[Federal Register: March 5, 2001 (Volume 66, Number 43)]
[Page 13385-13387]
>From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 13385]]


Part III

Department of Education


Intent To Repay to the State of Ohio Rehabilitation Services Commission 
Funds Recovered as a Result of an Investigation; Notice

[[Page 13386]]



Intent to Repay to the State of Ohio Rehabilitation Services 
Commission Funds Recovered as a Result of an Investigation

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 an investigation. 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 April 4, 2001.

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 the 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 $538,210 from the ORSC for overclaimed 
indirect costs following an investigation conducted by the Office of 
Inspector General (OIG) covering Federal fiscal years ending September 
30, 1993 and 1994.
    The claims involved the ORSC's administration of the State 
Vocational Rehabilitation (VR) Services Program (Federal Grants 
H126A930052 and H126A940052). 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 
    During a review of ORSC's expenditures for fiscal years 1993 and 
1994, the Office of the Chief Financial Officer (OCFO) determined that 
ORSC's provisional indirect cost rates for those years were greater 
than its final rate. On July 1, 1997, OCFO asked the OIG to quantify 
the actual amount of overclaimed indirect costs so that OCFO could 
recover them from ORSC.
    OIG carried out an investigation of the indirect costs claimed by 
ORSC during fiscal years 1993 and 1994. The investigative report was 
issued on November 21, 1997. According to that report, in fiscal years 
1993 and 1994, ORSC billed Federal programs using the provisional 
indirect cost rates that turned out to be higher than the final rates 
negotiated for those periods. The allowable recovery for the 2-year 
period, based on the final indirect cost rates, was $13,773,251. By 
using provisional rates, ORSC actually billed Federal programs 
$15,463,402. As a result, ORSC overclaimed indirect costs of $1,690,151 
in fiscal years 1993 and 1994, of which $538,210 was the portion that 
belonged to the Department.
    Based on the OIG investigation, ORSC submitted a payment of 
$538,210 to the Department in August, 1999 in full settlement of the 
Department's claims arising from the investigation.
    On September 20, 1999, the ORSC requested a grantback of $403,650, 
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 under an applicable program because 
the recipient made an expenditure of funds that was not allowable, 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 
findings have been corrected, and the State agency is, in all other 
respects, in compliance with the requirements of the applicable 
    (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 
misexpenditures that resulted in the investigation; 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 $403,650, 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 for the reengineering of 
the ORSC Accounting System (RAS) to bring it into operating 
compatibility with the agency's consumer reporting system and the Ohio 
Central Accounting System. The project will greatly enhance the 
agency's ability to efficiently process and track program expenditures 
and eliminate the outdated overnight batch transfer of consumer and 
financial information between the two ORSC's internal computer systems. 
The project will also allow direct entry of payments into the Ohio 
Statewide Central Accounting System in place of the current overnight 
batch processing of administrative payments. The new system will be a 
much more responsive, functional, and integrated computer system that 
will bring the agency's consumer and financial systems into the same 
operating environment.
    The procedural violation, which led to the repayment of Federal 
funds has been corrected by the ORSC. In addition, ORSC has clarified 
to the Rehabilitation Services Administration that the situation has 
been remedied through the Department of Education's approval of their 
current fixed rate structure, under which they have been operating 
since fiscal year 1995. There have been no audit exceptions noted 
against their indirect cost plans, and none are anticipated.

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

[[Page 13387]]

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 other 

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 $403,650, which is 75 percent--
the maximum percentage authorized by statute--of the principal amount 
recovered as a result of the investigation.

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, 2002, in accordance with section 459(c) of 
    (c) The ORSC must, no later than January 1, 2003, submit a report 
to the Secretary that--
    (1) Indicates that the funds awarded under the grantback have been 
spent in accordance with the proposed plan and any amendments that have 
been approved in advance by the Secretary; and
    (2) Describes the results and effectiveness of the project for 
which the funds were spent.
    (d) Separate accounting records must be maintained documenting the 
expenditures of funds awarded under the grantback arrangement.
    (e) Before funds will be repaid pursuant to this notice, the ORSC 
must repay to the Department any debts that become overdue or enter 
into a repayment agreement for those debts.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the internet at either of the 
following sites:


    To use PDF you must have Adobe Acrobat Reader, which is available 
free at either of the previous sites. If you have questions about using 
PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-
888-293-6498; or in Washington, DC, area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.acess.gpo.gov/

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

    Dated: February 28, 2001.
Andrew J. Pepin,
Executive Administrator for Special Education and Rehabilitative 
[FR Doc. 01-5254 Filed 3-2-01; 8:45 am]