American Recovery and Reinvestment Act of 2009: Vocational Rehabilitation Recovery Funds
April 1, 2009

The American Recovery and Reinvestment Act of 2009 (ARRA) appropriates significant new funding for the Vocational Rehabilitation (VR) State Grants program, authorized under Title I of the Rehabilitation Act of 1973, as amended (Rehabilitation Act). The VR State Grants program provides grants to states to help individuals with disabilities, especially those individuals with the most significant disabilities, prepare for, obtain, and maintain employment.

The ARRA provides an unprecedented opportunity for states and VR agencies to implement innovative strategies to improve employment outcomes for individuals with disabilities. Under the ARRA, $540 million is provided for the VR State Grants program. Information about each state's formula allocation is available at: This website also provides information about the State Fiscal Stabilization Fund (SFSF) under the ARRA, which is separate from the VR ARRA funds described in this Fact Sheet.

Overview of ARRA

Principles: The overall goals of the ARRA are to stimulate the economy in the short term and invest in education and other essential public services to ensure the long-term economic health of our nation. The success of the part of the ARRA providing support for programs under the Rehabilitation Act will depend on the shared commitment and responsibility of all involved in supporting improved outcomes for young people and adults with disabilities. Collectively, we must advance ARRA's short-term economic goals by investing quickly, and we must support ARRA's long-term economic goals by investing wisely, using these funds to strengthen VR programs, drive reforms, and improve results for people with disabilities.

Principles guiding the distribution and use of ARRA funds that are particularly relevant to VR programs include:

  1. Spend funds quickly to save and create jobs. ARRA funds will be distributed quickly to states and other entities in order to avert layoffs and create jobs. They in turn are urged to move rapidly to develop plans for using funds, consistent with ARRA's reporting and accountability requirements, and to promptly begin spending funds to help drive the nation's economic recovery.

  2. Ensure transparency, reporting, and accountability. To prevent fraud and abuse, support the most effective uses of ARRA funds, and accurately measure and track results, recipients must publicly report on how funds are used. Due to the unprecedented scope and importance of this investment, ARRA funds are subject to additional and more rigorous reporting requirements than normally apply to grant recipients.

  3. Invest one-time ARRA funds thoughtfully to minimize the "funding cliff." ARRA represents a historic infusion of funds that is expected to be temporary. VR ARRA funds are available for obligation until September 30, 2011. These funds should be invested in ways that do not result in unsustainable continuing commitments after the funding expires.

Awarding VR State Grants Program ARRA Funds

  • The U.S. Department of Education (Department) awarded 50 percent of the VR ARRA funds to state VR agencies on April 1, 2009. The remaining funds will be awarded by September 30, 2009. These funds are allocated to state VR agencies under the program's allotment formula and are in addition to the funds received under the regular FY 2009 appropriation for the VR State Grants program. Together, these awards will constitute a state's total FY 2009 allocation for the VR State Grants program.

  • State VR agencies do not need to submit new applications or amend their approved FY 2009 state plans to receive VR ARRA funds. Eligibility for these VR ARRA funds is based on a state's eligibility for FY 2009 VR funds and the provision of the certification required by section 1607 of the ARRA. The assurances in a state's approved FY 2009 state plan, as well as the requirements of the ARRA, will apply to the use of the VR ARRA funds. However, in order to receive the remaining 50 percent of the state's allocation of VR ARRA funds, states must submit information, for review and approval by the Department, that addresses the recordkeeping and reporting requirements in the ARRA.

  • In accordance with the ARRA, state VR agencies should obligate VR ARRA funds expeditiously. State VR agencies may begin obligating VR ARRA funds immediately. All VR ARRA funds must be obligated by September 30, 2011.

Uses of VR ARRA Funds

  • All VR ARRA funds must be used consistently with the statutory and regulatory requirements for the VR State Grants program, as well as applicable requirements in the General Education Provisions Act (GEPA) and the Education Department General Administrative Regulations (EDGAR).

  • The VR ARRA funds constitute a large one-time increment in VR state grant funding that offers state VR agencies a unique opportunity to improve employment outcomes for individuals with disabilities, especially those with the most significant disabilities. Generally, funds should be used for short-term investments that have the potential for long-term benefits, rather than for commitments that the State may not be able to sustain once ARRA funds are expended. State VR agencies are encouraged to consider serving individuals on waiting lists in agencies currently using an order of selection; increasing services to eligible consumers; and expanding services to traditionally underserved and unserved populations in the state, including students with disabilities transitioning from school to the workplace.

  • States are also encouraged to use funds in innovative ways for significant system improvement. Examples of possible uses include:

    • Obtaining or improving effective case management systems that provide the agency with enhanced program management and evaluation capabilities.
    • Providing training to VR counselors and other persons who provide VR services that will enhance the utilization of rehabilitation technology by VR program participants and improve employment outcomes.
    • Providing intensive training to VR counselors and other persons who provide VR services on effective and innovative evidence-based VR practices to improve employment outcomes for persons with disabilities.
    • Providing intensive training to agency staff to improve the capability of the agency to analyze and use data to improve VR services and employment outcomes.

Fiscal Issues

  • In accordance with the goals of the ARRA, the VR ARRA funds should be obligated expeditiously and with appropriate accountability. VR ARRA funds will remain available for obligation by grantees until September 30, 2011. However, grant funds from the regular FY 2009 appropriation must be obligated by September 30, 2010 and may only be carried over into FY 2010 if the state has met the matching requirements for those funds.

  • The ARRA waives the matching requirements for the VR ARRA funds. However, it does not waive the requirements to match the regular grant funds. Therefore, a state still must provide the requisite non-federal funds, as provided in section 7(14) of the Rehabilitation Act, to match its FY 2009 VR grant award received through the program's regular appropriation.

  • A state may not count State Fiscal Stabilization funds or VR ARRA funds as non-federal funds for purposes of meeting the maintenance of effort (MOE) requirement for the VR State Grants program or the match that the state is required to make for the regular FY 2009 award.

  • The Secretary has authority under the Rehabilitation Act to waive a state's MOE requirement, in whole or in part, based on a determination that a waiver 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 causes significant unanticipated expenditures or reductions in revenue that result in a general reduction in programs within a state.

Accountability Principles

As with all federal funds, states are responsible for ensuring that VR ARRA funds are used prudently and in accordance with the law.

  • ARRA requires that recipients of funds made available under that act separately account for, and report on, how those funds are spent. Further information on reporting instructions will be provided online at

  • The President and the Secretary are committed to ensuring that ARRA funds are spent with an unprecedented level of transparency and accountability. VR ARRA expenditures will be reported on the Web site.

Additional Information

  • The Department will provide updates as additional information becomes available regarding the details of the VR ARRA funds.
  • The Department will also provide further information on the government-wide data collection and reporting requirements as this information becomes available.
  • If you have any questions or concerns, please email them to

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Last Modified: 04/09/2009