The federal government is authorized to make grants to state vocational rehabilitation (VR) agencies. These grants support services to aid individuals with disabilities in preparing for and engaging in employment. State agencies use VR funding to provide individualized services to individuals who have physical or mental impairments that impede those individuals' ability to engage in or maintain employment in the competitive labor market. The VR state grants program was reauthorized in July 2014 by the Workforce Innovation and Opportunity Act of 2014 (WIOA; P.L. 113-128 ). The next section of this report will describe recent legislation and changes made by WIOA. The remainder of the report will discuss the statutory provisions of the program as amended and authorized by WIOA. The VR grants to states program is authorized by Title I of the Rehabilitation Act of 1973, as amended. The Rehabilitation Act authorizes a number of grant programs related to supporting the employment and independent living of individuals with disabilities. In 1998, the Rehabilitation Act was reauthorized in conjunction with other employment programs as Title IV of the Workforce Investment Act of 1998 (WIA, P.L. 105-220 ). WIA authorized appropriations for VR state grants through FY2003. After the expiration of the authorization under WIA, the VR state grants program continued under the automatic reauthorization provisions in Section 100(d) of the Rehabilitation Act. These automatic reauthorization provisions specified that each year's appropriation for VR state grants must equal the prior year's appropriation plus an increase equal to inflation. VR state grants are, by a substantial margin, the largest program authorized under the Rehabilitation Act. In FY2014, VR state grants accounted for approximately 90% of the funds appropriated under the act. The Workforce Innovation and Opportunity Act of 2014 (WIOA, P.L. 113-128 ) was enacted in July 2014. Similar to the WIA legislation in 1998, WIOA reauthorized a group of employment and workforce development programs. Title IV of WIOA reauthorized programs in the Rehabilitation Act, including VR state grants. The VR provisions of WIOA are scheduled to be enacted incrementally over several years. WIOA designates the major formula grants authorized by the legislation (including VR state grants) as core programs . All WIOA core programs are aligned and coordinated through a unified state plan (described in the " State Plans " section later in this report) and monitored by a common set of performance accountability indicators (described in the " Performance Accountability " section later in this report). Prior to the enactment of WIOA, each core program had its own state plan and its own set of performance accountability indicators. WIOA inserted three new purposes into Section 2 of the Rehabilitation Act. Programmatic changes that reflect these revised principles are included throughout the legislation: Emphasis on competitive integrated employment for individuals with disabilities . WIOA inserts a new definition of "competitive integrated employment" into the general provisions of the Rehabilitation Act. Generally, competitive integrated employment is employment that (1) is compensated at a rate that is at least minimum wage and not less than the customary rate paid to similar employees who are not individuals with disabilities, (2) is at a location where the employee interacts with persons who are not individuals with disabilities to the same extent that employees who are not individuals with disabilities and who are in comparable positions interact with such persons, and (3) presents opportunities for advancement that are similar to those for other employees who are not individuals with disabilities and who have similar positions. WIOA amended language throughout the Rehabilitation Act to emphasize competitive integrated employment as the objective for program participants. Increasing employment opportunities for individuals with disabilities by encouraging involvement and input from employers. WIOA amends the Rehabilitation Act to allow states to spend VR funds on outreach, technical assistance, and other services to employers that provide opportunities for VR clients. The VR portion of a state's unified state plan is required to describe how agencies will collaborate with employers to develop community-based competitive integrated employment. Emphasis on services to youth with disabilities and students with disabilities to assist these populations in transitioning from secondary school to postsecondary education and/or competitive integrated employment . WIOA creates new requirements for state VR agencies regarding the coordination of transition services and requires each state to reserve 15% of state VR grants for pre-employment transition services for youth who are transitioning out of secondary school. WIOA also requires coordination between state VR agencies and local educational agencies responsible for providing services under the Individuals with Disabilities Education Act (IDEA). WIOA is scheduled to be implemented in steps over the next several years. Currently, the VR state grants program is largely operating under the pre-WIOA provisions. This report will discuss the statutory provisions of the VR state grants program, as amended by WIOA. VR state grants are administered at the federal level by the Rehabilitation Services Administration (RSA) of the Department of Education (ED). The head administrator of RSA is a commissioner who is appointed by the President and confirmed by the Senate. VR state grants receive mandatory funding through the appropriations process (i.e., this program is an annually appropriated entitlement to states). Statute specifies that each year's appropriation must be at least equal to the prior year's appropriation plus an increase equal to inflation. Statute further specifies that if authorization for appropriations expires and Congress does not act to extend the program, each year's mandatory appropriation will be equal to the prior year's appropriation plus inflation. In years where the inflation rate is negative, the appropriation equals the prior year's appropriation. These automatic reauthorization provisions applied during the lapse between the expiration of WIA and the enactment of WIOA. WIOA authorizes $3,302,053,000 per year for VR state grants for FY2015 through FY2020. This authorization level matches the FY2014 appropriation level. WIOA did not amend the automatic increase provisions for VR state grants, meaning that annual appropriations are to be adjusted for inflation, when applicable. VR state grants are not exempt from sequestration under the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The BCA, as amended, requires annual sequestration reductions for non-exempt mandatory spending to occur annually through FY2024. Therefore, the funding available for grants to states may be less than the appropriated amount during this timeframe. For instance, the Office of Management and Budget (OMB) announced that non-exempt nondefense mandatory spending programs, including VR state grants, are to be reduced by 7.3% in FY2015. As such, the initial appropriation of $3.335 billion appropriated in the FY2015 omnibus ( P.L. 113-235 ) was reduced by 7.3%, leaving $3.091 billion available for VR state grants (see Table 1 ). The annual appropriation for VR grants is allotted to states using a formula. The formula considers each state's population, average per capita income, and original VR allotment in 1978. Grant sizes are positively correlated with a state's population and original 1978 allocation and negatively correlated with per capita income. The formula for the District of Columbia and the territories is somewhat different than the formula for the 50 states. Statute requires that no state may receive a grant smaller than one-third of 1% of the total funding for VR state grants. A more detailed description of the formula is provided in the Appendix . VR grants require a match from the states. The federal share is 78.7%, with the state providing the remaining 21.3%. Grant recipients have the option of contributing funds beyond their required match. Not all states provide a full match for their VR allotments. In these cases, the state's federal grant is reduced and the remaining funds are made available to other states. States that receive reallocated funds must match them as they do their original VR grant funds. If state requests for reallocated funds exceed the funds available for reallocation, ED typically gives first preference to states that received the smallest increases (in percentage terms) from the prior year. In cases where the amount of funding available for reallocations is greater than requests for reallocated funds, the unmatched funds are typically returned to the Treasury, though Congress may specify other uses for unmatched funds in appropriations legislation. Determination of client eligibility and provision of VR services are conducted by state VR agencies. While the Rehabilitation Act provides general guidance and certain requirements, state agencies have discretion in how clients are assessed, what specific services are provided, and how the services are delivered. To be eligible for a VR grant, each state must submit and have approved a unified state plan (USP). The USP is a four-year strategy that applies to the recipient state agencies receiving VR state grants as well as the agencies administering WIOA core programs. WIOA specifies that each state's USP must describe the labor force needs in the state and how the core program authorized by WIOA will be administered, aligned, and coordinated to meet those needs. The USP and the formal alignment of each state's core workforce programs is a change enacted in WIOA. Prior to WIOA, each state submitted a separate plan for each core program. State plans must be approved by the Secretary of Labor and the Secretary of Education, in consultation with the commissioner of RSA. WIOA specifies that each state must submit its USP by March 2016. These plans will be effective July 1, 2016. While the USP coordinates the WIOA core programs, there are a number of state plan requirements that are specific to VR grantees.