30626 Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices

DEPARTMENT OF EDUCATION

Intent To Repay to the State of Illinois

Department of Human Services Funds

Recovered as a Result of a Preliminary

Department Decision

AGENCY: Office of Special Education and

Rehabilitative Services, Department of

Education.

ACTION: Notice of intent to award

grantback funds.

SUMMARY: Under section 459 of the

General Education Provisions Act

(GEPA), 20 U.S.C. 1234h (1994), the

U.S. Secretary of Education intends to

repay to the State of Illinois Department

of Human Services (IDHS), under a

grantback arrangement, an amount equal

to 75 percent of the principal amount of

funds recovered by the U.S. Department

of Education (Department) as a result of

a Preliminary Department Decision

(PDD). This notice describes the IDHS’

plan for the use of the repaid funds and

the terms and conditions under which

the Secretary intends to make those

funds available. This notice invites

comments on the proposed grantback.

DATES: We must receive your comments

on or before July 6, 2001.

ADDRESSES: Address all comments about

the proposed grantback to Syed M.

Asghar, U.S. Department of Education,

400 Maryland Avenue, SW., room 3215,

Switzer Building, Washington, DC

20202–6132. If you prefer to send your

comments through the Internet, use the

following address: syed.asghar@ed.gov.

FOR FURTHER INFORMATION CONTACT:

Syed M. Asghar. Telephone: (202) 205–

3015. If you use a telecommunications

device for the deaf (TDD), you may call

the Federal Information Relay Service

(FIRS) at 1–800–877–8339.

Individuals with disabilities may

obtain the document in an alternative

format (e.g., Braille, large print,

audiotape, or computer diskette) on

request to the contact person listed in

the preceding paragraph.

SUPPLEMENTARY INFORMATION:

A. Background

In August 1998, the Department

recovered $4,942,253 from the IDHS

under the terms of a Settlement

Agreement entered into between IDHS

and the Department on June 17, 1998,

which resolved the audit determination

of the June 20, 1997 PDD, bearing Audit

Control Number 05–53012. The PDD

originally sought a refund in the amount

of $11,173,422 for violations of the

Office of Management and Budget

(OMB) Circular A–87 relating to the

charging of indirect costs to the State’s

Vocational Rehabilitation (VR) Services

Program grants for Federal fiscal years

(FYs) 1993 and 1994.

The overclaimed indirect costs

resulted from the organizationwide

audit conducted in accordance with the

Single Audit Act of 1984, Public Law

98–502, 31 U.S.C. 7501–7507, and the

provisions of OMB Circular A–128,

‘‘Audits of State and Local

Governments.’’

The claims involved the IDHS’

administration of the State VR Services

Program for Federal FYs 1993 and 1994.

This program is authorized by the

Rehabilitation Act of 1973, as amended

(Act), 29 U.S.C. 701 et seq. The Act

authorizes grants to assist States to meet

the current and future needs of

individuals with disabilities so that

those individuals may prepare for and

engage in gainful employment to the

extent of their capabilities.

The PDD established the fact that

IDHS’ predecessor, the Illinois

Department of Rehabilitation Services

(DORS), had violated OMB Circular A–

87 by overclaiming $11,173,422 in FYs

1993 and 1994 as indirect costs to the

VR program. Based on documentation

submitted by IDHS after it filed its

application for review of the PDD with

the Office of Administrative Law Judges,

the Department agreed on June 16, 1998

to reduce its claims from $11,173,422 to

$4,942,252.38. In August 1998, IDHS

refunded these funds to the Department.

On November 15, 1999, the IDHS

requested grantback of $3,706,689,

which represents 75 percent of these

recovered funds.

B. Authority for Awarding a Grantback

Section 459(a) of GEPA, 20 U.S.C.

1234h(a), provides that, whenever the

Secretary has recovered funds under an

applicable program because the

recipient made an expenditure of funds

that was not allowable, the Secretary

may consider those funds to be

additional funds available for the

program and may arrange to repay to the

grantee affected by that determination

an amount not to exceed 75 percent of

the recovered funds. The Secretary may

enter into this grantback requested by

the IDHS if the Secretary determines

that the—

(a) Practices and procedures of the

IDHS and its predecessor that resulted

in the findings have been corrected, and

the State agency is, in all other respects,

in compliance with the requirements of

the applicable programs;

(b) IDHS has submitted to the

Secretary a plan for the use of the funds

to be awarded under the grantback

arrangement that meets the

requirements of the program and, to the

extent possible, benefits the population

that was affected by the failure to

comply or by misexpenditures that

resulted in the PDD; and

(c) Use of funds to be awarded under

the grantback arrangement in

accordance with the IDHS’ plan would

serve to achieve the purposes of the

program under which the funds were

originally granted.

C. Plan for Use of Funds Awarded

Under a Grantback Arrangement

Pursuant to section 459(a)(2) of GEPA,

the IDHS has applied for a grantback

totaling $3,706,689, which is 75 percent

of the principal amount of the recovered

funds, and has submitted a plan for use

of the grantback funds. The agency will

use the funds for the following

purposes:

IDHS proposes to use the entire sum

of requested grantback funding,

$3,706,689, to augment case service

provision by its counselors in its offices

throughout the State. None of these

funds will be used for administrative or

operations expenses. Specifically, the

major goal is to double the number of

competitive outcomes while remaining

at the same funding level. This means

instead of successfully placing

approximately 5,150 persons per year in

competitive employment, IDHS projects

a goal of 10,300.

Instead of continuing to purchase an

increasing amount of services from

community rehabilitation providers,

IDHS will train counseling staff to

perform some of these functions

themselves. IDHS maintains that this is

a more efficient use of available funds.

Counseling staff will take over services

such as job development, job placement,

and vocational assessment.

Illinois is already on ‘‘order of

selection’’ to serve customers having

only significant and most significant

disabilities and wants to avoid

narrowing the order of selection any

further than this. By using the grantback

funds, the agency can open up more

categories of disabilities for the

provision of VR services.

The procedural violation, which led

to the repayment of Federal funds, has

been corrected by the IDHS. IDHS’ noncompliance with OMB Circular A–87

was due to the absence of appropriate

Illinois General Revenue Fund (GRF)

appropriations to allow DORS to

allocate DORS’ indirect administrative

costs between State and Federal VR

program related monies. In July 1997,

IDHS, in order to come into compliance

with OMB Circular A–87, instituted a

revised budgeting procedure.

An estimate is now prepared at the

beginning of each State fiscal year to

determine the amount of anticipated VR

Federal Register / Vol. 66, No. 109 / Wednesday, June 6, 2001 / Notices 30627

indirect costs reimbursements. A second

estimate is made as to the amount of

overall administrative costs associated

with the transitioned DORS’ staff (those

administrative staff funded from a nonGRF appropriation). Both of these

estimates are compared to determine

what proportion of the anticipated

funding will not be covered by the

receipt of Federal indirect cost

reimbursements. IDHS then requests

from the Illinois General Assembly

sufficient GRF funding to allow the

State of Illinois to pay its share of

indirect costs.

Thereafter, whenever funding is

required for administrative purposes,

following the timeliness criteria

mandated by the Cash Management

Improvement Act, the indirect cost is

calculated on the appropriate basis and

drawn down from the Federal sources.

As soon as this money is received, it is

deposited into the Federal Vocational

Rehabilitation Fund. At the same time,

a proportionate amount of general

revenue is drawn down to fund the nonFederal part of the operation. In this

way, no overcommitment is made on

receipts of Federal funds for

administration, and only the

appropriate parts associated with the

Federal programs are claimed and

deposited into the Federal Vocational

Rehabilitation Fund.

With the use of this process, the cost

principles disallowances are eliminated.

If the estimate of overall administrative

costs is in error, there may be small

adjustments necessary at the end of the

Federal fiscal years to accommodate the

under or over receipt of Federal funds

associated with the administrative

operations. If the adjustments require

additional Federal revenue funding,

then either adjustments will be made in

the succeeding year or at the time of

audit finalization for the appropriate

fiscal year period.

Since this procedure was instituted by

the IDHS in July 1997, there have been

no audit exceptions noted against the

indirect costs charged to the Federal VR

program and none are anticipated.

D. The Secretary’s Determinations

The Secretary has carefully reviewed

the plan submitted by the IDHS. Based

upon that review, the Secretary has

determined that the conditions under

section 459(a) of GEPA have been met.

These determinations are based upon

the best information available to the

Secretary at the present time. If this

information is not accurate or complete,

the Secretary is not precluded from

taking appropriate administrative

action. In finding that the conditions of

section 459(a) of GEPA have been met,

the Secretary makes no determination

concerning any pending audit

recommendations or other

investigations.

E. Notice of the Secretary’s Intent To

Enter Into a Grantback Arrangement

Section 459(d) of GEPA requires that,

at least 30 days before entering into an

arrangement to award funds under a

grantback, the Secretary publish in the

Federal Register a notice of intent to do

so, and the terms and conditions under

which the payment will be made.

In accordance with section 459(d) of

GEPA, notice is hereby given that the

Secretary intends to make funds

available to the Illinois Department of

Human Services under a grantback

arrangement. The grantback award

would be in the amount $3,706,689,

which is 75 percent—the maximum

percentage authorized by statute—of the

principal amount recovered as a result

of the settlement agreement.

F. Terms and Conditions Under Which

Payments Under a Grantback

Arrangement Would Be Made

The IDHS agrees to comply with the

following terms and conditions under

which payments under a grantback

arrangement would be made:

(a) The funds awarded under the

grantback must be spent in accordance

with—

(1) All applicable statutory and

regulatory requirements;

(2) The plan that the IDHS submitted

and any amendments to the plan that

are approved in advance by the

Secretary; and

(3) The budget that was submitted

with the plan and any amendments to

the budget that are approved in advance

by the Secretary.

(b) All funds received under the

grantback arrangement must be

obligated by September 30, 2001, in

accordance with section 459(c) of GEPA.

(c) The IHDS must, no later than

January 1, 2002, submit a report to the

Secretary that—

(1) Indicates that the funds awarded

under the grantback have been spent in

accordance with the proposed plan and

any amendments that have been

approved in advance by the Secretary;

and

(2) Describes the results and

effectiveness of the project for which the

funds were spent.

(d) Separate accounting records must

be maintained documenting the

expenditures of funds awarded under

the grantback arrangement.

(e) Before funds will be repaid

pursuant to this notice, the IDHS must

repay to the Department any debts that

become overdue or enter into a

repayment agreement for those debts.

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Note: The official version of this document

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Register. Free Internet access to the official

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of Federal Regulations is available on GPO

Access at: http://www.access.gpo.gov/nara/

index.html.

(Catalog of Federal Domestic Assistance

Number 84.126 State Vocational

Rehabilitation Services Program).

Dated: June 1, 2001.

Francis V. Corrigan,

Deputy Director, National Institute on

Disability and Rehabilitation Research.

[FR Doc. 01–14225 Filed 6–5–01; 8:45 am]

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