The U.S. Department of Education has issued final regulations
implementing the 1992 amendments to the Rehabilitation Act.

Since the document is about 140K in size, I've put
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Jamal Mazrui
National Council on Disability
Email: 74444.1076@compuserve.com

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DEPARTMENT OF EDUCATION
34 CFR Parts 361, 363, 376, and 380
RIN 1820-AB12
The State Vocational Rehabilitation Services Program
AGENCY:  Department of Education
ACTION:    Final regulations
SUMMARY:  The Secretary amends the regulations governing The
State Vocational Rehabilitation Services Program.  These 
amendments are needed to implement changes to the Rehabilitation 
Act of 1973 (Act) made by the Rehabilitation Act Amendments of 
1992, enacted on October 29, 1992, as amended by the 1993 
technical amendments (hereinafter collectively referred to as 
the 1992 Amendments).
EFFECTIVE DATE:  These regulations take effect (insert the 30th
day from the date of publication in the FEDERAL REGISTER).
FOR FURTHER INFORMATION CONTACT:  Beverlee Stafford, U.S.
Department of Education, 600 Independence Avenue, S.W., Room 
3014, Mary E. Switzer Building, Washington, D.C. 20202-2531.  
Telephone (202) 205-8831.  Individuals who use a 
telecommunications device for the deaf (TDD) may call (202) 
205-5538.
SUPPLEMENTARY INFORMATION:  The State Vocational Rehabilitation
Services Program (program) is authorized by Title I of the Act 
(29 U.S.C. 701-744).  This program provides support to each 
State to assist it in operating a comprehensive, 
coordinated,effective, efficient, and accountable State program 
to assess, plan, develop, and provide vocational rehabilitation 
(VR) services to individuals with disabilities so that those 
individuals may prepare for and engage in gainful employment, 
consistent with their strengths, resources, priorities, 
concerns, abilities, capabilities, and informed choice.
	On December 15, 1995, the Secretary published a notice of
proposed rulemaking (NPRM) for this program in the FEDERAL 
REGISTER (60 FR 64476).
	Additionally, pursuant to Executive Order 12866, which
encourages Federal agencies to facilitate meaningful 
participation in the regulatory development process, the 
Rehabilitation Services Administration (RSA) made available 
draft proposed regulations (draft regulations) in accessible 
formats, including an electronic format, to a broad spectrum of 
parties for informal review and comment prior to publishing the 
December 15, 1995 NPRM.  RSA also gathered public input on the 
draft regulations through public meetings and focus groups and 
analyzed over 600 letters of comments on the draft regulations.
	These final regulations implement changes made to the program by
the 1992 Amendments with the exception of the evaluation 
standards and performance indicator requirements in section 106 
of the Act, which are being implemented in a separate rulemaking 
document, and incorporate some of the burden-reducing changes 
previously proposed in an NPRM for this program that was 
published on July 3, 1991 (56 FR 30620) (1991 NPRM).  The 
1991NPRM was not finalized at the request of Congress.  These 
regulations also implement changes that the Secretary believes 
are important to update, consolidate, clarify, and in other ways 
improve the regulations for this program.
	The Supplementary Information section to the NPRM includes a
discussion of the major changes to Title I of the Act made by 
the 1992 Amendments.  These changes have far-reaching 
implications for the program.  Individuals are encouraged to 
refer to the NPRM (60 FR 64476-64477) for a discussion of the 
major themes associated with the 1992 Amendments.
	These final regulations contain a limited number of significant
changes to the proposed regulations based on public comment and 
interdepartmental review.  A detailed description of these 
changes follows.  In addition, the final regulations have been 
reviewed and revised in accordance with the Department's 
Principles for Regulating, which were developed as part of the 
Administration's regulatory reinvention initiative under the 
National Performance Review II.  The principles are designed to 
ensure that the Department regulates in the most flexible, most 
equitable, and least burdensome way possible.
	The Secretary also notes that the changes to supported
employment definitions included in these final regulations 
affect those definitions in 34 CFR Parts 363, 376, and 380.  
Corresponding regulatory changes to those parts follow the final 
regulations amending 34 CFR Part 361.Goals 2000:  Educate 
America Act
	The Goals 2000:  Educate America Act (Goals 2000) focuses the
Nations education reform efforts on the eight National 
Education Goals and provides a framework for meeting them.  
Goals 2000 promotes new partnerships to strengthen schools and 
expands the Department's capacities for helping communities to 
exchange ideas and obtain information needed to achieve the 
goals.
	These regulations address the National Education Goal that every
adult American, including individuals with disabilities, will 
possess the knowledge and skills necessary to compete in a 
global economy and exercise the rights and responsibilities of 
citizenship.
Executive Order 12866:
	These final regulations have been reviewed in accordance with
Executive Order 12866.  Under the terms of the order the 
Secretary has assessed the potential costs and benefits of this 
regulatory action.
	The potential costs associated with the final regulations are
those resulting from statutory requirements and those 
determined by the Secretary as necessary for administering this 
program effectively and efficiently.
	In assessing the potential costs and benefits--both quantitative
and qualitative--of these final regulations, the Secretary has 
determined that the benefits of the final regulations justify 
the costs.	The Secretary has also determined that this 
regulatory action does not unduly interfere with State, local, 
and tribal governments in the exercise of their governmental 
functions.
Summary of potential costs and benefits
	The potential costs and benefits of these final regulations
were summarized in the preamble to the NPRM under the following 
headings:  Improved Organization of Regulations; Notes and 
Examples; Reduction of Grantee Burden; Enhanced Protections for 
Individuals with Disabilities (60 FR 64495); Increased 
Flexibility of Grantees to Satisfy Statutory Requirements; and 
Additional Benefits (60 FR 64496).  Additional discussion of 
potential costs and benefits is included in the following 
Analysis of Comments and Changes section of this preamble.
Analysis of Comments and Changes
	In response to the Secretary's invitation in the NPRM, more
than 400 parties submitted comments on the proposed 
regulations.  RSA gathered additional public input on the NPRM 
through a series of public meetings.  An analysis of the 
comments and of the changes in the regulations since publication 
of the NPRM follows.
	Major issues are grouped according to subject under appropriate
sections of the regulations.  Other substantive issues are 
discussed under the section of the regulations to which they 
pertain.  Technical and other minor changes--and suggested 
changes the Secretary is not legally authorized to make under 
the applicable statutory authority--generally are not addressed. 
However, some suggested changes that the Secretary isnot 
authorized to make also raise important policy issues and, 
therefore, are discussed under the appropriate section of the 
analysis.
	References in the analysis of comments to the proposed
regulations refer to the regulatory provisions in the December 
15, 1995 NPRM, whereas references to the draft regulations refer 
to provisions in the draft proposed regulations that were 
circulated for informal comment prior to publishing the NPRM.
Section 361.5(b)  Applicable definitions
	  Administrative costs under the State plan
Comments:  Some commenters requested that this definition be
revised to specifically limit administrative costs to 
expenditures incurred by the Designated State Unit (DSU) in 
administering the VR program.  One commenter recommended that 
the definition identify indirect costs as a type of 
administrative cost.  Finally, one commenter sought to exclude 
costs incurred by DSUs in providing technical assistance to 
businesses and industries from the definition on the basis that 
those costs represent expenditures for the provision of services 
under 361.49(a) of the proposed regulations.
Discussion:  The Secretary agrees that administrative costs under
the VR State plan are those costs that the DSU incurs in 
administering the VR program.  While most indirect costs (those 
costs that cannot be allocated to a single cost objective and 
that benefit more than one program) are generally types of 
administrative expenditures, they need not be limited 
toadministrative expenditures.  The Secretary does not believe 
it is necessary to classify indirect costs in order to ensure 
their allowability under the program.  All indirect costs that 
are approved under an indirect cost agreement or cost allocation 
plan are allowable.  The Secretary emphasizes that indirect 
costs related to multiple State programs (e.g., operating 
expenses for State buildings occupied by DSU staff and staff 
from other State-administered programs) can be charged to the VR 
program only to the extent that the costs are attributable to 
the VR program.
	In addition, the Secretary agrees that although technical
assistance to businesses, in some cases, is considered an 
administrative cost, any technical assistance provided by a DSU 
to a business or industry that seeks to employ individuals with 
disabilities and that is not subject to the Americans with 
Disabilities Act (ADA) does not constitute an administrative 
cost.  Technical assistance provided under these circumstances 
is authorized by section 103(b)(5) of the Act and 361.49(a)(4) 
of the regulations as a service for groups of individuals with 
disabilities.
Changes:  The Secretary has revised 361.5(b)(2) to clarify that
administrative costs are expenditures that are incurred by the 
DSU in performing administrative functions related to the VR 
program.  The definition also has been amended to exclude 
technical assistance provided to businesses and industries as a 
service under the conditions in 361.49(a)(4).	  Appropriate 
modes of communication
Comments:  One commenter opposed defining appropriate modes of
communication as specialized media systems and devices that 
facilitate communication on the basis that not all modes of 
communication used by persons with disabilities are media 
systems and devices.  Several commenters requested that the 
definition identify graphic presentations, simple language, and 
other modes of communication used by individuals with cognitive 
impairments.
Discussion:  The Secretary agrees that appropriate modes of
communication are not limited to specific systems, devices, or 
equipment, as indicated by the proposed definition, and include 
any type of aid or support needed by an individual with a 
disability to communicate with others effectively.  For example, 
the use of an interpreter by a person who is deaf is an 
appropriate mode of communication, but is not typically viewed 
as a system or device.
	The Secretary believes it would be useful for the definition of
appropriate modes of communication to include examples of 
communication methods used by individuals with cognitive 
impairments.  However, the Secretary emphasizes that the 
examples of communication services and materials listed in the 
definition in the final regulations are not all-inclusive and 
that other appropriate modes of communication not specified in 
the definition are also available to address the particular 
communication needs of an individual with a disability.Changes: 
The Secretary has amended 361.5(b)(5) to clarify that 
appropriate modes of communication include any aid or support 
that enables an individual with a disability to comprehend and 
respond to information being communicated.   In addition, the 
definition has been amended to include graphic presentations and 
simple language materials as examples of modes of communication 
that may be appropriate for individuals with cognitive 
impairments.
	  Assistive technology service
Comments:  Some commenters asked that particular services be
identified in this definition as examples of permissible 
assistive technology services.  For instance, one commenter 
suggested that the definition specifically identify 
modifications to vehicles used by individuals with disabilities 
as an assistive technology service.
Discussion:  The definition of the term assistive technology
service in both the proposed and final regulations tracks the 
definition of that term in the Technology-Related Assistance for 
Individuals with Disabilities Act of 1988 (Tech Act), as 
required by section 7(24) of the Act.  The Tech Act defines 
assistive technology services generally to include any service 
that directly assists an individual with a disability in the 
selection, acquisition, or use of an assistive technology 
device.  The definition in the regulations, therefore, is 
intended to address the scope of service-related needs of 
individuals who use assistive technology devices  (e.g., the 
need to acquire aparticular device or the need to receive 
training on the operation of a device) rather than to identify 
actual services that an individual might receive.  Nevertheless, 
the Secretary recognizes that any modification to a vehicle that 
is necessary to enable an individual with a disability to use 
that vehicle is considered an adaptation or a customization of 
an assistive technology device under 361.5(b)(7)(iii) and, 
therefore, constitutes an assistive technology service.  This 
position is consistent with current RSA policy.
Changes:  None.
	  Community rehabilitation program
Comments:  Some commenters requested that the definition of
community rehabilitation program specify additional services, 
such as rehabilitation teaching services, that could be provided 
under a community rehabilitation program for individuals with 
disabilities.
Discussion:  The definition of community rehabilitation program
in both the proposed and final regulations is based on the 
statutory definition in section 7(25) of the Act.  However, 
paragraph (i)(Q) of this definition, like section 7(25)(Q) of 
the Act, authorizes community rehabilitation programs that 
provide services similar to the services specified in the 
definition.  Thus, the Secretary believes that a community 
rehabilitation program could provide rehabilitation teaching 
services for individuals who are blind because those services 
are similar to orientation and mobility services for individuals 
who are blind,which are expressly authorized under paragraph 
(i)(K) of the definition.
Changes: None.
	  Comparable services and benefits
Comments:  Several commenters requested clarification of the
requirement in the proposed regulations that comparable 
services and benefits be available to the individual within a 
reasonable period of time.  Some commenters requested that the 
regulations allow DSUs to use comparable services and benefits 
only if they are currently available at the time the individuals 
Individualized Written Rehabilitation Program (IWRP) is 
developed.  Other commenters suggested that comparable services 
and benefits should be available when necessary to meet the 
rehabilitation objectives identified in the individuals IWRP.
Discussion:  The definition of "comparable services and benefits"
is intended to support the statutory purpose of conserving 
rehabilitation funds, while ensuring the provision of 
appropriate and timely services.  The proposed requirement in 
the NPRM that comparable services and benefits be available 
within a reasonable period of time was intended to enable DSUs 
to conserve VR funds by searching for alternative sources of 
funds without jeopardizing the timely provision of VR services 
to eligible individuals.  The Secretary agrees that additional 
clarification in the regulations is required to ensure that VR 
services are provided to eligible individuals at the time they 
are needed.Changes:  The Secretary has revised 361.5(b)(9)(ii) 
of the proposed regulations to require that comparable services 
and benefits be available to the individual at the time that the 
relevant service is needed to achieve the rehabilitation 
objectives in the individuals IWRP.  This change is consistent 
with revisions made to 361.53 of the proposed regulations, which 
are discussed in the analysis of comments to that section.
	 Competitive employment and integrated setting
Comments:  Some commenters opposed the definition of competitive
employment in the proposed regulations on the basis that it 
limited competitive employment outcomes to those in which an 
individual with a disability earns at least the minimum wage.  
Because the proposed definition applied to supported employment 
placements, these commenters believed that the minimum wage 
requirement would restrict employment opportunities for 
individuals with the most severe disabilities who need supported 
employment services in order to work.  These commenters stated 
that some individuals with the most severe disabilities would be 
unable to obtain competitive employment unless the definition 
permitted employers to compensate employees in accordance with 
section 14(c) of the Fair Labor Standards Act (FLSA) (i.e., 
wages based on individual productivity that would be less than 
the minimum wage).  Other commenters supported the proposed 
definition and the requirement that individuals in competitive 
employment earn at least the minimum wage.	Several commenters 
opposed the requirement in the proposed regulations that 
individuals in competitive employment earn at least the 
prevailing wage for the same or similar work in the local 
community performed by non-disabled individuals.  The commenters 
believed that it would be unduly burdensome for DSUs to 
ascertain the relevant prevailing wage given the potential 
differences in wages provided by employers within the same 
community.  In addition, these commenters stated that the 
prevailing wage standard would dissuade some employers from 
hiring individuals with disabilities when the wage to be 
provided, although at least the minimum wage, would have to be 
increased to be consistent with higher wages provided by other 
employers in the community for the same or similar work.
	Several commenters on the proposed regulations opposed the
requirement that competitive employment be performed in an 
integrated setting.  Several other commenters questioned or 
requested clarification of the proposed definition of integrated 
setting with respect to the provision of services or the 
achievement of an employment outcome.  In light of the 
interrelationship between the terms competitive employment and 
integrated setting and the fact that the Secretary considers 
integration to be an essential component of competitive 
employment, comments on both the proposed definition of 
integrated setting and the use of the term integrated setting as 
an element of competitive employment are addressed in the 
following paragraphs.	Commenters who opposed limiting 
competitive employment to placements in integrated settings 
believed that requiring individuals with disabilities to 
interact with non-disabled persons at the work site would 
preclude certain kinds of employment outcomes from the scope of 
competitive employment.  Specifically, the commenters identified 
self-employment, home-based employment, and various forms of 
telecommuting as examples of employment outcomes that are 
competitive but are not located in integrated settings.  The 
commenters stated that these placement options should be 
available to individuals with disabilities to same extent that 
they are available to non-disabled persons.
	Some commenters believed that the definition of integrated
setting in the proposed regulations was too weak.  These 
commenters recommended that the proposed definition, which 
defined integrated setting as ...a setting typically found in 
the community in which an applicant or eligible individual has 
an opportunity to interact regularly with non-disabled 
persons..., be amended to require actual interaction between the 
applicant or eligible individual and non-disabled individuals.  
Other commenters stated that individuals in competitive 
employment should be required to interact with non-disabled 
persons only to the extent that non-disabled individuals in 
similar positions interact with others.  Finally, some 
commenters suggested that the definition clarify that sheltered 
workshops and other employment settings that are established 
specifically for thepurpose of employing individuals with 
disabilities do not constitute integrated settings.
Discussion:  The Secretary agrees with the commenters who believe
that competitive employment outcomes should be limited to those 
in which individuals earn at least the minimum wage. 
Consequently, the Secretary does not consider placements in 
supported employment settings in which individuals receive wages 
below the minimum wage under section 14(c) of the FLSA to be 
competitive employment.  This position, which would modify 
longstanding RSA regulatory policy, is consistent with the 
requirement in the 1992 Amendments (section 101(a)(16) of the 
Act) that DSUs annually review and reevaluate the status of each 
individual in an employment setting under section 14(c) of the 
FLSA in order to determine the individual's readiness for 
competitive employment.  This statutory requirement indicates 
that supported employment settings in which individuals are 
compensated below the minimum wage in accordance with the FLSA 
do not constitute competitive employment.  The Secretary wishes 
to clarify that the minimum wage requirement for individuals 
placed in supported employment applies at the time of transition 
to extended services.  If an individual is unable to obtain the 
minimum wage at this time, the individual would still be 
considered to have achieved an employment outcome but it would 
not be considered a supported employment outcome.
	The Secretary agrees that requiring individuals in competitive
employment to earn at least the prevailing wage forthe same or 
similar work in the local community performed by non-disabled 
individuals is unduly restrictive and that requiring individuals 
with disabilities who achieve competitive employment outcomes to 
be compensated at the wage level typically paid to non-disabled 
individuals who perform the same or similar work for the same 
employer is a more reasonable standard.  This standard requires 
that competitively employed individuals with disabilities 
receive the customary wage and level of benefits (e.g., 
insurance premiums, retirement contributions) received by 
non-disabled workers performing comparable jobs for the same 
employer.  Clarification in the final regulations that 
comparable compensation includes both the wage and benefit level 
typically paid by the employer is necessary, the Secretary 
believes, in order to ensure that competitive employment 
outcomes for individuals with disabilities are truly 
competitive.
	A key purpose of the 1992 Amendments is to ensure that
individuals with disabilities achieve employment outcomes in 
the most integrated settings possible, consistent with the 
individual's informed choice.  Consequently, the Secretary 
believes that placement in an integrated setting is an essential 
component of competitive employment.
	The Secretary agrees with those commenters who believe that the
definition of integrated setting in the proposed regulations 
did not sufficiently ensure actual interaction between 
individuals with disabilities and non-disabled persons.  The 
Secretary also agrees with those commenters who contend that 
thebest measure of integration in an employment setting for 
individuals with disabilities is to require parity with the 
integration experienced by non-disabled workers in similar 
positions.  Consequently, the final regulations establish a 
standard of integration with respect to employment outcomes that 
is based on ensuring the same level of interaction by disabled 
individuals with non-disabled persons as that experienced by a 
non-disabled worker in the same or similar job.  An integrated 
setting for purposes of a job placement is one in which 
anapplicant or eligible individual interacts with non-disabled 
persons, excluding service providers, to the same extent that a 
non-disabled worker in a comparable position interacts with 
others.
	The Secretary believes, however, that interaction between
individuals with disabilities and non-disabled persons need not 
be face-to-face in order to meet this standard.  Persons with 
disabilities who are self-employed or telecommute may interact 
regularly with non-disabled persons through a number of mediums 
(e.g., telephone, facsimile, or computer).  Self-employment, 
home-based employment, and other forms of employment in which 
individuals communicate regularly from separate locations, 
therefore, would satisfy the integration requirement of 
competitive employment as long as the eligible individual 
interacts with non-disabled persons other than service providers 
to the same extent as a non-disabled person in a comparable job.


	The Secretary, like many of the commenters, also believes that
settings that are established specifically for the purpose of 
employing individuals with disabilities (e.g., sheltered 
workshops) do not constitute integrated settings since there are 
no comparable settings for non-disabled individuals.
Changes:  The Secretary has amended 361.5(b)(10) to define
competitive employment, in part, as work for which an 
individual earns at least the minimum wage but not less than the 
customary wage and level of benefits provided by the same 
employer to non-disabled workers who perform the same or 
similarwork.  The Secretary also has amended 361.5(b)(30) to 
define integrated setting with respect to an employment outcome 
as a setting typically found in the community in which 
applicants or eligible individuals interact with non-disabled 
individuals to the same extent that non-disabled individuals in 
comparable positions interact with other persons.  The 
definition of integrated setting with respect to the provision 
of services has been similarly strengthened to require actual 
interaction between individuals with disabilities receiving 
services and non-disabled individuals.
	 Designated State unit
Comments:  Some commenters requested that the regulatory
definition of designated State unit prohibit DSUs from 
administering vocational and other rehabilitation programs other 
than those programs authorized or funded under the Act.  
Discussion:  Sections 101(a)(1) and (a)(2) of the Act require 
that the State VR Services Program be administered by a State 
entity that is primarily concerned with vocational 
rehabilitation or vocational and other rehabilitation of 
individuals with disabilities, but does not restrict this 
rehabilitation focus to only programs authorized or funded under 
the Act.  The Secretary wishes to give States as much 
organizational flexibility as is permitted by statute.
Changes:  None.	 Employment outcome
Comments: Several commenters opposed the definition of
employment outcome in the proposed regulations on the basis 
that it failed to exclude outcomes other than competitive 
employment (e.g., homemaker, self-employment).  Other commenters 
disagreed with the emphasis in the definition on competitive 
employment.
Discussion:  The definition of "employment outcome" in the final
regulations, like the proposed definition, elaborates on the 
definition in section 7(5) of the Act by incorporating into the 
definition the statutory concept that an employment outcome must 
be consistent with an individual's strengths, resources, 
priorities, concerns, abilities, capabilities, interests, and 
informed choice.  Although the definition does not contain a 
full list of permissible employment outcomes, it does not 
exclude any employment outcomes that have been permitted in the 
past.  Thus, for example, homemaker, extended employment, and 
self-employment remain acceptable employment outcomes even 
though they are not specifically identified in the definition.  
The Secretary also believes, however, that competitive 
employment, which is the optimal employment outcome under the 
program, should be considered for each individual who receives 
services under the program and should, therefore, be highlighted 
in the definition.   Changes:  None.	 Establishment, 
development, or improvement of a public or nonprofit community 
rehabilitation program
Comments:  Some commenters opposed that part of the proposed
definition of the term "establishment, development, or improvement 
of a public or nonprofit community rehabilitation program" that 
would reduce over a four-year period Federal financial support 
of staffing costs associated with operating a community 
rehabilitation program.  Some of these commenters also opposed 
the prohibition in the definition of Federal support for ongoing 
operating expenses of a community rehabilitation program.  The 
commenters were concerned that these provisions would make it 
difficult or impossible to develop new community rehabilitation 
programs.
Discussion:  The definition elaborates on the statutory
definition of the term establishment of a community 
rehabilitation program under section 7(6) of the Act by 
incorporating all of the types of expenditures for which a DSU 
can receive Federal financial support.  The limitations on 
staffing costs in the proposed definition are based on the 
authorization in section 7(6) of the Act for the Secretary to 
include as part of the costs of establishment any additional 
staffing costs that the Secretary considers appropriate.  The 
limitations are similar to those previously proposed in the 1991 
NPRM.  Specifically, the proposed regulations established a 
limitation on staffing costs by providing, after the first 12 
months of staffing assistance, for an annual decrease in 
thepercentage of staffing costs (from 100 percent to 45 
percent) for which Federal financial participation (FFP) is 
available.  This limitation, like the staffing cost requirements 
proposed in the 1991 NPRM, is influenced by and in part based on 
the conclusions of a 1979 General Accounting Office (GAO) report 
(HRD-79-84).  The GAO Report to Congress recommended amending 
the Act to provide for a gradual reduction of Federal funding 
for staffing costs in the establishment authority.  Legislative 
change is unnecessary to accomplish this purpose because section 
7(6) of the Act vests the Secretary with the authority to 
determine what staffing costs are appropriate for Federal 
financial participation.   The Secretary believes that the GAO 
recommendation is still relevant and needs to be implemented.  
The limitation on staffing costs is intended, in part, to ensure 
that facilities bear an increasing share of the responsibility 
for running community rehabilitation programs, while preserving 
VR funds needed to support necessary development or expansion of 
community rehabilitation facilities.  More generally, the 
limitation on staffing costs is intended to preserve the amount 
of funds available to the DSU for providing VR services to 
eligible individuals.
	The final regulations also authorize Federal support for other
costs needed to establish, develop, or improve a community 
rehabilitation program as long as these costs are not ongoing 
operational expenses of the program.  The Secretary believes 
that this prohibition is consistent with the Act, which limits 
Federalfinancial support to costs associated with setting up, 
renovating, converting, or otherwise improving community 
rehabilitation programs.	The Secretary also notes that recent 
audits of State agencies have indicated, in some cases, that VR 
funds have been used under the authority for establishing 
community rehabilitation programs for purposes other than 
providing services under the VR program.  In response, the 
Secretary believes the proposed definition should be amended to 
ensure that Federal support for the establishment, development, 
or improvement of a public or nonprofit community rehabilitation 
program is provided only if the purpose of the expenditures is 
to provide services to applicants and eligible individuals under 
the VR program.
Changes:  The Secretary has amended 361.5(b)(16) to ensure that
costs associated with the establishment, development, or 
improvement of a public or nonprofit community rehabilitation 
program must be necessary to the provision of VR services to 
applicants and eligible individuals.  Changes to this definition 
and to the State plan requirements in 361.33(b) of the 
regulations are intended to address the violations identified in 
recent audits of State agencies.
 Extended employment
Comments:  Several commenters requested that the definition of
extended employment in the proposed regulations be broadened to 
include placements in integrated settings.  Other commenters 
sought to expand the proposed definition to include employment 
with profitmaking organizations.  Finally, some 
commentersrequested that the regulations exclude extended 
employment from the scope of potential employment outcomes under 
the program.
Discussion:  Section 101(a)(16) of the Act requires DSUs to
annually review and reevaluate the status of each individual in 
extended employment to determine the individuals readiness for 
competitive employment in an integrated setting.  This statutory 
requirement indicates that extended employment is limited to 
placements in non-integrated settings.  The lack of integration 
in extended employment placements is a key factor in 
differentiating between extended employment and competitive 
employment outcomes.
	The Secretary does not believe that extended employment includes
work performed on behalf of profitmaking organizations.  
Extended employment, according to section 101(a)(16) of the Act, 
means work performed in community rehabilitation programs, 
including workshops, or in other non-integrated employment 
settings in which individuals are compensated pursuant to the 
FLSA.  The Secretary believes that employment in private, 
profitmaking organizations should be viewed as competitive 
employment in which individuals shall earn at least the minimum 
wage and work in integrated settings.  Incorporating placements 
in profitmaking organizations into the definition of extended 
employment would expand the scope of potential extended 
employment placements and would be contrary to the statutory 
policy that promotes movement from extended employment to 
competitive employment, the optimal employment outcome under 
theprogram.  Nevertheless, the final regulations will continue 
to recognize extended employment as a possible employment 
outcome under the program consistent with 101(a)(16) of the Act.
Changes:  None.
	 Impartial hearing officer
Comments:  One commenter requested that the regulations prohibit
a member of a State Rehabilitation Advisory Council from 
serving as an impartial hearing officer for any DSU within that 
State.
Discussion:  The definition of impartial hearing officer in the
proposed regulations specified that a member of a DSU's State 
Rehabilitation Advisory Council (Council) could not serve as an 
impartial hearing officer for that same DSU.  The proposed 
definition, however, did allow a member of a DSUs Council to 
serve as an impartial hearing officer in cases involving another 
DSU within the same State.  For example, a member of the Council 
for a State unit serving individuals who are blind was not 
precluded under the proposed regulations, solely on the basis of 
that membership, from serving as an impartial hearing officer in 
cases involving the State unit that serves individuals with 
disabilities other than individuals with visual disabilities.  
The Secretary believes that prohibiting members of a Council 
from serving as impartial hearing officers in cases involving 
any DSU within the State would be unduly restrictive.  The 
Secretary also believes that other impartiality requirements in 
the definition that apply to all impartial hearing officers, 
including those who are members of Councils for other DSUs 
(e.g., the individual hasno personal, professional, or 
financial conflict of interest) will sufficiently ensure the 
absence of potential conflicts between the hearing officer and 
the parties to the dispute.
Changes:  None.
	 Maintenance
Comments:  Some commenters requested that the definition of 
maintenance in the proposed regulations be expanded to include 
expenses other than living expenses (e.g., food, shelter, and 
clothing).  As an example, the commenters stated that 
maintenance should be authorized to support costs incurred by 
eligible individuals who take part in enrichment activities as 
part of a training program in a higher education institution.  
Several other commenters recommended deletion of the fourth 
example in the note following the proposed definition, which 
stated that maintenance could be used to pay for food, shelter, 
and clothing for homeless or recently deinstitutionalized 
individuals until other financial assistance is secured.  These 
commenters asserted that these costs should be supported by 
welfare or other public assistance agencies rather than DSUs.
Discussion:  The Secretary agrees that maintenance may include
costs other than standard living expenses (i.e., food, shelter, 
and clothing) as long as the expenses are in excess of the 
normal expenses incurred by an eligible individual or an 
individual receiving extended evaluation services.  Limiting 
maintenance to additional costs incurred by individuals 
receiving services under an IWRP or under a written plan for 
providing extended evaluationservices is consistent with 
section 103(a)(5) of the Act, which restricts the provision of 
maintenance to "additional costs while participating in 
rehabilitation.
	The Secretary also agrees that the fourth example of permissible
maintenance expenses in the proposed regulations was 
inadvisable.  Permitting DSUs to support the full costs of a 
homeless or deinstitutionalized individuals subsistence under 
the maintenance authority, until other financial assistance 
becomes available, is inconsistent with the policy of limiting 
maintenance costs to those in excess of the individuals normal 
expenses.  In addition, the Secretary agrees that welfare and 
other social service agencies are better equipped to support the 
everyday living expenses of the homeless or deinstitutionalized. 
However, a DSU could choose to provide short-term emergency 
financial assistance to those individuals under 361.48(a)(20) as 
other services that the DSU determines are necessary for the 
individual to achieve an employment outcome.
Changes:  The Secretary has deleted the term living from
361.5(b)(31) of the proposed regulations to clarify that 
maintenance may include expenses other than living expenses.  In 
addition, the Secretary has deleted the fourth example in the 
note following the proposed definition of maintenance and 
replaced it with an example of a permissible maintenance cost 
that would not constitute a living expense.	 Ongoing support 
services
Comments:  Some commenters recommended that the Secretary place a
time limit on the provision of ongoing support services 
furnished by extended services providers.  The commenters stated 
that the regulations should permit ongoing support services to 
fade once they are no longer needed to maintain an individual in 
supported employment.
Discussion:  It is RSAs longstanding policy that individuals with
the most severe disabilities who are placed in supported 
employment should require ongoing support services throughout 
the course of their placement.  The need for ongoing support 
services provides a critical distinction (i.e., the provision of 
ongoing supports) between supported employment and other kinds 
of employment outcomes.  The Secretary believes that if an 
individual in supported employment no longer requires ongoing 
support services that individual is no longer an appropriate 
candidate for supported employment.
Changes:  None.
	 Personal assistance services
Comments:  Some commenters requested that the definition of
personal assistance services in the proposed regulations be 
amended to more closely track the statutory definition of that 
term in section 7(11) of the Act.  The commenters stated that 
revision to the proposed definition is needed to clarify that 
personal assistance services need not be provided on the job 
site.Discussion:  The Secretary agrees that personal assistance 
services may be provided off the job site as long as they are 
necessary to assist an individual with a disability to perform 
daily living functions and achieve an employment outcome and are 
provided while the individual is participating in a program of 
VR services.  The Secretary believes the proposed definition 
clearly authorized personal assistance services needed by an 
individual to perform everyday activities off the job but, 
nevertheless, agrees that further clarification may be helpful.
Changes:  The Secretary has amended 361.5(b)(34) of the proposed
regulations to track the language in section 7(11) of the Act 
authorizing personal assistance services needed to increase the 
individuals control in life and ability to perform everyday 
activities on or off the job.
	 Physical and mental restoration services
Comments:  Some commenters requested that the regulatory
definition of physical and mental restoration services 
specifically include psychological services provided by 
qualified personnel under State licensure laws.
Discussion:  The Secretary agrees that psychological services are
a form of mental restoration services.  Psychological services, 
however, are subsumed within the broader term mental health 
services in paragraph (xiii) of the definition and need not be 
identified separately.  Moreover, section 103(a)(4) of the Act 
authorizes services, including psychological services, that are 
needed to diagnose and treat mental or emotional disorders 
onlyif those services are provided by qualified personnel in 
accordance with State licensure laws.  This requirement, which 
was included in the proposed definition, is reflected in 
paragraph (ii) of the definition in the final regulations.
Changes:  None.
	 Physical or mental impairment
Comments:  Some commenters requested clarification of the
requirement in the proposed regulations that a physical or 
mental impairment will probably result in materially limiting 
mental or physical functioning if it is not treated.  One 
commenter stated that the definition should be limited to 
conditions that cause present functional limitations so as not 
to unnecessarily expand the pool of eligible individuals.
Discussion:  The Secretary agrees that clarification is needed. 
The proposed regulations defined physical or mental impairment 
as an injury, disease, or other condition that materially 
limits, or if not treated will probably result in materially 
limiting, mental or physical functioning.  The existence of a 
physical or mental impairment is the first criterion for 
determining eligibility under the program (see 361.42(a) of the 
final regulations).  The proposed definition was designed to 
include progressive conditions that may cause functional 
limitations in the future even though current functional 
limitations may not be evident.  Although a DSU may not always 
know with certainty whether a certain condition will limit an 
individuals functional abilities, the Secretary believes that 
the definition mustaccount for situations in which there is a 
strong likelihood that functional limitations will result if 
treatment is not provided.  On the other hand, the Secretary 
does not believe that accounting for progressive conditions will 
result in an unwarranted increase in eligible individuals since 
all eligible individuals, including those who do not currently 
experience a limitation in functioning, must meet each of the 
eligibility criteria in 361.42(a).
Changes:  The Secretary has amended 361.5(b)(36) of the proposed
regulations to clarify that a physical or mental impairment 
must materially limit, or if untreated must be expected to 
materially limit, physical or mental functioning.
	 Post-employment services
Comments:  Some commenters requested that the regulations
specify a time limit for providing  post-employment services 
following the achievement of an employment outcome. Other 
commenters opposed the availability of post-employment services 
for purposes of assisting an individual to advance in 
employment.  Finally, several commenters recommended thatp0* ( ( 
programs.
	(a)  General provisions.  The State plan must assure that--
	(1)  The designated State unit will establish and maintain
information and referral programs adequate to ensure that 
individuals with disabilities within the State are given 
accurate information about State vocational rehabilitation 
services, independent living services, vocational rehabilitation 
services available from other agencies, organizations, and 
community rehabilitation programs, and, to the extent possible, 
other Federal and State services and programs that assist 
individuals with disabilities, including client assistance and 
other protection and advocacy programs;
	(2)  The State unit will refer individuals with disabilities to
other appropriate Federal and State programs that might be of 
benefit to them; and
	(3)  The State unit will use existing information and referral
systems in the State to the greatest extent possible.
	(b)  Appropriate modes of communication.  The State plan further
must assure that information and referral programs use 
appropriate modes of communication.
	(c)  Special Circumstances.  If the State unit is operating
under an order of selection for services, the State unit may 
elect to establish an expanded information and referral program 
that includes counseling, guidance, and referral for job 
placements for those eligible individuals who are not in 
thepriority category or categories to receive vocational 
rehabilitation services under the State's order of selection.
	(1)  If a State unit elects to establish an expanded information
and referral program under paragraph (c) of this section, the 
State plan must include--
	(i)  A description of how the expanded information and referral
program will be established and how it will function, including 
the level of commitment of State unit staff and resources; and
	(ii)  An assurance that, in carrying out this program, the State
unit will not use funds that are needed to provide vocational 
rehabilitation services under IWRPs for eligible individuals in 
the priority category or categories receiving services under the 
State unit's order of selection or for other eligible 
individuals who have begun to receive services prior to the 
effective date of the order of selection.
	(2) If the designated State unit chooses to track the
individuals who obtain employment through participation in an 
expanded information and referral program established under 
paragraph (c) of this section, the State plan must include a 
report of the number of individuals served and the number of 
individuals who obtain employment through this program.
(Approved by the Office of Management and Budget under control
number 1820-0500.)
(Authority:  Section 101(a)(22) of the Act; 29 U.S.C.
721(a)(22))361.38  Protection, use, and release of personal 
information.
	(a)  General provisions.
	(1)  The State plan must assure that the State agency and the
State unit will adopt and implement policies and procedures to 
safeguard the confidentiality of all personal information, 
including photographs and lists of names.  These policies and 
procedures must assure that--
	(i)  Specific safeguards protect current and stored personal
information;
	(ii)  All applicants and eligible individuals and, as
appropriate, those individuals' representatives, service 
providers, cooperating agencies, and interested persons are 
informed through appropriate modes of communication of the 
confidentiality of personal information and the conditions for 
accessing and releasing this information;
	(iii)  All applicants or their representatives are informed
about the State unit need to collect personal information and 
the policies governing its use, including--
	(A)  Identification of the authority under which information is
collected;
	(B)  Explanation of the principal purposes for which the State
unit intends to use or release the information;
	(C)  Explanation of whether providing requested information to
the State unit is mandatory or voluntary and the effects of not 
providing requested information;	(D)  Identification of those 
situations in which the State unit requires or does not require 
informed written consent of the individual before information 
may be released; and
	(E)  Identification of other agencies to which information is
routinely released;
	(iv)  An explanation of State policies and procedures affecting
personal information will be provided to each individual in 
that individual's native language or through the appropriate 
mode of communication; and
	(v)  These policies and procedures provide no fewer protections
for individuals than State laws and regulations.
	(2)  The State unit may establish reasonable fees to cover
extraordinary costs of duplicating records or making extensive 
searches and shall establish policies and procedures governing 
access to records.
	(b)  State program use.  All personal information in the
possession of the State agency or the designated State unit 
must be used only for the purposes directly connected with the 
administration of the vocational rehabilitation program.  
Information containing identifiable personal information may not 
be shared with advisory or other bodies that do not have 
official responsibility for administration of the program.  In 
the administration of the program, the State unit may obtain 
personal information from service providers and cooperating 
agencies under assurances that the information may not be 
further divulged,except as provided under paragraphs (c), (d), 
and (e) of this section.
	(c)  Release to applicants and eligible individuals.
	(1)  Except as provided in paragraphs (c)(2) and (c)(3) of this
section, if requested in writing by an applicant or eligible 
individual, the State unit shall make all requested information 
in that individual's record of services accessible to and shall 
release the information to the individual or the individual's 
representative in a timely manner.
	(2)  Medical, psychological, or other information that the State
unit determines may be harmful to the individual may not be 
released directly to the individual, but must be provided to the 
individual through a third party chosen by the individual, which 
may include, among others, an advocate, a family member, or a 
qualified medical or mental health professional, unless a 
representative has been appointed by a court to represent the 
individual, in which case the information must be released to 
the court-appointed representative.
	(3)  If personal information has been obtained from another 
agency or organization, it may be released only by, or under the 
conditions established by, the other agency or organization.
	(4) An applicant or eligible individual who believes that
information in the individuals record of services is inaccurate 
or misleading may request that the designated State unit amend 
the information.  If the information is not amended, the request 
for an amendment must be documented in the record of 
services.	(d)  Release for audit, evaluation, and research.  
Personal information may be released to an organization, agency, 
or individual engaged in audit, evaluation, or research only for 
purposes directly connected with the administration of the 
vocational rehabilitation program, or for purposes that would 
significantly improve the quality of life for applicants and 
eligible individuals and only if the organization, agency, or 
individual assures that--
	(1)  The information will be used only for the purposes for
which it is being provided;
	(2)  The information will be released only to persons officially
connected with the audit, evaluation, or research;
	(3)  The information will not be released to the involved
individual;
	(4)  The information will be managed in a manner to safeguard
confidentiality; and
	(5)  The final product will not reveal any personal identifying
information without the informed written consent of the 
involved individual or the individual's representative.
	(e)  Release to other programs or authorities.
	(1)  Upon receiving the informed written consent of the
individual or, if appropriate, the individual's representative, 
the State unit may release personal information to another 
agency or organization for its program purposes only to the 
extent that the information may be released to the involved 
individual or the individual's representative and only to the 
extent that the otheragency or organization demonstrates that 
the information requested is necessary for its program.
	(2)  Medical or psychological information that the State unit 
determines may be harmful to the individual may be released if 
the other agency or organization assures the State unit that the 
information will be used only for the purpose for which it is 
being provided and will not be further released to the 
individual.
	(3)  The State unit shall release personal information if
required by Federal law or regulations.
	(4)  The State unit shall release personal information in
response to investigations in connection with law enforcement, 
fraud, or abuse, unless expressly prohibited by Federal or State 
laws or regulations, and in response to an order issued by a 
judge, magistrate, or other authorized judicial officer.
	(5)  The State unit also may release personal information in
order to protect the individual or others if the individual 
poses a threat to his or her safety or to the safety of others.
(Authority:  Sections 12(c) and 101(a)(6)(A) of the Act; 29
U.S.C. 711(c) and 721(a)(6)(A))
361.39  State-imposed requirements.
	The State plan must assure that the designated State unit
identifies upon request those regulations and policies relating 
to the administration or operation of its vocational 
rehabilitation program that are State-imposed, including 
anyregulations or policy based on State interpretation of any 
Federal law, regulations, or guideline.
(Authority:  Section 17 of the Act; 29 U.S.C. 716)
361.40  Reports.
     The State plan must assure that the State unit--
	(a)  Will submit reports in the form and detail and at the time
required by the Secretary, including reports required under 
sections 13, 14, and 101(a)(10) of the Act; and
	(b)  Will comply with any requirements necessary to ensure the
correctness and verification of those reports.
(Approved by the Office of Management and Budget under control
number 1820-0500.)
(Authority:  Section 101(a)(10) of the Act; 29 U.S.C. 721(a)(10))

         STATE PLAN CONTENT: PROVISION AND SCOPE OF SERVICES
361.41  Processing referrals and applications.
	(a)  Referrals.  The State plan must assure that the 
designated State unit has established and implemented standards 
for the prompt and equitable handling of referrals of 
individuals for vocational rehabilitation services.  The 
standards must include timelines for making good faith efforts 
to inform these  individuals of application requirements and to 
gather information necessary to initiate an assessment for 
determining eligibility and priority for services.
	(b)  Applications.
	(1)  The State plan must assure that once an individual has
submitted an application for vocational rehabilitation 
services,an eligibility determination will be made within 60 
days, unless--
	(i)  Exceptional and unforeseen circumstances beyond the control
of the agency preclude a determination within 60 days and the 
agency and the individual agree to a specific extension of time; 
or
	(ii)  An extended evaluation is necessary, in accordance with
361.42(d).
	(2)  An individual is considered to have submitted an
application when the individual or the individual's 
representative, as appropriate,--
	(i)  Has completed and signed an agency application form or has
otherwise requested services;
	(ii)  Has provided information necessary to initiate an
assessment to determine eligibility and priority for services; 
and
	(iii)  Is available to complete the assessment process.
	(3)  The designated State unit shall ensure that its
application forms are widely available throughout the State.
(Authority:  Sections 101(a)(6)(A) and 102(a)(5)(A) of the Act;
29 U.S.C. 721(a)(6)(A) and 722(a)(5)(A))361.42  Assessment for 
determining eligibility and priority for services.
     The State plan must assure that, in order to determine
whether an individual is eligible for vocational rehabilitation 
services and the individual's priority under an order of 
selection for services (if the State is operating under an order 
of selection), the designated State unit will conduct an 
assessment for determining eligibility and priority for 
services.  The assessment must be conducted in the most integrated 
setting possible, consistent with the individual's needs and 
informed choice, and in accordance with the following 
provisions:
	(a)  Eligibility requirements.
	(1)  Basic requirements.  The State plan must assure that the
State unit's determination of an applicant's eligibility for 
vocational rehabilitation services is based only on the 
following requirements:
	(i)  A determination that the applicant has a physical or mental
impairment.
	(ii)  A determination that the applicant's physical or mental
impairment constitutes or results in a substantial impediment 
to employment for the applicant.
 	(iii)  A presumption, in accordance with paragraph (a)(2) of
this section, that the applicant can benefit in terms of an 
employment outcome from the provision of vocational 
rehabilitation services.	(iv)  A determination that the 
applicant requires vocational rehabilitation services to prepare 
for, enter into, engage in, or retain gainful employment 
consistent with the applicant's strengths, resources, 
priorities, concerns, abilities, capabilities, and informed 
choice.
	(2)  Presumption of benefit.  The State plan must assure that
the designated State unit will presume that an applicant who 
meets the eligibility requirements in paragraphs (a)(1)(i) and 
(ii) of this section can benefit in terms of an employment 
outcome unless it demonstrates, based on clear and convincing 
evidence, that the applicant is incapable of benefitting in 
terms of an employment outcome from vocational rehabilitation 
services.
  	(3)  Limited presumption for Social Security beneficiaries. 
The State plan must assure that, if an applicant has 
appropriate evidence, such as an award letter, that establishes 
the applicant's eligibility for Social Security benefits under 
Title II or Title XVI of the Social Security Act, the designated 
State unit will presume that the applicant--
	(i)  Meets the eligibility requirements in paragraphs (a)(1)(i)
and (ii) of this section; and
	(ii)  Has a severe physical or mental impairment that seriously
limits one or more functional capacities in terms of an 
employment outcome.
  	(b)  Prohibited factors.  The State plan must assure that-- 
	(1)  No duration of residence requirement is imposed that 
excludes from services any applicant who is present in the 
State;	(2)  No applicant or group of applicants is excluded or 
found ineligible solely on the basis of the type of disability;
 	(3)  The eligibility requirements are applied without regard to
the age, gender, race, color, creed, or national origin of the 
applicant; and
	(4)  The eligibility requirements are applied without regard to
the particular service needs or anticipated cost of services 
required by an applicant or the income level of an applicant or 
applicant's family.
	(c)  Review and assessment of data for eligibility
determination.  Except as provided in paragraph (d) of this 
section, the designated State unit shall base its determination 
of each of the basic eligibility requirements in paragraph (a) 
of this section on--
	(1)  A review and assessment of existing data, including
counselor observations, education records, information provided 
by the individual or the individual's family, information used 
by the Social Security Administration, and determinations made 
by officials of other agencies; and
	(2)  To the extent existing data do not describe the current
functioning of the individual or are unavailable, insufficient, 
or inappropriate to make an eligibility determination, an 
assessment of additional data resulting from the provision of 
vocational rehabilitation services, including assistive 
technology devices and services and worksite assessments, that 
are necessary to determine whether an individual is 
eligible.	(d)  Extended evaluation for individuals with severe 
disabilities.
	(1)  Prior to any determination that an individual with a severe
disability is incapable of benefitting from vocational 
rehabilitation services in terms of an employment outcome 
because of the severity of that individual's disability, the 
State unit shall conduct an extended evaluation to determine 
whether or not there is clear and convincing evidence to support 
such a determination.
	(2)  During the extended evaluation period, which may not exceed
18 months, vocational rehabilitation services must be provided 
in the most integrated setting possible, consistent with the 
informed choice of the individual.
	(3)  During the extended evaluation period, the State unit shall
develop a written plan for determining eligibility and for 
determining the nature and scope of services required to achieve 
an employment outcome.  The State unit may provide during this 
period only those services that are necessary to make these two 
determinations.
	(4)  The State unit shall assess the individual's progress as
frequently as necessary, but at least once every 90 days, 
during the extended evaluation period.
	(5)  The State unit shall terminate extended evaluation services
at any point during the 18-month extended evaluation period if 
the State unit determines that--	(i) There is sufficient 
evidence to conclude that the individual can benefit from the 
provision of vocational rehabilitation services in terms of an 
employment outcome; or
	(ii)  There is clear and convincing evidence that the individual
is incapable of benefitting from vocational rehabilitation 
services in terms of an employment outcome.
	(e)  Data for determination of priority for services under an
order of selection.  If the State unit is operating under an 
order of selection for services, as provided in 361.36, the 
State unit shall base its priority assignments on--
	(1)  A review of the data that was developed under paragraphs
(c) and (d) of this section to make the eligibility 
determination; and
	(2)  An assessment of additional data, to the extent necessary.
(Authority:  Sections 7(22)(A)(ii), 7(22)(C)(iii), 101(a)(9)(A),
101(a)(14), 101(a)(31), 102(a)(1), 102(a)(2), 102(a)(3), 
102(a)(4), 103(a)(4), and 103(a)(6) of the Act; 29 U.S.C. 
706(22)(A)(ii), 706(22)(C)(iii), 721(a)(9)(a), 721(a)(14), 
721(a)(31), 722(a)(1), 722(a)(2), 722(a)(3), 722(a)(4), 
723(a)(4), and 723(a)(6))
	NOTE:  "Clear and convincing evidence" means that the designated
State unit shall have a high degree of certainty before it can 
conclude that an individual is incapable of benefitting from 
services in terms of an employment outcome.  The "clear and 
convincing" standard constitutes the highest standardused in 
our civil system of law and is to be individually applied on a 
case-by-case basis.  The term "clear" means unequivocal.  Given 
these requirements, a review of existing information generally 
would not provide clear and convincing evidence.  For example, 
the use of an intelligence test result alone would not 
constitute clear and convincing evidence.  Clear and convincing 
evidence might include a description of assessments, including 
situational assessments and supported employment assessments, 
from service providers who have concluded that they would be 
unable to meet the individual's needs due to the severity of the 
individual's disability.  The demonstration of "clear and 
convincing evidence" must include, if appropriate, a functional 
assessment of skill development activities, with any necessary 
supports (including assistive technology), in real life 
settings. (S. Rep. No. 357, 102d Cong., 2d. Sess. 37-38 (1992))
361.43  Procedures for ineligibility determination.
	The State plan must assure that if the State unit determines
that an applicant is ineligible for vocational rehabilitation 
services or determines that an individual receiving services 
under an individualized written rehabilitation program is no 
longer eligible for services, the State unit shall--
	(a)  Make the determination only after providing an opportunity
for full consultation with the individual or, as appropriate, 
with the individual's representative;
	(b)  Inform the individual in writing, supplemented as necessary
by other appropriate modes of communication consistentwith the 
informed choice of the individual, of the ineligibility 
determination, including the reasons for that determination, the 
requirements under this section, and the means by which the 
individual may express and seek remedy for any dissatisfaction, 
including the procedures for review of a determination by the 
rehabilitation counselor or coordinator in accordance with 
361.57;
	(c)  Provide the individual with a description of services
available from a client assistance program established under 34 
CFR Part 370 and information on how to contact that program; and


	(d) Review within 12 months and annually thereafter if requested
by the individual or, if appropriate, by the individual's 
representative any ineligibility determination that is based on 
a finding that the individual is incapable of achieving an 
employment outcome.  This review need not be conducted in 
situations in which the individual has refused it, the 
individual is no longer present in the State, the individual's 
whereabouts are unknown, or the individuals medical condition is 
rapidly progressive or terminal.
(Authority:  Sections 101(a)(9)(D), 102(a)(6), and 102(c) of the
Act; 29 U.S.C. 721(a)(9), 722(a)(6), and 722(c))
361.44  Closure without eligibility determination.
	The State plan must assure that the State unit may not close an
applicant's record of services prior to making an eligibility 
determination unless the applicant declines to participate in, 
or is unavailable to complete an assessment for 
determiningeligibility and priority for services, and the State 
unit has made a reasonable number of attempts to contact the 
applicant or, if appropriate, the applicant's representative to 
encourage the applicant's participation.
(Authority:  Sections 12(c) and 101(a)(6)(A) of the Act; 29
U.S.C. 711(c) and 721(a)(6))
361.45  Development of the individualized written rehabilitation
program.
	(a)  Purpose.  The State plan must assure that the State unit
conducts an assessment for determining vocational 
rehabilitation needs for each eligible individual or, if the 
State is operating under an order of selection, for each 
eligible individual to whom the State is able to provide 
services.  The purpose of this assessment is to determine the 
long-term vocational goal, intermediate rehabilitation 
objectives, and the nature and scope of vocational 
rehabilitation services to be included in the IWRP, which must 
be designed to achieve an employment outcome that is consistent 
with the individual's unique strengths, priorities, concerns, 
abilities, capabilities, career interests, and informed choice.
	(b)  Procedural requirements.  The State plan must assure that--

	(1)  The IWRP is developed jointly, agreed to, and signed by
the vocational rehabilitation counselor or coordinator and the 
individual or, as appropriate, the individual's representative   
within the framework of a counseling and guidance 
relationship;	(2)  The State unit has established and 
implemented standards for the prompt development of IWRPs for 
the individuals identified under paragraph (a) of this section, 
including timelines that take into consideration the needs of 
the individual;
	(3)  The State unit advises each individual or, as appropriate,
the individual's representative of all State unit procedures 
and requirements affecting the development and review of an 
IWRP, including the availability of appropriate modes of 
communication;
	(4)  In developing an IWRP for a student with a disability who
is receiving special education services, the State unit 
considers the student's individualized education program;
	(5)  The State unit reviews the IWRP with the individual or, as
appropriate, the individual's representative as often as 
necessary, but at least once each year to assess the 
individual's progress in meeting the objectives identified in 
the IWRP;
	(6)  The State unit incorporates into the IWRP any revisions
that are necessary to reflect changes in the individual's 
vocational goal, intermediate objectives, or vocational 
rehabilitation services, and obtains the agreement and signature 
of the individual or, as appropriate, of the individual's 
representative to the revisions; and
	(7)  The State unit promptly provides each individual or, as 
appropriate, the individual's representative, a copy of the IWRP 
and its amendments in the native language, or appropriate mode 
ofcommunication, of the individual or, as appropriate, of the 
individual's representative.
	(c)  Data for preparing the IWRP.
	(1)  Preparation without comprehensive assessment.  To the
extent possible, the vocational goal, intermediate objectives, 
and the nature and scope of rehabilitation services to be 
included in the individual's IWRP must be determined based on 
the data used for the assessment of eligibility and priority for 
services under section 361.42.
	(2)  Preparation based on comprehensive assessment.
	(i)  If additional data are necessary to prepare the IWRP, the
designated State unit shall conduct a comprehensive assessment 
of the unique strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and needs, including the 
need for supported employment services, of an eligible 
individual, in the most integrated setting possible, consistent 
with the informed choice of the individual.
  	(ii)  The comprehensive assessment must be limited to
information that is necessary to identify the rehabilitation 
needs of the individual and develop the IWRP and may, to the 
extent needed, include--
	(A)  An analysis of pertinent medical, psychiatric,
psychological, neuropsychological, and other pertinent 
vocational, educational, cultural, social, recreational, and 
environmental factors, and related functional limitations, that 
affect the employment and rehabilitation needs of the 
individual;	(B)  An analysis of the individual's personality, 
career interests, interpersonal skills, intelligence and related 
functional capacities, educational achievements, work 
experience, vocational aptitudes, personal and social 
adjustments, and employment opportunities;
	(C)  An appraisal of the individual's patterns of work behavior
and services needed to acquire occupational skills and to 
develop work attitudes, work habits, work tolerance, and social 
and behavior patterns suitable for successful job performance; 
and
	(D)  An assessment, through provision of rehabilitation
technology services, of the individual's capacities to perform 
in a work environment, including in an integrated setting, to 
the maximum extent feasible and consistent with the individual's 
informed choice.
	(iii)  In preparing a comprehensive assessment, the State unit
shall use, to the maximum extent possible and appropriate and 
in accordance with confidentiality requirements, existing 
information, including information that is provided by the 
individual, the family of the individual, and education 
agencies.
(Authority:  Sections 7(22)(B), 102(b)(1)(A), and 102(b)(2); 29
U.S.C. 706(5), 721(a)(9), 722, and 723(a)(1))
361.46  Content of the individualized written rehabilitation
program.
	(a)  General requirements.  The State plan must assure that each
IWRP includes, as appropriate, statements concerning--	(1)  
The specific long-term vocational goal, which must be based on 
the assessment for determining vocational rehabilitation needs, 
including the individual's career interests, and must be, to the 
extent appropriate and consistent with the informed choice of 
the individual, in an integrated setting;
	(2)  The specific intermediate rehabilitation objectives related
to the attainment of the long-term vocational goal, based on 
the assessment for determining vocational rehabilitation needs 
and consistent with the informed choice of the individual;
	(3)  The specific rehabilitation services under 361.48 to be
provided to achieve the established intermediate rehabilitation 
objectives, including, if appropriate, rehabilitation technology 
services and on-the-job and related personal assistance 
services;
	(4)  The projected dates for the initiation of each vocational
rehabilitation service, the anticipated duration of each 
service, and the projected timeframe for the achievement of the 
individual's vocational goal;
	(5)  A procedure and schedule for periodic review and 
evaluation of progress toward achieving intermediate 
rehabilitation objectives based upon objective criteria;
 	(6)  How, in the words of the individual or, as appropriate, in
the words of the individual's representative, the individual 
was informed about and involved in choosing among alternative 
goals, objectives, services, providers, and methods used to 
procure or provide services; 	(7)  The terms and conditions for 
the provision of vocational rehabilitation services, including--


	(i)  The responsibilities of the individual in implementing the
IWRP;
	(ii)  The extent of the individual's participation in the cost
of services;
	(iii)  The extent to which goods and services will be provided
in the most integrated settings possible, consistent with the 
informed choices of the individual; 
	(iv)  The extent to which comparable services and benefits are
available to the individual under any other program; and
	(v)  The entity or entities that will provide the services and
the process used to provide or procure the services;
	(8)  The rights of the individual under this part and the means
by which the individual may express and seek remedy for any 
dissatisfaction, including the opportunity for a review of 
rehabilitation counselor or coordinator determinations under 
361.57;
	(9)  The availability of a client assistance program established
under 34 CFR Part 370; and
	(10)  The basis on which the individual has been determined to
have achieved an employment outcome in accordance with 361.56.
	(b)  Supported employment requirements.  The State plan must
assure that the IWRP for individuals with the most 
severedisabilities for whom a vocational goal in a supported 
employment setting has been determined to be appropriate will 
also contain--
	(1)  A description of the supported employment services to be
provided by the State unit; and
	(2)  A description of the extended services needed and
identification of the source of extended services or, in the 
event that identification of the source is not possible at the 
time the IWRP is developed, a statement explaining the basis for 
concluding that there is a reasonable expectation that services 
will become available.
	(c)  Post-employment services.  The State plan must assure that
the IWRP for each individual contains statements 
concerning--
	(1)  The expected need for post-employment services, based on
an assessment during the development of the IWRP;
	(2)  A reassessment of the need for post-employment services
prior to the determination that the individual has achieved an 
employment outcome;
	(3)  A description of the terms and conditions for the provision
of any post-employment services, including the anticipated 
duration of those services, subsequent to the achievement of an 
employment outcome by the individual; and
	(4)  If appropriate, a statement of how post-employment services
will be provided or arranged through cooperative agreements 
with other service providers.	(d)  Coordination of services for 
students with disabilities who are receiving special education 
services.  The State plan must assure that the IWRP for a 
student with a disability who is receiving special education 
services is coordinated with the individualized education 
program (IEP) for that individual in terms of the goals, 
objectives, and services identified in the IEP.
	(e)  Ineligibility.  The State plan must assure that the
decision that an individual is not capable of achieving an 
employment outcome and is no longer eligible to receive services 
under an IWRP is made in accordance with the requirements in 
361.43.  The decision, and the reasons on which the decision was 
based, must be included as an amendment to the IWRP.
(Approved by the Office of Management and Budget under control
number 1820-0500.)
(Authority:  Sections 101(a)(9), 102(b)(1), 102(c), and 635(b)(6)
of the Act; 29 U.S.C. 721(a)(9), 722, and 795n)
361.47  Record of services.
     The State plan must assure that the designated State unit
maintains for each applicant or eligible individual a record of 
services that includes, to the extent pertinent, the following 
documentation:
	(a)  If an applicant has been determined to be an eligible
individual, documentation supporting that determination in 
accordance with the requirements in 361.42.	(b)  If an 
applicant has been determined to be ineligible, documentation 
supporting that determination in accordance with the 
requirements of 361.43.
	(c)  Documentation supporting the determination that an
 individual has a severe disability or a most severe disability.


	(d)  If an individual with a severe disability requires an
extended evaluation in order to determine whether the 
individual is an eligible individual, documentation supporting 
the need for an extended evaluation, documentation supporting 
the periodic assessments conducted during the extended 
evaluation, and the written plan developed during the extended 
evaluation, in accordance with the requirements in 361.42(d).
	(e)  The IWRP, and any amendments to the IWRP, containing the
information required under 361.46.
	(f)  In accordance with 361.45(a), documentation supporting the
development of the long-term vocational goal, intermediate 
rehabilitation objectives, and nature and scope of services 
included in the individual's IWRP and, for students with 
disabilities who are receiving special education services, in 
the student's IEP.
	(g)  In the event that an individual's IWRP provides for
services or a job placement in a non-integrated setting, a 
justification for that non-integrated setting.
	(h) Documentation of the periodic reviews and evaluations of
progress toward achieving intermediate rehabilitation 
objectives conducted under 361.46(a)(5).	(i) In the event that 
an individual obtains competitive employment, verification that 
the individual is compensated at or above the minimum wage and 
that the individuals wage and level of benefits are not less 
than that customarily paid by the employer for the same or 
similar work performed by non-disabled individuals in accordance 
with 361.5(b)(10)(ii).
	(j)  Documentation concerning any action and decision resulting 
from a request by an individual for review of a rehabilitation 
counselor or coordinator determination under 361.57.
(Authority:  Sections 101(a)(6) and 101(a)(9) of the Act; 29
U.S.C. 721(a)(6) and 721(a)(9))
361.48  Scope of vocational rehabilitation services for
individuals with disabilities.
	(a)  The State plan must assure that, as appropriate to the
vocational rehabilitation needs of each individual and 
consistent with each individual's informed choice, the following 
vocational rehabilitation services are available:
	(1)  Assessment for determining eligibility and priority for
services in accordance with 361.42.
	(2)  Assessment for determining vocational rehabilitation needs
in accordance with 361.45.
	(3)  Vocational rehabilitation counseling and guidance.
	(4)  Referral and other services necessary to help applicants
and eligible individuals secure needed services fromother 
agencies and to advise those individuals about client assistance 
programs established under 34 CFR Part 370.
	(5)  Physical and mental restoration services in accordance with
the definition of that term in 361.5(b)(35).
	(6)  Vocational and other training services, including personal
and vocational adjustment training, books, tools, and other 
training materials, except that no training or trainingservices 
in an institution of higher education (universities, colleges, 
community or junior colleges, vocational schools, technical 
institutes, or hospital schools of nursing) may be paid for with 
funds under this part unless maximum efforts have been made by 
the State unit and the individual to secure grant assistance in 
whole or in part from other sources to pay for that training.
	(7)  Maintenance, in accordance with the definition of that term
in 361.5(b)(31).
	(8)  Transportation in connection with the rendering of any
vocational rehabilitation service and in accordance with the 
definition of that term in 361.5(b)(49).
	(9)  Vocational rehabilitation services to family members of an
applicant or eligible individual if necessary to enable the 
applicant or eligible individual to achieve an employment 
outcome.
	(10)  Interpreter services for individuals who are deaf and
tactile interpreting services for individuals who are 
deaf-blind.
	(11)  Reader services, rehabilitation teaching services, and
orientation and mobility services for individuals who are 
blind.
	(12)  Recruitment and training services to provide new
employment opportunities in the fields of rehabilitation, 
health, welfare, public safety, law enforcement, and other 
appropriate public service employment.
	(13)  Job search and placement assistance and job retention
services.	(14)  Supported employment services in accordance 
with the definition of that term in 361.5(b)(46).
	(15)  Personal assistance services in accordance with the
definition of that term in 361.5(b)(34).
	(16)  Post-employment services in accordance with the definition
of that term in 361.5(b)(37).
	(17)  Occupational licenses, tools, equipment, initial stocks,
and supplies.
	(18)  Rehabilitation technology in accordance with the
definition of that term in 361.5(b)(39), including vehicular 
modification, telecommunications, sensory, and other 
technological aids and devices.
	(19)  Transition services in accordance with the definition of
that term in 361.5(b)(47).
	(20)  Other goods and services determined necessary for the
individual with a disability to achieve an employment outcome.
	(b)  The State plan also must describe--
	(1)  The manner in which a broad range of rehabilitation
technology services will be provided at each stage of the 
rehabilitation process and on a statewide basis;
	(2)  The training that will be provided to vocational
rehabilitation counselors, client assistance personnel, and 
other related services personnel on the provision of 
rehabilitation technology services; 
	(3)  The manner in which assistive technology devices and
services will be provided or worksite assessments will be made 
aspart of the assessment for determining eligibility and 
vocational rehabilitation needs of an individual; and
	(4)  The manner in which on-the-job and other related personal
assistance services will be provided to assist individuals 
while they are receiving vocational rehabilitation services.
(Approved by the Office of Management and Budget under control
number 1820-0500.)
(Authority:  Sections 101(a)(5)(C), 101(a)(26), 101(a)(31), and
103(a) of the Act; 29 U.S.C. 721(a)(5)(C), 721(a)(26), 
721(a)(31), and 723(a))
361.49  Scope of vocational rehabilitation services for groups of
individuals with disabilities.
	(a)  The State plan may also provide for the following
vocational rehabilitation services for the benefit of groups of 
individuals with disabilities:
	(1)  The establishment, development, or improvement of a public
or other nonprofit community rehabilitation program that is 
used to provide services that promote integration and 
competitive employment, including under special circumstances, 
the construction of a facility for a public or nonprofit 
community rehabilitation program.  Examples of "special 
circumstances" include the destruction by natural disaster of 
the only available center serving an area or a State 
determination that construction is necessary in a rural area 
because no otherpublic agencies or private nonprofit 
organizations are currently able to provide services to 
individuals.
	(2)  Telecommunications systems that have the potential for
substantially improving vocational rehabilitation service 
delivery methods and developing appropriate programming to meet 
the particular needs of individuals with disabilities, including 
telephone, television, video description services, satellite, 
tactile-vibratory devices, and similar systems, as appropriate.
	(3)  Special services to provide recorded material or video
description services for individuals who are blind, captioned 
television, films, or video cassettes for individuals who are 
deaf, tactile materials for individuals who are deaf-blind, and 
other special services that provide information through tactile, 
vibratory, auditory, and visual media.
	(4)  Technical assistance and support services, such as job site
modification and other reasonable accommodations, to businesses 
that are not subject to Title I of the Americans with 
Disabilities Act of 1990 and that are seeking to employ 
individuals with disabilities.
	(5)  In the case of small business enterprises operated by
individuals with the most severe disabilities under the 
supervision of the State unit, including enterprises established 
under the Randolph-Sheppard program, management services and 
supervision, acquisition of equipment, initial stocks and 
supplies, and initial operating expenses, in accordance with the 
following requirements:	(i)  "Management services and 
supervision" includes inspection, quality control, consultation, 
accounting, regulating, in-service training, and related 
services provided on a systematic basis to support and improve 
small business enterprises operated by individuals with the most 
severe disabilities.  "Management services and supervision" may 
be provided throughout the operation of the small business 
enterprise.
	(ii)  "Initial stocks and supplies" includes those items
necessary to the establishment of a new business enterprise 
during the initial establishment period, which may not exceed 
six months.
	(iii)  Costs of establishing a small business enterprise may
include operational costs during the initial establishment 
period, which may not exceed six months.
	(iv)  If the State plan provides for these services, it must
contain an assurance that only individuals with the most severe 
disabilities will be selected to participate in this supervised 
program.
	(v)  If the State plan provides for these services and the State
unit chooses to set aside funds from the proceeds of the 
operation of the small business enterprises, the State plan also 
must assure that the State unit maintains a description of the 
methods used in setting aside funds and the purposes for which 
funds are set aside.  Funds may be used only for small 
businessenterprises purposes, and benefits that are provided to 
operators from set-aside funds must be provided on an equitable 
basis.
	(6)  Other services that promise to contribute substantially to
the rehabilitation of a group of individuals but that are not 
related directly to the IWRP of any one individual.  Examples of 
those other services might include the purchase or lease of a 
bus to provide transportation to a group of applicants or 
eligible individuals or the purchase of equipment or 
instructional materials that would benefit a group of applicants 
or eligible individuals.
	(b)  If the State plan provides for vocational rehabilitation
services for groups of individuals, the State plan must assure 
that the designated State unit--
	(1)  Develops and maintains written policies covering the nature
and scope of each of the vocational rehabilitation services it 
provides and the criteria under which each service is provided; 
and
	(2)  Maintains information to ensure the proper and efficient
administration of those services in the form and detail and at 
the time required by the Secretary, including the types of 
services provided, the costs of those services, and, to the 
extent feasible, estimates of the numbers of individuals 
benefitting from those services.
(Approved by the Office of Management and Budget under control
number 1820-0500.)(Authority:  Sections 12(c), 101(a)(6), and 
103(b) of the Act; 29 U.S.C. 711(c), 721(a)(6), and 723(b))
361.50  Written policies governing the provision of services for
individuals with disabilities.
	The State plan must assure that the State unit develops and
maintains written policies covering the nature and scope of 
each of the vocational rehabilitation services specified in 
361.48 and the criteria under which each service is provided.  
The policies must ensure that the provision of services is based 
on the rehabilitation needs of each individual as identified in 
that individual's IWRP and is consistent with the individuals 
informed choice.  The written policies may not establish any 
arbitrary limits on the nature and scope of vocational 
rehabilitation services to be provided to the individual to 
achieve an employment outcome.  The policies must be developed 
in accordance with the following provisions:
  	(a)  Out-of-State services.
	(1)  The State unit may establish a preference for in-State
services, provided that the preference does not effectively 
deny an individual a necessary service.  If the individual 
chooses an out-of-State service at a higher cost than an 
in-State service, if either service would meet the individual's 
rehabilitation needs, the designated State unit is not 
responsible for those costs in excess of the cost of the 
in-State service.
	(2)  The State unit may not establish policies that effectively
prohibit the provision of out-of-State services.	(b)  Payment 
for services.
	(1)  The State unit shall establish and maintain written
policies to govern the rates of payment for all purchased 
vocational rehabilitation services.
	(2)  The State unit may establish a fee schedule designed to
ensure a reasonable cost to the program for each service, 
provided that the schedule is--
	(i)  Not so low as to effectively deny an individual a necessary
service; and
	(ii)  Not absolute and permits exceptions so that individual
needs can be addressed.
	(3)  The State unit may not place absolute dollar limits on
specific service categories or on the total services provided 
to an individual.
	(c)  Duration of services.
	(1)  The State unit may establish reasonable time periods for
the provision of services provided that the time periods are--
	(i)  Not so short as to effectively deny an individual a
necessary service; and
	(ii)  Not absolute and permit exceptions so that individual
needs can be addressed.
	(2)  The State unit may not establish absolute time limits on
the provision of specific services or on the provision of 
services to an individual.  The duration of each service 
neededby an individual must be determined on an individual 
basis and reflected in that individual's IWRP.
	(d)  Authorization of services.  The State unit shall establish
policies related to the timely authorization of services, 
including any conditions under which verbal authorization can be 
given.
(Approved by the Office of Management and Budget under control
number 1820-0500.)
(Authority:  Sections 12(c), 12(e)(2)(A), and 101(a)(6) of the
Act and 29 U.S.C. 711(c), 711(e)(2)(A), and 721(a)(6))
361.51  Written standards for facilities and providers of
services.
     The State plan must assure that the designated State unit
establishes, maintains, makes available to the public, and 
implements written minimum standards for the various types of 
facilities and providers of services used by the State unit in 
providing vocational rehabilitation services, in accordance with 
the following requirements:
	(a)  Accessibility of facilities.  Any facility in which
vocational rehabilitation services are provided must be 
accessible to individuals receiving services and must comply 
with the requirements of the Architectural Barriers Act of 1968, 
the Uniform Accessibility Standards and their implementing 
regulations in 41 CFR Part 101, Subpart 101-19.6, the Americans 
with Disabilities Act of 1990, and section 504 of the Act.	(b)  
Personnel standards.
	(1)  Qualified personnel.  Providers of vocational
rehabilitation services shall use qualified personnel, in 
accordance with any applicable national or State-approved or 
-recognized certification, licensing, or registration 
requirements, or, in the absence of these requirements, other 
comparable requirements (including State personnel 
requirements), that apply to the profession or discipline in 
which that category of personnel is providing vocational 
rehabilitation services.
	(2)  Affirmative action.  Providers of vocational rehabilitation
services shall take affirmative action to employ and advance in 
employment qualified individuals with disabilities.
	(3)  Special communication needs personnel.  Providers of
vocational rehabilitation services shall--
	(i)  Include among their personnel, or obtain the services of,
individuals able to communicate in the native languages of 
applicants and eligible individuals who have limited English 
speaking ability; and
	(ii)  Ensure that appropriate modes of communication for all
applicants and eligible individuals are used.
	(c)  Fraud, waste, and abuse.  Providers of vocational
rehabilitation services shall have adequate and appropriate 
policies and procedures to prevent fraud, waste, and abuse.
(Approved by the Office of Management and Budget under control
number 1820-0500.)(Authority:  Sections 12(e)(2)(B), (D), and 
(E) and 101(a)(6)(B) of the Act; 29 U.S.C. 711(e) and 
721(a)(6)(B))
361.52  Opportunity to make informed choices.
	The State plan must describe the manner in which the State unit
will provide each applicant, including individuals who are 
receiving services during an extended evaluation, and each 
eligible individual the opportunity to make informed choices 
throughout the vocational rehabilitation process in accordance 
with the following requirements:
	(a)  Each State unit, in consultation with its State
Rehabilitation Advisory Council, if it has one, shall develop 
and implement written policies and procedures that enable each 
individual to make an informed choice with regard to the 
selection of a long-term vocational goal, intermediate 
rehabilitation objectives, vocational rehabilitation services, 
including assessment services, and service providers.  These 
policies and procedures must ensure that each individual 
receives, through appropriate modes of communication, 
information concerning the availability and scope of informed 
choice, the manner in which informed choice may be exercised, 
and the availability of support services for individuals with 
cognitive or other disabilities who require assistance in 
exercising informed choice.
	(b)  In developing an individual's IWRP, the State unit shall
provide the individual, or assist the individual in acquiring, 
information necessary to make an informed choice aboutthe 
specific services, including the providers of those services, 
that are needed to achieve the individual's vocational goal.  
This information must include, at a minimum, information 
relating to the cost, accessibility, and duration of potential 
services, the consumer satisfaction with those services to the 
extent that information relating to consumer satisfaction is 
available, the qualifications of potential service providers, 
the types of services offered by those providers, and the degree 
to which services are provided in integrated settings.
	(c)  In providing, or assisting the individual in acquiring, the
information required under paragraph (b) of this section, the 
State unit may use, but is not limited to, the following methods 
or sources of information:
	(1)  State or regional lists of services and service providers.
	(2)  Periodic consumer satisfaction surveys and reports.
	(3)  Referrals to other consumers, local consumer groups, or
disability advisory councils qualified to discuss the services 
or service providers.
	(4)  Relevant accreditation, certification, or other information
relating to the qualifications of service providers.
(Approved by the Office of Management and Budget under control
number 1820-0500.)
(Authority:  Sections 12(e)(1), 12(e)(2)(C) and (F), and
101(a)(29) of the Act; 29 U.S.C. 711(e) and 721(a)(29))361.53  
Availability of comparable services and benefits.
	 (a)  The State plan must assure that--
	(1)  Prior to providing any vocational rehabilitation services
to an eligible individual, or to members of the individual's 
family, except those services listed in paragraph (b) of this 
section, the State unit shall determine whether comparable 
services and benefits exist under any other program and whether 
those services and benefits are available to the individual;
	(2)  If comparable services or benefits exist under any other
program and are available to the eligible individual at the 
time needed to achieve the rehabilitation objectives in the individuals 
IWRP, the State unit shall use those comparable services or 
benefits to meet, in whole or in part, the cost of vocational 
rehabilitation services; and
	(3)  If comparable services or benefits exist under any other
program, but are not available to the individual at the time 
needed to satisfy the rehabilitation objectives in the 
individuals IWRP, the State unit shall provide vocational 
rehabilitation services until those comparable services and 
benefits become available.
	(b) The following services are exempt from a determination of
the availability of comparable services and benefits under 
paragraph (a) of this section:
	 (1)  Assessment for determining eligibility and priority for
services. 	(2)  Assessment for determining vocational 
rehabilitation needs.
 	(3)  Vocational rehabilitation counseling, guidance, and
referral services.
 	(4)  Vocational and other training services, such as personal
and vocational adjustment training, books (including 
alternative format books accessible by computer and taped 
books), tools, and other training materials in accordance with 
361.48(a)(6).
 	(5)  Placement services.
 	(6)  Rehabilitation technology.
 	(7)  Post-employment services consisting of the services
listed under paragraphs (b)(1) through (6) of this section.
 	(c)  The requirements of paragraph (a) of this section also do
not apply if--
 	(1)  The determination of the availability of comparable
services and benefits under any other program would delay the 
provision of vocational rehabilitation services to any 
individual who is determined to be at extreme medical risk, 
based on medical evidence provided by an appropriate qualified 
medical professional; or
 	(2)  An immediate job placement would be lost due to a delay in
the provision of comparable services and benefits.
(Authority:  Section 101(a)(8) of the Act; 29 U.S.C.
721(a)(8))361.54  Participation of individuals in cost of 
services based on financial need.
	(a)  No Federal requirement.  There is no Federal requirement
that the financial need of individuals be considered in the 
provision of vocational rehabilitation services.
	(b)  State unit requirements.
	(1)  The State unit may choose to consider the financial need
of eligible individuals or individuals who are receiving 
services during an extended evaluation for purposes of 
determining the extent of their participation in the costs of 
vocational rehabilitation services, other than those services 
identified in paragraph (b)(3) of this section.
	(2)  If the State unit chooses to consider financial need--
	(i)  It shall maintain written policies covering the
determination of financial need;
	(ii)  The State plan must specify the types of vocational
rehabilitation services for which the unit has established a 
financial needs test;
	(iii)  The policies must be applied uniformly to all individuals
in similar circumstances;
	(iv)  The policies may require different levels of need for
different geographic regions in the State, but must be applied 
uniformly to all individuals within each geographic region; and
	(v)  The policies must ensure that the level of an individual's
participation in the cost of vocational rehabilitation services 
is--	(A)  Reasonable; 
	(B)  Based on the individual's financial need, including
consideration of any disability-related expenses paid by the 
individual; and
	(C)  Not so high as to effectively deny the individual a
necessary service.
	(3)  The State plan must assure that no financial needs test is
applied and no financial participation is required as a 
condition for furnishing the following vocational rehabilitation 
services:
	(i)  Assessment for determining eligibility and priority for
services, except those non-assessment services that are 
provided during an extended evaluation for an individual with a 
severe disability under 361.42(d).
	(ii)  Assessment for determining vocational rehabilitation
needs.
	(iii)  Vocational rehabilitation counseling, guidance, and
referral services.
	(iv)  Placement services.
(Approved by the Office of Management and Budget under control 
number 1820-0500.)
(Authority:  Section 12(c) of the Act; 29 U.S.C. 711(c))
361.55  Review of extended employment in community
rehabilitation programs or other employment under section 14(c) 
of the Fair Labor Standards Act.
     The State plan must assure that the State unit--	(a) 
Reviews and re-evaluates at least annually the status of each 
individual determined by the State unit to have achieved an 
employment outcome in an extended employment setting in a 
community rehabilitation program or other employment setting in 
which the individual is compensated in accordance with section 
14(c) of the Fair Labor Standards Act.  This review or 
re-evaluation must include input from the individual or, in an 
appropriate case, the individual's representative to determine 
the interests, priorities, and needs of the individual for 
employment in, or training for, competitive employment in an 
integrated setting in the labor market;
	(b)  Makes maximum effort, including the identification of
vocational rehabilitation services, reasonable accommodations, 
and other support services, to enable the eligible individual to 
benefit from training in, or to be placed in employment in, an 
integrated setting; and
	(c)  Provides services designed to promote movement from
extended employment to integrated employment, including 
supported employment, independent living, and community 
participation.
(Authority:  Section 101(a)(16) of the Act; 29 U.S.C. 721(a)(16))

361.56  Individuals determined to have achieved an employment
outcome.
     The State plan must assure that an individual is determined
to have achieved an employment outcome only if the following 
requirements are met:	(a)  The provision of services under the 
individual's IWRP has contributed to the achievement of the 
employment outcome.
	(b)  The employment outcome is consistent with the individual's
strengths, resources, priorities, concerns, abilities, 
capabilities, interests, and informed choice.
	(c)  The employment outcome is in the most integrated setting 
possible, consistent with the individual's informed choice.
	(d)  The individual has maintained the employment outcome for a
period of at least 90 days.
	(e)  At the end of the appropriate period under paragraph (d) of
this section, the individual and the rehabilitation counselor 
or coordinator consider the employment outcome to be 
satisfactory and agree that the individual is performing well on 
the job.
(Authority:  Sections 12(c), 101(a)(6), and 106(a)(2) of the Act;
29 U.S.C. 711(c), 721(a)(6), and 726(a)(2))
361.57  Review of rehabilitation counselor or coordinator
determinations.
     The State plan must contain procedures, including standards
of review under paragraph (b)(7) of this section, established 
by the director of the designated State unit to ensure that any 
applicant or eligible individual who is dissatisfied with any 
determinations made by a rehabilitation counselor or coordinator 
concerning the furnishing or denial of services may request, or, 
if appropriate, may request through the individuals 
representative, a timely review of those determinations.  
Theprocedures established by the director of the State unit 
must be in accordance with the following provisions:
	(a)  Informal resolution.  The State unit may establish an
informal process to resolve a request for review without 
conducting a formal hearing.  However, a State's informal 
process must be conducted and concluded within the time period 
established under paragraph (b)(1) of this section for holding a 
formal hearing.  If informal resolution is not successful, a 
formal hearing must be conducted by the end of this same period, 
unless the parties agree to a specific extension of time.
	(b)  Formal hearing procedures.  Except as provided in paragraph
(d) of this section, the State unit shall establish formal 
review procedures that provide that--
	(1)  A hearing by an impartial hearing officer, selected in
accordance with paragraph (c) of this section, must be held 
within 45 days of an individuals request for review, unless informal 
resolution is achieved prior to the 45th day or the parties 
agree to a specific extension of time;
	(2)  The State unit may not institute a suspension, reduction,
or termination of services being provided under an IWRP pending 
a final determination of the formal hearing under this paragraph 
or informal resolution under paragraph (a) of this section, 
unless the individual or, in an appropriate case, the 
individual's representative so requests or the agency has 
evidence that the services have been obtained 
throughmisrepresentation, fraud, collusion, or criminal conduct 
on the part of the individual;
	(3)  The individual or, if appropriate, the individual's
representative must be afforded an opportunity to present 
additional evidence, information, and witnesses to the impartial 
hearing officer, to be represented by counsel or other 
appropriate advocate, and to examine all witnesses and other 
relevant sources of information and evidence;
	(4)  The impartial hearing officer shall make a decision based
on the provisions of the approved State plan, the Act, Federal 
vocational rehabilitation regulations, and State regulations and 
policies that are consistent with Federal requirements and shall 
provide to the individual or, if appropriate, the individual's 
representative and to the director of the designated State unit 
a full written report of the findings and grounds for the 
decision within 30 days of the completion of the hearing
	(5)  If the director of the designated State unit decides to
review the decision of the impartial hearing officer, the 
director shall notify in writing the individual or, if 
appropriate, the individual's representative of that intent 
within 20 days of the mailing of the impartial hearing officer's 
decision;
	(6)  If the director of the designated State unit fails to
provide the notice required by paragraph (b)(5) of this 
section,the impartial hearing officer's decision becomes a 
final decision;
	(7)  The decision of the director of the designated State unit
to review any impartial hearing officer's decision must be 
based on standards of review contained in written State unit 
policy;
	(8)  If the director of the designated State unit decides to
review the decision of the impartial hearing officer, the 
director shall provide the individual or, if appropriate, the 
individual's representative an opportunity to submit additional 
evidence and information relevant to the final decision;
	(9)  The director may not overturn or modify a decision, or part
of a decision, of an impartial hearing officer that supports 
the position of the individual unless the director concludes, 
based on clear and convincing evidence, that the decision of the 
impartial hearing officer is clearly erroneous because it is 
contrary to the approved State plan, the Act, Federal vocational 
rehabilitation regulations, or State regulations or policies 
that are consistent with Federal requirements;
	(10)  Within 30 days of providing notice of intent to review the
impartial hearing officers decision, the director of the 
designated State unit shall make a final decision and provide a 
full report in writing of the decision, including the findings 
and the statutory, regulatory, or policy grounds for the 
decision, to the individual or, if appropriate, the individual's 
representative;	(11)  The director of the designated State unit 
may not delegate responsibility to make any final decision to 
any other officer or employee of the designated State unit; and
	(12)  Except for the time limitations established in paragraphs
(b)(1) and (b)(5) of this section, each State's review 
procedures may provide for reasonable time extensions for good 
cause shown at the request of a party or at the request of both 
parties.
	(c)  Selection of impartial hearing officers.  Except as
provided in paragraph (d) of this section, the impartial 
hearing officer for a particular case must be selected--
	(1)  From among the pool of persons qualified to be an impartial
hearing officer, as defined in 361.5(b)(22), who are identified 
by the State unit, if the State unit is an independent 
commission, or jointly by the designated State unit and those 
members of the State Rehabilitation Advisory Council designated 
in section 102(d)(2)(C) of the Act, if the State has a Council; 
and
	(2)(i)  On a random basis; or
	(ii)  By agreement between the director of the designated State
unit and the individual or, if appropriate, the individual's 
representative.
	(d)  State fair hearing board.  The provisions of paragraphs (b)
and (c) of this section are not applicable if the State has a 
fair hearing board that was established before January 1, 1985, 
that is authorized under State law to review 
rehabilitationcounselor or coordinator determinations and to 
carry out the responsibilities of the director of the designated 
State unit under this section.
	(e)  Informing affected individuals.  The State unit shall
inform, through appropriate modes of communication, all 
applicants and eligible individuals of--
	(1)  Their right to review under this section, including the
names and addresses of individuals with whom appeals may be 
filed; and
	(2)  The manner in which an impartial hearing officer will be
selected consistent with the requirements of paragraph (c) of 
this section.
	(f)  Data collection.  The director of the designated State unit
shall collect and submit, at a minimum, the following data to 
the Secretary for inclusion each year in the annual report to 
Congress under section 13 of the Act:
	(1)  The number of appeals to impartial hearing officers and the
State director, including the type of complaints and the issues 
involved.
	(2)  The number of decisions by the State director reversing in
whole or in part a decision of the impartial hearing officer.
	(3)  The number of decisions affirming the position of the
dissatisfied individual assisted through the client assistance 
program, when that assistance is known to the State unit.
(Approved by the Office of Management and Budget under control
number 1820-0500.)(Authority:  Section 102(b) and 102(d) of 
the Act; 29 U.S.C. 722(b) and 722(d))
Subpart C--Financing of State Vocational Rehabilitation Programs
361.60  Matching requirements.
	(a)  Federal share.
	(1)  General.	Except as provided in paragraphs (a)(2) and
(a)(3) of this section, the Federal share for expenditures made 
by the State unit under the State plan, including expenditures 
for the provision of vocational rehabilitation services, 
administration of the State plan, and the development and 
implementation of the strategic plan, is 78.7 percent.
	(2)  Construction projects.  The Federal share for expenditures
made for the construction of a facility for community 
rehabilitation program purposes may not be more than 50 percent 
of the total cost of the project.
	(3)  Innovation and expansion grant activities.  The Federal
share for the cost of innovation and expansion grant activities 
funded by appropriations under Part C of Title I of the Act is 
90 percent.
	(b)  Non-Federal share.
	(1)  General.  Except as provided in paragraphs (b)(2) and
(b)(3) of this section, expenditures made under the State plan 
to meet the non-Federal share under this section must be 
consistent with the provisions of 34 CFR 80.24.	(2)  Third 
party in-kind contributions.  Third party in-kind contributions 
specified in 34 CFR 80.24(a)(2) may not be used to meet the 
non-Federal share under this section.
	(3)  Contributions by private entities.  Expenditures made from
contributions by private organizations, agencies, or 
individuals that are deposited in the account of the State 
agency or sole local agency in accordance with State law and 
that are earmarked, under a condition imposed by the 
contributor, may be used as part of the non-Federal share under 
this section if the following requirements are met:
	(i)  The funds are earmarked for meeting in whole or in part the
State's share for establishing a community rehabilitation 
program or constructing a particular facility for community 
rehabilitation program purposes.
	(ii)  If the funds are earmarked for any other purpose under the
State plan, the expenditures do not benefit in any way the 
donor, an individual to whom the donor is related by blood or 
marriage or with whom the donor has a close personal 
relationship, or an individual, entity, or organization with 
whom the donor shares a financial interest.  The Secretary does 
not consider a donor's receipt from the State unit of a grant, 
subgrant, or contract with funds allotted under this part to be 
a benefit for the purposes of this paragraph if the grant, 
subgrant, or contract is awarded under the State's regular 
competitive procedures.(Authority:  Sections 7(7), 101(a)(3), 
and 104 of the Act; 29 U.S.C. 706(7), 721(a)(3) and 724)
NOTE:  The Secretary notes that contributions may be earmarked in
accordance with paragraph (b)(3)(ii) of this section for 
providing particular services (e.g., rehabilitation technology 
services); serving individuals with certain types of 
disabilities (e.g., individuals who are blind), consistent with 
the State's order of selection, if applicable; providing 
services to special groups that State or Federal law permits to 
be targeted for services (e.g., students with disabilities who 
are receiving special education services), consistent with the 
State's order of selection, if applicable; or carrying out 
particular types of administrative activities permissible under 
State law.  Contributions also may be restricted to particular 
geographic areas to increase services or expand the scope of 
services that are available statewide under the State plan.  
However, if a contribution is earmarked for a restricted 
geographic area, expenditures from that contribution may be used 
to meet the non-Federal share requirement only if the State unit 
requests and the Secretary approves a waiver of statewideness, 
in accordance with 361.26.
361.61  Limitation on use of funds for construction expenditures.

	No more than 10 percent of a State's allotment for any fiscal
year under section 110 of the Act may be spent on the 
construction of facilities for community rehabilitation program 
purposes.(Authority:  Section 101(a)(17)(A) of the Act; 29 
U.S.C. 721(a)(17)(A))
361.62  Maintenance of effort requirements.
	(a)  General requirements.
	(1)  The Secretary reduces the amount otherwise payable to a
State for a fiscal year by the amount by which the total 
expenditures from non-Federal sources under the State plan for 
the previous fiscal year were less than the total of those 
expenditures for the fiscal year two years prior to the previous 
fiscal year.  For example, for fiscal year 1996, a State's 
maintenance of effort level is based on the amount of its 
expenditures from non-Federal sources for fiscal year 1994.  
Thus, if the State's non-Federal expenditures in 1996 are less 
than they were in 1994, the State has a maintenance of effort 
deficit, and the Secretary reduces the State's allotment in 1997 
by the amount of that deficit.
	(2)  If, at the time the Secretary makes a determination that a
State has failed to meet its maintenance of effort 
requirements, it is too late for the Secretary to make a 
reduction in accordance with paragraph (a)(1) of this section, 
then the Secretary recovers the amount of the maintenance of 
effort deficit through audit disallowance.
	(b)  Specific requirements for construction of facilities.  If
the State plan provides for the construction of a facility for 
community rehabilitation program purposes, the amount of the 
State's share of expenditures for vocational 
rehabilitationservices under the plan, other than for the 
construction of a facility for community rehabilitation program 
purposes or the establishment of a facility for community 
rehabilitation purposes, must be at least equal to the 
expenditures for those services for the second prior fiscal 
year.  If a State fails to meet the requirements of this 
paragraph, the Secretary recovers the amount of the maintenance 
of effort deficit through audit disallowance.
	(c)  Separate State agency for vocational rehabilitation
services for individuals who are blind.  If there is a separate 
part of the State plan administered by a separate State agency 
to provide vocational rehabilitation services for individuals 
who are blind--
	(1)  Satisfaction of the maintenance of effort requirements
under paragraphs (a) and (b) of this section are determined 
based on the total amount of a State's non-Federal expenditures 
under both parts of the State plan; and
	(2)  If a State fails to meet any maintenance of effort
requirement, the Secretary reduces the amount otherwise payable 
to the State for that fiscal year under each part of the plan in 
direct relation to the amount by which expenditures from 
non-Federal sources under each part of the plan in the previous 
fiscal year were less than they were for that part of the plan 
for the fiscal year two years prior to the previous fiscal 
year.	(d)  Waiver or modification.
	(1)  The Secretary may waive or modify the maintenance of effort
requirement in paragraph (a)(1) of this section if 
theSecretary determines that a waiver or modification is 
necessary to permit the State to respond to exceptional or 
uncontrollable circumstances, such as a major natural disaster 
or a serious economic downturn, that--
	(i)  Cause significant unanticipated expenditures or reductions
in revenue; and
	(ii)  Result in--
	(A)  A general reduction of programs within the State; or
	(B)  The State making substantial expenditures in the
vocational rehabilitation program for long-term purposes due to 
the one-time costs associated with the construction of a 
facility for community rehabilitation program purposes, the 
establishment of a facility for community rehabilitation program 
purposes, or the acquisition of equipment.
	(2)  The Secretary may waive or modify the maintenance of effort
requirement in paragraph (b) of this section or the 10 percent 
allotment limitation in 361.61 if the Secretary determines that 
a waiver or modification is necessary to permit the State to 
respond to exceptional or uncontrollable circumstances, such as 
a major natural disaster, that result in significant destruction 
of existing facilities and require the State to make substantial 
expenditures for the construction of a facility for community 
rehabilitation program purposes or the establishment of a 
facility for community rehabilitation program purposes in order 
to provide vocational rehabilitation services.	(3)  A written 
request for waiver or modification, including supporting 
justification, must be submitted to the Secretary as soon as the 
State determines that an exceptional or uncontrollable 
circumstance will prevent it from making its required 
expenditures from non-Federal sources.
(Authority:  Sections 101(a)(17) and 111(a)(2) of the Act; 29
U.S.C. 721(a)(17) and 731(a)(2))
361.63  Program income.
	(a)  Definition.  Program income means gross income received by
the State that is directly generated by an activity supported 
under this part.
	(b)  Sources.  Sources of program income include, but are not
limited to, payments from the Social Security Administration 
for rehabilitating Social Security beneficiaries, payments 
received from workers' compensation funds, fees for services to 
defray part or all of the costs of services provided to 
particular individuals, and income generated by a State-operated 
community rehabilitation program.
	(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, the administration of the 
State plan, and developing and implementing the strategic plan.  
Program income is considered earned when it is received.
	(2)  Payments provided to a State from the Social Security
Administration for rehabilitating Social Security 
beneficiariesmay also be used to carry out programs under Part 
B of Title I of the Act (client assistance), Part C of Title I 
of the Act (innovation and expansion), Part C of Title VI of the 
Act (supported employment) and Title VII of the Act (independent 
living).
	(3)  The State is authorized to treat program income as--
	(i)  An addition to the grant funds to be used for additional 
allowable program expenditures, in accordance with 34 CFR 
80.25(g)(2); or
	(ii)  A deduction from total allowable costs, in accordance with
34 CFR 80.25(g)(1).
	(4)  Program income may not be used to meet the non-Federal
share requirement under 361.60.
(Authority:  Section 108 of the Act; 29 U.S.C. 728; 34 CFR 80.25)
361.64  Obligation of Federal funds and program income.
	(a)  Except as provided in paragraph (b) of this section, any
Federal funds, including reallotted funds, that are 
appropriated for a fiscal year to carry out a program under this 
part that are not obligated by the State unit by the beginning 
of the succeeding fiscal year and any program income received 
during a fiscal year that is not obligated by the State unit by 
the beginning of the succeeding fiscal year must remain 
available for obligation by the State unit during that 
succeeding fiscal year.
	(b)  Federal funds appropriated for a fiscal year remain
available for obligation in the succeeding fiscal year only to 
the extent that the State unit met the matching requirement 
forthose Federal funds by obligating, in accordance with 34 CFR 
76.707, the non-Federal share in the fiscal year for which the 
funds were appropriated.
(Authority:  Section 19 of the Act; 29 U.S.C. 718)
361.65  Allotment and payment of Federal funds for vocational
rehabilitation services.
	(a)  Allotment.
	(1)  The allotment of Federal funds for vocational
rehabilitation services for each State is computed in 
accordance with the requirements of section 110 of the Act, and 
payments are made to the State on a quarterly basis, unless some 
other period is established by the Secretary.
 	(2)  If the State plan designates one State agency to
administer, or supervise the administration of, the part of the 
plan under which vocational rehabilitation services are provided 
for individuals who are blind and another State agency to 
administer the rest of the plan, the division of the State's 
allotment is a matter for State determination.
	(b)  Reallotment.
	(1)  The Secretary determines not later than 45 days before the
end of a fiscal year which States, if any, will not use their 
full allotment.
	(2)  As soon as possible, but not later than the end of the
fiscal year, the Secretary reallots these funds to other States 
that can use those additional funds during the current or 
subsequent fiscal year, provided the State can meet the 
matchingrequirement by obligating the non-Federal share of any 
reallotted funds in the fiscal year for which the funds were 
appropriated.
	(3)  Funds reallotted to another State are considered to be an
increase in the recipient State's allotment for the fiscal year 
for which the funds were appropriated.
(Authority:  Sections 110 and 111 of the Act; 29 U.S.C. 730 and
731)
Subpart D--Strategic Plan for Innovation and Expansion of
Vocational Rehabilitation Services 
361.70  Purpose of the strategic plan.
     The State shall prepare a statewide strategic plan, in
accordance with 361.71, to develop and use innovative 
approaches for achieving long-term success in expanding and 
improving vocational rehabilitation services, including 
supported employment services, provided under the State plan, 
including the supported employment supplement to the State plan 
required under 34 CFR Part 363.
(Authority:  Section 120 of the Act; 29 U.S.C. 740)
361.71  Procedures for developing the strategic plan.
	(a)  Public input.
	(1)  The State unit shall meet with and receive recommendations
from members of the State Rehabilitation Advisory Council, if 
the State has a Council, and the Statewide Independent Living 
Council prior to developing the strategic plan.	(2)  The State 
unit shall solicit public input on the strategic plan prior to 
or at the public meetings on the State plan, in accordance with 
the requirements of 361.20.
	(3)  The State unit shall consider the recommendations received
under paragraphs (a)(1) and (a)(2) of this section and, if the 
State rejects any recommendations, shall include a written 
explanation of the reasons for those rejections in the strategic 
plan.
	(4)  The State unit shall develop a procedure to ensure ongoing
comment from the Council or Councils, if applicable, as the 
plan is being implemented.
	(b)  Duration.  The strategic plan must cover a three-year
period.
	(c)  Revisions.  The State unit shall revise the strategic plan
on an annual basis to reflect the unit's actual experience over 
the previous year and input from the State Rehabilitation 
Advisory Council, if the State has a Council, individuals with 
disabilities, and other interested parties.
	(d)  Dissemination.  The State unit shall disseminate widely the
strategic plan to individuals with disabilities, disability 
organizations, rehabilitation professionals, and other 
interested persons and shall make the strategic plan available 
in accessible formats and appropriate modes of communication.
(Approved by the Office of Management and Budget under control
number 1820-0500.)
(Authority:  Section 122 of the Act; 29 U.S.C. 742)361.72 
Content of the strategic plan.
	The strategic plan must include--
	(a)  A statement of the mission, philosophy, values, and
principles of the vocational rehabilitation program in the 
State;
	(b)  Specific goals and objectives for expanding and improving
the system for providing vocational rehabilitation services;
	(c)  Specific multi-faceted and systemic approaches for
accomplishing the objectives, including interagency 
coordination and cooperation, that build upon state-of-the-art 
practices and research findings and that implement the State 
plan and the supplement to the State plan submitted under 34 CFR 
Part 363;
	(d)  A description of the specific programs, projects, and
activities funded under this subpart, including how the 
programs, projects, and activities accomplish the objectives of 
the subpart, and the resource allocation and budget for the 
programs, projects, and activities; and
 	(e)  Specific criteria for determining whether the objectives
have been achieved, including an assurance that the State will 
conduct an annual evaluation to determine the extent to which 
the objectives have been achieved and, if specific objectives 
have not been achieved, the reasons that the objectives have not 
been achieved and a description of alternative approaches that 
will be taken.
(Approved by the Office of Management and Budget under control
number 1820-0500.)(Authority:  Section 121 of the Act; 29 
U.S.C. 741)
361.73  Use of funds.
	(a)  A State unit shall use all grant funds received under
Title I, Part C of the Act to carry out programs and activities 
that are identified under the State's strategic plan, including 
but not limited to those programs and activities that are 
identified in paragraph (b) of this section.
	(b)  A State unit shall use at least 1.5 percent of the funds
received under section 111 of the Act to carry out one or more 
of the following types of programs and activities that are 
identified in the State's strategic plan:
	(1)  Programs to initiate or expand employment opportunities for
individuals with severe disabilities in integrated settings 
that allow for the use of on-the-job training to promote the 
objectives of Title I of the Americans with Disabilities Act of 
1990.
	(2)  Programs or activities to improve or expand the provision
of employment services in integrated settings to individuals 
with sensory, cognitive, physical, and mental impairments who 
traditionally have not been served by the State vocational 
rehabilitation agency.
	(3)  Programs or activities to maximize the ability of
individuals with disabilities to use rehabilitation technology 
in employment settings.
	(4)  Programs or activities that assist employers in
accommodating, evaluating, training, or placing individuals 
withdisabilities in the workplace of the employer consistent 
with the provisions of the Act and Title I of the Americans with 
Disabilities Act of 1990.  These programs or activities may 
include short-term technical assistance or other effective 
strategies.
	(5)  Programs or activities that expand and improve the extent
and type of an individual's involvement in the review and 
selection of his or her training and employment goals.
	(6)  Programs or activities that expand and improve
opportunities for career advancement for individuals with 
severe disabilities.
	(7)  Programs, projects, or activities designed to initiate,
expand, or improve working relationships between vocational 
rehabilitation services provided under Title I of the Act and 
independent living services provided under Title VII of the Act.


	(8)  Programs, projects, or activities designed to improve
functioning of the system for delivering vocational 
rehabilitation services and to improve coordination and working 
relationships with other State agencies and local public 
agencies, business, industry, labor, community rehabilitation 
programs, and centers for independent living, including projects 
designed to--
	(i)  Increase the ease of access to, timeliness of, and quality
of vocational rehabilitation services through the development 
and implementation of policies, procedures, systems,and 
interagency mechanisms for providing vocational rehabilitation 
services;
	(ii)  Improve the working relationships between State vocational
rehabilitation agencies and other State agencies, centers for 
independent living, community rehabilitation programs, 
educational agencies involved in higher education, adult basic 
education, and continuing education, and businesses, industry, 
and labor organizations, in order to create and facilitate 
cooperation in--
	(A)  Planning and implementing services; and
	(B)  Developing an integrated system of community-based
vocational rehabilitation services that includes appropriate 
transitions between service systems; and
	(iii)  Improve the ability of professionals, advocates,
business, industry, labor, and individuals with disabilities to 
work in cooperative partnerships to improve the quality of 
vocational rehabilitation services and job and career 
opportunities for individuals with disabilities.
	(9)  Projects or activities that ensure that the annual 
evaluation of the effectiveness of the program in meeting the 
goals and objectives in the State plan, including the system for 
evaluating the performance of rehabilitation counselors, 
coordinators, and other personnel used in the State, facilitates 
and does not impede the accomplishment of the purpose of this 
part, including serving individuals with the most severe 
disabilities.	(10)  Projects or activities to support the 
initiation, expansion, and improvement of a comprehensive system 
of personnel development.
	(11)  Programs, projects, or activities to support the provision
of training and technical assistance to individuals with 
disabilities, business, industry, labor, community 
rehabilitation programs, and others regarding the implementation 
of the Rehabilitation Act Amendments of 1992, of Title V of the 
Act, and of the Americans with Disabilities Act of 1990.
	(12)  Projects or activities to support the funding of the State
Rehabilitation Advisory Council and the Statewide Independent 
Living Council.
(Authority:  Sections 101(a)(34)(B) and 123 of the Act; 29 U.S.C.
721(a)(34)(B) and 743)
361.74  Allotment of Federal funds.
	(a)  The allotment and any reallotment of Federal funds under
Title I, Part C of the Act are computed in accordance with the 
requirements of section 124 of the Act.
	(b)  If at any time the Secretary determines that any amount
will not be expended by a State in carrying out the purpose of 
this subpart, the Secretary makes that amount available to one 
or more other States that the Secretary determines will be able 
to use additional amounts during the fiscal year.  Any amount 
made available to any State under this paragraph of this section 
is regarded as an increase in the State's allotment for that 
fiscal year.(Authority:  Section 124 of the Act; 29 U.S.C. 744)


PART 363--THE STATE SUPPORTED EMPLOYMENT SERVICES PROGRAM
	2.  The authority citation for part 363 continues to read as
follows:
	AUTHORITY: 29 U.S.C. 795j-q, unless otherwise noted.
	3.  In 363.6, paragraphs (c)(1), (c)(2)(i), (c)(2)(ii), and 
the authority citation are revised to read as follows:
363.6  What definitions apply?
*	*	*	*	*
	(c)  * * *
	(1)  Supported employment means--
	(i)  Competitive employment in an integrated setting with
ongoing support services for individuals with the most severe 
disabilities--
	(A)  For whom competitive employment has not traditionally
occurred or for whom competitive employment has been 
interrupted or intermittent as a result of a severe disability; 
and
	(B)  Who, because of the nature and severity of their
disabilities, need intensive supported employment services from 
the designated State unit and extended services after transition 
in order to perform this work; or	(ii)  Transitional employment 
for individuals with the most severe disabilities due to mental 
illness.
	(2)  As used in the definition of Supported employment--
	(i)  Competitive employment means work--
	(A)  In the competitive labor market that is performed on a
full-time or part-time basis in an integrated setting; and
	(B)  For which an individual is compensated at or above the
minimum wage, but not less than the customary or usual wage 
paid by the employer for the same or similar work performed by 
individuals who are not disabled.
	(ii)  Integrated setting means a setting typically found in the
community in which an individual with the most severe 
disabilities interacts with non-disabled individuals, other than 
non-disabled individuals who are providing services to that 
individual, to the same extent that non-disabled individuals in 
comparable positions interact with other persons.
*	*	*	*	*
(Authority:  29 U.S.C. 706(18), 711(c), and 795j)
PART 376--SPECIAL PROJECTS AND DEMONSTRATIONS FOR PROVIDING
 TRANSITIONAL REHABILITATION SERVICES TO YOUTH WITH DISABILITIES


	4.  The authority citation for part 376 continues to read as
follows:
	AUTHORITY:  29 U.S.C. 777a(b), unless otherwise noted.
	5.  In 376.4, paragraph (c) and the authority citation are 
revised to read as follows:376.4  What definitions apply to 
this program?
*	*	*	*	*
	(c)  The definitions of Competitive employment, Integrated
setting, On-going support services, Transitional employment, 
and Time-limited services in 34 CFR Part 380.
*	*	*	*	*
(Authority: 29 U.S.C. 711(c) and 777a(b))
Part 380--SPECIAL PROJECTS AND DEMONSTRATIONS FOR PROVIDING
SUPPORTED EMPLOYMENT SERVICES TO INDIVIDUALS WITH THE MOST 
SEVERE DISABILITIES AND TECHNICAL ASSISTANCE PROJECTS
	6.  The authority citation for part 380 continues to read as
follows:
	AUTHORITY:  29 U.S.C. 711(c) and 777a(c), unless otherwise
noted.
	7.  In 380.9,  paragraphs (c)(1)(i) and (c)(1)(ii) are revised
to read as follows:
380.9  What definitions apply?
*	*	*	*	*
	(c)  * * *
	(1)  * * *	(i)  Competitive employment means work--
	(A)  In the competitive labor market that is performed on a
full-time or part-time basis in an integrated setting; and
	(B)  For which an individual is compensated at or above the
minimum wage, but not less than the customary or usual wage 
paid by the employer for the same or similar work performed by 
individuals who are not disabled.
	(ii)  Integrated setting means a setting typically found in the
community in which an individual with the most severe 
disabilities interacts with non-disabled individuals, other than 
non-disabled individuals who are providing services to that 
individual, to the same extent that non-disabled individuals in 
comparable positions interact with other persons.

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