[Federal Register: May 19, 1999 (Volume 64, Number 96)]
[Proposed Rules]               
[Page 27403-27407]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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Part IV

Department of Education
34 CFR Part 611

Teacher Quality Enhancement Grants Program; Proposed Rule

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34 CFR Part 611

RIN 1840-AC67

Teacher Quality Enhancement Grants Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.


SUMMARY: The Assistant Secretary for Postsecondary Education (Assistant 
Secretary) proposes to develop regulations that would apply the eight 
percent (8%) indirect cost limitation for the Department's educational 
training grants to all States and local educational agencies (LEAs) 
receiving funds under the Teacher Quality Enhancement Grants Program 
for States and Partnerships authorized by sections 201-205 of the 
Higher Education Act (HEA), as amended by the Higher Education 
Amendments of 1998. These proposed regulations would ensure that the 
limited funding available to support program activities is concentrated 
on direct support for improvements in teacher licensing, certification, 
preparation, and recruitment, rather than for recipient ``overhead.''

DATES: We must receive your comments on or before June 18, 1999.

ADDRESSEES: All comments concerning these proposed regulations should 
be addressed to: Dr. Louis Venuto, Higher Education Programs, Office of 
Postsecondary Education, 400 Maryland Ave. SW., Portals Building, Room 
6234, Washington, DC 20202-5131: Telephone: (202) 708-8847, or by FAX 
to: (202) 260-9272. If you prefer to send your comments through the 
Internet use the following address: comments@ed.gov.
    You must include the term ``Indirect Costs'' in the subject line of 
your electronic message.

FOR FURTHER INFORMATION CONTACT: Dr. Louis Venuto, Higher Education 
Programs, Office of Postsecondary Education, 400 Maryland Avenue, SW, 
Portals Building, Room 6234, Washington, DC 20202-5131: Telephone: 
(202) 708-8847; FAX (202) 260-9272. If you use a telecommunications 
device for the deaf (TDD), you may call the Federal Information Relay 
Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternate format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed in the preceding 


Invitation to Comment

    We invite you to submit comments regarding these proposed 
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the program.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations at the Department of 
Education, 1250 Maryland Avenue, SW., Room 6234, Portal Building, 
Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m., Eastern 
time, Monday through Friday of each week except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, you may call (202) 205-
8113 or (202) 260-9895. If you use a TDD, you may call the Federal 
Information Relay Service (FIRS) at 1-800-877-8339.


    Background: On October 8, 1998, the President signed into law the 
Higher Education Amendments of 1998 (Pub. L. 105-244). Title II of this 
law addresses the Nation's need to ensure that new teachers enter the 
classroom prepared to teach all students to high standards by 
authorizing, as Title II of the Higher Education Act, Teacher Quality 
Enhancement Grants for States and Partnerships. The new Teacher Quality 
Enhancement Grants programs provide an historic opportunity to effect 
positive change in the recruitment, preparation, licensing, and on-
going support of teachers in America. The programs are designed to 
increase student achievement by implementing comprehensive approaches 
to improving teacher quality.
    More specifically, the Teacher Quality Enhancement Grants Program 
include three new competitive grant programs:
    State Grants Program: Competitive grants to States will support the 
implementation of comprehensive statewide reforms to improve the 
quality of a State's teaching force. By law, State activities must 
include one or more of the following activities: reforming teacher 
certification or licensure standards; implementing reforms to hold 
institutions of higher education accountable for preparing teachers who 
are highly competent in their subject areas; providing prospective 
teachers with alternative pathways into teaching; implementing programs 
of support for teachers during their initial periods of teaching and 
establishing, expanding, or improving alternative routes to State 
certification; developing effective methods of recruiting and rewarding 
highly competent teachers and removing incompetent or unqualified 
teachers; recruiting teachers for high-poverty urban and rural areas; 
and developing ways teachers can address the problem of social 
    Partnership Grants for Improving Teacher Preparation Program: The 
purpose of the Partnership program is to bring teacher preparation 
programs, schools of arts and sciences, and high-need school districts 
and schools together (as appropriate, with other stakeholders) to 
create fundamental change and improvement in traditional teacher 
education programs--thereby increasing teachers' capacity to help all 
students learn to high standards. Designed to support highly committed 
partnerships that will accelerate the change process in teacher 
education, the program will (1) strengthen the vital role of K-12 
educators in the design and implementation of effective teacher 
education programs; and (2) increase collaboration between departments 
of arts and sciences and schools of education.
    The program is designed to make an important impact on teacher 
education and thereby to increase significantly the number of new 
teachers emerging from programs that have been redesigned to ensure 
that new teachers have the content knowledge and teaching skills to be 
    Teacher Recruitment Grants Program: In addition, there is a great 
need, especially in high-poverty communities, to recruit and prepare 
more people to become teachers. The Teacher Recruitment Grants--awarded 
either to States or to partnerships among high-need LEAs, teacher 
preparation institutions, and schools of arts and sciences--are 
designed to reduce shortages of highly qualified teachers in high-need 
school districts.

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    Local partnerships between school districts and teacher preparation 
institutions have been found to be very effective at providing teachers 
for communities where they are most needed. The ``grow your own'' 
approach is also effective for these communities because individuals 
who are already members of a community are likely to remain there after 
they become teachers. The recruitment grants will allow individual 
communities to determine their needs for teachers and to recruit and 
prepare teachers who meet those needs. States can also play an 
important role in ensuring that high-need school districts are able to 
recruit highly qualified teachers, and they can use the recruitment 
grants to develop and implement effective mechanisms to do so.
    The Department announced the initial competitions for grants under 
these three programs by publishing a notice in the Federal Register on 
February 8, 1999 (64 FR 6139). The Department expects to make awards 
under the State and Teacher Recruitment programs by mid-July 1999, and 
awards under the Partnership program by early September 1999.
    Need to Regulate: More than ever before in our history, teaching is 
the profession that is shaping the Nation's future--molding the skills 
of our future workforce and laying the foundation for good citizenship 
and full participation in community and civic life. Accordingly, what 
teachers know and are able to do is critically important. Yet, we face 
daunting challenges as we seek to ensure a national teaching force of 
the highest quality. America's schools will need to hire 2.2 million 
teachers over the next decade, more than half of whom will be first-
time teachers. As classrooms grow more challenging and diverse, these 
teachers will need to be well prepared to teach all students to the 
highest standards. Contemporary classrooms and social conditions 
confront teachers with a range of complex challenges previously unknown 
in the profession. New education goals and tougher standards, more 
rigorous assessments, site-based management, greater interest in 
parental involvement, the continuing importance of safety and 
discipline, and expanded use of technology increase the knowledge and 
skills that teaching demands.
    The three new Teacher Quality Enhancement Grants programs offer an 
opportunity to improve teacher quality in America by effectively 
addressing these challenges. However, success will depend upon how well 
we use the resources that Congress provides to make sustained and 
meaningful improvements in teacher licensure, certification, 
preparation, and recruitment. For fiscal year 1999, Congress 
appropriated $75 million for these three component programs. If these 
funds, and funds that Congress will appropriate for use in future 
years, are to achieve their purposes, we need to ensure that they are 
used as effectively as possible. To do so, it is necessary to place a 
reasonable limitation on the amount of program funds that Title II 
grant recipients may use to reimburse themselves for the ``indirect 
costs'' of program activities.
    Sections 75.560-75.564 and 80.22 of the Education Department 
General Administrative Regulations (EDGAR) incorporate and apply cost 
principles developed by the Office of Management and Budget (OMB) for 
government-wide grant activities to projects and activities that States 
and local governments undertake with funds awarded under the 
Department's discretionary grants. These regulations provide that costs 
of project activities may be charged to grant funds in two forms: as 
direct costs and indirect costs. The direct costs of a grant are 
charges that are directly allocable to grant activities. Indirect 
costs, on the other hand, are charges that are incurred by so many 
programs or cost objectives that it would be either impossible or 
prohibitively expensive to calculate the precise amount of charges 
allocable to a particular program or grant activity. Examples of 
typical indirect costs are heat, electricity and other utilities, 
building services and depreciation, and general administration.
    Generally, the formula for determining the amount of indirect costs 
that may be charged to any grant is based on application of a 
negotiated indirect cost rate to the grant's direct costs. Thus, the 
higher the indirect cost rate the more grant funds that will be charged 
for these ``overhead'' expenses, and the fewer grant funds that remain 
available for the costs of direct services. By their own terms, EDGAR 
regulations in sections 75.560-75.564 and 80.22 (which incorporate 
applicable OMB cost principles for determining a grant's allowable 
costs) provide that an agency's or institution's indirect cost rate 
depends, subject to EDGAR definitions, on the agency's or institution's 
own overall cost structure.
    The best data available to the Department indicate that over 20 
States have indirect cost rates of over 15 percent; two States has an 
indirect cost rates of 34 percent. If peer reviewers recommend these 
States for award of State or Teacher Recruitment Program grants, over 
15 percent or more of the funds that Congress has appropriated for 
these programs may support the States' indirect costs rather than the 
direct costs of activities designed to improve teacher quality. While 
recognizing the legitimacy of indirect costs, the Secretary believes 
that having these large amounts of funds compensate States and other 
recipients for their general overhead and related expenses is 
inconsistent with the purpose of the programs and the expectations that 
Congress and the Nation have for their success. Therefore, given (1) 
the pivotal significance of the Teacher Quality Enhancement Grants 
programs, (2) the national need that these programs have a maximum 
impact on the quality and quantity of highly-qualified new teachers, 
and (3) the fact that these programs are competitive, the Secretary has 
determined that a reasonable limitation on the indirect cost rate that 
States and LEAs may charge to their Teacher Quality Enhancement Grants 
program funds is appropriate.
    Section 75.562 of EDGAR limits the indirect cost rate that 
institutions of higher education (IHEs) and nonprofit agencies may 
charge for educational training grants to eight percent of modified 
total direct costs. By the notice published in the Federal Register on 
February 8, 1999 (64 FR 6145-6146) that will govern the initial 
competition and awards under the Teacher Quality Enhancement Grants 
programs, the Secretary extended this eight percent cap on indirect 
cost rates to all grantee IHE and nonprofit agencies, regardless of 
whether the Partnership or Teacher Recruitment programs for which they 
receive funding are educational training grants. Section 75.562(a) of 
EDGAR acknowledges that educational training grants typically have a 
large proportion of their funds available for direct costs, since these 
grants largely implement previously developed materials and methods, 
rather than ``support activities involving research, development, and 
dissemination of new educational materials and methods.'' The Secretary 
believes that Teacher Recruitment grants fit the category of 
educational training grants but that, depending on how they are 
implemented, Partnership program grants may not. Still, the Secretary 
believes that, as is the case with educational training grants, IHEs 
and nonprofit agency grantees that receive Partnership program grants 
will not have the need to support their activities with high indirect 
cost rates.
    Similarly, the Secretary believes that States and LEAs that receive 
Teacher Quality Enhancement Grants program funds do not need to 
exercise high

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indirect cost rates in order to fairly compensate themselves for the 
activities they will conduct under the State, Partnership, or Teacher 
Recruitment grant programs. Rather, given the important role that each 
grant recipient has in making the maximum impact with the program funds 
it receives, the Secretary believes that it is appropriate that all 
Teacher Quality Enhancement Grants program grant recipients have the 
same cap--eight percent--on the indirect costs they may charge. 
Combined with the rule published in the Federal Register on February 8, 
1999, the regulation proposed in proposed Sec. 611.30 would do just 
    This proposal strikes a reasonable balance between the need to 
focus as much funding for the Teacher Quality Enhancement Grants 
programs as possible on direct services to improve teacher licensure, 
certification, preparation, and recruitment, and the reality that, to 
do so, recipients invariably must encounter some indirect costs. In 
addition, because these programs are competitive, States and LEAs (as 
well as IHEs and nonprofit agencies) that believe that they need 
additional indirect costs to implement these needed grant activities 
simply need not apply or accept grant awards. Therefore, this proposed 
regulation would not impose any non-reimbursed indirect costs on 
unwilling recipients.
    If proposed Sec. 611.30 becomes final, it will apply to all funding 
that States and LEAs receive under the three Teacher Quality 
Enhancement Grants programs, both under the initial and any subsequent 
program competitions. With regard to the initial competition being 
conducted in the spring of 1999, the Teacher Quality Enhancement Grants 
program application packages made available in February 1999 advised 
the public of the Department's intent to publish these proposed 
regulations. The application packages also advised States that, given 
the need for these programs to produce significant results, peer 
reviewers might rate applications that did not limit their indirect 
costs less competitively.
    If these proposed regulations become final, it would in essence 
establish this guidance as a program requirement.

Goals 2000: Educate America Act

    The Goals 2000: Educate America Act (Goals 2000) focuses the 
Nation's 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 proposed regulations would address the National Education 
Goal that the Nation's teaching force will have the content knowledge 
and teaching skills needed to instruct all American students for the 
next century.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. Entities that would be affected by these regulations are 
States and State agencies and LEAs. States and State agencies are not 
defined as ``small entities'' in the Regulatory Flexibility Act. Small 
LEAs are small entities for purposes of the Regulatory Flexibility Act. 
The final regulations would not have a significant impact on these 
small entities because the regulations would not impose excessive 
regulatory burden or require unnecessary Federal supervision. The 
regulations would impose minimal requirements to ensure the appropriate 
expenditure of funds.

Paperwork Reduction Act of 1995

    These proposed regulations have been examined under the Paperwork 
Reduction Act of 1995 and have been found to contain no information 
collection requirements.

Intergovernmental Review

    This program is subject to Executive Order 12372 and the 
regulations in 34 CFR part 79. One of the objectives of the Executive 
Order is to foster an intergovernmental partnership and a strengthened 
federalism. The Executive order relies on processes developed by State 
and local governments for coordination and review of proposed Federal 
financial assistance.
    This document is intended to provide early notification of our 
specific plans and actions for this program.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether these 
proposed regulations would require transmission of information that any 
other agency or authority of the United States gathers or makes 

Electronic Access to This Document

    You may review this document, as well as all other Department of 
Education documents published in the Federal Register, in text or 
portable document format (PDF) on the World Wide Web at either of the 
following sites:


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

    Note: The official version of the 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://

    Program Authority: 20 U.S.C. 1021 et seq.

List of Subjects in 34 CFR Part 611

    Colleges and universities, Elementary and secondary education, 
Grant programs--education.

    Dated: May 14, 1999.
David A. Longanecker,
Assistant Secretary, Office of Postsecondary Education.

(Catalog of Federal Domestic Assistance Number 84.336: Teacher 
Quality Enhancement Grants Program)

    For reasons stated in the preamble, the Secretary proposes to amend 
Chapter VI of title 34 of the Code of Federal Regulations by adding the 
following new part 611 to read as follows:



Subparts A--[Reserved]

Subpart D--What Conditions Must Be Met by a Grantee?

611.30  What is the maximum indirect cost rate for States and local 
educational agencies?

    Authority: 20 U.S.C. 1021 et seq., unless otherwise noted.


Subparts A [Reserved]

Subpart D--What Conditions Must Be Met by a Grantee?

Sec. 611.30  What is the maximum indirect cost rate for States and 
local educational agencies?

    Notwithstanding 34 CFR 75.560-75.562 and 34 CFR 80.22, the maximum 
indirect cost rate that a State or local educational agency receiving 
funding under the Teacher Quality Enhancement Grants Program may use to 
charge indirect costs to these funds is the lesser of --

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    (a) The rate established by the negotiated indirect cost agreement; 
    (b) Eight percent.

(Authority: 20 U.S.C. 1021 et seq.)

[FR Doc. 99-12603 Filed 5-18-99; 8:45 am]