**U.S. DEPARTMENT OF EDUCATION**

**OFFICE OF SPECIAL EDUCATION AND REHABILITATION SERVICES**

**REHABILITATION SERVICES ADMINISTRATION**

**WASHINGTON D.C. 20202**

> **[TECHNICAL ASSISTANCE CIRCULAR]{.underline}**
>
> **RSA-TAC-00-02**
>
> **July 24, 2000**

**TO:** State Vocational Rehabilitation Agencies (General)

> State Vocational Rehabilitation Agencies (Blind)
>
> Client Assistance Programs
>
> Regional Rehabilitation Continuing Education Programs
>
> American Indian Vocational Rehabilitation Service Programs
>
> RSA Senior Management Team

**SUBJECT:** Self-employment, Telecommuting, and Establishing a Small
Business as Employment Outcomes

> Statutory and Regulatory Citations: the Rehabilitation Act of 1973, as
> amended; the Workforce Investment Act of 1998; 34 CFR Part 361.

**[PURPOSES]{.underline}:**

The Rehabilitation Act (Act) Amendments of 1998, which are contained in
Title IV of the Workforce Investment Act, include two specific
references to self-employment, telecommuting, and establishing a small
business as viable employment outcomes under the State Vocational
Rehabilitation (VR) Services Program. One purpose of this Technical
Assistance Circular (TAC) is to highlight these changes.

A second purpose of this TAC is to bring attention to three recent
publications that contain effective and proven methods for utilizing
self-employment, including the establishment of a small business, as an
employment outcome.

# **BACKGROUND**

The U.S. Department of Labor reported that in 1994 approximately 12
percent of the American workforce were self-employed. Data from the 1990
Census indicated that approximately 12 percent of the individuals who
reported a work disability also reported being self-employed. While
self-employment has always been a permissible employment outcome under
the Act, data from the State VR Services Program indicate that, of those
individuals who achieve an employment outcome, 3 percent achieve an
employment outcome in the self-employment category. The results of
several recently completed demonstration projects on "Choice" (see
RSA-IM-98-16, July 7, 1998) indicate that vocational rehabilitation
consumers are interested in self-employment outcomes. The percentages of
individuals participating in "Choice" projects who sought
self-employment were higher than the percentage of individuals in the
State VR Services Program who achieve self-employment outcomes.

Two recent reports, one by the XXIV Institute on Rehabilitation Issues
(1998) and the other by the Presidential Task Force on Employment of
Adults with Disabilities (November 15, 1998), concluded that
self-employment outcomes are an underutilized, and potentially
productive (given the changing nature of the U.S. workforce) source of
employment opportunities for individuals with disabilities. These
reports found that technological advances, especially in the areas of
computers and telecommunications, have removed many of the obstacles
that previously hampered individuals with disabilities from successfully
entering self-employment.

The language in the Rehabilitation Act Amendments of 1998 regarding
self-employment, telecommuting, and establishing a small business makes
it clear that Congress intends these employment outcomes to be available
in assisting individuals with disabilities to obtain employment
opportunities consistent with their strengths, resources, priorities,
concerns, abilities, capabilities, interests, and informed choice. These
inclusions also make it explicit that Congress intends self-employment,
telecommuting, and establishing a small business to be viable employment
outcomes, and that the State VR Services Program is to have the
authority and ability to provide the services necessary to support those
outcomes when they are "described in an individualized plan for
employment necessary to assist an individual with a disability in
preparing for, securing, retaining, or regaining an employment outcome
that is consistent with the strengths, resources, priorities, concerns,
abilities, capabilities, interests, and informed choice of the
individual." (§103(a))

# 

# **The Rehabilitation Act Amendments of 1998**

There are two sections of the Act, as amended in 1998, where
self-employment, telecommuting, and establishing a small business are
cited as appropriate employment outcomes.

The first instance is at §7(11)(C), under the definition of an
employment outcome:

The term "employment outcome" means, with respect to an individual\--

> ...
>
> \(C\) satisfying any other vocational outcome the Secretary may
> determine to be appropriate (including satisfying the vocational
> outcome of self-employment, telecommuting, or business ownership), in
> a manner consistent with the Act.

The second instance is at §103(a)(13), among the vocational services to
be provided under the Act:

\(13\) technical assistance and other consultation services to conduct
market analyses, develop business plans, and otherwise provide
resources, to the extent such resources are authorized to be provided
through the statewide workforce investment system, to eligible
individuals who are pursuing self-employment or telecommuting or
establishing a small business operation as an employment outcome.

The Rehabilitation Services Administration has received several requests
for clarification of the meaning of the phrase "to the extent such
resources are authorized to be provided through the statewide workforce
investment system\...." The phrase refers to the manner in which the Act
authorizes the State VR Services Program to "otherwise provide
resources," to individuals pursuing self-employment, telecommuting, or
establishing a small business, and, in effect, places a condition on the
provision of resources [other than]{.underline} "technical assistance
and other consultation services to provide market analyses" and the
"develop\[ment\] of business plans" to eligible individuals. The
condition is that the other "resources" must be provided in a manner
consistent with what is authorized to be provided through the statewide
workforce investment system of the WIA. This condition does not apply to
the provision of any other vocational rehabilitation service listed in
section 103(a) of the Act.

Each statewide workforce investment system must include a "State plan"
which describes the employment and training activities that are to be
carried out with the funding received under the WIA (see §112 of WIA).
The employment and training activities to be provided under each
statewide workforce investment system are to be determined individually
by each State, will vary depending on the needs and economic conditions
of each State, and may vary between local areas within each State (see
§116 of WIA). As the extent and scope of the employment and training
services to be provided under the statewide workforce investment system
will vary from State to State, each State VR agency must determine what
activities the WIA State plan calls for in their State (and localities
within their State, as appropriate), and ensure that these resources are
also available and provided (as appropriate) to eligible individuals in
a manner consistent with the statewide workforce investment system.

Based upon long-standing policy, an individual with a disability cannot
be **required** to take out a loan to pay for any vocational
rehabilitation service. However, there may be circumstances where the
individual elects to do so. In such instances, the Department has
determined that State VR Services Program funds may be used to guarantee
(but not provide) a loan to an individual with a disability receiving VR
services to enable the individual to pay for certain items contained in
the individualized plan for employment. Included among those items may
be loans for the purpose of establishing a small business or for
equipment needed to enter self-employment. The loans must be for the
receipt of a VR service that the State agency may provide to the
consumer under the law. State VR Services Program funds may be used to
guarantee the repayment of the unpaid balance of principal (but not the
accrued interest) on the loan. In addition, the provisions of 34 CFR
361.54 - [Participation of individuals in cost of services based on
financial need]{.underline} may apply if a State employs such a
procedure. As stated at 34 CFR 361.50(b)(3), the State unit may not
place absolute dollar limits on specific service categories or on the
total services provided to an individual.

# **Recent Publications**

To implement the intent of Congress for self-employment, telecommuting,
and the establishment of a small business to become viable employment
outcomes under the State VR Services Program, the rehabilitation
community must continue to define and refine the nature and scope of
vocational rehabilitation services to be provided to eligible
individuals pursuing those outcomes, and the role of the vocational
counselor in providing vocational rehabilitation services to those
individuals. Vocational rehabilitation counselors require assistance and
guidance to support clients in exploring the marketplace, developing a
viable business plan, providing necessary accommodations, obtaining
items necessary for business start-up, connecting clients with community
resources (including funding sources), and other activities related to
entering self-employment of establishing a small business.

Three recent documents present information on effective methods of
providing VR services to individuals with disabilities entering
self-employment and establishing small businesses.

The XXIV Institute on Rehabilitation Issues produced a document titled
"People With Disabilities Developing Self-employment and Small Business
Opportunities" (1998). This document is intended as a tool for VR
counselors to assist individuals with disabilities, and a resource for
VR consumers who wish to pursue self-employment and small business
opportunities. This document also contains references that can provide
additional assistance. Copies of this document may be obtained from:

> Region VI Rehabilitation Continuing Education Program
>
> P.O. Box 1358
>
> Hot Springs, Arkansas 71902
>
> Telephone: 501-623-7700
>
> Fax: 501-624-6250

(Note: The Region VI Rehabilitation Continuing Education Program
maintains a web site on self-employment and entrepreneurship for
individuals with disabilities at www.cei.net/\~regionvii/business.htm.)

The "First Report of the Presidential Task Force on Employment of Adults
with Disabilities" (November 15, 1998) contains the findings of the Work
Group on the Small Business and Entrepreneurial Opportunities which
provides information on what activities are currently underway to
increase self-employment as a viable employment outcome and what actions
are necessary to further the use of this employment outcome. This
document also provides references that may be useful to State VR
agencies in their efforts to more effectively utilize self-employment
and the establishment of a small business as employment outcomes.

\"Getting Down to Business: A Blueprint for Creating and Supporting
Entrepreneurial Opportunities for Individuals with Disabilities\"
(April, 2000) addresses the current status of small business and
self-employment opportunities for individuals with disabilities and
offers recommendations for addressing barriers to business ownership.
The findings in this report build upon the proceedings of the National
Blue Ribbon Panel on Self-employment, Small Business and Disability,
convened by the President\'s Committee on Employment of People with
Disabilities in July 1998. This publication contains profiles of
successful entrepreneurs, an overview of the business planning process,
useful web sites, and entrepreneurial opportunities for individuals with
disabilities.

Copies of these latter two documents may be obtained from:

> Presidential Task Force on Employment of Adults with Disabilities
>
> Room S2220D
>
> 200 Constitution Avenue
>
> Washington DC 20210
>
> Telephone (voice): 202-693-4939
>
> (TTY): 202-693-4290
>
> Fax: 202-693-4929

Questions regarding this Technical Assistance Circular should be
directed to the RSA Regional Commissioners.

> Fredric K. Schroeder, Ph.D.
>
> Commissioner