[Federal Register: October 6, 1999 (Volume 64, Number 193)]
[Page 54443-54445]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 54443]]


Part III

Department of Education


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

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

AGENCY: Office of Special Education and Rehabilitative Services,
Department of Education.

ACTION: Notice of intent to award grantback funds.


SUMMARY: Under section 459 of the General Education Provisions Act
(GEPA), 20 U.S.C. 1234h (1994), the U.S. Secretary of Education intends
to repay to the State of Ohio Rehabilitation Services Commission
(ORSC), under a grantback arrangement, an amount equal to 75 percent of
the principal amount of funds recovered by the U.S. Department of
Education (Department) as a result of a preliminary departmental
decision (PDD). This notice describes the ORSC's plan for the use of
the repaid funds and the terms and conditions under which the Secretary
intends to make those funds available. This notice invites comments on
the proposed grantback.

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

ADDRESSES: Address all comments about the proposed grantback to Syed M.
Asghar, U.S. Department of Education, 400 Maryland Avenue, SW., room
3215, Switzer Building, Washington, DC, 20202-6132. If you prefer to
send your comments through the Internet, use the following address:

FOR FURTHER INFORMATION CONTACT: Syed M. Asghar. Telephone: (202) 205-
3015. If you use a telecommunications device for the deaf (TDD), you
may call the Federal Information Relay Service (FIRS) at 1-800-877-
    Individuals with disabilities may obtain this document in an
alternative format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed in the preceding


A. Background

    The Department has recovered $227,400 from the ORSC for claims
arising from the audit conducted by the State of Ohio under the State
of Ohio Single Audit covering State fiscal year 1990 (i.e., the one-
year period beginning July 1, 1989 and ending June 30, 1990).
    The claims involved the ORSC's administration of the State
Vocational Rehabilitation (VR) Services Program (Federal Grant
H126A00052). This program is authorized by the Rehabilitation Act of
1973, as amended (Act), 29 U.S.C. 701 et seq. The Act authorizes grants
to assist States to meet the current and future needs of individuals
with disabilities so that those individuals may prepare for and engage
in gainful employment to the extent of their capabilities.
    The June 24, 1993 PDD of the Regional Commissioner of Region V of
the Rehabilitation Services Administration (RSA) found, in part, that
the ORSC was required to refund $227,400 to the Department because it
did not use program funds appropriately during fiscal year 1990.\1\
Specifically, the ORSC used program funds to satisfy a judgment entered
pursuant to a settlement agreement of a lawsuit brought against the
ORSC by a former employee who claimed to have been wrongfully
discharged some years earlier. The ORSC's charging of $227,400 in costs
to the State Vocational Rehabilitation Services Program represented a
violation of OMB Circular A-87, Attachment A, Section C(1)(a), which
required that to be allowable under a grant program, costs must be
necessary and reasonable. Since no services were provided by the former
ORSC employee, it was determined that these costs were neither
necessary nor reasonable for the VR program.

    \1\ This PDD, which contained several other issues of
noncompliance, requested repayment of $883,517, and a second PDD
requested repayment of $10,798.

    The ORSC appealed the PDD on September 30, 1993 to the U.S.
Department of Education, Office of Administrative Law Judges (OALJ). In
a settlement agreement between the Department and the ORSC signed on
March 3, 1995, under Docket Nos. 93-76-R and 93-120-R, the parties
agreed to settle all of the issues in the cases with the exception of
finding #19, in 93-76-R, in the amount of $227,400, which the parties
agreed to litigate. On July 14, 1995, the OALJ ruled in favor of the
Department and ordered the ORSC to repay the sum of $227,400. On
September 12, 1995, the OALJ's decision became the Final Decision of
the Department.
    The ORSC then appealed this decision to the circuit court. On
November 14, 1996, the United States Court of Appeals for the Sixth
Circuit ruled in favor of the Department by denying the petition filed
by the ORSC (State of Ohio, Rehabilitation Services Commission v.
United States Department of Education. No.95-4213, 6th Cir. 1996). As a
result of this decision, the ORSC submitted payment of $227,400 to the
Department in February 1997 in full settlement of all claims arising
from this audit issue.
    On March 20, 1998, the ORSC requested a grantback of $170,550,
which represents 75 percent of these recovered funds.

B. Authority for Awarding a Grantback

    Section 459(a) of GEPA, 20 U.S.C. 1234h(a), provides that, whenever
the Secretary has recovered funds following a PDD with respect to an
applicable program, the Secretary may consider those funds to be
additional funds available for the program and may arrange to repay to
the grantee affected by that determination an amount not to exceed 75
percent of the recovered funds. The Secretary may enter into this
grantback requested by the ORSC if the Secretary determines that the--
    (a) Practices and procedures of the ORSC that resulted in the PDD
have been corrected, and the State agency is, in all other respects, in
compliance with the requirements of the applicable programs;
    (b) ORSC has submitted to the Secretary a plan for the use of the
funds to be awarded under the grantback arrangement that meets the
requirements of the program and, to the extent possible, benefits the
population that was affected by the failure to comply or by the
misexpenditures that resulted in the PDD; and
    (c) Use of funds to be awarded under the grantback arrangement in
accordance with the ORSC's plan would serve to achieve the purposes of
the program under which the funds were originally granted.

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

    Pursuant to section 459(a)(2) of GEPA, the ORSC has applied for a
grantback totaling $170,550, which is 75 percent of the principal
amount of the recovered funds, and has submitted a plan for use of the
grantback funds. The agency will use the funds to increase field access
to the automated case management system by expanding the licensing
agreement from a product license for a single server to an enterprise
server license. The additional user licenses are needed to handle the
increased use of the product, which occurred when the ORSC implemented
a new automated case management system in June 1998. This management
system allows the ORSC field counselors to directly access the
statewide rehabilitation computer system from remote locations,
including laptop computers. According to the ORSC, this increased
system access will result in more timely information processing,
increased efficiency in entering Individualized Plan for Employment
(IPE) and authorization

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information, and a higher level of service to the ORSC consumers.
    The procedural violation, which led to the judgment against the
ORSC, has been corrected. In addition, the ORSC has clarified to RSA
that it now has procedures in place to prohibit the use of Federal
funds to satisfy any judgment resulting from employment litigation. In
the years subsequent to this finding, there have been no other
occurrences of a similar nature.

D. The Secretary's Determinations

    The Secretary has carefully reviewed the plan submitted by the
ORSC. Based upon that review, the Secretary has determined that the
conditions under section 459(a) of GEPA have been met.
    These determinations are based upon the best information available
to the Secretary at the present time. If this information is not
accurate or complete, the Secretary is not precluded from taking
appropriate administrative action. In finding that the conditions of
section 459(a) of GEPA have been met, the Secretary makes no
determination concerning any pending audit recommendations or PDDs.

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

    Section 459(d) of GEPA requires that, at least 30 days before
entering into an arrangement to award funds under a grantback, the
Secretary publish in the Federal Register a notice of intent to do so,
and the terms and conditions under which the payment will be made.
    In accordance with section 459(d) of GEPA, notice is hereby given
that the Secretary intends to make funds available to the Ohio
Rehabilitation Services Commission under a grantback arrangement. The
grantback award would be in the amount of $170,550, which is 75
percent--the maximum percentage authorized by statute--of the principal
amount recovered as a result of the PDD.

F. Terms and Conditions Under Which Payments Under a Grantback
Arrangement Would Be Made

    The ORSC agrees to comply with the following terms and conditions
under which payments under a grantback arrangement would be made:
    (a) The funds awarded under the grantback must be spent in
accordance with--
    (1) All applicable statutory and regulatory requirements;
    (2) The plan that the ORSC submitted and any amendments to the plan
that are approved in advance by the Secretary; and
    (3) The budget that was submitted with the plan and any amendments
to the budget that are approved in advance by the Secretary.
    (b) All funds received under the grantback arrangement must be
obligated by September 30, 2000, in accordance with section 459(c) of
    (c) The ORSC must, not later than January 1, 2001, submit a report
to the Secretary that--
    (1) Indicates that the funds awarded under the grantback have been
spent in accordance with the proposed plan and any amendments that have
been approved in advance by the Secretary; and
    (2) Describes the results and effectiveness of the project for
which the funds were spent.
    (d) Separate accounting records must be maintained documenting the
expenditures of funds awarded under the grantback arrangement.
    (e) Before funds will be repaid pursuant to this notice, the ORSC
must repay to the Department any debts that become overdue or enter
into a repayment agreement for those debts.

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    (Catalog of Federal Domestic Assistance Number 84.126 The State
Vocational Rehabilitation Services Program)

    Dated: October 1, 1999.
Judith E. Heumann,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 99-26095 Filed 10-5-99; 8:45 am]