National Council on Disability

An independent federal agency making recommendations to the President and Congress 

to enhance the quality of life for all Americans with disabilities and their families.

1331 F Street, NW ■ Suite 850 ■ Washington, DC 20004

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Workforce Investment Act Reauthorization 

National Council on Disability 

March 23, 2010 

TOPICAL BRIEF: Vocational Rehabilitation (VR) Funding

ISSUE 1: Inadequate funding for state VR programs 

Recommendation:

Congress should authorize those funds necessary to equitably provide the 

Federal match for the state/Federal VR program. Further, Congress should amend

the VR funding formula to consider not only a state’s percentage of national 

population, but also its percentage of people with disabilities, and maintain states 

at their existing formula levels, without cuts, through a grandfathering period. 

Summary of Concern:

Although VR is an approximately $2.5 billion program, adjusted for inflation through a

cost of living adjustment (COLA), it has become apparent in recent years that the

combination of Federal and state matching funds available to the program have proved 

insufficient to meet the needs of all eligible individuals. Under the current system of

funding VR, the overall national program receives a mandatory COLA based on the 

Consumer Price Index (CPI). This COLA is then distributed to the states using a formula 

based largely on overall population growth and the average wage in each state. This 

formula has resulted in well over 20 states receiving less than the mandated COLA in 

any given year. It is also not apparent that this formula takes into account the population 

growth of working­age people with disabilities who need VR services to obtain 

competitive employment. Currently, Reallotment Funds, funds returned by states that do 

not match their entire federal allotment, are sometimes used to begin to address this 

formula problem by helping to insure that no state actually receives fewer dollars than

the prior year. The additional amount needed to bring all states up to the minimum

COLA has been estimated at approximately $20 million dollars per year. A combination

of any available Reallotment Funds and increases phased in over a number of years 

would insure all states reach the mandated COLA without adversely impacting any 

states that currently receive greater than the COLA due to the distribution formula.
ISSUE 2: Service delays for people with significant disabilities

Recommendation:

Congress should authorize the establishment of a Task Force comprised of

representatives from the Office of Management and Budget (OMB), Council of

State Administrators of VR (CSAVR), National Council of State Agencies for the 

Blind (NCSAB), and the Office on Disability Employment Policy (ODEP), as well as

rehabilitation consumers to make recommendations to Congress regarding 

statutory/funding formula changes to reduce or eliminate undue service delays 

for people with significant disabilities. The Task Force would be chaired by the 

Assistant Secretary, OSERS at the U.S. Department of Education, and provide a 

report with findings and recommendations within a six­month period after the 

signing of the bill into law. 

Summary of Concern:

A growing number of states have an approved Order of Selection, which has increased

the number of eligible individuals with disabilities who are on waiting lists to receive 

services. Order of selection is a provision of the law that allows states to delay or

withhold the provision of many services to some otherwise eligible individuals when 

state program resources do not enable all valid requests for service to be met. As a 

result, people deemed to have the least significant disabilities may be denied services 

or be placed on waiting lists for service, which can result in substantial delays. Although

it is difficult to estimate the proportion of eligible people who may have sought services 

or achieved stable competitive employment through them, the current situation in which 

many people are denied resources and opportunities from VR, is both troubling and 

unsustainable. It may be that some of those people who cannot obtain VR services in a

timely manner will receive meaningful assistance through the One­Stop system.  However, VR’s role as a mandatory partner to the One­Stop system means that where 

order­of­selection prevails, VR’s ability to provide supportive services to the One­Stops 

may also be compromised.

ISSUE 3: Separate funding authority 

Recommendation:

Congress should continue separate funding authorization for Supported

Employment State Grants, Projects with Industry, Migrant and Seasonal Farm

workers, and Recreation projects to provide a structured balance in the 

Rehabilitation system that would not be achieved with limited Title I funds. 

Likewise, Congress should continue to authorize VR as a separate Title with

separate funding under WIA. 

Summary of Concern:

When the WIA was adopted, the reauthorization of the Federal­state VR services 

program for people with disabilities (the Rehabilitation Act) was included as its Title IV.  At that time, considerable controversy surrounded the degree to which the existing VR 

system should be retained or merged into the new workforce development system. In
the end, Congress sought to achieve the best of both approaches by retaining the state

VR system but creating opportunities and requirements for cooperation between VR 

and the newly created local Work Investment Boards, One­Stop Career Centers and 

other WIA entities. The VR system is a complex combination of stand­alone and

collaborative functions and responsibilities. In its collaborative role, the VR system is 

one component of the overall Federal employment system operating under the auspices 

of WIA. As a separate program with separate funding under WIA, VR can continue 

focus on assisting people with disabilities in obtaining competitive jobs in their 

communities.

ISSUE 4: Focus on job retention and career advancement

Recommendation:

Congress should extend current VR responsibility to monitor employment

outcomes from 60 days to 12 months to place renewed focus on job retention and 

career advancement, with results documented. Accordingly, Congress should

provide separate line item appropriations to support extended VR attention to job

retention and career advancement. 

Summary of Concern:

The current VR system retains a structure that focuses on short­term outcomes rather

than the reality of long­term challenges of job retention and career advancement. Many 

VR clients recycle back to VR after less than one year as a result of limited or no

supports available from VR or any other system.

ISSUE 5: Documented collaboration efforts in service delivery 

Recommendation:

Congress should require VR state plans to document collaboration in service

delivery with both disability and generic systems, including Mental Health,  Developmental Disability, Social Security field offices, and local Workforce

Development One­Stops. Congress should require state Annual Reports to RSA 

to document these collaborations and their results.

Summary of Concern:

Primary and secondary sources of information indicate concern about the capacity and 

effectiveness of vocational rehabilitation and workforce development professionals to

provide effective and meaningful services and supports to people with the most 

significant disabilities. Currently, coordination and collaboration amongst VR agencies,

Workforce Development, Veterans Affairs, and Social Security is limited and typically 

does not provide a seamless system of support. Section 101(a)(11)(A) of the 

Rehabilitation Act requires the designated state VR agency to enter into cooperative 

agreements with other entities that are components of the statewide workforce 

investment system, and to replicate these agreements at the local level between 

individual offices of the designated state unit and the local entities carrying out activities 

through the statewide workforce investment system. These agreements, particularly
those at the local level, are important mechanisms to ensure effective communication, 

collaboration, coordination, and cooperation between the VR program and its partners 

in the statewide workforce investment system.

ISSUE 6: Enhanced options for SSI and SSDI applicants 

Recommendation:

Congress should require Social Security Administration (SSA) field offices to

offer referral to VR and the local Workforce Development area to all Supplemental 

Security Income (SSI) and/or Social Security Disability Insurance (SSDI)

applicants, whether or not they are successful in becoming a beneficiary. 

Summary of Concern:

Applicants for Social Security benefits are often unaware of resources and supports 

available from other systems. With the advent of the One­Stop Career Center approach 

to delivering employment and training services nationally, SSA recognized a unique

opportunity to gain assistance for its beneficiaries and has actively pursued 

collaborative projects with the Employment and Training Administration (ETA). Although 

previous Department of Labor (DOL) employment programs, such as the Job Training

Partnership Act, were ineffective in serving individuals with significant disabilities, WIA 

continues to present an opportunity for beneficiaries to successfully access and benefit 

from the same employment services as those available to the general public. While SSA

has begun positive work to harness these opportunities, currently, SSA does not 

formally offer applicants referral to other systems, which misses another important 

opportunity to coordinate return­to­work strategies.

ISSUE 7: Enhanced Partnership Plus Activities with Area ENs 

Recommendation:

Congress should require each VR state agency to document their Partnership

Plus activities with area Employment Networks (ENs) in their annual report to

RSA as part of effective collaboration under the Ticket to Work program. 

Summary of Concern:

Under Social Security’s Ticket to Work program, a person with a Ticket may choose 

between being served by a provider approved by SSA to function as an EN or being 

served by the state VR agency. An EN may choose whether or not to serve a particular

Social Security beneficiary with a disability. However, since Social Security beneficiaries 

with disabilities are presumptively eligible for services, VR agencies cannot chose 

whether or not to serve a particular beneficiary. 

In 2008, SSA issued revised regulations that significantly improved the Ticket to Work 

program. Partnership Plus represents a new service delivery model that allows flexibility 

for increased collaboration among VR agencies and ENs. When a State VR agency 

serves a beneficiary under the new Partnership Plus option, the beneficiary may initially 

receive VR services to meet his/her intensive up­front service needs, and after the VR
case is closed, the Ticket Holder may assign his/her Ticket to an EN and receive job

retention services or ongoing support services. While the EN has the potential to earn 

Phase 2 Milestone and Outcome payments, the Phase 1 Milestone payments are not 

available to the EN where VR closed the case with the beneficiary in employment.

ISSUE 8: Advance self­employment as an employment option

Recommendation:

Congress should require all VR state plans to document policies and practices to

advance self­employment as an employment goal and report annually as to

expenditures made to support this goal as well as on collaboration and results 

with Small Business Development Centers (SBDCs).

Summary of Concern:

Title V of WIA recognizes and emphasizes self­employment as an employment outcome 

for clients in the VR system. For an individual to be successful in pursuing and

maintaining self­employment, it is critical that both business professionals and disability 

service providers work as a collaborative team in assessing the individual’s readiness 

for self­employment and identifying and providing the necessary supports to the 

individual. In addition, it is critical for people with disabilities to understand how their

government cash benefits and health care coverage may be affected by becoming selfemployed.

Often in the past, disability service providers have not collaborated effectively with the

business community and business services and support systems have not been

receptive to individuals with more severe disabilities who are looking to enter selfemployment . To address this concern, rehabilitation and social service agencies are 

increasingly implementing strategies and establishing partnerships with other public and 

private sector agencies to advance self­employment as an effective route to economic 

independence and self­sufficiency for their clients. For example, a survey of SBDCs 

shows that although only 8 percent of SBDCs had formal interagency agreements with 

rehabilitation agencies, the majority of the respondents report it important to have the 

assistance of the rehabilitation agencies when working with people with disabilities. 

SBDCs that have interagency agreements at either the local or state level reported 

higher rates of referrals and more experience in meeting the needs of individuals with 

disabilities who desire to enter self­employment.

The National Council on Disability wishes to express its appreciation to Michael Morris 

and Dr. Peter Blanck (The Blanck Group, LLC) for their assistance in developing this 

brief.