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42837
Federal Register
 /Vol. 64, No. 151/Friday, August 6, 1999/Rules and Regulations
 Example 1.
In conducting a performanceevaluation, a supervisor may take intoconsideration information showing that theemployee had failed to propose anappropriate adjustment to tax liability in oneof the cases the employee examined,provided that information is derived from areview of the work done on the case. Allinformation derived from such a review of individual cases handled by an employee,including time expended, issues raised, andenforcement outcomes reached may beconsidered in evaluating the employee.
 Example 2.
When assigning a case, asupervisor may discuss with the employeethe merits, issues and development of techniques of the case based upon a reviewof the case file.
 Example 3.
A supervisor may not establisha goal for proposed adjustments in a futureexamination, based upon the tax enforcementresults achieved in other cases.
 Example 4.
A headquarters unit may userecords of tax enforcement results to developmethodologies and algorithms for use inselecting tax returns to audit.Approved: July 22, 1999.
Charles O. Rossotti,
Commissioner of Internal Revenue.
Dated: July 22, 1999.
Donald C. Lubick,
 Assistant Secretary of the Treasury (TaxPolicy).
[FR Doc. 99–19769 Filed 8–5–99; 8:45 am]
BILLING CODE 4830–01–U
DEPARTMENT OF EDUCATION34 CFR Part 611
RIN 1840–AC67
Teacher Quality Enhancement GrantsProgram
AGENCY
:
Office of PostsecondaryEducation, Department of Education
ACTION
:
Final regulations
SUMMARY
:
The Assistant Secretary forPostsecondary Education (AssistantSecretary) issues regulations that applythe eight percent (8%) indirect costlimitation for the Department’seducational training grants to all fundsthat States and local educationalagencies receive under the TeacherQuality Enhancement Grants Programfor States and Partnerships authorizedby sections 201–205 of the HigherEducation Act (HEA), as amended bythe Higher Education Amendments of 1998. These regulations would ensurethat the limited funding available tosupport program activities isconcentrated on direct support forimprovements in teacher licensing,certification, preparation, andrecruitment, rather than for recipient‘‘overhead.’’
DATES
:
These regulations are effectiveon September 7, 1999.
FOR FURTHER INFORMATION CONTACT
:
Dr.Louis Venuto, Higher EducationPrograms, Office of PostsecondaryEducation, 400 Maryland Ave. SW.,Portals Building, Room 6234,Washington, D.C. 20202–5131:Telephone: (202) 708–8847, or by FAXto: (202) 260–9272. Inquiries also maybe sent by e-mail to:Louis
              
Venuto@ed.gov. If you use atelecommunications device for the deaf (TDD), you may call the FederalInformation Relay Service (FIRS) at 1–800–877–8339.Individuals with disabilities mayobtain this document in an alternateformat (e.g., Braille, large print,audiotape, or computer diskette) onrequest to the contact person listed inthe preceding paragraph.
SUPPLEMENTARY INFORMATION
:
Background
The Nation faces an immediate needfor significant improvements in teacherlicensure, certification, preparation, andrecruitment. America’s schools willneed to hire 2.2 million teachers overthe next decade, more than half of whom will be first-time teachers. Asclassrooms grow more challenging anddiverse, these teachers will need to bewell prepared to teach all students tothe highest standards. Contemporaryclassrooms and social conditionsconfront teachers with a range of complex challenges previouslyunknown in the profession. Neweducation goals and tougher standards,more rigorous assessments, site-basedmanagement, greater interest in parentalinvolvement, the continuing importanceof safety and discipline, and expandeduse of technology increase theknowledge and skills that teachingdemands.On October 8, 1998, the Presidentsigned into law the Higher EducationAmendments of 1998 (Pub. L. 105–244).Title II of this law addresses theNation’s need to ensure that newteachers enter the classroom prepared toteach all students to high standards byauthorizing, as Title II of the HEA,Teacher Quality Enhancement Grantsfor States and Partnerships.The new Teacher QualityEnhancement Grants Program consistsof three different competitive grantprograms: (1) The State Grants Program,which is designed to help Statespromote a broad array of improvementsin teacher licensure, certification,preparation and recruitment, (2) thePartnership Grants for ImprovingTeacher Preparation Program, which isdesigned to have schools of education,schools of arts and sciences, high-needlocal educational agencies (LEAs) andothers work together to ensure that newteachers have the content knowledgeand skills their students need of themwhen they enter the classroom, and (3)the Teacher Recruitment Program,which is designed to help schools andschool districts with severe teachershortages to secure the high-qualityteachers that they need. For Fiscal Year1999, Congress appropriated $75million for grants to States andpartnerships to implement activitiesunder these programs.These three programs are designed toincrease student achievement byimplementing comprehensiveapproaches to improving teacherquality. They collectively provide anhistoric opportunity to make positivechange in the recruitment, preparation,licensing, and on-going support of teachers in America. As such, thesuccess of these programs is critical tothe Nation’s ability to succeed inincreasing student achievement for allstudents. However, to achieve successthose awarded Teacher QualityEnhancement Grants must ensure thatthey focus their grant funds on coststhat are directly associated withsecuring needed improvements inteaching and the teaching profession.For this reason, on May 19, 1999, theAssistant Secretary published a Noticeof Proposed Rulemaking (NPRM) forthis program in the
Federal Register
(64FR 27403) that proposed a limit of eightpercent (8%) on the indirect cost ratethat States and LEAs receiving TeacherQuality Program funds could use to payfor their overhead and other expensesthat they could charge as ‘‘indirectcosts.’’ This eight-percent rate is thesame maximum rate that theDepartment, under 34 CFR 75.562(a),now permits institutions of highereducation (IHEs) and nonprofit agenciesto use in charging indirect costs toeducation training grants. As the May18, 1999 NPRM explained, byestablishing this maximum eight-percent indirect cost for States andLEAs, these recipients will have thesame limitation on their indirect costsas do those IHEs and nonprofitorganizations that receive fundsawarded under the programs’ initialcompetitions. See the Notice InvitingApplications for New Awards and FinalProcedures and Requirements for FY1999 Competitions Under the TeacherQuality Enhancement Grant Programs,64 FR 6139, 6145–46 (February 8, 1999).Therefore, this regulation will have all
 
42838
Federal Register
 /Vol. 64, No. 151/Friday, August 6, 1999/Rules and Regulations
recipients of program funds subject tothe same maximum indirect cost rate.The NPRM recognized that, absent alimitation of this kind, §§75.560–75.564and 80.22 of the EducationDepartment’s General AdministrativeRegulations (EDGAR), whichincorporate Federal cost principlesdeveloped by the Office of Managementand Budget (OMB), permit grantees toclaim these costs. However, it alsoexplained that the best data available tothe Department indicate that over 20States have indirect cost rates of over 15percent; two States have an indirect costrates of 34 percent. Absent theestablishment, through programregulations, of a limitation on recipientindirect cost rates, States with theseindirect cost rates that are awarded Stateor Teacher Recruitment Program grantscould devote 15 percent or more of theirgrant awards to support their overalloverhead expenses and other indirectcosts rather than the direct costs of improving teacher quality.The Secretary continues to believethat allowing States, LEAs, and otherTeacher Quality Enhancement grantrecipients to use program funds tocompensate themselves for these veryhigh general overhead and relatedexpenses is inconsistent with the vitalpurpose of the programs and theexpectations that Congress and theNation have for their success.Accordingly, for reasons explained morefully in the NPRM, given (1) the pivotalsignificance of the Teacher QualityEnhancement Grant programs, (2) thenational need that these programs havea maximum impact on the quality andquantity of highly-qualified newteachers, and (3) the fact that theseprograms are competitive, the Secretaryissues 34 CFR 611.41 (renumbered fromproposed §611.30 in the NPRM).Section 611.41 establishes a maximumindirect cost rate that a State or LEAreceiving funds under any of theTeacher Quality Enhancement GrantPrograms may use in charging programfunds as indirect costs. Under thisregulation, a State or LEA may chargeTeacher Quality Enhancement GrantsProgram funds for indirect costs at a ratethat is limited to eight percent or itsnegotiated rate, whichever is less.Section 611.41 will apply to anyfunding that States and LEAs receiveunder the three Teacher QualityEnhancement Grant programs, bothunder the initial and any subsequentprogram. As explained above, theDepartment previously established thislimitation for IHEs and nonprofitorganizations that receive programfunds awarded in the initial 1999 grantcompetitions. In proposed regulationsthat the Secretary will develop to governfuture competitions under the threeTeacher Quality Enhancement Grantprograms, the Secretary intends topropose that this eight-percentlimitation for IHEs and nonprofitorganizations apply to futurecompetitions as well. This proposal, if finalized, would make the eight-percentmaximum indirect cost rate applicableto all grant funds awarded under allgrant competitions held under theseprograms, regardless of the recipient.
Analysis of Comments and Changes
In response to the Secretary’sinvitation in the NPRM, one partysubmitted comments on the proposedregulation. An analysis of the commentand of the changes in the regulationssince publication of the NPRM follows.
Comment:
The commenter noted thatthe cost principles in OMB Circular A–87, which govern Federal grants to Stateand local governments, authorizegrantees to recover indirect costs thatare otherwise allowable. Thecommenter, a State official,acknowledged that the proposed rule forthe Teacher Quality programs woulditself have minimal impact on his state.However, the commenter expressedconcern about what appeared to be atrend on the part of Federal programs tocap administrative costs, and thus createan ‘‘unfunded mandate.’’
 Discussion:
The three new TeacherQuality Enhancement Grant programsoffer an opportunity to improve teacherquality in America by effectivelyaddressing the immediate need forsignificant improvements in teacherlicensure, certification, preparation, andrecruitment. However, success willdepend upon how well we use theresources that Congress provides tomake sustained and meaningfulimprovements in teacher licensure,certification, preparation, andrecruitment. For fiscal year 1999,Congress appropriated $75 million forthese three component programs. If these funds, and funds that Congresswill appropriate for use in future years,are to achieve their purposes, we needto ensure that they are used aseffectively as possible. To do so, it isnecessary to place a reasonablelimitation on the amount of programfunds that Title II grant recipients mayuse to reimburse themselves for the‘‘indirect costs’’ of program activities.Doing so does not create, as thecommenter suggests, an unfundedmandate. Rather, §611.41 strikes areasonable balance between the need tofocus as much funding for the TeacherQuality Enhancement Grant programs aspossible on direct services to improveteacher licensure, certification,preparation, and recruitment, and thereality that, to do so, recipients willencounter some indirect costs. In thisregard, the Secretary continues tobelieve that States and LEAs receivingTeacher Quality Enhancement Grantfunds do not need to apply high generalindirect cost rates in order to fairlycompensate themselves for the overheadand other indirect costs associated withactivities they will conduct.Moreover, because these programs arecompetitive, States and LEAs (as well asIHEs and nonprofit agencies) thatbelieve that they need additionalindirect costs to implement theseneeded grant activities simply need notapply or accept grant awards. Therefore,this regulation does not impose anynon-reimbursed indirect costs onunwilling recipients, and so does notestablish an unfunded mandate.The Department has no plans to applythis limitation on State and LEAindirect cost rates to other grantprograms. However, any decision topropose doing so would come only afterthe Department weighs State and LEAinterests in charging indirect costsauthorized in both EDGAR regulationsand OMB cost principles against theNation’s need to maximize the amountof grant funds supporting directprogram services. In weighing theserelative interests, one considerationmust be whether a proposal to limitindirect cost rates can be expected todiscourage submission of high-qualityapplications. In this regard, we note thatthe Department announced in theapplication packages used for the initialTeacher Quality Enhancement grantcompetitions its intent to propose theeight-percent limitation on State andLEA indirect cost rates. Nonetheless, 40States applied for the State Programgrants, and large numbers of LEAs areincluded as partners in the 220partnerships that applied for thePartnership Program grants. Alsorelevant here is the fact that no Stateapplicant for 1999 grant competitionsrequested an indirect costreimbursement in excess of eightpercent.State and Teacher Recruitment grantawards have yet to be announced.However, the Secretary is pleased withthe number of high-quality applications,and believes that this outpouring of interest in the new Teacher QualityEnhancement Grants Programdemonstrates that the limitation onindirect costs has not discouraged high-quality applications for these importantawards.
Change:
None.
of 00

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