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 Thursday, April 6, 2000
Part IX 
Department of Education 
34 CFR Part 379Projects With Industry; Final Rule
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Federal Register
/Vol. 65, No. 67/Thursday, April 6, 2000/Rules and Regulations
RIN 1820–AB45
Projects With Industry
Office of Special Education andRehabilitative Services, Education.
Final regulations.
The Secretary amends theregulations governing the Projects WithIndustry (PWI) program to clarifystatutory intent and to enhance programaccountability.
These regulations are effectiveMay 8, 2000.
Thomas E. Finch, U.S. Department of Education, 400 Maryland Avenue, SW.,room 3315, Mary E. Switzer Building,Washington, DC 20202–2575.Telephone: (202) 205–8292. 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 alternativeformat (
Braille, large print,audiotape, or computer diskette) onrequest to the contact person named inthe preceding paragraph.
On January 22, 1996, we published a noticeof proposed rulemaking (NPRM) for thePWI program in the
Federal Register
(61FR 1672) inviting comments on changesneeded to improve the PWI program’scompliance indicators. We used thecomments received in response to thatNPRM, comments provided byparticipants in focus group meetingsheld by the Rehabilitation ServicesAdministration (RSA), a June 1994report on the PWI program prepared forthe Department by the ResearchTriangle Institute, and RSA’s analysis of grantee performance on the current PWIcompliance indicators to developrevisions to the PWI complianceindicators.On June 23, 1998, we published anNPRM for the PWI program in the
Federal Register
(63 FR 34218)proposing revisions to the PWIcompliance indicators. On pages 34218through 34221 of the June 23, 1998,NPRM, we discussed the major changesproposed in that document to improveproject performance, enhance projectaccountability, better reflect statutoryintent, and reduce grantee burden.These proposed changes included thefollowing:
Amending §379.21(a)(4) to requirean applicant to include in itsapplication a description of the factorsthat justify the project’s projectedaverage cost per placement.
Amending §379.50 to eliminate theminimum composite scoring system forall proposed compliance indicators andreplace it with minimum performancelevels on all proposed complianceindicators. We also proposed therequirement that grantees attain at leastthe minimum performance level on eachof the compliance indicators to beeligible for continuation funding.
Amending §379.51 and §379.52 toeliminate both the performance rangeswithin each proposed complianceindicator and the minimum compositescoring system for all proposedcompliance indicators. We proposedreplacing these with the requirementthat grantees attain at least theminimum performance level on each of the compliance indicators.
Amending §379.53 to replace thenine compliance indicators with fiveproposed compliance indicators.
Amending §379.54 to reflect thechange from composite scoring to apass/fail system.In addition to the proposed changes,we also stated that we proposed tocollect data from PWI projects on‘‘change in earnings’’ and ‘‘jobretention’’ for individuals who receiveservices. We stated our intention to usethis data to determine the need for—(a)Any revision to the performance levelfor the ‘‘Change in earnings’’compliance indicator or to thecompliance indicator itself; and (b)developing a compliance indicator, andappropriate performance level tomeasure job retention for individualswho receive PWI services.In response to public comment, wehave made several changes in these finalregulations from what was proposed inthe June 23, 1998, NPRM. The finalregulations—(1) Require that each grantapplication include a projected averagecost per placement for the project379.21(c)); (2) require a project to passthe two ‘‘primary’’ complianceindicators and any two of the three‘‘secondary’’ compliance indicators toreceive a continuation award (§379.50);(3) designate two compliance indicatorsas ‘‘primary’’ and three complianceindicators as ‘‘secondary’’ (§379.51(b)and (c)); and (4) change the minimumperformance levels for three of thecompliance indicators (§379.53(a)(1)—Placement rate; §379.53(a)(2)—Changein earnings; and §379.53(b)(3)—Averagecost per placement). A more detaileddescription of these and other changesto the regulations is contained in the‘‘Analysis of Comments and Changes’’section of this preamble.
Analysis of Comments and Changes
In response to our invitation in the June 23, 1998, NPRM, 108 partiessubmitted comments on the proposedregulations. Most commentersaddressed more than one issueregarding the proposed regulations. Wereviewed all comments and carefullyconsidered these comments in thedevelopment of the final regulations.Major issues raised by the commentersare discussed under the section of thefinal regulations to which they pertain.We do not specifically discuss in thispreamble: (1) The technical changes tothe PWI regulations (published in the
Federal Register
on September 1, 1999(64 FR 48052)) to implement the 1998Amendments to the Rehabilitation Actof 1973 (1998 Amendments), which arein title IV of the Workforce InvestmentAct of 1998 (WIA), Pub. L. 105–220(enacted August 7, 1998); (2) changessuggested by commenters but that thelaw does not authorize us to make underthe applicable statutory authority; and(3) other minor changes. We also wishto point out that the technical changeswe made to the PWI regulations toimplement the 1998 Amendmentsincluded substantial changes to §379.21from what we proposed in the June 23,1998, NPRM. In these final regulations,we made several additional changes to§379.21 beyond the technical changeswe made on September 1, 1999.However, only one of these additionalchanges, which we mentionedpreviously, was significant, and theothers were very minor.An analysis of the comments and thechanges in the regulations sincepublication of the June 23, 1998, NPRMfollows.
Section 379.21(a)(7)—Grant ApplicationMust Include a Description of theFactors That Justify the Applicant’sProjected Average Cost Per Placement Comments:
Four commenterssupported the requirement in proposed§379.21(a)(4) that an applicationinclude a justification of the project’sproposed cost per placement.
We have reviewed thissection and wish to clarify that it is theproject’s projected
cost perplacement that must be justified. Thisclarifying change makes the applicationrequirement consistent with the actualcompliance indicator, which refers tothe project’s ‘‘actual
cost perplacement.’’ (Emphasis added.)
We have revised§379.21(a)(7)(proposed §379.21(a)(4)) by changing the word ‘‘proposed’’ to‘‘projected’’ and adding the word‘‘average’’ to the phrase ‘‘proposed cost
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Federal Register
/Vol. 65, No. 67/Thursday, April 6, 2000/Rules and Regulations
per placement’’ so that the regulationsnow read ‘‘projected average cost perplacement.’’
Section 379.21(c)—Grant ApplicationMust Include the Project’s Projected Average Cost Per Placement Comments:
Since publication of the June 23, 1998, NPRM, we have reviewedthis section and realized that therequirement to include in an applicationthe projected average cost per placementwas only implicit. The NPRM requiredthat the grant application include adescription of the justification of theproject’s proposed cost per placement.In addition, the NPRM proposed aminimum performance level not toexceed 110 percent of the projectedaverage cost per placement in thegrantee’s application. Although thislanguage implied that the grantee’sapplication should include theprojected average cost per placement sothat the difference between the actualaverage cost per placement and theprojected average cost per placementcould be calculated, this requirementwas not explicit anywhere in the NPRM.As a result, we believed the language inthe final regulations needed to be clearand explicit that the applicant mustinclude the projected average cost perplacement in its application. Inaddition, we believe an applicantshould understand that it must use thesame method to calculate the projectedaverage cost per placement that we havealways used, which is to divide the sumof the total project costs (
Federaldollar amount of the grant plus the totalnon-Federal contributions) by thenumber of individuals the applicantprojects in its application will be served by the project. This method is describedin Instruction Number 8 of the‘‘Instructions for Completing theReporting Form for Projects WithIndustry Compliance Indicators andAnnual Evaluation Report’’ that we mailto each recipient of a PWI grant.
We have added a newparagraph (c) to §379.21 that explicitlyrequires the applicant to include in itsapplication the projected average costper placement for the proposed project,which must be calculated by dividingthe sum of the total project costs (
Federal dollar amount of the grant plusthe total non-Federal contributions) bythe number of individuals the applicantprojects in its application will be served by the project.
Section 379.50—Requirements for Continuation Funding Comments:
Fifteen commentersopposed the requirement that granteesmeet minimum performance levels onall program compliance indicators toreceive continuation funding. Amajority of these commenters objectedto the proposed requirement becausethey believed the composite scoringmethod allowed for more flexibility inhow projects achieve their goals. Four of these commenters favored retaining thecomposite scoring method because itallowed a project that excelled in one ormore areas to receive continuationfunding even though it might be weakor unable to attain the minimumperformance level in one or more otherareas.
We agree with thecomments favoring more flexibility andhave made changes to achieve acombination of flexibility andaccountability. Under the formercomposite scoring method, a PWIproject could receive zero points on asmany as five of the nine complianceindicators and still receive continuationfunding. Because this did not ensure thehigh level of performance andaccountability we expected of all PWIprojects, we proposed the changespublished in the June 23, 1998, NPRM.We have since reviewed availabledata to determine the effect on PWIprojects if they had been required tomeet all of the five proposedcompliance indicators to receivecontinuation funding. The availabledata indicated that, although mostprojects could have met most of theminimum performance levels, asignificant percentage of projects mightnot have met all five of the proposedcompliance indicators. These projectswould have failed to receivecontinuation funding under the systemproposed in the June 23, 1998, NPRM.After reviewing the data, we believe thechanges we have made combine the bestfeatures of the minimum performancelevel approach and the compositescoring method.The changes we have made are basedon the belief that placing individuals incompetitive employment and increasingtheir earnings are the two mostimportant purposes of the PWI program.The newly designated ‘‘primary’’compliance indicators will measurehow well a PWI project achieves thesedual goals. We believe that if a projectis unable to meet the minimumperformance level for both of these twocompliance indicators, it should notreceive a continuation award.We believe the newly designated‘‘secondary’’ compliance indicators alsoare important for measuring the successof a PWI project. However, we do not believe that the failure to meet any oneof the ‘‘secondary’’ complianceindicators should cause an otherwisesuccessful project to lose itscontinuation funding. Therefore, wehave determined that PWI projects mustmeet only two of the three ‘‘secondary’’compliance indicators to receivecontinuation funding.We believe that requiring PWIprojects to meet only two of the three‘‘secondary’’ compliance indicatorsprovides the necessary flexibility toensure that individuals without asignificant disability and individualswho were unemployed for shorterperiods also will have access to PWIservices. Finally, this added flexibilitywill benefit projects—(1) Designed toexcel in meeting one ‘‘secondary’’compliance indicator (
projectsserving a high percentage of individualswith significant disabilities) but whichmay have difficulty in meeting one or both of the other ‘‘secondary’’indicators; and (2) projects facing avariety of economic and other factorsthat affect how much it costs to provideservices to individuals.
We have revised §379.50 toeliminate the proposed requirement thata project meet the minimumperformance levels on all fivecompliance indicators to receive acontinuation award. We also havedivided the proposed five complianceindicators into ‘‘primary’’ and‘‘secondary’’ compliance indicators.‘‘Placement rate’’ and ‘‘Change inearnings’’ are ‘‘primary’’ indicators.‘‘Percent placed who have significantdisabilities,’’ ‘‘Percent placed who werepreviously unemployed,’’ and ‘‘Cost perplacement’’ are ‘‘secondary’’ indicators.We have revised §379.50 to require thata grantee meet the minimumperformance levels of the two newlydesignated ‘‘primary’’ complianceindicators and any two of the threenewly designated ‘‘secondary’’compliance indicators to receivecontinuation funding. This last changemakes proposed §379.52(c) incorrect.Therefore, we have deleted §379.52(c).
Four commenters believedthat eliminating the composite scoringmethod (on which continuation fundingwas based) in the middle of a grantperiod is unfair to existing grantees.
We are sensitive to theconcerns of commenters that existingprojects should not be unfairlypenalized for grant proposals that wereproduced under the previouscompliance indicators. We alsorecognize the need for a delay in theimplementation of the indicators andthe need to allow projects theopportunity to negotiate changes to theirapproved grant applications.
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