pursuant to the comparable services or benefits requirements in § 361.53.

(d) Coordination of services for students with disabilities. The individualized plan for employment for a student with a disability must be coordinated with the individualized education program or 504 services, as applicable, for that individual in terms of the goals, objectives, and services identified in the education program.

Preamble Discussion:

Content of the Individualized Plan for Employment found in the preamble Final VR Regulations at 81 FR 55690 (August 19, 2016)

Discussion: In response to the request for additional guidance, the individualized plan for employment with a projected post-school employment outcome should outline the services and activities that will guide the individual’s career exploration. The projected post-school employment outcome facilitates the individual’s exploration and identification of a vocational goal based upon his or her informed choice. It may be a specific goal, such as a Web designer, or a broader goal, such as medical practitioner. The projected goal may be amended during the career development process, and eventually it must be revised to a specific vocational goal once this process is completed.

Scope of Vocational Rehabilitation Services for Individuals with Disabilities (§361.48)

• (361.48(a)) Pre-employment transition services
• (361.48(b)) Services for individuals who have applied for or been determined eligible for vocational rehabilitation
• Scope of Pre-Employment Transition Services and Use of Reserve found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55690 (August 19, 2016)
• Potentially Eligible found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55690-55691 (August 19, 2016)
• Discretion to Provide Pre-Employment Transition Services to All Students with Disabilities found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55691 (August 19, 2016)
• Provision of Required Activities Based on Need found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55691-55692 (August 19, 2016)
• Continuation of Pre-Employment Transition Services is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55692-55693 (August 19, 2016)
• Required Activities is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55693-55694 (August 19, 2016)
• Continuum of Services is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55694-55695 (August 19, 2016)
• Transition Services (§ 361.5(c)(55)) Scope of ‘‘Pre-Employment Transition Services’’ and ‘‘Transition Services’’ found in the preamble Final VR Regulations at 81 FR 55685 (August 19, 2016)
• Other Vocational Rehabilitation Services as Pre-Employment Transition Services is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55695 (August 19, 2016)
• Pre-Employment Transition Coordination Activities is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55695 - 55696 (August 19, 2016)
• Documenting and Reporting is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55696 (August 19, 2016)
• Performance Measures is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55697 (August 19, 2016)
• Services for Individuals Who Have Applied for or Been Determined Eligible for Vocational Rehabilitation Services is found in the preamble Pre-employment Transition Services (§361.48(b)) Final VR Regulations at 81 FR 55697 (August 19, 2016)

(361.48(a)) Pre-employment transition services.

Regulation:

Each State must ensure that the designated State unit, in collaboration with the local educational agencies involved, provide, or arrange for the provision of, pre-employment transition services for all students with disabilities, as defined in § 361.5(c)(51), in need of such services, without regard to the type of disability, from Federal funds reserved in accordance with § 361.65, and any funds made available from State, local, or private funding sources. Funds reserved and made available may be used for the required, authorized, and pre-employment transition coordination activities under paragraphs (2), (3) and (4) of this section.

(1) Availability of services. Pre-employment transition services must be made available Statewide to all students with disabilities, regardless of whether the student has applied or been determined eligible for vocational rehabilitation services.

(2) Required activities. The designated State unit must provide the following pre-employment transition services:

(i) Job exploration counseling;

(ii) Work-based learning experiences, which may include in-school or after school opportunities, or experience outside the traditional school setting (including internships), that is provided in an integrated environment in the community to the maximum extent possible;

(iii) Counseling on opportunities for enrollment in comprehensive transition or postsecondary educational programs at institutions of higher education;

(iv) Workplace readiness training to develop social skills and independent living; and

(v) Instruction in self-advocacy (including instruction in person-centered planning), which may include peer mentoring (including peer mentoring from individuals with disabilities working in competitive integrated employment).

(3) Authorized activities. Funds available and remaining after the provision of the required activities described in paragraph (a) (2) of this section may be used to improve the transition of students with disabilities from school to postsecondary education or an employment outcome by -

(i) Implementing effective strategies to increase the likelihood of independent living and inclusion in communities and competitive integrated workplaces;

(ii) Developing and improving strategies for individuals with intellectual disabilities and individuals with significant disabilities to live independently; participate in postsecondary education experiences; and obtain, advance in and retain competitive integrated employment;

(iii) Providing instruction to vocational rehabilitation counselors, school transition personnel, and other persons supporting students with disabilities;

(iv) Disseminating information about innovative, effective, and efficient approaches to achieve the goals of this section;

(v) Coordinating activities with transition services provided by local educational agencies under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.);

(vi) Applying evidence-based findings to improve policy, procedure, practice, and the preparation of personnel, in order to better achieve the goals of this section;

(vii) Developing model transition demonstration projects;

(viii) Establishing or supporting multistate or regional partnerships involving States, local educational agencies, designated State units, developmental disability agencies, private businesses, or other participants to achieve the goals of this section; and

(ix) Disseminating information and strategies to improve the transition to postsecondary activities of individuals who are members of traditionally unserved and underserved populations.

(4) Pre-employment transition coordination. Each local office of a designated State unit must carry out responsibilities consisting of -

(i) Attending individualized education program meetings for students with disabilities, when invited;

(ii) Working with the local workforce development boards, one-stop centers, and employers to develop work opportunities for students with disabilities, including internships, summer employment and other employment opportunities available throughout the school year, and apprenticeships;

(iii) Working with schools, including those carrying out activities under section 614(d) of the IDEA, to coordinate and ensure the provision of pre-employment transition services under this section;

(iv) When invited, attending person-centered planning meetings for individuals receiving services under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.);

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(361.48(b)) Services for individuals who have applied for or been determined eligible for vocational rehabilitation

• ...(18) Transition services for students and youth with disabilities, that facilitate the transition from school to postsecondary life, such as achievement of an employment outcome in competitive integrated employment, or pre-employment transition services for students.

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Preamble Discussion:

Scope of Pre-Employment Transition Services and Use of Reserve found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55690 (August 19, 2016)

Discussion: Section 113(a) of the Act, as amended by WIOA, states that the funds reserved under section 110(d) and any funds made available from State, local, or private (other) sources shall be used to provide, or arrange for the provision of, pre-employment transition services. The coordination activities required by section 113(d) of the Act, as amended by WIOA, and final §361.48(a)(4) are essential for arranging and providing the "required" and "authorized" activities set forth in section 113(b) and (c) of the Act and final §361.48(a)(2) and (3). Therefore, there is no statutory authority to limit the scope of final 361.48(a) to only the direct services required by section 113(b) of the Act. See a more detailed discussion of the definition of "Pre-Employment Transition Services," and the services included in that definition, earlier in this section.

We agree with the commenter that proposed §361.48(a) should be revised to clarify that pre-employment transition coordination services provided under §361.48(a)(4) may be paid with funds reserved for providing pre-employment transition services, because coordination activities are essential for arranging and providing those services, as required by section 113(a) of the Act and §361.48(a).

Changes: We have revised final §361.48(a) to clarify that the funds reserved for the provision of pre-employment transition services may be used to pay for pre-employment transition coordination activities.

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Potentially Eligible found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55690-55691 (August 19, 2016)

Discussion: We appreciate the comments supporting the proposed regulation, as well as comments expressing concerns and suggestions for changes. After much consideration of all available options, we have decided to maintain our interpretation of "potentially eligible" for purposes of pre-employment transition services. In so doing, all students with disabilities, regardless of whether they have applied for or been determined eligible for the VR program, may receive pre-employment transition services. The Secretary believes this is the broadest legally supportable interpretation and the one that is most consistent with the apparent congressional intent.

Most notably, section 113 of the Act is the only statutory section that references "potentially eligible" students with disabilities. All other sections of title I of the Act refer to "applicants" or individuals determined eligible for services. Given the stark contrast in the use of "potentially eligible" in section 113 of the Act, the Secretary believes it imperative that meaning is given to that phrase by not limiting it to individuals who have applied for or been determined eligible for the VR program.

The broader interpretation means all students with disabilities will be able to obtain much-needed pre-employment transition services and begin the early phase of job exploration without the potential delays, and the administrative burden on DSU personnel and resources, caused by application processing, eligibility determinations, assignment to an order of selection category, and development of an individualized plan for employment. However, there is nothing that precludes a DSU from taking an application as soon as a student expresses an interest in pre-employment transition services or other vocational rehabilitation services and making a timely determination of eligibility.

We want to emphasize that the phrase "potentially eligible" applies only in the context of pre-employment transition services. This means that students with disabilities who need individualized services beyond the scope of pre-employment transition services (e.g., transition and other vocational rehabilitation services) must first apply for, and be determined eligible for, the VR program, be assigned to the appropriate category if the State is on an order of selection, and develop an approved individualized plan for employment. We recommend that DSUs request students with disabilities who are "potentially eligible" for vocational rehabilitation services and receiving pre-employment transition services submit an application for services as soon as possible in the event further vocational rehabilitation services are needed.

This recommendation is especially pertinent for those States that have implemented an order of selection. A student's position on the waitlist for services other than pre-employment transition services, in the event the student is placed in a closed category, is based on the date of application, not the date of referral or the receipt of pre-employment transition services. To provide students with disabilities an opportunity to apply for services as early as possible in the transition process and ensure a smooth transition into the VR program, it is imperative that DSUs collaborate with educational programs to identify students who may be eligible or potentially eligible for vocational rehabilitation services and engage parents and representatives. The earlier a student is placed on a wait list, the sooner his or her turn will open in the State's order in the event a State is on an order of selection.

We want to make clear that neither the Act nor these final regulations exempt these students with disabilities from the State's order of selection, if one has been implemented, or VR program requirements once they apply and are determined eligible for services. While under the order of selection regulations at §361.36, the student could continue to receive pre-employment transition services if such services have begun, a student could not begin to receive pre-employment transition services if such services had not begun prior to applying and being determined eligible. To permit such would create an exemption from the order of selection requirements and the statute does not provide such authority. However, we recognize the benefit early services can have for students. Therefore, we want to make clear that these students could receive transition services offered to groups of students and youth with disabilities under §361.49. While not identical to pre-employment transition services, many similar services could be provided under the services to groups authority.

A detailed discussion regarding comments related to the continuation of pre-employment transition services under an order of selection is provided in the Continuation of Pre-Employment Transition Services section later in this Analysis of Comments and Changes.

In response to the concern related to the availability of services from the CAP, section 112(a) of the Act, as amended by WIOA, specifically authorizes CAP grantees to assist individuals receiving services under sections 113 and 511 of the Act. Therefore, these individuals are clients and client-applicants for purposes of the CAP.

Finally, as discussed previously under "Coordination with Education Officials," parental consent to participate in pre-employment transition services is governed by State law, as well as policies of the educational programs and the DSU. Furthermore, informed choice, as outlined in final §361.52, applies throughout the vocational rehabilitation process; therefore, students with disabilities receiving pre-employment transition services under final §361.48(a) must be given the opportunity to exercise their informed choice.

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Discretion to Provide Pre-Employment Transition Services to All Students with Disabilities found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55691 (August 19, 2016)

Discussion: We agree that clarification is necessary. Section 110(d)(1) of the Act, as amended by WIOA, requires States to reserve at least 15 percent of their Federal vocational rehabilitation allotment for providing pre-employment transition services. Moreover, section 113 of the Act, as amended by WIOA, requires States to use the reserved funds to provide, or arrange for the provision of, pre-employment transition services to all students with disabilities in need of such services who are eligible or potentially eligible for services.

Therefore, the requirement to reserve and use funds for providing pre-employment transition services is mandatory, not discretionary. A State must provide pre-employment transition services to all students with disabilities needing those services and may not limit or expand those services. We used the term ‘‘may'' in proposed § 361.48(a)(1) to recognize that, for the first time, the Act permitted the delivery of pre-employment transition services to students with disabilities who have not applied for or been determined eligible for the VR program. However, we acknowledge the confusion caused by the use of the term. We therefore clarify that States must provide pre-employment transition services not only to students with disabilities who have applied for vocational rehabilitation services but also to those students with disabilities who have not applied for services.

Changes: We have revised final § 361.48(a)(1) to clarify that DSUs must make pre-employment transition services available statewide to all students with disabilities, not just those who have applied for or been determined eligible for vocational rehabilitation services.

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Provision of Required Activities Based on Need found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55691-55692 (August 19, 2016)

Discussion: Section 113(a) and (b) of the Act, as amended by WIOA, when read in concert with each other, as well as final §361.48(a)(2), require the DSU to make certain "required" pre-employment transition services available to all students with disabilities who need them. However, none of these provisions mandate that all five "required" activities be provided to each student with a disability if all the activities are not necessary. Pre-employment transition services, as is true for any vocational rehabilitation service, must be provided solely on the basis of the individual's need for that service.

Under final §361.50, DSUs are responsible for developing policies, in consultation with the SRC, for determining the need for pre-employment transition services. These policies must include clear and consistent criteria based on the needs of students identified in the comprehensive statewide needs assessment. The policies will guide the DSU, in consultation with school personnel, family members, and students with a disability, in determining which pre-employment transition services each student needs, consistent with his or her interests and informed choice.

Finally, pre-employment transition services are designed to be an early start at job exploration for students with disabilities and should enrich, not delay, transition planning, application to the VR program, and the continuum of vocational rehabilitation services necessary for movement from school to post-school activities. Neither section 113 of the Act, as amended by WIOA, nor final §361.48(a) requires students with disabilities receiving pre-employment transition services to apply for, or be determined eligible for, the VR program or to receive other vocational rehabilitation services. The Act and these final regulations maximize opportunities for achieving competitive integrated employment by imposing no requirement that would delay or hinder the student's ability to access these crucial early services or that would permit a DSU to coerce an individual to participate in any of them. However, should the student with a disability need additional vocational rehabilitation services, he or she must apply for and be determined eligible for those services. See the more detailed discussion of comments related to "Potentially Eligible" earlier in this section.

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Continuation of Pre-Employment Transition Services is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55692-55693 (August 19, 2016)

Discussion: We understand the commenters' concerns about the continuation of services for students with disabilities after receiving pre-employment transition services, as some students may apply but not be determined eligible for the VR program. Others may no longer satisfy the definition of a "student with a disability" because they are no longer within the required age range or are no longer participating in an education program. These issues arise only when a student with a disability who is receiving, or has received, pre-employment transition services also needs other vocational rehabilitation services. All students with disabilities who apply for vocational rehabilitation services, even if they are still receiving pre-employment transition services, will be subject to all relevant requirements for eligibility, order of selection, and development of the individualized plan for employment (including its development prior to leaving school under final §361.22(a)(2)). Neither the Act nor these final regulations exempt students with disabilities from any of these requirements, which apply to all VR program applicants.

Section 101(a)(5) of the Act, as amended by WIOA, does not exempt students with disabilities receiving pre-employment transition services prior to the determination of eligibility from a State's order of selection; therefore, we do not have the statutory authority to include such an exemption in final §361.36. Nonetheless, consistent with the policy underlying prior §361.36(e)(3), which requires a DSU to continue providing vocational rehabilitation services to individuals who had begun receiving these services under an individualized plan for employment prior to the implementation of an order of selection, it is imperative that students with disabilities not experience a disruption in the pre-employment transition services that they are receiving and that are so critical to their transition to postsecondary education and employment. Thus, we have revised final §361.36(e)(3) by requiring DSUs implementing an order of selection to continue the provision of pre-employment transition services to students with disabilities who were receiving these services prior to the determination of eligibility and assignment to a priority category. DSUs may use the funds reserved under section 110(d) and final §361.65(a)(3) for the continuation of these services. This change does not permit the DSU to provide any other transition or vocational rehabilitation services for students with disabilities assigned to closed priority categories.

As for ceasing to satisfy the definition of "student with a disability," pre-employment transition services under section 113 of the Act and final §361.48(a) are available only to students with disabilities. Therefore, if an individual no longer meets the definition of a "student with a disability," despite the fact that he or she has received or is receiving pre-employment transition services, he or she is no longer able to receive these services under section 113 of the Act and final §361.48(a). However, if the individual has been determined eligible for vocational rehabilitation services and has been assigned to an open category in the State's order of selection, if the State has implemented one, he or she may continue to receive the same types of pre-employment transition services under section 103(a) of the Act and final 361.48(b), in accordance with an approved individualized plan for employment. The DSU would pay for these services with VR funds, other than those reserved for the provision of pre-employment transition services under section 113 of the Act because the reserved funds must be used solely for the provision of pre-employment transition services to individuals who satisfy the definition of a "student with a disability."

Changes: We have revised final §361.36(e)(3) by requiring a designated State unit implementing an order of selection to continue to provide pre-employment transition services to students with disabilities who have begun receiving these services prior to the determination of eligibility and assignment to a closed priority category.

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Required Activities is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55693-55694 (August 19, 2016)

Discussion: We appreciate the commenters' suggestions, concerns, and requests for clarification. However, section 113(b) of the Act, as amended by WIOA, specifically itemizes the pre-employment transition services that must be provided–-the "required" activities. Furthermore, section 113(c) of the Act itemizes the pre-employment transition services that may be provided–-the "authorized" activities--in the event funds remain after providing the required activities. Given the Act's specificity about the pre-employment transition services that must be provided, as well as those that may be provided, there is no statutory basis to require additional activities or impose additional requirements, such as requiring that instruction in self-advocacy be provided by a recognized self-advocacy group of the individual's choosing or that peer mentoring occur during work experiences.

We disagree with the commenters' request to revise 361.48(a)(2)(iii) to conform to similar language in the Higher Education Opportunity Act of 2008 and specifically includes programs and services for students with intellectual disabilities. Final §361.48(a)(2)(iii) mirrors section 113(b)(3) of the Act, as amended by WIOA, and we do not believe the replacement of "or" with "and" helps to better describe the manner in which DSUs are to provide this service. In addition, Section 113(b)(3)of the Act and final §361.48(a)(2)(iii) encompass counseling on the broad range of comprehensive transition or postsecondary education programs available to all students with disabilities, including students with intellectual disabilities. Therefore, we do not believe it is necessary to revise final §361.48(a)(2)(iii).

Moreover, there is no statutory basis for States to develop their own menu of pre-employment transition services. Rather, under section 113(b) of the Act and final §361.48(a)(2), each State must make all "required" pre-employment transition services available to students with disabilities who need such services.

Similarly, contrary to recommendations made by commenters, we do not have the authority to remove, by regulation, statutory requirements. Accordingly, 361.48(a)(2)(ii) must be consistent with section 113(b)(2) of the Act, as amended by WIOA, which requires that work-based learning experiences occur in integrated settings to the maximum extent possible. While we agree with commenters that work-based learning experiences in integrated settings are optimal, the Act's use of the phrase "to the maximum extent possible" leaves open the possibility for work-based learning experiences in non-integrated settings. Consequently, we cannot require that all work-based learning experiences occur in integrated settings. However, DSUs should exhaust all opportunities for work-based learning experiences in competitive integrated employment settings before considering provision of these services in non-integrated work settings, as appropriate for the needs, and consistent with the informed choice, of the individual student with a disability, and his or her family or guardian, as applicable.

Having said this, the Department agrees that actual work experiences in integrated settings, rather than simulated or mock experiences in sheltered environments, provide students with disabilities with the most beneficial opportunities for job exploration, work-based learning, work readiness, and peer mentoring. The Secretary believes that DSUs, to the maximum extent possible, should provide work-based learning experiences, which may be paid or unpaid, through actual work experiences in integrated community environments to prepare students with disabilities for community-based competitive integrated employment, instead of using classrooms and educational facilities as settings for work-based learning experiences that segregate, replicate the tasks performed in adult sheltered employment, and often result in referrals to segregated employment settings following exit from school.

If these are paid work-based learning experiences, students with disabilities must be paid competitive wages to the extent competitive wages are paid to students without disabilities. Training stipends are also permissible for students with disabilities to the same extent that they are provided to students without disabilities participating in these experiences. Similarly, nothing in the Act prohibits States from coordinating the provision of pre-employment transition services with entities that hold certificates issued by the Department of Labor under section 14(c) of the FLSA. However, the Department strongly encourages training in competitive integrated settings to prepare students for competitive integrated employment. In addition, there is no statutory basis here to require that self-advocacy instruction be provided by a specific entity.

We agree that engaging students' parents or representatives is essential to their participation in pre-employment transition services and vital to their success. Since DSUs will be delivering pre-employment transition services to students with disabilities at a much younger age, parents must be involved, as required by State law and the policies of educational agencies and the DSU. We encourage DSUs to provide information regarding the application process and availability of services to all students with disabilities, and their parents or representatives, early in the transition process. As such, parent centers funded through the Rehabilitation Act and the IDEA may serve as mechanisms for outreach to, and engagement of, parents.

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Continuum of Services is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55694-55695 (August 19, 2016)

Discussion: In response to requests for clarification, DSUs may provide, or arrange for the provision of, "required" pre-employment transition services to students with disabilities in classroom, employment, or community (group) settings. These services may be general in nature for students with disabilities who have not applied and been determined eligible for vocational rehabilitation services. As a student progresses through the vocational rehabilitation process by applying and being determined eligible for services, the DSU will have the information necessary to conduct assessments and provide more individualized and customized services to address the student's particular needs. But in some instances DSUs may nonetheless have sufficient information to provide individualized pre-employment transition services to students with disabilities who have not applied and been determined eligible for vocational rehabilitation services. Thus, we decline to require in final §361.48(a)(2) that providing more individualized pre-employment transition services be limited to students with disabilities who have applied and been determined eligible for vocational rehabilitation services.

Finally, section 113 requires that DSUs use the funds reserved under section 110(d) of the Act, as amended by WIOA, to provide pre-employment transition services not only to students with disabilities who are eligible for vocational rehabilitation services but also to students with disabilities who are potentially eligible for vocational rehabilitation services, which includes all students with disabilities regardless of whether they have submitted an application for these services.

Examples of the five "required" activities and how they may be provided in either a group or individualized setting include, but are not limited to, the following:

One, general job exploration counseling may be provided in a classroom or community setting and include information regarding in-demand industry sectors and occupations, as well as non-traditional employment, labor market composition, administration of vocational interest inventories, and identification of career pathways of interest to the students. Job exploration counseling provided on an individual basis might be provided in school or the community and include discussion of the student's vocational interest inventory results, in-demand occupations, career pathways, and local labor market information that applies to those particular interests.

Two, work-based learning experiences in a group setting may include coordinating a school-based program of job training and informational interviews to research employers, work-site tours to learn about necessary job skills, job shadowing, or mentoring opportunities in the community. Work-based learning experiences on an individual basis could include work experiences to explore the student's area of interest through paid and unpaid internships, apprenticeships (not including pre-apprenticeships and Registered Apprenticeships), short-term employment, fellowships, or on-the-job trainings located in the community. These services are those that would be most beneficial to an individual in the early stages of employment exploration during the transition process from school to post-school activities, including employment. Should a student need more individualized services (e.g., job coaching, orientation and mobility training, travel expenses, uniforms or assistive technology), he or she would need to apply and be determined eligible for vocational rehabilitation services and develop and have an approved individualized plan for employment.

Three, counseling on opportunities for enrollment in comprehensive transition or postsecondary educational programs at institutions of higher education in a group setting may include information on course offerings, career options, the types of academic and occupational training needed to succeed in the workplace, and postsecondary opportunities associated with career fields or pathways. This information may also be provided on an individual basis and may include advising students and parents or representatives on academic curricula, college application and admissions processes, completing the Free Application for Federal Student Aid (FAFSA), and resources that may be used to support individual student success in education and training, which could include disability support services.

Four, workplace readiness training may include programming to develop social skills and independent living, such as communication and interpersonal skills, financial literacy, orientation and mobility skills, job-seeking skills, understanding employer expectations for punctuality and performance, as well as other "soft" skills necessary for employment. These services may include instruction, as well as opportunities to acquire and apply knowledge. These services may be provided in a generalized manner in a classroom setting or be tailored to an individual's needs in a training program provided in an educational or community setting.

Five, instruction in self-advocacy in a group setting may include generalized classroom lessons in which students learn about their rights, responsibilities, and how to request accommodations or services and supports needed during the transition from secondary to postsecondary education and employment. During these lessons, students may share their thoughts, concerns, and needs, in order to prepare them for peer mentoring opportunities with individuals working in their area(s) of interest. Further individual opportunities may be arranged for students to conduct informational interviews or mentor with educational staff such as principals, nurses, teachers, or office staff; or they may mentor with individuals employed by or volunteering for employers, boards, associations, or organizations in integrated community settings. Students may also participate in youth leadership activities offered in educational or community settings.

The wide variety of pre-employment transition services described in these examples is designed to be an early start at job exploration for students with disabilities. DSUs are not to use these activities as assessment services for the purpose of determining whether additional vocational rehabilitation services are needed, or if the individual will be successful in employment. In response to commenters' requests for clarification of the difference between employment assistance under pre-employment transition services and transition services, see more detailed descriptions of the distinctions between the two types of services in the Transition Services (section 361.5(c)(55)) and Scope of Pre-Employment Transition Services and Use of the Reserve sections earlier in this section B.

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Transition Services (§ 361.5(c)(55)) Scope of ‘‘Pre-Employment Transition Services’’ and ‘‘Transition Services’’ found in the preamble Final VR Regulations at 81 FR 55685 (August 19, 2016)

Discussion: We appreciate the support from commenters to maintain the proposed definition of ‘‘transition services’’ in final § 361.5(c)(55). As to the difference between ‘‘pre-employment transition services’’ and ‘‘transition services,’’ we believe the distinction between the two is critical. As stated in the preamble to the NPRM, vocational rehabilitation services are provided on a continuum, with pre-employment transition services being the earliest set of services available to students with disabilities. Pre-employment transition services, authorized by section 113 of the Act, as amended by WIOA, and implemented by final § 361.48(a), are designed to help students with disabilities to begin to identify career interests that will be further explored through additional vocational rehabilitation services, such as transition services. Furthermore, pre-employment transition services are only those services and activities listed in section 113 of the Act, as amended by WIOA, and final § 361.48(a). Job placement assistance is not included among the listed pre-employment transition services, but it could constitute a transition service under section 103(a)(15) of the Act and final § 361.48(b). Finally, pre-employment transition services are available only to students with disabilities, whereas transition services may be provided to a broader population—both students and youth with disabilities. Following the continuum, transition services represent the next set of vocational rehabilitation services available to students and youth with disabilities. They are outcome-oriented and promote movement from school to post-school activities, including postsecondary education, vocational training, and competitive integrated employment. As such, transition services may include job-related services, such as job search and placement assistance, job retention services, follow-up services, and follow along services, based on the needs of the Individual. Individualized transition services under section 103(a)(15) of the Act and final § 361.48(b) must be provided to students who have been determined eligible for the VR program and in accordance with an approved individualized plan for employment. Transition services also may be provided in group settings to students and youth with disabilities under section 103(b)(7) of the Act, as amended by WIOA, and final § 361.49(a)(7). Although these group services are not individualized, they can still be beneficial for job exploration, including presentations from employers in the community and group mentoring activities.

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Other Vocational Rehabilitation Services as Pre-Employment Transition Services is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55695 (August 19, 2016)

Discussion: Section 113 of the Act, as amended by WIOA, and final §361.48(a) set out a list of pre-employment transition services that must be made available to all students with disabilities who are eligible or potentially eligible for vocational rehabilitation services ("required" activities), as well as those that may be provided ("authorized" activities). Under section 113(a) of the Act, the funds required to be reserved for pre-employment transition services must be used solely for providing pre-employment transition services. Therefore, the Department has no statutory authority to expand or limit the pre-employment transition services listed in section 113 of the Act, as amended by WIOA. Furthermore, if a student with a disability needs any additional individualized vocational rehabilitation services, including those necessary for participating in pre-employment transition services, such as those provided under final §361.48(b), the student must apply and be determined eligible for vocational rehabilitation services and develop an individualized plan for employment that includes the additional necessary services. These additional services must be charged as a vocational rehabilitation expenditure separate from the funds reserved for providing pre-employment transition services.

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Pre-Employment Transition Coordination Activities is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55695 - 55696 (August 19, 2016)

Discussion: We agree that alternate means for participating in pre-employment transition coordination activities (e.g., video conferences and teleconferences) could minimize travel time and costs and maximize both the number of individualized education program and person-centered planning meetings in which a vocational rehabilitation counselor could participate, as well as the number of direct services a vocational rehabilitation counselor could provide to students with disabilities. Although §361.48(a)(4), both as proposed and final, does not explicitly permit DSUs to use alternate means to participate in individualized education program or person-centered planning meetings, it does not prohibit them. DSUs may therefore use these alternate means.

Decisions on how to conduct meetings is a matter of agency administration. Conducting these meetings via alternate means would be consistent with the explicit authority to conduct alternate format meetings under section 101(a)(11)(D)(i) of the Act and final 361.22(b)(1). Additionally, section 614(f) of the IDEA and its implementing regulations in 34 CFR 300.328 allow the parent of a child with a disability and a public agency to agree to use alternative means of meeting participation requirements, such as video conferences and conference calls, when conducting individualized education program team meetings and placement meetings under the IDEA, as well as carrying out administrative matters under section 615 of the IDEA (such as scheduling, exchange of witness lists, and status conferences). Since the Act and the IDEA provide for alternate means for conducting meetings very similar to those required by section 113 of the Act and final §361.48(a), DSUs may use alternate means to conduct these meetings as well. We do not believe a regulatory change is necessary to accomplish this.

We agree that coordinating with federally funded parent centers is a mechanism that would help parents of students with disabilities understand the benefits of pre-employment transition services. Section 113(d) of the Act, as amended by WIOA, however, does not require this. The statute is clear that the funds reserved for providing pre-employment transition services must only be spent on the activities specified in section 113 of the Act, as amended by WIOA, and final §361.48(a). Given the Act's specificity of the activities that constitute pre-employment transition services, there is no statutory authority for final 361.48(a)(4) to include any additional required coordination responsibilities.

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Documenting and Reporting is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55696 (August 19, 2016)

Discussion: Because sections 110(d) and 113 of the Act require a State to reserve and use at least 15 percent of its total vocational rehabilitation allotment for providing, or arranging for the provision of, pre-employment transition services to students with disabilities, it will be critical that the DSU implement administrative methods and procedures that ensure proper data collection and financial accountability of these reserved funds, as required by final §361.12 and 2 CFR 200.302 of the Uniform Guidance. In addition, section 101(a)(10)(C) of the Act, as amended by WIOA, expands the VR program -specific data that DSUs must report, including data elements related to students with disabilities who are receiving pre-employment transition services. These reporting requirements are included in final §361.40(a) to ensure that the Secretary has the information needed to assess the performance of the VR program, especially with regard to providing pre-employment transition services to students with disabilities.

Although the Department recognizes the burden placed on DSUs to develop procedures for tracking pre-employment transition services and related expenditures for students who have not yet applied or been determined eligible for vocational rehabilitation services, DSUs are required by section 101(a)(10)(C) of the Act to do so in order to properly account for, and report, the provision of pre-employment transition services and the reserved funds spent on those services. Moreover, the State's accounting procedures must be such that the DSU will be able to complete accurately all required forms, including financial reports, that show the reservation and use of these funds for this purpose, as required by final §361.12 and 2 CFR 200.302.

The Department does not have the authority to grant exceptions from, or waivers of, these reporting requirements. Regardless of whether students with disabilities are receiving pre-employment transition services without having applied or been determined eligible for vocational rehabilitation services, i.e. by virtue of the fact they are "potentially eligible" for the program, if Federal funds are being spent, expenditures must be tracked and monitored in accordance with final §361.12 and the Uniform Guidance in 2 CFR §200.302 (Financial Management), §200.328 (Monitoring), as well as the Federal cost principles in §§200.403 (Allowability), 200.404 (Reasonable) and 200.405 (Allocable). Furthermore, the Department issued Policy Directive (PD) 15-05 on February 5, 2015, which provided technical assistance on reporting the total Federal expenditures for providing pre-employment transition services. We appreciate the commenters' proposed alternate suggestions for reporting. However, the Department uses the SF-425 to collect financial data from DSUs so that it can monitor the financial status of the VR program and assess grantee compliance with Federal fiscal requirements under the VR program, including requirements for the reservation and use of funds for providing pre-employment transition services.

As they have been required to do for many years, DSUs must submit completed SF-425 reports semi-annually. The end dates for each reporting period in a fiscal year are March 31 and September 30. Semi-annual reports must be submitted no later than 45 days after the end of the reporting period. Final reports must be submitted no later than 90 days after the period of performance. "Period of performance" means the time during which the non-Federal entity may incur new obligations to carry out the work authorized under the Federal award.

These final regulations do not affect any of these reporting requirements. To ensure the proper accounting and reporting of services provided and funds expended, especially with regard to pre-employment transition services, DSUs must track and report data on students with disabilities until they no longer meet the definition of a student with a disability. At that point, DSUs must track and report services provided to, and funds expended on, these individuals as they would any other individual receiving vocational rehabilitation services.

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Performance Measures is found in the preamble Pre-employment Transition Services (§361.48(a)) Final VR Regulations at 81 FR 55697 (August 19, 2016)

Discussion: The VR program is no longer subject to its own set of performance standards and indicators established by the Department, as it had been prior to the enactment of WIOA. Because the common performance accountability indicators are mandated by section 116(b) of title I of WIOA and apply to all six core programs of the workforce development system, including the VR program, the Departments of Education and Labor do not have the authority to establish additional performance accountability indicators beyond those identified in the statute. However, section 106(a)(2) of the Act and section 116(b)(1)(A)(ii) of title I of WIOA permit States to develop additional accountability measures to evaluate the performance of the core partners in the workforce development system. We intend to monitor State implementation of pre-employment transition services and expenditure of funds during our annual review and periodic on-site monitoring of State VR agencies to identify areas of concern and the need for technical assistance. The Departments of Education and Labor address the remaining comments in the joint final regulations implementing the performance accountability system under title I of WIOA, and published elsewhere in this issue of the Federal Register.

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Services for Individuals Who Have Applied for or Been Determined Eligible for Vocational Rehabilitation Services is found in the preamble Pre-employment Transition Services (§361.48(b)) Final VR Regulations at 81 FR 55697 (August 19, 2016)

Discussion: We appreciate the support for, and consideration given by commenters to, proposed 361.48(b)(18). We agree that students and youth with disabilities should receive adequate information and applications for vocational rehabilitation services at the beginning of the transition from secondary programs to postsecondary activities. A DSU may provide the information and application under final §§361.41 and 361.52, which require the DSU to establish and implement standards for promptly processing referrals, informing individuals of application requirements, and facilitating individuals' informed choice as they transition. Therefore, we do not believe it is necessary to add further requirements to final §361.48(b)(18).

We acknowledge that the heightened emphasis on providing services to students and youth with disabilities may cause some DSUs concern about their ability to serve all individuals. We believe that the process for implementing an order of selection established within section 101(a)(5) of the Act, as amended by WIOA, is adequate to address these concerns in the event that vocational rehabilitation services cannot be provided to all eligible individuals.

We acknowledge the commenters' support and concerns about section 14(c) certificate holders providing transition and other vocational rehabilitation services. While the Act does not prohibit community rehabilitation programs that are section 14(c) certificate holders from providing transition or other vocational rehabilitation services or training in sheltered settings, section 511 of the Act prohibits local and State educational agencies from entering into a contract or other arrangement with section 14(c) entities for the purpose of operating a program for youth with disabilities under which work is compensated at a subminimum wage. The Department strongly encourages training in competitive integrated settings to prepare students for competitive integrated employment, as stated in the discussion of "required" activities in final 361.48(a) and discussed in more detail in Required Activities earlier in this section B. There is no statutory basis for requiring or permitting incentive payments for providing vocational rehabilitation services, including transition and supported employment services.

Scope of Vocational Rehabilitation Services for Groups of Individuals with Disabilities (§361.49)

Regulation:

(a) The designated State unit may provide for the following vocational rehabilitation services for the benefit of groups of individuals with disabilities:

...(6) Consultation and technical assistance services to assist State educational agencies and local educational agencies in planning for the transition of students and youth with disabilities from school to postsecondary life, including employment

(7) Transition services to youth with disabilities and students with disabilities who may not have yet applied or been determined eligible for vocational rehabilitation services, for which a vocational rehabilitation counselor works in concert with educational agencies, providers of job training programs, providers of services under the Medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.), entities designated by the State to provide services for individuals with developmental disabilities, centers for independent living (as defined in section 702 of the Act), housing and transportation authorities, workforce development systems, and businesses and employers. These specific transition services are to benefit a group of students with disabilities or youth with disabilities and are not individualized services directly related to an individualized plan for employment goal. Services may include, but are not limited to, group tours of universities and vocational training programs, employer or business site visits to learn about career opportunities, career fairs coordinated with workforce development and employers to facilitate mock interviews and resume writing, and other general services applicable to groups of students with disabilities and youth with disabilities.

Preamble Discussion:

Scope of Vocational Rehabilitation Services for Groups of Individuals with Disabilities (361.49) found in the preamble Final VR Regulations at 81 FR 55697-55698 (August 19, 2016)

Discussion: We appreciate all of these comments. A student with a disability or a youth with a disability is not required to have applied or been determined eligible for vocational rehabilitation services to receive general transition services provided to groups under section 103(b)(7) of the Act, as amended by WIOA, and final 361.49(a)(7). Therefore, a DSU may, but is not required to, provide or collect applications from students and youth with disabilities receiving transition services under final 361.49(a)(7). Students with disabilities may receive these services in a variety of settings, including classroom, employment, and community-based settings. However, the Department strongly encourages DSUs to provide these services in integrated settings to the maximum extent possible to best prepare students and youth with disabilities for competitive integrated employment. Furthermore, students and youth with disabilities may continue to receive generalized transition services under this authority while also receiving individualized vocational rehabilitation services under an individualized plan for employment pursuant to section 103(a) of the Act and final §361.48(b).

Pre-employment transition services may be provided in a group setting to students with disabilities who have not applied or been determined eligible for vocational rehabilitation services, as discussed in the examples in final §361.48(a). Contrary to the assumption in some comments, pre-employment transition services cannot be provided to students with disabilities as a service for groups under section 103(b)(7) of the Act, as amended by WIOA, or final §361.49(a)(7). Pre-employment transition services must only be provided under section 113 of the Act and final §361.48(a).

The intent of these generalized transition services when provided under final §361.49(a)(7) is to benefit groups of students and youth with disabilities. We understand the concern that these services are limited to only students and youth with disabilities. Transition services provided under final §361.48(b) under an individualized plan for employment are more individualized in nature, and the settings in which they are delivered are typically more diverse.

We agree that the purpose of transition services to groups should ultimately be achieving competitive integrated employment for students and youth with disabilities consistent with the purpose of the VR program set forth in final §361.1. Nonetheless, the transition services provided under final §361.49(a)(7) are not limited to those individuals who have been determined eligible for the VR program and who are pursuing an employment outcome in competitive integrated employment or supported employment. Therefore, we cannot require that the transition services authorized in final section 361.49(a)(7) be provided only for the purpose of assisting students and youth with disabilities to obtain competitive integrated employment.

We also agree that the families of students and youth with disabilities should be involved in all transition services, even though section 103(b) of the Act, as amended by WIOA, does not specifically include outreach to and engagement of parents within its requirements. Neither the Act nor these final regulations prohibit a DSU from providing outreach to, and engaging parents in, the provision of transition services under final §361.49(a)(7).

Finally, informed choice, as outlined in final 361.52, applies throughout the vocational rehabilitation process; therefore, students and youth with disabilities receiving transition services under final §361.49(a)(7) must be given the opportunity to exercise their informed choice.

• Program Income (§361.63)
• Allotment and Payment of Federal Funds for Vocational Rehabilitation Services (§361.65)
• Administrative Costs §361.5(c)(2)
• Part 363 - The State Supported Employment Services Program
• Part 397 - Section 511 Related to Youth with Disabilities

• Subpart B - Coordinated Documentation Procedures Related to Youth with Disabilities §397.10
• Subpart C - Designated State Unit Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment §397.20
• Subpart D - Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment- What are the responsibilities of a local educational agency to youth with disabilities who are known to be seeking subminimum wage employment? §397.30
• Subpart D - Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment- What are the contracting limitations on educational agencies under this part? §397.31

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Program Income (§361.63)

Regulation:

(a) Definition. For purposes of this section, program income means gross income received by the State that is directly generated by a supported activity under this part or earned as a result of the Federal award during the period of performance, as defined in 2 CFR 200.80.

(b) Sources. Sources of program income include, but are not limited to: Payments from the Social Security Administration for assisting Social Security beneficiaries and recipients to achieve employment outcomes; payments received from workers' compensation funds; payments received by the State agency from insurers, consumers, or others for services to defray part or all of the costs of services provided to particular individuals; and income generated by a State-operated

(c) Use of program income.

1) Except as provided in paragraph (c)(2) of this section, program income, whenever earned, must be used for the provision of vocational rehabilitation services and the administration of the vocational rehabilitation services portion of the Unified or Combined State Plan.

Program income -

(i) Is considered earned in the fiscal year in which it is received; and

(ii) Must be disbursed during the period of performance of the award.

(2) Payments provided to a State from the Social Security Administration for assisting Social Security beneficiaries and recipients to achieve employment outcomes may also be used to carry out programs under part B of title I of the Act (client assistance), title VI of the Act(supported employment), and title VII of the Act (independent living).

(3)(i) The State must use program income to supplement Federal funds that support program activities that are subject to this part. See, for example, 2 CFR 200.307(e)(2).

(ii) Notwithstanding 2 CFR 200.305(a) and to the extent that program income funds are available, a State must disburse those funds (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional funds from the Department.

(4) Program income cannot be used to meet the non-Federal share requirement under § 361.60.

Preamble Discussion:

Program Income Pre-Employment Transition Services (§ 361.63) found in the preamble Final VR Regulations at 81 FR 55700-55701 (August 19, 2016)

Discussion: We recognize the challenge for States to meet both the requirements to disburse program income prior to drawing down Federal funds as well as to reserve VR program funds for providing pre-employment transition services. While final § 361.63(c)(1)(ii) requires States to expend available program income funds before requesting additional cash payments, it does not preclude States from executing allowable accounting adjustments between program income disbursed on pre-employment transition services and other Federal funds expended on non-pre-employment transition services for the same time period. These accounting adjustments must be in accordance with Generally Accepted Accounting Principles (GAAP) and the State's accounting procedures and must be reflected in the State accounting system that is required by final § 361.12 and 2 CFR 200.302.

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Allotment and Payment of Federal Funds for Vocational Rehabilitation Services (§361.65)

Regulation:

(a)(3) Reservation for pre-employment transition services.

(i) Pursuant to section 110(d) of the Act, the State must reserve at least 15 percent of the State’s allotment, received in accordance with section 110(a) of the Act for the provision of pre-employment transition services, as described in §361.48(a) of this part.

(ii) The funds reserved in accordance with paragraph (3)(i) of this section--

(A) Must only be used for pre-employment transition services specified in §361.48(a); and

(B) Must not be used to pay for administrative costs, (as defined in §361.5(c)(2)) associated with the provision of such services or any other vocational rehabilitation services.

Exemption From the Reservation of Funds Requirement for Pre-Employment Transition Services (§ 361.65) found in the preamble Final VR Regulations at 81 FR 55701 (August 19, 2016)

Discussion: We appreciate the commenters who supported proposed §361.65 and those who expressed concern or sought clarification. Section 110(d)(1) of the Act, as amended by WIOA, requires States - -not the Department--to reserve at least 15 percent of their VR program allotment for providing pre-employment transition services. Given this explicit requirement, the Secretary lacks statutory authority to exempt States from the reservation requirement or to modify this requirement because to do so would be inconsistent with the statute. While we understand the concerns expressed by commenters regarding an inability to expend the full amount of reserved funds on pre-employment transition services, we encourage DSUs to work closely with the school systems and other entities to identify students with disabilities who might benefit from pre-employment transition services. Through these outreach activities, DSUs may be able to identify students with disabilities who could benefit from pre-employment transition services and who were not previously known to the agencies.

Use of Reserved Funds for Other Vocational Rehabilitation Services found in the preamble Final VR Regulations at 81 FR 55701 (August 19, 2016)

Discussion: Funds reserved, pursuant to section 110(d)(1) of the Act, for providing pre-employment transition services must be used solely for the activities set forth in section 113 of the Act, as amended by WIOA, and final 361.48(a). If a student with a disability requires other vocational rehabilitation services, the DSU must pay for those services with the remainder of the VR program allotment.

Amount of Funds to be Reserved found in the preamble Final VR Regulations at 81 FR 55701-55702 (August 19, 2016)

Discussion: Section 110(d)(1) of the Act, as amended by WIOA, requires States to reserve "at least" 15 percent of their VR program allotment for providing pre-employment transition services. Final §361.65(c)(3) mirrors the statutory requirement. Although several commenters referred to the 15 percent reservation requirement as a "limit," the Act as amended by WIOA, and final 361.65(c)(3) do not restrict States from spending more than 15 percent of their allotments for the provision of these services.

We appreciate the many recommendations for alternative ways for DSUs to meet the pre-employment transition services reservation requirement under proposed 361.65(a)(3)(i). We also appreciate the concerns that the reservation of funds for the sole purpose of providing pre-employment transition services will reduce the amount of funds available for other VR program purposes, including services for individuals who are blind or visually impaired who wish to start a vending facility under the Randolph-Sheppard program. Nevertheless, the Act requires States to reserve at least 15 percent of their VR program allotment for providing pre-employment transition services. The Act provides no exceptions to this requirement and, therefore, we do not have the authority to make the changes suggested by the commenters because to do so would be inconsistent with the statute.

Application of the Reservation of Funds to the State and to the State Allotment found in the preamble Final VR Regulations at 81 FR 55702 (August 19, 2016)

Discussion: Section 113(a) of the Act requires pre-employment transition services to be paid for with funds reserved from the VR program allotment pursuant to section 110(d)(1) of the Act, as amended by WIOA. We agree with commenters that the reservation of funds for providing pre-employment transition services is a State requirement, not a DSU-specific requirement. Section 110(d) of the Act, as amended by WIOA, and final §361.65(a)(3)(i) require the State--not the DSU--to reserve the funds, thereby making this a matter that must be resolved at the State level when there are two agencies in the State. For this reason, the Department encourages DSUs to coordinate to ensure State compliance. While the Department recommends that each DSU, when a State has two DSUs, reserve at least 15 percent of its allotment to facilitate the tracking of State compliance with the reservation requirement, the Act does not require that this be done. If one DSU (when a State has two DSUs) uses more of its funds than the other, the State would be in compliance so long as the State’s total of funds reserved for providing pre-employment transition services is at least 15 percent of the State’s total allotment, including any additional funds received during reallotment by one or both DSUs.

The State allotment, from which funds must be reserved, refers to the Federal funds awarded pursuant to section 110(a) of the Act, not State funds appropriated to the DSUs by State legislatures.

Effect of Reallotment and Carryover on the Reservation of Funds found in the preamble Final VR Regulations at 81 55702 (August 19, 2016)

Discussion: Under section 110(b)(3) of the Act, funds received during reallotment are an increase to the State’s allotment. Similarly, funds relinquished during reallotment are a reduction to the State’s allotment. Therefore, funds received or relinquished by a State during reallotment affect the amount of funds that must be reserved for providing pre-employment transition services.

Section 19 of the Act, which governs the carryover of grant funds, applies to all VR program funds, including funds reserved for providing pre-employment transition services. Section 19(b) of the Act permits grantees to carry over Federal funds for obligation and expenditure in the subsequent Federal fiscal year only to the extent that the DSU has provided sufficient non-Federal expenditures to match those funds. This means that grantees may carry over Federal funds reserved for providing pre-employment transition services into the subsequent Federal fiscal year only to the extent that they have provided the requisite 21.3 percent non-Federal share by the end of the Federal fiscal year in which the funds were awarded. In addition, because they have been matched in the fiscal year for which they were appropriated, the funds reserved for providing pre-employment transition services that are eligible for carryover into the succeeding Federal fiscal year may only be obligated in that succeeding Federal fiscal year and expended for providing pre-employment transition services.

Tracking of the Reserved Funds found in the preamble Final VR Regulations at 81 FR 55703 (August 19, 2016)

Discussion: When tracking expenditures incurred for the provision of pre-employment transition services, DSUs may need to develop a cost objective (i.e., a separate accounting code) that is different from the one used for other VR program cost allocation purposes, thereby enabling DSUs to track pre-employment transition services expenditures properly with the reserved funds. Similarly, DSUs should account for personnel time to ensure the proper allocation of staff time between the provision of pre-employment transition services and other vocational rehabilitation services, just as the DSU does when its personnel work on multiple programs. DSUs must track pre-employment transition services in a manner that ensures the reserved funds are used only for the provision of services set forth in section 113 of the Act and final §361.48(a). Although this could increase administrative burden slightly, it is only in this manner that a DSU can be certain it is expending reserved funds appropriately. The Department will issue guidance separately about tracking expenditures from the reserved funds and other fiscal matters relevant to the reservation of funds for providing pre-employment transition services.

Use of Reserved Funds for Authorized Activities found in the preamble Final VR Regulations at 81 FR 55703 (August 19, 2016)

Discussion: As stated in final §361.48(a)(3), a DSU may provide "authorized" pre-employment transition services only to the extent that reserved funds remain after providing the "required" activities. As part of the Comprehensive Statewide Needs Assessment, States should determine the number of potential individuals eligible for pre-employment transition services. This data will enable the States to target the amount of the reserved funds necessary for ensuring the "required" pre-employment transition services are provided to students with disabilities. To the extent the States demonstrate that they have made the required pre-employment transition services available to the population identified in the Comprehensive Statewide Needs Assessment, the States have met the requirement to provide the "required" pre-employment transition services prior to the "authorized" activities. Any reserved funds remaining beyond the targeted amount necessary for the "required" activities may then be used for "authorized" activities in final 361.48(a)(3).

Changes: We have revised proposed §361.65(a)(3)(ii)(A) to clarify that funds reserved for providing pre-employment transition services may be used to pay for the costs of providing all of the services "specified" in final 361.48(a). Proposed §361.65(a)(3)(ii)(A) referred to services "authorized" in final §361.48(a). We believe this technical change is necessary to avoid any confusion about the general use of the term "authorized" and the distinction between "required" and "authorized" services in the context of pre-employment transition services.

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Administrative Costs §361.5(c)(2)

Regulation:

Administrative costs under the vocational rehabilitation services portion of the Unified or Combined State Plan means expenditures incurred in the performance of administrative functions under the vocational rehabilitation program carried out under this part, including expenses related to program planning, development, monitoring, and evaluation, including, but not limited to, expenses for -

(i) Quality assurance;

(ii) Budgeting, accounting, financial management, information systems, and related data processing;

(iii) Providing information about the program to the public;

(iv) Technical assistance and support services to other State agencies, private nonprofit organizations, and businesses and industries, except for technical assistance and support services described in § 361.49(a)(4);

(v) The State Rehabilitation Council and other advisory committees;

(vi) Professional organization membership dues for designated State unit employees;

(vii) The removal of architectural barriers in State vocational rehabilitation agency offices and State operated rehabilitation facilities;

(viii) Operating and maintaining designated State unit facilities, equipment, and grounds, as well as the infrastructure of the one-stop system;

(ix) Supplies;

(x) Administration of the comprehensive system of personnel development described in § 361.18, including personnel administration, administration of affirmative action plans, and training and staff development;

(xi) Administrative salaries, including clerical and other support staff salaries, in support of these administrative functions;

(xii) Travel costs related to carrying out the program, other than travel costs related to the provision of services;

(xiii) Costs incurred in conducting reviews of determinations made by personnel of the designated State unit, including costs associated with mediation and impartial due process hearings under § 361.57; and

(xiv) Legal expenses required in the administration of the program.

Preamble Discussion:

Administrative Costs found in the preamble Final VR Regulations at 81 55702-55703 (August 19, 2016)

Discussion: We appreciate the comments requesting clarification regarding whether DSUs may pay for staff-related costs from funds reserved for the provision of pre-employment transition services. Section 110(d)(2) of the Act, as amended by WIOA, prohibits DSUs from using the reserved funds for administrative costs. Section 7(1) of the Act and final §361.5(c)(2) define “administrative costs” as including, among other things, “administrative salaries, including clerical and other support staff salaries, in support of these administrative functions.” It has been the long-standing Department policy that staff-related costs, including salaries, fringe benefits, and travel, incurred while providing vocational rehabilitation services, constitute service costs, not administrative costs. As such, costs associated with staff time spent providing pre-employment transition services may be paid with the funds reserved for providing those services.

By contrast, supervisory costs, rent, utilities, indirect costs, and other similar associated costs are administrative costs–not service costs–and, as such, cannot be paid with the reserved funds. In considering the various pre-employment transition services specified in section 113 of the Act and final §361.48(a) in this way, we do not believe there are actual conflicts between final 361.48(a) and §361.65.

However, we have revised final §361.65(a)(3)(ii)(B) to add a cross-reference to the definition of "administrative costs" in final §361.5(c)(2), to clarify that these costs are still allowable under the VR program and may be paid for with VR program funds not reserved for the provision of pre-employment transition services under final 361.65(a)(3).

Changes: We have revised final §361.65(a)(3)(ii)(B) to clarify that the administrative costs referred to in this provision are those that meet the definition of “administrative costs” in final §361.5(c)(2). This change is technical, not substantive.

Administrative Costs §361.5(c)(2) found in the preamble Final VR Regulations at 81 55636 (August 19, 2016)

Supervisory Personnel

Discussion: We disagree with the recommendation to consider the costs for local level supervisors who do not perform counseling duties, but who directly supervise counselors, to be direct service costs, rather than "administrative costs." Final § 361.5(c)(2)(xi) specifies that administrative salaries constitute "administrative costs." Administrative salaries are those personnel costs paid to individuals who are not providing direct services to VR program applicants and consumers, and may include clerical and managerial salaries. Therefore, we consider costs for supervisors who do not provide direct services to be administrative costs in support of vocational rehabilitation services, rather than costs for the actual provision of such services.

Transportation Costs

Discussion: We appreciate the commenter's observation that the definition of "administrative costs" in proposed § 361.5(c)(2)(xii) appears to conflict with the instructions for completing the RSA–2 with regard to staff travel costs. The Department will review and update previously issued guidance as necessary to ensure consistency with these final regulations. We agree that travel costs incurred directly as a result of providing vocational rehabilitation services constitute service-related costs, not "administrative costs" for purposes of the VR program. Therefore, DSUs may pay for travel costs incurred as a direct result of providing pre-employment transition services to students with disabilities, including travel to individualized education program meetings, from the funds reserved for the provision of those services. Travel costs incurred as a result of providing other vocational rehabilitation services to students with disabilities may not be paid from the funds reserved for the provision of pre-employment transition services because such travel would be beyond the scope of section 113 of the Act, as amended by WIOA, and final § 361.48(a). While travel costs incurred as a result of providing other vocational rehabilitation services to students with disabilities who have been determined eligible for vocational rehabilitation services may not be paid from the funds reserved for the provision of pre-employment transition services, they still would be service-related, not administrative, costs. Staff travel costs incurred for other purposes, such as attending regional meetings or trainings, satisfy the definition of "administrative costs" and must be reported as such on the RSA–2. DSUs must have an established system of internal controls sufficient to record and track administrative expenditures associated with authorized activities so they can be distinguished from authorized service related costs. In this way, DSUs are able to satisfy accounting and reporting requirements set forth in final § 361.12 and Uniform Guidance on financial management in 2 CFR 200.302.

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Part 363 - The State Supported Employment Services Program

Subpart B - What are the vocational rehabilitation services portion of the Unified or Combined State Plan supplement requirements? (§363.11)

Regulation:

Each State plan supplement, submitted in accordance with §363.10, must - (a) Designate a designated State unit or, as applicable, units, as defined in 34 CFR 361.5(c)(13), as the State agency or agencies to administer the Supported Employment program under this part;

(b) Summarize the results of the needs assessment of individuals with most significant disabilities, including youth with the most significant disabilities, conducted under 34 CFR 361.29(a), with respect to the rehabilitation and career needs of individuals with most significant disabilities and their need for supported employment services. The results of the needs assessment must also address needs relating to coordination;

(c) Describe the quality, scope, and extent of supported employment services to be provided to eligible individuals with the most significant disabilities under this part, including youth with the most significant disabilities;

(d) Describe the State's goals and plans with respect to the distribution of funds received under §363.20;

(e) Demonstrate evidence of the designated State unit's efforts to identify and make arrangements, including entering into cooperative agreements, with -

(1) Other State agencies and other appropriate entities to assist in the provision of supported employment services; and

(2) Other public or non-profit agencies or organizations within the State, employers, natural supports, and other entities with respect to the provision of extended services;

(f) Describe the activities to be conducted for youth with the most significant disabilities with the funds reserved in accordance with §363.22, including -

(1) The provision of extended services to youth with the most significant disabilities for a period not to exceed four years, in accordance with §363.4(a)(2); and

(2) How the State will use supported employment funds reserved under §363.22 to leverage other public and private funds to increase resources for extended services and expand supported employment opportunities for youth with the most significant disabilities;

(g) Assure that -

(1) Funds made available under this part will only be used to provide authorized supported employment services to individuals who are eligible under this part to receive such services;

(2) The comprehensive assessments of individuals with significant disabilities, including youth with the most significant disabilities, conducted under 34 CFR part 361 will include consideration of supported employment as an appropriate employment outcome;

(3) An individualized plan for employment, as described in 34 CFR 361.45 and 361.46, will be developed and updated, using funds received under 34 CFR part 361, in order to -

(i) Specify the supported employment services to be provided, including, as appropriate, transition services and pre-employment transition services to be provided for youth with the most significant disabilities;

(ii) Specify the expected extended services needed, including the extended services that may be provided under this part to youth with the most significant disabilities in accordance with an approved individualized plan for employment for a period not to exceed four years; and

(iii) Identify, as appropriate, the source of extended services, which may include natural supports, programs, or other entities, or an indication that it is not possible to identify the source of extended services at the time the individualized plan for employment is developed;

(4) The State will use funds provided under this part only to supplement, and not supplant, the funds received under 34 CFR part 361, in providing supported employment services specified in the individualized plan for employment;

(5) Services provided under an individualized plan for employment will be coordinated with services provided under other individualized plans established under other Federal or State programs;

(6) To the extent job skills training is provided, the training will be provided onsite;

(7) Supported employment services will include placement in an integrated setting based on the unique strengths, resources, interests, concerns, abilities, and capabilities of individuals with the most significant disabilities, including youth with the most significant disabilities;

(8) The designated State agency or agencies, as described in paragraph (a) of this section, will expend no more than 2.5 percent of the State's allotment under this part for administrative costs of carrying out this program; and

(9) The designated State agency or agencies will provide, directly or indirectly through public or private entities, non-Federal contributions in an amount that is not less than 10 percent of the costs of carrying out supported employment services provided to youth with the most significant disabilities with the funds reserved for such purpose under §363.22; and

(h) Contain any other information and be submitted in the form and in accordance with the procedures that the Secretary may require.

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Part 397 - Section 511 Related to Youth with Disabilities

• Subpart B - Coordinated Documentation Procedures Related to Youth with Disabilities §397.10
• Subpart C - Designated State Unit Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment §397.20
• Subpart D - Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment- What are the responsibilities of a local educational agency to youth with disabilities who are known to be seeking subminimum wage employment? §397.30
• Subpart D - Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment- What are the contracting limitations on educational agencies under this part? §397.31

Subpart B - Coordinated Documentation Procedures Related to Youth with Disabilities §397.10

Regulation:

(a) The designated State unit, in consultation with the State educational agency, must develop a new process, or utilize an existing process, to document the completion of the actions described in § 397.20 and § 397.30 by a youth with a disability, as well as a process for the transmittal of that documentation from the educational agency to the designated State unit, consistent with confidentiality requirements of the Family Education Rights and Privacy Act (20 U.S.C. 1232g(b) and 34 CFR 99.30 and 99.31) and the Individuals with Disabilities Education Act (20 U.S.C. 1417(c) and 34 CFR 300.622).

(1) Such documentation must, at a minimum, contain the -

(i) Youth's name;

(ii) Determination made, including a summary of the reason for the determination, or description of the service or activity completed;

(iii) Name of the individual making the determination or the provider of the required service or activity;

(iv) Date determination made or required service or activity completed;

(v) Signature of the designated State unit or educational personnel making the determination or documenting completion of the required services or activity;

(vi) Date of signature described in paragraph (a)(1)(v) of this section;

(vii) Signature of designated State unit personnel transmitting documentation to the youth with a disability; and

(viii) Date and method (e.g., hand delivered, faxed, mailed, emailed, etc.) by which document was transmitted to the youth.

(2) In the event a youth with a disability or, as applicable, the youth's parent or guardian, refuses, through informed choice, to participate in the activities required by this part, such documentation must, at a minimum, contain the -

(i) Youth's name;

(ii) Description of the refusal and the reason for such refusal;

(iii) Signature of the youth or, as applicable, the youth's parent or guardian;

(iv) Signature of the designated State unit or educational personnel documenting the youth's refusal;

(v) Date of signatures; and

(vi) Date and method (e.g., hand delivered, faxed, mailed, emailed, etc.) by which documentation was transmitted to the youth.

(3) The documentation process must include procedures for the designated State unit to retain a copy of all documentation required by this part in a manner consistent with the designated State unit's case management system and the requirements of 2 CFR 200.333.

(b) The documentation process must ensure that -

(1) A designated State unit provides, in the case of a student with a disability, documentation of completion of appropriate pre-employment transition services, in accordance with § 361.48(a) of this chapter and as required by § 397.20(a)(1);

(2) In the case of a student with a disability, for actions described in § 397.30 -

(i) The appropriate school official, responsible for the provision of transition services, must provide the designated State unit documentation of completion of appropriate transition services under the Individuals with Disabilities Education Act, including those provided under section 614(d)(1)(A)(i)(VIII) (20 U.S.C. 1414(d)(1)(A)(i)(VIII));

(ii) The designated State unit must provide documentation of completion of the transition services, as documented and provided by the appropriate school official in accordance with paragraph (b)(2) of this section, to the youth with a disability.

(c) The designated State unit must provide -

(1) Documentation required by this part in a form and manner consistent with this part and in an accessible format for the youth; and

(2)(i) Documentation required by paragraph (a)(1) of this section to a youth as soon as possible upon the completion of each of the required actions, but no later than -

(A) 45 calendar days after the determination or completion of the required activity or service; or

(B) 90 calendar days, if additional time is necessary due to extenuating circumstances, after the determination or completion of each of the required actions in § 397.20 and § 397.30(a). Extenuating circumstances should be interpreted narrowly to include circumstances such as the unexpected lengthy absence of the educational or designated State unit personnel necessary for the production of the documentation or the transmittal of that documentation due to illness or family emergency, or a natural disaster.

(ii) Documentation required by paragraph (a)(2) of this section, when a youth has refused to participate in an action required by this part, must be provided to the youth within 10 calendar days of the youth's refusal to participate.

(3) When transmitting documentation of the final determination or activity completed, as required by § 397.20 and § 397.30(a), the designated State unit must provide a coversheet that itemizes each of the documents that have been provided to the youth.

Preamble Discussion:

Coordinated Documentation Process § 397.10 is found in the preamble Final VR Regulations at 81 FR 55715-55717 (August 19, 2016) -

Discussion: We appreciate the many comments we received regarding the documentation process. Compliance with the documentation process requirements is intended to result in limiting the use of subminimum wages. The Secretary agrees that the formal interagency agreement between the DSU and the State educational agency provides an optimal mechanism to develop and describe the documentation process required in final § 397.10, and the Department appreciates the strong support we received from commenters on this point. As noted by the commenters, final 34 CFR 361.22(b)(5) requires the DSU and State educational agency to develop a formal interagency agreement that, at a minimum, provides for coordination necessary to satisfy documentation requirements set forth in final § 397.10…..

...While the Secretary agrees that students and parents or guardians can benefit from training about subminimum wage employment, the Act does not require the formal interagency agreement to include such a requirement. To add it would be inconsistent with the statutorily required actions that must be taken by either the DSU or the State educational agency with regard to the documentation process. Nonetheless, nothing in the Act precludes the DSU and State educational agency from including a training requirement in the formal interagency agreement. Similarly, we do not believe it necessary to require, in final part 397, the DSU to enter into interagency agreements with local educational agencies and State agencies serving individuals with intellectual and developmental disabilities, because final 34 CFR 361.24(f) and (g) provide for the DSU to enter into cooperative agreements and engage in interagency collaboration with these State agencies. These cooperative agreements could provide a mechanism for addressing, as appropriate, the requirements in final § 397.10 and promote data sharing. The Secretary encourages the DSUs, local educational agencies, and State agencies serving individuals with developmental and intellectual disabilities to work collaboratively to identify individuals with disabilities, particularly youth with disabilities, who are considering or who are already engaged in subminimum wage employment. The Secretary agrees that further operational guidance regarding the requirements for collaboration, development, and implementation of the documentation process is warranted. Therefore, the Department's Office of Special Education and Rehabilitative Services intends to collaborate with the Department of Labor's Wage and Hour Division in issuing guidance about implementing the requirements in final part 397, particularly the documentation process. This guidance will help to ensure that the documentation process works smoothly within already established procedures for the DSUs and State and local educational agencies, especially with regard to the protection of personally identifiable information, while also enabling efficient and effective reviews of any such documentation by the Department of Labor.

Final §§ 397.10 and 397.30 specify the documentation requirements. Final § 397.20 describes the activities for which documentation must be provided, all of which are familiar to DSUs and local educational agencies and should pose no additional administrative burden. Each DSU has case management practices for documenting various steps in the vocational rehabilitation process, such as eligibility and ineligibility determinations, the individualized plan for employment, the provision of vocational rehabilitation services (including pre-employment transition services), and case closure. State educational agencies also have methods for documenting transition services provided to students under the IDEA. In developing the documentation process, each DSU, in coordination with the State educational agency, has flexibility to determine the most appropriate procedures for documenting required activities and for timely provision of the documentation to youth with disabilities upon their completion of the required activities.

As proposed, § 397.10(c)(2) required the DSU to provide the documentation of the completion of each of the required actions in §§ 397.20 and 397.30 to a youth as soon as possible, but no later than 90 days, following the completion of each of the actions. We understand the concerns raised by commenters, and we want to emphasize that we anticipate DSUs and State educational agencies will develop a process whereby the documentation in most instances will be provided either concurrently with the completion of the activity or very shortly thereafter, and we encourage them to do so. For example, DSUs typically provide documentation of eligibility or ineligibility determinations to the individual within a very short time after the decision is made. Similarly, DSUs typically provide a copy of the individualized plan for employment to the individual at the time both parties sign the document. With regard to providing services, such as pre-employment transition services or transition services, we anticipate that the DSUs and schools will develop a streamlined approach for transmittal of the documentation by the DSU to the youth.

We proposed a period of up to 90 days to be consistent with other time frames in the vocational rehabilitation process and to enable DSUs to obtain documentation from local educational agency personnel who may not be available due to extenuating circumstances. It was never the Department’s intent to delay the provision of the required documentation to any individual seeking subminimum wage employment. After considerable deliberation and balancing competing interests while not imposing undue burden on the DSUs or schools, the Secretary has modified the time frame in these final regulations. Final § 397.10(c)(2) requires the DSU to provide the requisite documentation, including documentation received from the local educational agency, to the youth within 45 calendar days of completion of the activity. For example, if a student completes a required activity provided by the local educational agency, the documentation must be transmitted to the DSU and provided to the youth all within 45 calendar days. However, if, due to extenuating circumstances additional time is needed, documentation must be provided to the youth within 90 calendar days after completion of the activity. As provided in final § 397.10(c)(2)(i)(B), this exception for extenuating circumstances is a limited exception that would cover circumstances such as, the unexpected absence of the individual necessary to provide the documentation, or a natural disaster. That said, DSUs and State educational agencies could establish a shorter time frame in their documentation processes.

We recognize that providing transition services, as well as pre-employment transition services, may be ongoing for students with disabilities. For example, under the IDEA, a student with a disability may receive transition services until the student graduates from high school with a regular diploma or exceeds the age of eligibility for a free appropriate public education. Similarly, pre-employment transition services under the Act for as long as the student remains in an educational program and meets the definition of a "student with a disability" under final 34 CFR 361.5(c)(51). For purposes of final § 397.10(b)(2)(i), the local educational agency must, consistent with confidentiality requirements of FERPA and/or the IDEA, provide the DSU documentation of transition services when a student has completed all transition services in the individualized education program. The final regulations do not contain a definition of "completion," as suggested by commenters, because the definition would vary widely depending on the activity. The Secretary will provide more guidance in the general operational guidance for the documentation process required by section 511 and final part 397.

Section 511 of the Act does not address what constitutes documentation, the level of detail required, requirements related to the rigor and quality of the activities, the need for signatures, dates, descriptions and settings of activities, information about the location or setting of activities, and the DSU's obligations if the education agency fails to provide documentation of transition activities or such activities are deemed substandard. Some of these issues are best left to the DSU and State educational agency to negotiate when developing the interagency agreement or the documentation process to maximize State flexibility and accommodate the unique needs within a State. However, the Secretary agrees that some guidance would be helpful. Therefore, the Secretary has revised final § 397.10(a) to state that the documentation process must address both the actual production and transmittal of documentation. Again, the transmittal of all documentation by the educational agency to the DSU must comply with the confidentiality requirements of FERPA and the IDEA.

In addition, the Secretary has revised final § 397.10(a) by adding three new paragraphs. Final § 397.10(a)(1) establishes minimum requirements for information to be contained in the documentation of determinations made or the completion of an activity. Final § 397.10(a)(2) establishes minimum requirements for information that must be contained in documentation in the event that a youth, or his or her parent or guardian, exercises informed choice and refuses to participate in an activity required by section 511 of the Act or final part 397. Final § 397.10(a)(3) requires the DSU to retain a copy of all required documentation provided to the youth. The DSU must retain this documentation just as it would any other documentation in its case management system, and the documentation must be retained in accordance with the requirements of 2 CFR 200.333, which governs record retention for all Federal grantees.

In using an existing process or developing a new documentation process, the DSU and the State educational agency may wish to consider questions such as those posed by the commenter but not addressed in these final regulations. In addition, the Secretary has revised final § 397.10(b)(2)(i) to require the educational agency to provide the documentation to the DSU. The Secretary has also added a new requirement in final § 397.10(c)(3) that the DSU provide, when transmitting documentation of the last determination made or activity completed, a cover sheet that itemizes all documentation provided to the youth. The Secretary hopes that these additions will assist DSUs and State educational agencies in developing a streamlined documentation process that will enable the expedient completion and transmittal of the documentation to the youth, and allow for the expedient review of the documentation, if a review is conducted by the DSU or the Wage and Hour Division of the Department of Labor. Additionally, for the reasons discussed in the section titled Jurisdiction (§ 397.2), any access to these records by CAPs or protection and advocacy systems is subject to the requirements of sections 112 and 509 of the Act, respectively, and implementing final regulations in 34 CFR part 370 and 34 CFR Part 370 and 34 CFR part 381.

Although section 511 of the Act and final part 397 establish prerequisites for a youth with a disability to work in subminimum wage employment, as with any vocational rehabilitation service, the youth with a disability, or his or her parent or guardian, as applicable, may exercise informed choice and refuse to participate. If a youth chooses not to participate in the activities required by section 511 of the Act and final part 397, or chooses to opt out of the vocational rehabilitation process entirely, such a choice will impact the permissibility of the youth to work at subminimum wage and preclude him or her from obtaining subminimum wage employment given the limitations imposed by section 511 of the Act and final part 397. Accordingly, DSUs should inform youth with disabilities and/or their guardians of the youth's ineligibility for subminimum wage employment if he or she refuses to participate in the required activities. As discussed previously, final § 397.10(a)(2) establishes documentation requirements for when a youth refuses to participate in the required activities. Meeting these requirements demonstrates the DSU's compliance under section 511 and final part 397. The Secretary believes it is appropriate to establish an even shorter time frame for the transmittal of documentation demonstrating the youth's refusal to participate in required activities under final part 397 because there should be few administrative reasons for delay. Thus, in this circumstance, final § 397.10(b)(2)(ii) requires that the documentation be provided to the youth, within 10 calendar days of the youth's refusal.

In a State that prohibits the payment of subminimum wages to individuals with disabilities, the DSU and the State educational agency still must develop a documentation process in accordance with final § 397.10, although it may be used infrequently. This documentation would be necessary if a youth with a disability seeks subminimum wage employment in another State that does not prohibit subminimum wages.

Finally, the Department, upon further review, notes that the documentation of pre-employment transition services in final § 397.10(b)(1) refers to a "student with a disability" rather than a "youth with a disability" because only a student with a disability may receive pre-employment transition services. Further, the section states more directly that the appropriate school official responsible for providing transition services will provide the DSU documentation of completion of appropriate transition services under the IDEA.

Changes: We made several changes to final § 397.10. First, we revised final § 397.10(a) to state that the documentation process must cover both the production and transmittal of the documentation. The process must ensure all confidentiality requirements of FERPA and the IDEA are satisfied.

Second, we revised final § 397.10(a) by adding three paragraphs. Final § 397.10(a)(1) establishes minimum information that must be contained in documentation of a youth's completion of required activities. Final §397.10(a)(2) establishes the minimum information that must be contained in documentation when a youth refuses to participate in the required activities. Final § 397.10(a)(3) requires the DSU to retain copies of all documentation required by final part 397.

We revised final § 397.10(b)(1) to clarify that we are referring to a "student with a disability" with regard to the documentation of the completion of appropriate pre-employment transition services. We also revised § 397.10(b)(2)(i) to clarify that the appropriate school official responsible for the provision of transition services must provide the DSU documentation of completion of appropriate transition services under the IDEA. We revised final § 397.10(c)(2) by adding two new paragraphs. Final § 397.10(c)(2)(i) requires the DSU to provide all requisite documentation to the youth within 45 calendar days of the determination or the completion of the required activities, unless extenuating circumstances make additional time necessary. In that case, the documentation must be provided to the youth within 90 calendar days of the determination or completion of the activity or service. The final regulations also provide examples of what could constitute extenuating circumstances necessitating the additional time. Final § 397.10(c)(2)(ii) requires the DSU to provide documentation of the youth's refusal to participate in required activities within 10 calendar days of the refusal. Lastly, final §397.10(c)(3) was added to require the DSU to provide a coversheet that itemizes all documentation provided to the youth when transmitting documentation of the last determination made or activity completed.

Subpart C - Designated State Unit Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment - §397.20

Subpart C - Designated State Unit Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment - What are the responsibilities of a designated State unit to youth with disabilities who are known to be seeking subminimum wage employment? § 397.20

Regulation:

(a) A designated State unit must provide youth with disabilities documentation upon the completion of the following actions:

(1)(i) Pre-employment transition services that are available to a student with a disability under 34 CFR 361.48; or

(ii) Transition services under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.), such as transition services available to the individual under section 614(d) of that Act (20 U.S.C. 1414(d));

(2) Application for vocational rehabilitation services, in accordance with 34 CFR 361.41(b), with the result that the individual was determined -

(i) Ineligible for vocational rehabilitation services, in accordance with 34 CFR 361.43; or

(ii) Eligible for vocational rehabilitation services, in accordance with 34 CFR 361.42; and

(A) The youth with a disability had an approved individualized plan for employment, in accordance with 34 CFR 361.46;

(B) The youth with a disability was unable to achieve the employment outcome specified in the individualized plan for employment, as described in 34 CFR 361.5(c)(15) and 361.46, despite working toward the employment outcome with reasonable accommodations and appropriate supports and services, including supported employment services and customized employment services, for a reasonable period of time; and

(C) The youth with a disability's case record, which meets all of the requirements of 34 CFR 361.47, is closed.

(3)(i) Regardless of the determination made under paragraph (a)(2) of this section, the youth with a disability has received career counseling, and information and referrals from the designated State unit to Federal and State programs and other resources in the individual's geographic area that offer employment-related services and supports designed to enable the individual to explore, discover, experience, and attain competitive integrated employment.

(ii) The career counseling and information and referral services provided in accordance with paragraph (a)(3)(i) of this section must -

(A) Be provided by the designated State unit in a manner that facilitates informed choice and decision-making by the youth, or the youth's representative as appropriate;

(B) Not be for subminimum wage employment by an entity defined in § 397.5(d), and such employment related services are not compensated at a subminimum wage and do not directly result in employment compensated at a subminimum wage provided by such an entity; and

(C) Be provided within 30 calendar days of a determination under paragraph (a)(2)(i) or (a)(2)(ii)(C) of this section for a youth known by the designated State unit to be seeking employment at subminimum wage.

(b) The following special requirements apply -

(1) For purposes of this part, all documentation provided by a designated State unit must satisfy the requirements for such documentation, as applicable, under 34 CFR part 361.

(2) The individualized plan for employment, required in paragraph(a)(2)(ii)(A) of this section, must include a specific employment goal consistent with competitive integrated employment, including supported or customized employment.

(3)(i) For purposes of paragraph (a)(2)(ii)(B) of this section, a determination as to what constitutes a "reasonable period of time" must be consistent with the disability-related and vocational needs of the individual, as well as the anticipated length of time required to complete the services identified in the individualized plan for employment.

(ii) For an individual whose specified employment goal is in supported employment, such reasonable period of time is up to 24 months, unless under special circumstances the individual and the rehabilitation counselor jointly agree to extend the time to achieve the employment outcome identified in the individualized plan for employment.

Preamble Discussion:

Responsibilities of a DSU to youth with disabilities who are known to be seeking subminimum wage employment § 397.20 is found in the preamble Final VR Regulations at 81 FR 55718-55720 (August 19, 2016) -

Discussion: Reasonable Period of Time - We appreciate the many comments we received about defining "reasonable period of time" before closing a service record as unsuccessful when a youth has been pursuing, through an individualized plan for employment, an employment outcome (as defined under final 34 CFR 361.5(c)(15)), other than in supported employment.

Although many commenters requested a specified time frame - of anywhere from 24 months, to coincide with that for the provision of supported employment services, to up to four years to coincide with the amount of time allowed for the provision of extended services for a youth with a disability - we believe that a "reasonable period of time" must take into account the disability-related and vocational needs of the individual, as well as the anticipated length of time required to complete the services identified in the individualized plan for employment to achieve an employment outcome. The time frame for providing supported employment services is prescribed in section 7(39) of the Act, as amended by WIOA, and final 34 CFR 361.5(c)(54), but the Act does not limit the amount of time for providing any other vocational rehabilitation service. Therefore, we believe that it is not in the best interest of individuals with disabilities to limit the time for providing vocational rehabilitation services other than supported employment services. To do so might unnecessarily restrict the amount of time an individual may need to complete the services necessary to achieve an employment outcome in competitive integrated employment.

We understand the concerns expressed by many of the commenters about limitations on the amount of time the DSU may devote to assisting youth with disabilities to achieve competitive integrated employment, especially if someone is not seeking supported employment. We also understand the desire to provide a minimum time, rather than a maximum time, during which the DSU may help youth with disabilities attain employment outcomes, including supported employment. However, we believe that with allowable extensions, and based upon the needs of the individual and the individual's disability, DSUs have the flexibility to provide all services and supports necessary for an individual to achieve competitive integrated employment in a reasonable time prior to closing the individual's service record as unsuccessful...

Discussion: Pre-employment Transition Services - As discussed in the Analysis of Comments and Changes section for part 361 earlier in this preamble, we do not have the authority to prohibit the use of segregated settings, such as sheltered workshops, for providing pre-employment transition services. That being said, assessment services and pre-employment transition services are to be carried out in an integrated setting to the maximum extent possible in accordance with final 34 CFR 361.5(c)(5) and final 34 CFR 361.48(a)(2), respectively. We understand the confusion created by proposed § 397.20(a)(1), which covered the documentation of completed pre-employment transition services that must be provided to youth by the DSU, when, in fact, pre-employment transition services are provided to students with disabilities, not to all youth with disabilities. We have revised this paragraph to clarify that documentation for the completion of pre-employment transition services applies to students with disabilities. We have made further revisions for the documentation of the completion of transition services under the IDEA, which the DSU is also responsible for providing to youth once the local educational agency has provided such documentation to the DSU.

We disagree with the commenter's alternative suggestion of making an exception to the definition of "preemployment transition services" in final 34 CFR 361.5(c)(42) to include all youth for purposes of this part, as that would be inconsistent with section 113 of the Act.

We understand that a DSU would find it challenging to obtain documentation of services after a youth has left the education system; however, educational systems must maintain records of the provision of transition services to students provided through an individualized education program.

We appreciate the commenter's concern about the burden of tracking individuals receiving pre-employment transition services and their activities in order to provide documentation to a few individuals that might seek subminimum wage employment. The commenter recommended removing the requirement from final § 397.20(a)(1). However, this would be inconsistent with section 511(d)(2)(a) of the Act.

We agree that youth with disabilities may find integrated work based learning programs, summer jobs, summer volunteering, and summer internships valuable and these experiences could better enable them to make an informed choice of whether to pursue subminimum wage employment. However, we do not believe that embedding this language in the regulations in part 397 would strengthen the final regulations, as they already incorporate the requirements to document the completion of pre-employment transition services and/or transition services for youth with disabilities, which include these activities.

Finally, we made a technical change in the title of this section, replacing "considering" with "seeking" to be consistent with § 397.30. "Seeking" more appropriately describes those youth who have determined that they would like to pursue subminimum wage employment.

Changes: We added § 397.20(a)(1)(i) and (ii) to require DSUs to document completion of transition services under the IDEA in addition to completion of pre-employment transition services under the VR program. Additionally, we inserted "a student with a disability" in final § 397.20(a)(1)(i) because pre-employment transition services are available only to students with disabilities. Finally, we replaced the word "considering" with "seeking" in the title of this section to be consistent with the title in § 397.30.

Other Comments and Discussion:

Comments: A commenter posed a series of questions and concerns about how to serve eligible VR consumers who might be contemplating subminimum wage employment if there is a lag time or lack of supported employment providers or customized employment and the consequences to consumers and families, as well as DSUs, if an individual chooses to opt out of the vocational rehabilitation process. Other commenters asked whether the employment goal specified in the individualized plan for employment needs to be consistent with competitive integrated employment when considering the individual's strengths, resources, priorities, concerns, abilities, capabilities, interests and informed choice. Also, they asked what the expectations are around the determination of ineligibility, including how many work experiences must be provided and how long to pursue supported employment after the 24- month period or customized employment when resources for long term supports are not available. Finally, commenters asked how to consider an individual's geographic area when providing referrals to Federal and State programs and other resources that offer employment-related services and supports designed to enable the individual to explore, discover, experience, and attain competitive integrated employment.

Discussion: We understand that commenters have concerns and questions about the responsibilities of DSUs in this section. Limited resources and available providers of services, including providers of long-term supports, provide a challenge for DSUs as they work to locate services that will assist individuals with disabilities in achieving competitive integrated employment or supported employment. Without sufficient service providers or resources, a youth may choose to opt out of the VR process entirely, precluding him or her from achieving even subminimum wage employment given the limitations imposed by section 511 of the Act and final part 397. In the event a youth opts out of the vocational rehabilitation process because of a lack of resources in the community, there would be no consequences for the DSU under this part. The specified employment goal must be consistent with the general goal of competitive integrated employment when considering the individual's strengths, resources, priorities, concerns, abilities, capabilities, interests, and informed choice in accordance with section 102(b)(4) of the Act, as amended by WIOA, and final 34 CFR 361.46(a). The answers to the other questions posed by the commenter are dependent upon circumstances and require the judgment of the DSU and the vocational rehabilitation counselor in consideration of the consumer's choice and needs.

Subpart D - Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment - §397.30

Subpart D-Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment - What are the responsibilities of a local educational agency to youth with disabilities who are known to be seeking subminimum wage employment? §397.30

Regulation:

(a) Of the documentation to demonstrate a youth with a disability's completion of the actions described in § 397.20(a), a local educational agency, as defined in § 397.5(b)(1), must provide the designated State unit with documentation that the youth has received transition services under the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.), such as transition services available to the individual under section 614(d) of that Act (20 U.S.C. 1414(d)). The documentation must be provided to the designated State unit in a manner that complies with confidentiality requirements of the Family Education Rights and Privacy Act (20 U.S.C. 1232g(b) and 34 CFR 99.30 and 99.31) and the Individuals with Disabilities Education Act (20 U.S.C. 1417(c) and 34 CFR 300.622).

(b)(1) The documentation of completed services or activities required by paragraph (a) of this section must, at a minimum, contain the -

(i) Youth's name;

(ii) Description of the service or activity completed;

(iii) Name of the provider of the required service or activity;

(iv) Date required service or activity completed;

(v) Signature of educational personnel documenting completion of the required service or activity;

(vi) Date of signature described in paragraph (b)(1)(v) of this section; and

(vii) Signature of educational personnel transmitting documentation to the designated State unit; and (viii) Date and method (e.g., hand delivered, faxed, mailed, emailed, etc.) by which document was transmitted to the designated State unit.

(2) In the event a youth with a disability or, as applicable, the youth's parent or guardian, refuses, through informed choice, to participate in the activities required by this part, such documentation must, at a minimum, contain the -

(i) Youth's name;

(ii) Description of the refusal and the reason for such refusal;

(iii) Signature of the youth or, as applicable, the youth's parent or guardian;

(iv) Signature of the educational personnel documenting the youth's refusal;

(v) Date of signatures required by paragraphs (b)(2)(iii) and (iv) of this section;

(vi) Signature of educational personnel transmitting documentation of the refusal to the designated State unit; and

(vii) Date and method (e.g., hand delivered, faxed, mailed, emailed, etc.) by which documentation was transmitted to the designated State unit.

(c)(1)(i) The educational personnel must transmit the documentation required by paragraph (b)(1) of this section to the designated State unit as soon as possible upon the completion of each of the required actions, but no later than -

(A) 30 calendar days after the completion of the required activity or service; or

(B) 60 calendar days, if additional time is necessary due to extenuating circumstances, after the completion of each of the required actions in paragraph (a) of this section. Extenuating circumstances should be interpreted narrowly to include the unexpected lengthy absence due to illness or family emergency of the educational personnel necessary to produce or transmit the documentation, or a natural disaster.

(ii) Documentation required by paragraph (b)(2) of this section, when a youth has refused to participate in an action required by this part, must be provided to the DSU within 5 calendar days of the youth's refusal to participate.

(2) When the educational personnel transmits the last documentation to the designated State unit regarding the services provided to the youth under paragraph (a) of this section, the educational personnel must provide a cover sheet that itemizes the documentation that has been provided to the designated State unit regarding that youth.

(d) The educational agency must retain a copy of all documentation provided to the designated State unit under this section in a manner consistent with the requirements of 2 CFR 200.333. (Authority: Sections 12(c), 511(a)(2)(A), and 511(d) of the Rehabilitation Act of 1973, as amended; 29 U.S.C. 709(c), 794g(a)(2)(A), and (d)) § 397.31

Preamble Discussion:

Responsibilities of a local educational agency to youth with disabilities who are known to be seeking subminimum wage employment § 397.30 is found in the preamble Final VR Regulations at 81 FR 55720-55721 (August 19, 2016) -

Discussion:...While the suggestion to require local educational agencies to retain copies of documentation that a youth has completed transition services is unnecessary given the requirements of 2 CFR 200.333, we understand the concerns expressed. After much consideration, the Secretary has revised final § 397.30 to require the educational agency to retain a copy of all documentation provided to the DSU in accordance with 2 CFR 200.333. This requirement in final § 397.30(d) should pose no additional burden to the local educational agencies because the agencies are already subject to Federal record retention requirements. Final § 397.30(d) is consistent with a similar provision in final § 397.10(c), thereby ensuring consistency between the DSU and local educational agencies for purposes of the documentation process. Similarly, the Secretary has revised final § 397.30(a) to state that the documentation transmitted to the DSU must comply with the confidentiality requirements of FERPA and the IDEA. Additionally, final § 397.30 is revised to establish minimum information content requirements for the documentation to be provided to the DSU upon completion of the transition services under the IDEA or the youth's refusal to participate in those activities. In addition, the Secretary has also added a new paragraph in final § 397.30 to require a time frame for the transmittal of the documentation to the DSU - of no more than 30 calendar days after completion of the transition service, or no more than 60 calendar days after completion of the transition service if additional time is needed due to extenuating circumstances, or within 5 calendar days of the youth refusal to participate. This gives the DSU the time necessary to transmit the documentation to the youth within the time required by final § 397.10(c).

In addition, final § 397.30(c)(2) requires educational personnel, when transmitting documentation of the last service or activity completed by the youth to the DSU, to provide a coversheet that itemizes all documentation transmitted to the DSU regarding that youth. In so doing, the DSU will have a checklist to ensure receipt of each documentation, thereby ensuring the youth obtains all necessary documentation. These additional provisions are necessary to ensure consistency between the DSU and the local educational agencies in the documentation process. All of these changes are consistent with those made in final § 397.10. As previously discussed in other sections of this part, the CAP and protection and advocacy systems already have access to records in accordance with their governing statutes and regulations and section 511 of the Act does not expand this access.

We disagree with the recommendation to remove the phrase "who are known to be seeking subminimum wage employment" or, alternatively, "who are known to be" from the title in final § 397.30. The provisions relate directly to youth who are contemplating or seeking subminimum wage employment, and local educational agencies have knowledge of these individuals in meeting the IDEA requirements for transition services in the individualized education program in 20 U.S.C. 1414(d)(1)(A)(i)(VIII)(aa)–(bb).

In considering the commenter who recommended making it mandatory for the local educational agency to provide documentation of the completion of required activities to the student, upon further review, the Department has determined that providing documentation of completed activities by the local educational agency directly to a youth with a disability seeking subminimum wage employment is not mandatory, and we are removing this language in the final regulation to be more consistent with the statute and final § 397.10. The documentation must be provided by the local education agency to the DSU in accordance with section 511(d)(2)(ii) and (iii).

The local educational agency, in accordance with the requirements in section 511(d)(2) and the documentation process developed by the DSU in consultation with the State educational agency, must provide documentation to the DSU. The DSU is then responsible under section 511(d)(2)(A)(iii) to provide this documentation to the student with a disability. Final §§ 397.10 and 397.30 make this requirement clear and ensure consistency with specific statutory requirements.

While we agree that it is in the best interest of a student with a disability considering subminimum wage employment to be referred by a local educational agency to the DSU in order to complete the requirements under final § 397.20, we believe that this is best left to the DSU and the State educational agency to negotiate when developing the interagency agreement required by 34 CFR 361.22. Nevertheless, we believe that this practice represents the type of coordination and cooperation that should exist between DSUs and local educational agencies and enables collaboration with the student with a disability to provide a complete program of services that may result in an employment outcome in competitive integrated employment. See a more detailed discussion of this issue earlier in this preamble. Regardless, once the DSU receives documentation of completed transition activities from the local educational agency, then the individual will become known to the DSU, and thus "referred."

Changes: We have revised final § 397.30 in several ways. We have revised final § 397.30(a) by deleting the language stating that a local educational agency may provide documentation to a youth of the completion of actions described in § 397.20(a) and inserting in its place language that the local educational agency must provide the DSU with such documentation in accordance with section 511(d)(2). We also stated that the documentation must be transmitted in a manner that complies with the confidentiality requirements of FERPA and the IDEA. We added final § 397.30(b), which establishes minimum content requirements for the documentation that must be transmitted by the local educational agency to the DSU. We added final § 397.30(c), which establishes the time frame under which a local educational agency must provide the DSU with required documentation and requires the local educational agency to retain a copy of all documentation provided to the DSU under this part. Final § 397.30(c)(2) requires educational personnel to transmit a coversheet to the DSU that itemizes all documentation provided to the DSU regarding the youth. This coversheet is to be provided when the educational personnel transmits documentation of the last activity completed by the youth. Lastly, we added final § 397.30(d), which establishes the timeline in which documentation must be transmitted by the educational agency to the DSU.

Subpart D - Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment - §397.31

Subpart D - Local Educational Agency Responsibilities Prior to Youth With Disabilities Starting Subminimum Wage Employment - What are the contracting limitations on educational agencies under this part? What are the contracting limitations on educational agencies under this part? § 397.31

Neither a local educational agency, as defined in §397.5(b)(1), nor a State educational agency, as defined in § 397.5(b)(2), may enter into a contract or other arrangement with an entity, as defined in § 397.5(d), for the purpose of operating a program for a youth under which work is compensated at a subminimum wage.

Preamble Discussion:

Contracting prohibition on educational agencies § 397.31 is found in the preamble Final VR Regulations at 81 FR 55721-55723 (August 19, 2016) -

Discussion: ...both the Departments of Education and Labor have responsibilities for oversight under section 511. Specifically, the Department has sole responsibility for overseeing all requirements under section 511 and final part 397 that relate to requirements that fall under its purview, such as the documentation process and the prohibition against a State or local educational agency entering into a contract with an entity holding a special wage certificate for the purpose of operating a program in which a youth is compensated for work at subminimum wage. The Department of Labor, on the other hand, has sole responsibility for overseeing requirements that fall under its purview, such as those related to entities holding special wage certificates paying individuals with disabilities subminimum wages without the requirements of section 511 of the Act and final part 397 being met. There is no statutory authority for the Department to compel the Department of Labor to oversee entities, such as the DSUs and educational agencies, that are under the Department’s purview.

We appreciate the significance of the contracting prohibition in section 511(b)(2) of the Act and the comments received in response to proposed § 397.31 seeking clarification and making recommendations. We agree with the substantial number of commenters that this section does not preclude State and local educational agencies from contracting with entities holding section 14(c) certificates, such as community rehabilitation programs, for purposes other than operating a program for youth under which work is compensated at a subminimum wage. In other words, nothing in section 511(b)(2) of the Act or final §397.31 precludes a State or local educational agency from contracting with an entity, even if that entity holds a special wage certificate under section 14(c) of the FLSA, for another purpose, including the provision of transition and pre-employment transition services that are beneficial to students with disabilities, so long as they are not paid subminimum wage if compensation is provided. Pre-employment transition services under final 34 CFR 361.48(a) and assessment services provided to vocational rehabilitation consumers must be provided in integrated settings to the maximum extent possible. Further, nothing in section 511(b)(2) of the Act or final § 397.31 prohibits a State or local educational agency from contracting with an entity holding a special wage certificate for the purpose of operating a program in which the youth is paid at or above minimum wage. A State or local educational agency, prior to entering into such a contract, must ensure that the youth will be paid at least minimum wage. Only in doing this can the local or State educational agency ensure its compliance with section 511(b)(2) and final § 397.31. It is not necessary to revise final § 397.31 because the regulation mirrors the statute and states that the prohibition is against contracting for "the purpose" of operating a program for youth under which work is compensated at a subminimum wage.

The Department also agrees with commenters who regard the contracting prohibition as a step toward limiting the progression of students and transition age youth into subminimum wage employment, since it seeks to limit the exposure of these individuals to settings that pay subminimum wages. Final § 397.31 raises expectations for both youth with disabilities and their families, and redirects them toward experiences leading to competitive integrated employment in the community.

While we understand the commenters' desire to align the language in final § 397.31 with section 511(a) of the Act, which references entities holding special wage certificates as well as their contractors and subcontractors, we disagree that it is necessary to specifically mention "subcontractors" in these final regulations. Final § 397.31 prohibits the State or local educational agency from entering into a contract or other arrangement with an "entity, as defined in § 397.5(d)" for the purpose of operating a program in which the youth is engaged in work compensated at a subminimum wage. Final § 397.5(d) defines "entity" as an employer, or a contractor or subcontractor of that employer, that holds a special wage certificate described in section 14(c) of the FLSA. Therefore, contractors and subcontractors of the employer holding the special wage certificate are already included in that definition, making specific reference to contractors and subcontractors unnecessary. The reference to "other arrangements" in both section 511(b)(2) and final § 397.31 refers to any other type of agreement (other than a contract), such as a memorandum of understanding or subcontract, through which the State or local educational agency makes arrangements with entities operating programs in which youth with disabilities are paid subminimum wages under section 14(c) of the FLSA. The term allows for a broad interpretation of the relationships that might exist between a local or State educational agency and an entity, as well as the types of agreements they may enter into to establish those relationships, including sub-contracts. For purposes of the requirements and limitations in final part 397 (including the contracting prohibition in final § 397.31), a local or State educational agency that holds a section 14(c) certificate to operate a program in which a youth with a disability is engaged in work compensated at a subminimum wage is treated in the same manner as any other entity holding a special wage certificate under section 14(c) of the FLSA.

We agree that the interagency agreement between the DSU and State educational agency, as described in 34 CFR 361.22, should include reference to the prohibition in final § 397.31. Therefore, 34 CFR 361.22(b)(6), both proposed and final, requires the interagency agreement to include an assurance that neither the State or local educational agency will enter into a contract or other arrangement for the purpose of operating a program in which youth with disabilities are engaged in work compensated at a subminimum wage. Thus, final 34 CFR 361.22(b)(6) ensures consistency between the interagency agreement required under that part and the requirements of final § 397.31.

The Secretary disagrees with the recommendation to revise final § 397.31 to prohibit local or State educational agencies from making referrals to entities holding special wage certificates. As discussed previously, as well as in detail in the preamble to final 34 CFR part 361, the Act does not prohibit services such as assessments, pre-employment transition services, and other services from being provided by entities holding special wage certificates under section 14(c) of the FLSA. However, the Act requires that each of these services be provided, to the maximum extent possible, in integrated settings. We wish to point out that entities holding special wage certificates under section 14(c) of the FLSA, also include businesses, in addition to community rehabilitation programs, that operate in integrated settings in the community. The focus of the prohibition in final § 397.31 is the payment of subminimum wages to youth with disabilities–not the setting in which the work is performed. Therefore, there is nothing in the Act to prohibit a State or local educational agency from making a referral to such entity, so long as the purpose of the referral is not for the payment of subminimum wages to the youth with a disability.

With regard to the request that final § 397.31 be revised to specify that the State educational agency is responsible for enforcing final § 397.31, the Secretary disagrees that such change is necessary. First, the Department will be enforcing this provision through its regular monitoring activities. Second, the prohibition applies to both the State and local educational agencies; therefore, it would not be appropriate for the State educational agency to enforce a requirement against itself. As stated above, the Department intends to issue operating guidance to the States regarding the implementation of the requirements of final part 397, including the prohibition contained in final § 397.31.