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a

to determine the rehabilitation potential of a handicapped individual or to render him fit to engage in a gainful occupation.

(b) Federal financial participation will also be available in expenditures for the following additional vocational rehabilitation services provided to individuals found eligible under $ 401.20:

(1) Business and occupational 11censes.

(2) Tools, equipment and initial stocks (including livestock) and supplies; equipment and initial stocks and supplies for vending stands. "Equipment” as used here includes, in the case of shelters, only those for a business undertaking which are customarily furnished by the operator of a like undertaking occupying premises under short-term lease.

(3) Placement services.

(c) Federal financial participation will not be available in any expenditure made, either directly or indirectly, on behalf of a handicapped individual, for the purchase of any land, or for the purchase or erection of any building. This exclusion with respect to buildings does not apply to shelters as described in paragraph (b) (2) of this section.

(d) The State may, if it so elects, retain legal title to any or all of the goods listed in paragraphs (a) (4) and (b) (2) of this section. § 401.62 Small business enterprises.

Federal financial participation will be available in expenditures made under the State plan for the acquisition of equipment, and initial stocks (including livestock) and supplies for small business enterprises (including vending stands) and, effective July 1, 1966, for management services and supervision provided to such small business enterprises. *Equipment” as used herein includes, in the case of shelters, only those for a business undertaking which are customarily furnished by the operator of a like undertaking occupying premises under a short-term lease. Federal financial participation will not be available in any expenditure for the purchase or rental of any land, nor for the purchase, rental, or erection of any building. This exclusion with respect to buildings does not apply to shelters as described in the second sentence of this section.

& 401.63 Establishment of public and

other nonprofit rehabilitation facili

ties. Federal financial participation will be available in expenditures made under the State plan for the establishment of public and other nonprofit rehabilitation facilities: Provided, however, That Federal financial participation will not be available in any expenditures for the purchase or rental of any land or buildings in connection with the establishment of such facilities. $ 401.64 Establishment of public and

other nonprofit workshops. Federal financial participation will be available in expenditures made under the State plan for the establishment of public and other nonprofit workshops: Provided, however, That Federal financial participation will not be available in any expenditures for the purchase or rental of any land or buildings in connection with the establishment of such workshops. § 401.65 Administration.

Federal financial participation will be available in expenditures under the State plan for administration. Administration includes, among other things: Program planning, development and control; research; interpretation of the program to the public; personnel administration; use of advisory committees; and staf development, including educational leave. All expenditures for administration in which Federal financial participation is claimed must be subject to the administrative or supervisory control of the State agency, or, if performed by some other agency of the State, must be subject to such terms of a cooperative arrangement as will serve to assure consistency with the State agency's policies and objectives. § 401.66 Purchase of goods, facilities,

or services from other agencies of the

State. Federal financial participation will be available in expenditures under the State plan for payment of the costs incurred by other agencies of the State furnishing goods, facilities, or services to the State agency: Provided, That (a) such payments are permissible under State law; (b) such costs are incurred to meet the needs of the State agency, and are not costs attributable to the general expense

of the State in carrying out the overall in publicly owned buildings (paragraph coordinating, fiscal, and administrative (a)(2) of this section), or the monthly functions of the State Government; and rental charge based on the cost of ini(c) such costs are extra, identifiable, and tial construction or purchase of pubreadily ascertainable either by segrega- licly owned buildings (paragraph (a) tion or as a prorata share of the cost (5) of this section), exceed 75 per centum of such goods, facilities, or services.

of the comparable rental, Federal fi& 401.67 Insurance and taxes.

nancial participation will be available

only upon special justification by the Federal financial participation will be State agency. available in expenditures made under the State plan for (a) the State or local re

$ 401.69 State and local funds. habilitation agency's share of costs in In order to receive the Federal share employee benefit programs, such as re- of expenditures under the State plan, tirement, group life and hospitalization expenditures from State or local funds insurance; (b) workmen's compensation; under such plan equal to the State's c) burglary, robbery, and fire insurance, share must be made. The State's share if permitted by the State, and reason- shall be the difference between the Fed. ably necessary to protect funds in transit eral share (see $ $ 401.72 and 401.92) and or in the custody of State or local agency 100 per centum. personnel; (d) motor vehicle liability (a) For the purposes of this section, costs, where the State accepts respon- "State or local funds" means (1) funds sibility for such loss; and (e) Federal, made available by appropriation directly State, and local taxes, if the State or to the State or local rehabilitation local rehabilitation agency is legally ob- agency, funds made available by allotligated to pay such taxes, and provided ment or transfer from a general departthat all comparable agencies in the State

mental appropriation, or funds otherare uniformly treated.

wise made available to the State or local $ 401.68 Costs of office space.

rehabilitation agency by any unit of

State or local government; (2) contri(a) Federal financial participation will

butions by private organizations or inbe available in expenditures made under

dividuals, which are deposited in the the State plan for costs of office space account of the State or local rehabilitafor State or local rehabilitation agencies

tion agency in accordance with State that are incurred (1) for paying rent

law, for expenditure by, and at the sole and service and maintenance costs in

discretion of, the State or local rehabiliprivately owned buildings; (2) in meet

tation agency: Provided, however, That ing the costs of service and maintenance

such contributions earmarked for meetin lieu of rent in publicly owned build

ing the State's share for providing parings; (3) in meeting rental charges in

ticular services, for serving certain types federally and municipally owned build

of disabilities, for providing services for ings, where the municipality is not ad

special groups which are identified on ministering the vocational rehabilitation

the basis of criteria which would be program locally; (4) in making neces

acceptable for the earmarking of public sary repairs and alterations to either pri

funds, or for carrying on types of advately or publicly owned buildings; and

ministrative activities so identified, may (5) for monthly rental charges, based on the cost of initial construction or pur

be deemed to be State funds, if perchase of State or locally owned build

missible under State law; or (3) contriings.

butions by private organizations or (b) All expense for office space must

individuals, deposited in the account of be based on an actual rental charge or

the State or local rehabilitation agency a monthly rental rate that is a reason- in accordance with State law, which are able approximation of actual cost over earmarked, under a condition imposed by a longrun period. Federal financial par- the contributor, for meeting (in whole or ticipation is available only for periods in part) the State's share for establishwhen the State or local agency occupies ing a particular workshop or rehabilithe space, and where the rate for any type tation facility, if permissible under State of cost or combination does not exceed law: Provided, however, That such funds comparable rental in the particular com- may be used to earn Federal funds only munity. Whenever the total charges for with respect to expenditures for estabservice and maintenance in lieu of rent lishing the particular workshop or re

habilitation facility for which the con for all States, subject to the provisions tributions are earmarked.

in paragraph (b) of this section. (b) To the extent that the State or (1) Population, as applied to any local funds are of the type described in State, means the population of that State paragraph (a) (3) of this section, Fed as determined by the most recent official eral financial participation shall be avail estimates of the Bureau of the Census able in expenditures by a State after available to the Commissioner preceding August 3, 1954, if, with respect to ex the fiscal year for which Federal grant penditures prior to July 1, 1965, the Com funds are appropriated, except that for missioner has included the amount of fiscal year 1966 population should be such expenditure in computing a Fed determined on the basis of such estimates eral grant certified prior to July 1, 1965, available to the Commissioner on Novemfor payment, and if, with respect to ex ber 8, 1965. penditures after June 30, 1964, the Com (2) The allotment percentage for any missioner finds that such expenditures State shall be 100 per centum less that will serve a useful program purpose and percentage which bears the same ratio to that Federal funds are available in the

50 per centum as the per capita income light of other program needs.

of such State bears to the per capita in(Interpret and apply Department of Health, come of the United States (i.e., the 50 Education, and Welfare Appropriation Act, States and the District of Columbia), 1965, Public Law 88-605, Title II, 78 Stat.

except that the allotment percentage 967)

shall in no case be more than 75 per § 401.70 Waiver of Statewideness.

centum or less than 331/3 per centum, If the approved State plan provides

and the allotment percentage for Puerto for activities to be carried out in one or

Rico, the Virgin Islands, and Guam shall more political subdivisions through local

be 75 per centum. financing, Federal financial participation

(3) The allotment percentage shall be will be available in expenditures made

promulgated by the Secretary between under the State plan for vocational re

July 1 and August 31 of each evenhabilitation services and administration

numbered year, on the basis of the averin connection with such activities in ac

age of the per capita incomes of the cordance with the provisions of this sub

States and of the United States (i.e., the part, except that funds made available

50 States and the District of Columbia) to the State agency by such political sub

for the three most recent consecutive divisions of the State (including funds

years for which satisfactory data are contributed to such a subdivision by a

available from the Department of Comprivate agency, organization or indi

merce. Such promulgation shall be convidual) may be earmarked for use within

clusive for each of the 2 fiscal years in a specific geographical area or for a spe

the period beginning July 1 next succeedcific facility or for the benefit of a group

ing such promulgation. of individuals with a particular disabil

(b) The allotment to any State for ity, provided that nothing in this para

any fiscal year, as computed under paragraph shall authorize the further

graph (a) of this section, which is less earmarking of funds for a particular in

than the amount such State was entitled dividual or for members of a particular

to receive for the fiscal year ending June organization.

30, 1965, pursuant to section 2 of the

act as then in effect, as the Federal share ALLOTMENT AND PAYMENT

of its expenditures under its State plan § 401.71 Allotment of Federal funds for

for vocational rehabilitation services, vocational rehabilitation services. shall be increased to that amount. The

amount which a State was entitled to (a) For each fiscal year each State shall be entitled to an allotment of an

receive for fiscal year 1965, pursuant to amount bearing the same ratio to the

the preceding sentence, shall be deter

mined on the basis of such information, amount authorized by the act to be

including reports from the State, as the appropriated for that fiscal year for

Vocational Rehabilitation Administramaking grants to States for meeting the

tion had on November 8, 1965. The cost of vocational rehabilitation services

total of any increases required under this under section 2 of the act as the product

paragraph shall be derived by proporof the population of the State and the

tionately reducing the allotment of each square of its allotment percentage bears of the States whose allotments were not to the sum of the corresponding products subject to the increase, but with such

adjustments as may be necessary to pre- (e) Where the State plan designates vent the allotment of any State from separate agencies to administer (or being thereby reduced to less than the supervise the administration of) the part amount the State was entitled to receive of the plan under which vocational refor the fiscal year ending June 30, 1965, habilitation services are provided for the pursuant to section 2 as then in effect. blind, and the rest of the plan, respec

(c) Additional allotments are made in tively, the division of the State's allotaccordance with Congressional authori- ment pursuant to paragraphs (a) and zations. The authorization for addi- (b) of this section and the State's allocational allotments under the Department tion pursuant to paragraph (d) of this of Health, Education, and Welfare Ap- section between such agencies is a matter propriation Act, 1966 (Public Law 89– for State determination. 156), was superseded by the later-enacted

(Interpret and apply Department of Health, Vocational Rehabilitation Act Amend

Education, and Welfare Appropriation Act, ments of 1965 (Public Law 89-333).

1965, Public Law 88–605, Title II, 78 Stat. 967; (d) (1) Within the limits of the allot- and Department of Health, Education, and ments and additional allotments to Welfare Appropriation Act, 1966, Public Law States for grants for vocational rehabili- 89–156, Title II, 79 Stat. 596) tation services under section 2 of the act,

§ 401.72 Payments from allotments. the Commissioner shall, as authorized by the Congress, make allocations among

(a) Except as provided in paragraph the States which may be used only for

(b) of this section, the Commissioner paying the Federal share of expenditures

shall pay to each State an amount equal for the establishment of workshops or

to the Federal share of the cost of vocarehabilitation facilities where, and to the

tional rehabilitation services under its extent that, the State funds used for such

approved State plan, including the cost of expenditures are derived from private

administration of the plan. The Federal contributions conditioned on use for a

share for each State for the fiscal year specified workshop or facility, (See

ending June 30, 1967, and each subse§ 401.69.) No part of the allotment to

quent fiscal year, shall be 75 percent. For any State for grants under section 2 of

the fiscal year ending June 30, 1966, the the act for any fiscal year other than the

Federal share for each State shall be its allocation to such State pursuant to this

Federal share in effect for the fiscal year paragraph may be used for these pur

ending June 30, 1965, plus one-half of the

difference between that share and 75 poses.

percent. (2) The allocations to the States for

(b) (1) The total of payments to & any fiscal year shall be made initially on

State under paragraph (a) of this section the basis of population, with such adjustments as may be necessary to make

for any fiscal year may not exceed its

allotment under $ 401.71 for such year. available to each State an allocation of $25,000 or such other standard minimum

(2) Amounts otherwise payable to a amount as the Commissioner may find

State under this section for any fiscal

year shall be reduced by the amount (if necessary to support a useful establishment project in each State.

any) by which expenditures from non(3) The Commissioner may make re

Federal sources (except for expenditures allocations for any fiscal year from time

with respect to which the State is ento time of amounts released by the States

titled to payments under $ 401.92) for or determined by the Commissioner not

such fiscal year under such state's apto be reasonably expected to be used by

proved plan for vocational rehabilitation the States within the fiscal year. Addi

services are less than such expenditures

under such plan for the fiscal year ending tional allocations may be made to States which have need of them as evidenced by

June 30, 1965. The expenditures under

the State plan for fiscal year 1965, purapprovable project proposals. Priority for additional allocations shall be given

suant to the preceding sentence, shall be

determined on the basis of such inforon the basis of national, State and local

mation, including reports from the State, program needs, with due regard for the

as the Vocational Rehabilitation Adminimportance of promoting a nationwide distribution of workshops and rehabilita

istration had on November 8, 1965. I tion facilities of high quality. A State's

a reduction in payments for any fiscal allocation as increased or decreased pur

year is required in the case of a State suant to this subparagraph shall be its where separate agencies administer (or allocation for the fiscal year.

supervise the administration of) the part

of the plan under which vocational re responsibility for the initial application habilitation services are provided for the of Federal funds to authorized plan purblind, and the rest of the plan, respec poses. The State will be required to tively, such reduction shall be made in make transfers and adjustments to disdirect relation to the amount by which charge its accountability to the Federal expenditures from non-Federal sources Government. under each part of the plan are less than they were under that part of the plan

$ 401.75 Interest and refunds. during the fiscal year ending June 30,

Interest earned on grants made under 1965.

the act shall be duly credited to the prin

cipal of the grant. All such earnings of § 401.73 Method of computing and make

interest shall be duly reported. Any ing payments.

amount refunded or repaid to the State The method of computing and paying shall be credited to the Federal account grants for vocational rehabilitation sery in proportion to the Federal participa. ices pursuant to section 2 of the act, and tion in the expenditures by reason of for innovation projects under section 3 which such refunds or repayments were of the act, shall be as follows:

made, and such sums shall be considered (a) Estimates. The Commissioner as granted from the State's allotment. shall prior to each fiscal quarter or other period prescribed by him, estimate the

$ 401.76 Determining to which fiscal amount to be paid each State from its

year an expenditure is chargeable. allotment for vocational rehabilitation In determining to which Federal fiscal services and its allotment for innova year expenditures are chargeable for the tion projects. This estimate will be purpose of earning the State's allotment based on such records of the State and under section 2 or section 3 of the act, information furnished by it, and such

State laws and regulations for determinother investigation, as the Commissioner ing to which State fiscal year and expendmay find necessary.

iture is chargeable will be followed. In (b) Payments. The Commissioner

those States which appropriate funds for shall pay, from the allotment available

a biennium and do not distinguish betherefor, the amount so estimated for

tween the separate fiscal years of the such period. In making any such pay

biennium, the State laws and regulations ment, such additions and subtractions

for determining to which biennium an will be made as the State's accounting for expenditure should be charged will be any prior period and audit thereof may

applied in determining to which Federal indicate as necessary in balancing the fiscal year an expenditure is properly Federal-State account for any such prior

chargeable. In those States where the period. Payments shall be made prior

State fiscal year does not coincide with to audit or settlement by the General

the Federal fiscal year, State laws and Accounting Office, shall be made through

regulations for determining to which the disbursing facilities of the Treasury

State fiscal year an expenditure is Department, and shall be made in such chargeable will be applied to the Fedinstallments as the Commissioner may

eral fiscal year. determine.

Subpart D-Payment of Costs of Vo& 401.74 Effect of payments.

cational Rehabilitation Services to (a) Neither the approval of the State Disability Beneficiaries from the plan nor any payment to the State Social Security Trust Funds pursuant thereto shall be deemed to

AUTHORITY: The provisions of this Subpart waive the right or duty of the Secretary D issued under sec. 336, 79 Stat. 408; 42 U.S.C. or Commissioner to withhold funds by

422(d). reason of the failure of the State to ob

SOURCE: The provisions of this Subpart D serve, before or after such administra

appear at 31 F.R. 3244, Mar. 1, 1966, unless tive action, any requirement of the act

otherwise noted. or of this part. (b) The final amount to be paid for

§ 401.80 General. any period is determinable on the basis (a) Pursuant to section 336 of the Soof expenditures under the State plan for cial Security Amendments of 1965 (Pubauthorized purposes with respect to lic Law 89-97), section 222 of the Social which Federal financial participation is Security Act as amended provides for the authorized. The State assumes absolute payment from the trust funds of costs of

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