[Title 34 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 34

Education


________________________

Parts 400 to 679

                         Revised as of July 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 34:
    SUBTITLE B--Regulations of the Offices of the Department 
      of Education (Continued)
          Chapter IV--Office of Career, Technical, and Adult 
          Education, Department of Education                         5
          Chapter V--Office of Bilingual Education and 
          Minority Languages Affairs, Department of Education      189
          Chapter VI--Office of Postsecondary Education, 
          Department of Education                                  193
  Findings Aids:
      Table of CFR Titles and Chapters........................     819
      Alphabetical List of Agencies Appearing in the CFR......     839
      List of CFR Sections Affected...........................     849

[[Page iv]]


      


                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 34 CFR 400.1 refers 
                       to title 34, part 400, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
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    To determine whether a Code volume has been amended since its 
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Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
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EFFECTIVE AND EXPIRATION DATES

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OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
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``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
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not accidentally dropped due to a printing or computer error.

INCORPORATION BY REFERENCE

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established by statute and allows Federal agencies to meet the 
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This material, like any other properly issued regulation, has the force 
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    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
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alphabetical list of agencies publishing in the CFR are also included in 
this volume.

[[Page vii]]

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INQUIRIES

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    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    July 1, 2017.

                                
                                      
                            

  

[[Page ix]]



                               THIS TITLE

    Title 34--Education is composed of four volumes. The parts in these 
volumes are arranged in the following order: Parts 1-299, parts 300-399, 
parts 400-679, and part 680 to end. The contents of these volumes 
represent all regulations codified under this title of the CFR as of 
July 1, 2017.

    For this volume, Michele Bugenhagen was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                           TITLE 34--EDUCATION




                  (This book contains parts 400 to 679)

  --------------------------------------------------------------------

 SUBTITLE B--Regulations of the Offices of the Department of Education 
                                (Continued)

                                                                    Part

chapter IV--Office of Career, Technical, and Adult 
  Education, Department of Education........................         400

chapter V--Office of Bilingual Education and Minority 
  Languages Affairs, Department of Education................         535

chapter VI--Office of Postsecondary Education, Department of 
  Education.................................................         600

[[Page 3]]

 Subtitle B--Regulations of the Offices of the Department of Education 
                               (Continued)

[[Page 5]]



CHAPTER IV--OFFICE OF CAREER, TECHNICAL, AND ADULT EDUCATION, DEPARTMENT 
                              OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
400             Career, technical, and applied technology 
                    education programs--general provisions..           7
401             Indian vocational education program.........          17
402             Native Hawaiian vocational education program          22
403             State vocational and applied technology 
                    education program.......................          25
406             State-administered tech-prep education 
                    program.................................          71
410             Tribally controlled postsecondary vocational 
                    institutions program....................          75
411             Vocational education research program.......          79
412             National network for curriculum coordination 
                    in vocational and technical education...          83
413             National center or centers for research in 
                    vocational education....................          86
415             Demonstration centers for the training of 
                    dislocated workers program..............          92
421             Business and education standards program....          95
425             Demonstration projects for the integration 
                    of vocational and academic learning 
                    program.................................          98
426             [Reserved]

427             Bilingual vocational training program.......         101
428             Bilingual vocational instructor training 
                    program.................................         106
429             Bilingual vocational materials, methods, and 
                    techniques program......................         109
460             [Reserved]

461             Adult education State-administered basic 
                    grant program...........................         112
462             Measuring educational gain in the National 
                    Reporting System for Adult Education....         126
463             Adult Education and Family Literacy Act.....         136
464             [Reserved]

472             [Reserved]

477             [Reserved]

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489-499        [Reserved]

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PART 400_CAREER, TECHNICAL, AND APPLIED TECHNOLOGY EDUCATION PROGRAMS 
GENERAL PROVISIONS--Table of Contents



Sec.
400.1  What is the purpose of the Vocational and Applied Technology 
          Education Programs?
400.2  What programs are governed by these regulations?
400.3  What other regulations apply to the Vocational and Applied 
          Technology Education Programs?
400.4  What definitions apply to the Vocational and Applied Technology 
          Education Programs?
400.5  Under what conditions may funds under the Act be used for the 
          joint funding of programs?
400.6  What are the requirements for establishing a State Committee of 
          Practitioners?
400.7  What are the provisions governing the issuance of State core 
          standards and measures of performance and State rules or 
          regulations?
400.8  What are the provisions governing student assistance?
400.9  What additional requirements govern the Vocational and Applied 
          Technology Education Programs?
400.10  What are the reporting requirements?

    Authority: 20 U.S.C. 2301 et seq., unless otherwise noted.

    Source: 57 FR 36724, Aug. 14, 1992, unless otherwise noted.



Sec. 400.1  What is the purpose of the Vocational and Applied 
Technology Education Programs?

    (a) The purpose of the Vocational and Applied Technology Education 
Programs is to make the United States more competitive in the world 
economy by developing more fully the academic and occupational skills of 
all segments of the population.
    (b) The purpose will be achieved principally through concentrating 
resources on improving educational programs leading to academic and 
occupational skill competencies needed to work in a technologically 
advanced society.

(Authority: 20 U.S.C. 2301)



Sec. 400.2  What programs are governed by these regulations?

    The regulations in this part apply to the Vocational and Applied 
Technology Education Programs as follows:
    (a) State-administered programs. (1) State Vocational and Applied 
Technology Education Program (34 CFR part 403).
    (2) State-Administered Tech-Prep Education Program (34 CFR part 
406).
    (3) Supplementary State Grants Program (34 CFR part 407).
    (b) National discretionary programs. (1) Indian Vocational Education 
Program (34 CFR part 401).
    (2) Native Hawaiian Vocational Education Program (34 CFR part 402).
    (3) National Tech-Prep Education Program (34 CFR part 405).
    (4) Community Education Employment Centers Program (34 CFR part 
408).
    (5) Vocational Education Lighthouse Schools Program (34 CFR part 
409).
    (6) Tribally Controlled Postsecondary Vocational Institutions 
Program (34 CFR part 410).
    (7) Vocational Education Research Program (34 CFR part 411).
    (8) National Network for Curriculum Coordination in Vocational and 
Technical Education (34 CFR part 412).
    (9) National Center or Centers for Research in Vocational Education 
(34 CFR part 413).
    (10) Materials Development in Telecommunications Program (34 CFR 
part 414).
    (11) Demonstration Centers for the Training of Dislocated Workers 
Program (34 CFR part 415).
    (12) Vocational Education Training and Study Grants Program (34 CFR 
part 416).
    (13) Vocational Education Leadership Development Awards Program (34 
CFR part 417).
    (14) Vocational Educator Training Fellowships Program (34 CFR part 
418).
    (15) Internships for Gifted and Talented Vocational Education 
Students Program (34 CFR part 419).
    (16) Business and Education Standards Program (34 CFR part 421).
    (17) Educational Programs for Federal Correctional Institutions (34 
CFR part 422).

[[Page 8]]

    (18) Vocational Education Dropout Prevention Program (34 CFR part 
423).
    (19) Model Centers of Regional Training for Skilled Trades Program 
(34 CFR part 424).
    (20) Demonstration Projects for the Integration of Vocational and 
Academic Learning Program (34 CFR part 425).
    (21) Cooperative Demonstration Programs (34 CFR part 426).
    (22) Bilingual Vocational Training Program (34 CFR part 427).
    (23) Bilingual Vocational Instructor Training Program (34 CFR part 
428).
    (24) Bilingual Materials, Methods, and Techniques Program (34 CFR 
part 429).

(Authority: 20 U.S.C. 2301 et seq.)



Sec. 400.3  What other regulations apply to the Vocational and Applied
Technology Education Programs?

    The following regulations apply to the Vocational and Applied 
Technology Education Programs:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1)[Reserved]
    (2) 34 CFR part 75 (Direct Grant Programs) (applicable to parts 401, 
402, 405, 408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418, 419, 
421, 422, 423, 424, 425, 426, 427, 428, and 429 except that 34 CFR 
75.720(b) does not apply to performance reports under parts 401, 402, 
405, 408, 409, 412, 413, 415, 416, 417, 419, 422, 423, 424, 425, 426, 
427, and 428, and to financial reports under parts 412 and 413).
    (3) 34 CFR part 76 (State-Administered Programs) (applicable to 
parts 403, 406, and 407).
    (4) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (5) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities) (not applicable to parts 401, 410, 
411, 413, 418, and 419).
    (6) [Reserved]
    (7) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (8) 34 CFR part 82 (New Restrictions on Lobbying) (not applicable to 
parts 401 and 410).
    (9) [Reserved]
    (10) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The Federal Acquisition Regulation (FAR) in 48 CFR chapter 1 and 
the Education Department Acquisition Regulation (EDAR) in 48 CFR chapter 
34 (applicable to contracts under parts 401, 402, 411, 412, 426, 427, 
428, and 429).
    (c) The regulations in this part 400.
    (d) The regulations in 34 CFR parts 401, 402, 403, 405, 406, 407, 
408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418, 419, 421, 422, 
423, 424, 425, 426, 427, 428, and 429.
    (e)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Debarment and 
Suspension (Nonprocurement)), as adopted at 2 CFR part 3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 20 U.S.C. 2301 et seq.)

[57 FR 36724, Aug. 14, 1992, as amended at 79 FR 76100, Dec. 19, 2014]



Sec. 400.4  What definitions apply to the Vocational and Applied
Technology Education Programs?

    (a) General definitions. The following terms used in regulations for 
the Vocational and Applied Technology Education Programs are defined in 
2 CFR part 200, subpart A, or 34 CFR 77.1:

Acquisition
Applicant
Application
Award
Budget
Contract
Department
EDGAR
Elementary school
Facilities
Federally recognized Indian tribal government
Fiscal year
Grant
Grantee
Grant period
Nonprofit
Private
Project
Public
Recipient
Secondary school
Secretary
State educational agency
Subgrant
Subgrantee
Supplies

    (b) Other definitions. The following definitions also apply to the 
regulations for Vocational and Applied Technology Education Programs.
    Act means the Carl D. Perkins Vocational and Applied Technology 
Education Act (20 U.S.C. 2301 et seq.), as amended by Public Law 101-
392, 104 Stat. 753 (1990), and Public Law 102-103, 105 Stat. 497 (1991), 
unless otherwise indicated.

[[Page 9]]

    Administration means activities of a State necessary for the proper 
and efficient performance of its duties under the Act, including 
supervision, but not including curriculum development activities, 
personnel development, or research activities.
    All aspects of an industry includes, with respect to a particular 
industry that a student is preparing to enter, planning, management, 
finances, technical and production skills, underlying principles of 
technology, labor and community issues, health and safety, and 
environmental issues related to that industry.
    Americans with Disabilities Act of 1990 or ADA mean the Act in 42 
U.S.C. 12101 et seq.
    Apprenticeship training program means a program registered with the 
Department of Labor or the State apprenticeship agency in accordance 
with the Act of August 16, 1937, known as the National Apprenticeship 
Act (29 U.S.C. 50), that is conducted or sponsored by an employer, a 
group of employers, or a joint apprenticeship committee representing 
both employers and a union, and that contains all terms and conditions 
for the qualification, recruitment, selection, employment, and training 
of apprentices.
    Area vocational education school means--
    (1) A specialized high school used exclusively or principally for 
the provision of vocational education to individuals who are available 
for study in preparation for entering the labor market;
    (2) The department of a high school exclusively or principally used 
for providing vocational education in not less than five different 
occupational fields to individuals who are available for study in 
preparation for entering the labor market;
    (3) A technical institute or vocational school used exclusively or 
principally for the provision of vocational education to individuals who 
have completed or left high school and who are available for study in 
preparation for entering the labor market; or
    (4) The department or division of a junior college, community 
college, or university that operates under the policies of the State 
board and provides vocational education in not less than five different 
occupational fields leading to immediate employment but not necessarily 
leading to a baccalaureate degree, if, in the case of a school, 
department, or division described in paragraph (3) of this definition or 
in this paragraph, it admits as regular students both individuals who 
have completed high school and individuals who have left high school.
    Career guidance and counseling means programs that--
    (1) Pertain to the body of subject matter and related techniques and 
methods organized for the development in individuals of career 
awareness, career planning, career decision-making, placement skills, 
and knowledge and understanding of local, State, and national 
occupational, educational, and labor market needs, trends, and 
opportunities; and
    (2) Assist those individuals in making and implementing informed 
educational and occupational choices.
    Chapter 1 means chapter 1 of title I of the Elementary and Secondary 
Education Act of 1965, as amended (20 U.S.C. 2701 et seq.).
    Coherent sequence of courses means a series of courses in which 
vocational and academic education are integrated, and which directly 
relates to, and leads to, both academic and occupational competencies. 
The term includes competency-based education, academic education, and 
adult training or retraining, including sequential units encompassed 
within a single adult retraining course, that otherwise meet the 
requirements of this definition.
    Community-based organization means a private nonprofit organization 
of demonstrated effectiveness that is representative of communities or 
significant segments of communities and that provides job training 
services (for example, Opportunities Industrialization Centers, the 
National Urban League, SER-Jobs for Progress, United Way of America, 
Mainstream, the National Puerto Rican Forum, National Council of La 
Raza, WAVE, Inc., Jobs for Youth, organizations operating career intern 
programs, neighborhood groups and organizations, community action

[[Page 10]]

agencies, community development corporations, vocational rehabilitation 
organizations, rehabilitation facilities (as defined in section 7(10) of 
the Rehabilitation Act of 1973 (29 U.S.C. 706(10)), agencies serving 
youth, agencies serving individuals with disabilities, including 
disabled veterans, agencies serving displaced homemakers, union-related 
organizations, and employer-related nonprofit organizations), and an 
organization of demonstrated effectiveness serving non-reservation 
Indians (including the National Urban Indian Council), as well as tribal 
governments and Native Alaskan groups.


(Authority: 20 U.S.C. 2471(6); 41 U.S.C. 1503(5))

    Construction includes construction of new buildings and acquisition, 
expansion, remodeling, and alteration of existing buildings, and 
includes site grading and improvement and architect fees.
    Cooperative education means a method of instruction of vocational 
education for individuals who, through written cooperative arrangements 
between the school and employers, receive instruction, including 
required academic courses and related vocational instruction by 
alternation of study in school with a job in any occupational field. The 
two experiences must be planned and supervised by the school and 
employers so that each contributes to the student's education and 
employability. Work periods and school attendance may be on alternate 
half days, full days, weeks, or other periods of time in fulfilling the 
cooperative program.
    Criminal offender means any individual who is charged with, or 
convicted of, any criminal offense, including a youth offender or a 
juvenile offender.
    Correctional institution means any--
    (1) Prison;
    (2) Jail;
    (3) Reformatory;
    (4) Work farm;
    (5) Detention center; or
    (6) Halfway house, community-based rehabilitation center, or any 
other similar institution designed for the confinement or rehabilitation 
of criminal offenders.
    Curriculum materials means instructional and related or supportive 
material, including materials using advanced learning technology, in any 
occupational field that is designed to strengthen the academic 
foundation and prepare individuals for employment at the entry level or 
to upgrade occupational competencies of those previously or presently 
employed in any occupational field, and appropriate counseling and 
guidance material.
    Disadvantaged refers to individuals (other than individuals with 
disabilities) who have economic or academic disadvantages and who 
require special services and assistance in order to enable these 
individuals to succeed in vocational education programs. This term 
includes individuals who are members of economically disadvantaged 
families, migrants, individuals of limited English proficiency, and 
individuals who are dropouts from, or who are identified as potential 
dropouts from, secondary school. For the purpose of this definition, an 
individual who scores at or below the 25th percentile on a standardized 
achievement or aptitude test, whose secondary school grades are below 
2.0 on a 4.0 scale (on which the grade ``A'' equals 4.0), or who fails 
to attain minimum academic competencies may be considered ``academically 
disadvantaged.'' The definition does not include individuals with 
learning disabilities.
    Displaced homemaker means an individual who--
    (1) Is an adult;
    (2) Has worked as an adult primarily without remuneration to care 
for the home and family, and for that reason has diminished marketable 
skills; and
    (3)(i) Has been dependent on public assistance or on the income of a 
relative but is no longer supported by that income;
    (ii) Is a parent whose youngest dependent child will become 
ineligible to receive assistance under part A of title IV of the Social 
Security Act (42 U.S.C. 601), Aid to Families with Dependent Children, 
within two years of the parent's application for assistance under the 
Carl D. Perkins Vocational and Applied Technology Education Act;
    (iii) Is unemployed or underemployed and is experiencing difficulty 
in obtaining any employment or suitable employment, as appropriate; or

[[Page 11]]

    (iv) Is described in paragraphs (1) and (2) of this definition and 
is a criminal offender.
    Economically disadvantaged family or individual means a family or 
individual that is--
    (1) Eligible for any of the following:
    (i) The program for Aid to Families with Dependent Children under 
part A of title IV of the Social Security Act (42 U.S.C. 601).
    (ii) Benefits under the Food Stamp Act of 1977 (7 U.S.C. 2011).
    (iii) To be counted for purposes of section 1005 of chapter 1 of 
title I of the Elementary and Secondary Education Act of 1965, as 
amended (chapter 1) (20 U.S.C. 2701).
    (iv) The free or reduced-price meals program under the National 
School Lunch Act (42 U.S.C. 1751).

    Note to paragraph (1)(iv): The National School Lunch Act prohibits 
the identification of students by name. However, State and local 
projects may use the total number of students participating in a free or 
reduced-priced meals program to determine eligibility for projects, 
services, and activities under the Vocational and Applied Technology 
Education Programs.

    (v) Participation in programs assisted under title II of the JTPA.
    (2) In receipt of a Pell grant or assistance under a comparable 
State program of need-based financial assistance.
    (3) Determined by the Secretary to be low-income according to the 
latest available data from the Department of Commerce or the Department 
of Health and Human Services Poverty Guidelines.
    (4) Identified as low income according to other indices of economic 
status, including estimates of those indices, if a grantee demonstrates 
to the satisfaction of the Secretary that those indices are more 
representative of the number of economically disadvantaged students 
attending vocational education programs. The Secretary determines, on a 
case-by-case basis, whether other indices of economic status are more 
representative of the number of economically disadvantaged students 
attending vocational education programs, taking into consideration, for 
example, the statistical reliability of any data submitted by a grantee 
as well as the general acceptance of the indices by other agencies in 
the State or local area.


(Authority: 20 U.S.C. 2341(d)(3))

    Eligible recipient means, except as otherwise provided, a local 
educational agency, an area vocational education school, an intermediate 
educational agency, a postsecondary educational institution, a State 
corrections educational agency, or an eligible institution as defined in 
34 CFR 403.117(a).
    General occupational skills means strong experience in, and 
understanding of, all aspects of an industry.
    High technology means state-of-the-art computer, microelectronic, 
hydraulic, pneumatic, laser, nuclear, chemical, telecommunication, and 
other technologies being used to enhance productivity in manufacturing, 
communication, transportation, agriculture, mining, energy, commercial, 
and similar economic activity, and to improve the provision of health 
care.
    IDEA means the Individuals with Disabilities Education Act (20 
U.S.C. 1400 et seq.), formerly entitled ``Education of the Handicapped 
Act.''
    Individual with disabilities means any individual with any 
disability (as defined in section 3(2) of the Americans With 
Disabilities Act of 1990), which includes any individual who--
    (1) Has a physical or mental impairment that substantially limits 
one or more of the major life activities of that individual;
    (2) Has a record of an impairment described in paragraph (1) of this 
definition; or
    (3) Is regarded as having an impairment described in paragraph (1) 
of this definition.
    Note: This definition necessarily includes any individual who has 
been evaluated under part B of the IDEA and determined to be an 
individual with a disability who is in need of special education and 
related services; and any individual who is considered disabled under 
section 504 of the Rehabilitation Act of 1973.


(Authority: 42 U.S.C. 12102(2))

    Individualized education program means a written statement for a 
disabled individual developed in accordance with sections 612(4) and 
614(a)(5) of

[[Page 12]]

the IDEA (20 U.S.C. 1412(4) and 1414(a)(5)).
    Institution of higher education. (1) The term means an educational 
institution in any State that--
    (i) Admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of such a certificate;
    (ii) Is legally authorized within such State to provide a program of 
education beyond secondary education;
    (iii) Provides an educational program for which it awards a 
bachelor's degree or provides not less than a two-year program that is 
acceptable for full credit toward such a degree;
    (iv) Is a public or other nonprofit institution; and
    (v) Is accredited by a nationally recognized accrediting agency or 
association, or if not so accredited--
    (A) Is an institution with respect to which the Secretary has 
determined that there is satisfactory assurance, considering the 
resources available to the institution, the period of time, if any, 
during which it has operated, the effort it is making to meet 
accreditation standards, and the purpose for which this determination is 
being made, that the institution will meet the accreditation standards 
of such an agency or association within a reasonable time; or
    (B) Is an institution whose credits are accepted, on transfer, by 
not less than three institutions which are so accredited, for credit on 
the same basis as if transferred from an institution so accredited.
    (2) The term also includes--
    (i) Any school which provides not less than a one-year program of 
training to prepare students for gainful employment in a recognized 
occupation and that meets the provisions of paragraphs (1) (i), (ii), 
(iv), and (v) of this definition; and
    (ii) A public or nonprofit private educational institution in any 
State which, in lieu of the requirement in paragraph (1) of this 
definition, admits as regular students persons who are beyond the age of 
compulsory school attendance in the State in which the institution is 
located and who meet the requirements of section 484(d) of the Higher 
Education Act of 1965 (20 U.S.C. 1091(d)).


(Authority: 20 U.S.C. 1141(a))

    Intermediate educational agency means a combination of school 
districts or counties (those divisions of a State utilized by the 
Secretary of Commerce in compiling and reporting data regarding 
counties) as are recognized in a State as an administrative agency for 
that State's vocational or technical education schools or for vocational 
programs within its public elementary or secondary schools. This term 
includes any other public institution or agency having administrative 
control and direction over a public elementary or secondary school.


(Authority: 20 U.S.C. 2891(5))

    JTPA means the Job Training Partnership Act (29 U.S.C. 1501 et 
seq.).
    Limited English proficiency, if used with reference to individuals, 
means individuals--
    (1)(i) Who were not born in the United States or whose native 
language is a language other than English;
    (ii) Who come from environments where a language other than English 
is dominant; or
    (iii) Who are American Indian and Alaska Natives and who come from 
environments where a language other than English has had a significant 
impact on their level of English language proficiency; and
    (2) Who by reason thereof, have sufficient difficulty speaking, 
reading, writing, or understanding the English language to deny those 
individuals the opportunity to learn successfully in classrooms where 
the language of instruction is English or to participate fully in our 
society.


(Authority: 20 U.S.C. 3223(a)(1))

    Local educational agency means a board of education or other legally 
constituted local school authority having administrative control and 
direction of public elementary or secondary schools in a city, county, 
township, school district, or political subdivision in a State, or any 
other public educational

[[Page 13]]

institution or agency having administrative control and direction of a 
vocational education program. For the purposes of sections 114, 115, 
116, 117, and 240 of the Act (implemented at 34 CFR 403.31 (e) and (f), 
403.32(c)(3), 403.190, 403.191, 403.192, 403.201, 403.202, and 403.204), 
this term includes a State corrections educational agency.
    Measure means a description of an outcome.


(Authority: H.R. Rep. No. 41, 101st Cong., 1st Sess. 13 (1989))

    Postsecondary educational institution means an institution legally 
authorized to provide postsecondary education within a State, a Bureau 
of Indian Affairs-controlled postsecondary institution, or any 
postsecondary educational institution operated by, or on behalf of, any 
Indian tribe that is eligible to contract with the Secretary of the 
Interior for the administration of programs under the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450) or under the 
Act of April 16, 1934 (25 U.S.C. 452).
    Preparatory services means services, programs, or activities 
designed to assist individuals who are not enrolled in vocational 
education programs in the selection of, or preparation for participation 
in, an appropriate vocational education training program. Preparatory 
services may include, but are not limited to--
    (1) Services, programs, or activities related to outreach to, or 
recruitment of, potential vocational education students;
    (2) Career counseling and personal counseling;
    (3) Vocational assessment and testing; and
    (4) Other appropriate services, programs, or activities.
    Private vocational training institution means a business or trade 
school, or technical institution or other technical or vocational 
school, in any State, that--
    (1) Admits as regular students only persons who have completed or 
left elementary or secondary school and who have the ability to benefit 
from the training offered by the institution;
    (2) Is legally authorized to provide, and provides within that 
State, a program of postsecondary vocational or technical education 
designed to fit individuals for useful employment in recognized 
occupations;
    (3) Has been in existence for two years or has been specially 
accredited by the Secretary as an institution meeting the other 
requirements of this definition; and
    (4) Is accredited--
    (i) By a nationally recognized accrediting agency or association 
listed by the Secretary;
    (ii) If the Secretary determines that there is no nationally 
recognized accrediting agency or association qualified to accredit 
schools of a particular category, by a State agency listed by the 
Secretary; or
    (iii) If the Secretary determines that there is no nationally 
recognized or State agency or association qualified to accredit schools 
of a particular category, by an advisory committee appointed by the 
Secretary and composed of persons specially qualified to evaluate 
training provided by schools of that category. The committee shall 
prescribe the standards of content, scope, and quality that must be met 
by those schools and shall also determine whether particular schools 
meet those standards.
    Program effectiveness panel means the panel of experts in the 
evaluation of education programs and in other areas of education, at 
least two-thirds of whom are not Federal employees, who are appointed by 
the Secretary, and who review and assign scores to programs according to 
the criteria in 34 CFR 786.12 or 787.12.
    Program year or academic year mean the twelve-month period during 
which a State operates its vocational education program (which is most 
generally a period beginning on July 1 and ending on the following June 
30).


(Authority: 20 U.S.C. 1225(a))

    Rehabilitation Act of 1973 means the Act in 29 U.S.C. 701 et seq.
    School facilities means classrooms and related facilities, including 
initial equipment, and interests in lands on which the facilities are 
constructed. The term does not include any facility intended primarily 
for events for which

[[Page 14]]

admission is to be charged to the general public.
    Sequential course of study means an integrated series of courses 
that are directly related to the educational and occupational skills 
preparation of individuals for jobs, or preparation for postsecondary 
education.
    Single parent means an individual who--
    (1) Is unmarried or legally separated from a spouse; and
    (2)(i) Has a minor child or children for which the parent has either 
custody or joint custody; or
    (ii) Is pregnant.
    Small business means a for-profit enterprise employing 500 or fewer 
employees.
    Special populations refers to individuals with disabilities, 
educationally and economically disadvantaged individuals (including 
foster children), individuals of limited English proficiency, 
individuals who participate in programs designed to eliminate sex bias, 
and individuals in correctional institutions.
    Specific job training means training and education for skills 
required by an employer to provide the individual student with the 
ability to obtain employment and to adapt to the changing demands of the 
workplace.
    Spread means the degree to which--
    (1) Project activities and results are demonstrated to others;
    (2) Technical assistance is provided to others to help them 
replicate project activities and results;
    (3) Project activities and results are replicated at other sites; or
    (4) Information and material about or resulting from the project are 
disseminated.
    Standard means the level or rate of an outcome.


(Authority: H.R. Rep. No. 41, 101st Cong., 1st Sess. 13 (1989))

    State means any of the 50 States, the Commonwealth of Puerto Rico, 
the District of Columbia, Guam, American Samoa, the Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, and Palau (until the 
Compact of Free Association with Palau takes effect pursuant to section 
101(a) of Public Law 99-658 (48 U.S.C. 1681)).
    State board means a State board designated or created by State law 
as the sole State agency responsible for the administration of 
vocational education or for supervision of the administration of 
vocational education in the State.
    State corrections educational agency means the State agency or 
agencies responsible for carrying out corrections education programs in 
the State.
    State council means the State council on vocational education 
established in accordance with 34 CFR 403.17 through 403.19.
    Supplementary services means curriculum modification, equipment 
modification, classroom modification, supportive personnel, and 
instructional aids and devices.
    Technology education means an applied discipline designed to promote 
technological literacy that provides knowledge and understanding of the 
impacts of technology including its organizations, techniques, tools, 
and skills to solve practical problems and extend human capabilities in 
areas such as construction, manufacturing, communication, 
transportation, power, and energy.
    Transportability means the ease by which project activities and 
results may be replicated at other sites, such as through the 
development and use of guides or manuals that provide step-by-step 
directions for others to follow in order to initiate similar efforts and 
reproduce comparable results.
    Tribally controlled community college means an institution that 
receives assistance under the Tribally Controlled Community College 
Assistance Act of 1978 (25 U.S.C. 1801 et seq.) or the Navajo Community 
College Act (25 U.S.C. 640a).
    Vocational education means organized educational programs offering a 
sequence of courses or instruction in a sequence or aggregation of 
occupational competencies that are directly related to the preparation 
of individuals for paid or unpaid employment in current or emerging 
occupations requiring other than a baccalaureate or advanced degree. 
These programs must include competency-based applied learning that 
contributes to an individual's academic knowledge, higher-order

[[Page 15]]

reasoning and problem-solving skills, work attitudes, general 
employability skills, and the occupational-specific skills necessary for 
economic independence as a productive and contributing member of 
society. This term also includes applied technology education.
    Vocational student organizations means those organizations for 
individuals enrolled in vocational education programs that engage in 
activities as an integral part of the instructional program. These 
organizations may have State and national units that aggregate the work 
and purposes of instruction in vocational education at the local level.
    Wagner-Peyser Act means the Act in 29 U.S.C. 49 et seq.

(Authority: 20 U.S.C. 2471)

[57 FR 36724, Aug. 14, 1992, as amended at 79 FR 76100, Dec. 19, 2014]



Sec. 400.5  Under what conditions may funds under the Act be used 
for the joint funding of programs?

    (a) Funds made available under the Act may be used to provide 
additional funds under any of the programs in--
    (1) Title II, section 123 and title III of the JTPA; or
    (2) The Wagner-Peyser Act.
    (b) Funds used to carry out paragraph (a) of this section may be 
used only if the--
    (1) Program otherwise meets the requirements of the Act and the 
requirements of the programs in paragraph (a) (1) and (2) of this 
section;
    (2) Program serves the same individuals that are served under the 
Act;
    (3) Program provides services in a coordinated manner with services 
provided under the Act; and
    (4) Funds would be used to supplement, and not supplant, funds 
provided from non-Federal sources.
    (c) Funds that meet the conditions in paragraphs (a) and (b) of this 
section may be used as matching funds.

(Authority: 20 U.S.C. 2468)



Sec. 400.6  What are the requirements for establishing a State
Committee of Practitioners?

    (a) Consultation. A State shall appoint a State Committee of 
Practitioners (Committee) after consulting with--
    (1) Local school officials representing eligible recipients;
    (2) Representatives of--
    (i) Organized labor;
    (ii) Business;
    (iii) Superintendents;
    (iv) Community-based organizations;
    (v) Private industry councils established under section 102(a) of 
the JTPA (29 U.S.C. 1512);
    (vi) State councils;
    (vii) Parents;
    (viii) Special populations; and
    (ix) Correctional institutions;
    (3) The administrator appointed under 34 CFR 403.13(a);
    (4) The State administrator of programs assisted under part B of the 
IDEA;
    (5) The State administrator of programs assisted under chapter 1;
    (6) The State administrator of programs for students of limited 
English proficiency; and
    (7) Guidance counselors.
    (b) Committee selection. The State shall select the Committee from 
nominees solicited from--
    (1) State organizations representing school administrators;
    (2) Teachers;
    (3) Parents;
    (4) Members of local boards of education; and
    (5) Appropriate representatives of institutions of higher education.
    (c)(1) Committee membership. The Committee must consist of--
    (i) Representatives of local educational agencies, who must 
constitute a majority of the members of the committee;
    (ii) School administrators;
    (iii) Teachers;
    (iv) Parents;
    (v) Members of local boards of education;
    (vi) Representatives of institutions of higher education; and
    (vii) Students.
    (2) School administrators, teachers, and members of local boards of 
education may be counted as representatives of LEAs for purposes of 
paragraph (c)(1)(i) of this section.

(Authority: 20 U.S.C. 2325 (a) and (d)(1); 2468a)

[[Page 16]]



Sec. 400.7  What are the provisions governing the issuance of State
core standards and measures of performance and State rules or
regulations?

    (a)(1) State standards and measures. A State shall convene, on a 
regular basis, the Committee established under Sec. 400.6 to review, 
comment on, and propose revisions to a draft proposal that the State 
board develops for a statewide system of core standards and measures of 
performance for secondary, postsecondary, and adult vocational education 
programs.
    (2) The Committee shall make recommendations to the State board with 
respect to modifying statewide standards and measures based on 
information provided by the State under 34 CFR 403.201(d).
    (b)(1) State rules and regulations. Except as provided in paragraph 
(b)(2) of this section, before a State publishes any proposed or final 
State rule or regulation for programs, services, or activities covered 
by the Act, the State shall convene the Committee for the purpose of 
reviewing the rule or regulation.
    (2) In an emergency, in which a rule or regulation must be issued 
within a very limited time period to assist eligible recipients with the 
operation of projects, services, or activities, the State--
    (i) May issue a proposed rule or regulation without meeting the 
requirements in paragraph (b)(1) of this section; but
    (ii) Shall immediately convene the Committee to review the rule or 
regulation before it is issued in final form.

    Cross Reference: See Sec. 400.9(c).

    (3) If a State policy is binding on eligible recipients and has the 
same effect as a formal rule or regulation, although it is not issued as 
one, that policy is covered by this section.

(Authority: 20 U.S.C. 2325(a); 2468a)



Sec. 400.8  What are the provisions governing student assistance?

    (a) The portion of any student financial assistance received under 
the Act that is made available for attendance costs described in 
paragraph (b) of this section may not be considered as income or 
resources in determining eligibility for assistance under any other 
program funded in whole or in part with Federal funds.
    (b) For purposes of this section, attendance costs are--
    (1) Tuition and fees normally assessed a student carrying the same 
academic workload as determined by the institution, including costs for 
rental or purchases of any equipment, materials, or supplies required of 
all students in the same course of study; and
    (2) An allowance for books, supplies, transportation, dependent 
care, and miscellaneous personal expenses for a student attending an 
institution on at least a half-time basis, as determined by the 
institution.

(Authority: 20 U.S.C. 2466d)



Sec. 400.9  What additional requirements govern the Vocational 
and Applied Technology Education Programs?

    In addition to the Act, applicable Federal laws, and regulations, 
the following requirements apply to Vocational and Applied Technology 
Education Programs:
    (a) A State that receives funds under the Act shall cooperate with 
the Secretary in supplying the information the Secretary requires, in 
the form the Secretary requires, and shall comply in its reports with 
the information system developed by the Secretary under section 421 of 
the Act.
    (b) Nothing in the Act is to be construed to be inconsistent with 
applicable Federal laws guaranteeing civil rights, or is intended to, or 
has the effect of, limiting or diminishing any obligations imposed under 
the IDEA or section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
794).
    (c) Any State rule, regulation, or policy imposed on the 
administration or operation of programs funded under the Act, including 
any rule, regulation, or policy based on a State's interpretation of any 
Federal law, regulation, or guideline, must be identified as a State 
imposed requirement.
    (d) Funds provided under the Act may not be used for the purpose of 
directly providing incentives or inducements to relocate a business or 
enterprise from one State to another State if the relocation would 
result in a reduction in the number of jobs available

[[Page 17]]

in the State where the business enterprise is located before the 
incentives or inducements are offered.
    (e) A State may not take into consideration payments under the Act 
in determining for any educational agency or institution in that State 
the eligibility for State aid or the amount of State aid with respect to 
public education within the State.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2421, 2424, 2466c, 2468b, 2468c, and 2468e(a)(2))



Sec. 400.10  What are the reporting requirements?

    (a) Recipients of grants and cooperative agreements shall report 
information about students, projects, evaluations, dissemination, 
expenditures, accomplishments, and any other information, as may be 
required by the Secretary.
    (b) Recipients of grants and cooperative agreements under--
    (1) Parts 401, 402, 405, 408, 409, 413, 415, 416, 417, 419, 422, 
423, 424, 425, 426, 427, and 428 shall submit performance reports at 
least semi-annually;
    (2) Part 412 shall submit monthly progress and financial status 
reports and an annual impact report; and
    (3) Part 413 shall submit monthly exception reports and quarterly 
financial status reports.
    (c) Recipients of grants under parts 403, 406, and 407 shall submit 
annual performance and financial reports.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2301 et seq.)



PART 401_INDIAN VOCATIONAL EDUCATION PROGRAM--Table of Contents



                            Subpart A_General

Sec.
401.1  What is the Indian Vocational Education Program?
401.2  Who is eligible for an award?
401.3  What activities may the Secretary fund?
401.4  What regulations apply?
401.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

401.10  How are applications submitted?

             Subpart C_How Does the Secretary Make an Award?

401.20  How does the Secretary evaluate an application?
401.21  What selection criteria does the Secretary use?
401.22  What additional factors may the Secretary consider?
401.23  Is the Secretary's decision not to make an award under the 
          Indian Vocational Education Program subject to a hearing?

          Subpart D_What Conditions Must Be Met After an Award?

401.30  How do the Indian Self-Determination Act and the Act of April 
          16, 1934 affect awards under the Indian Vocational Education 
          Program?
401.31  What are the evaluation requirements?

    Authority: 20 U.S.C. 2313(b), unless otherwise noted.

    Source: 57 FR 36730, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 401.1  What is the Indian Vocational Education Program?

    The Indian Vocational Education Program provides financial 
assistance to projects that provide vocational education for the benefit 
of Indians.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.2  Who is eligible for an award?

    (a) The following entities are eligible for an award under this 
program:
    (1) A tribal organization of any Indian tribe that is eligible to 
contract with the Secretary of the Interior under the Indian Self-
Determination and Education Assistance Act or under the Act of April 16, 
1934.
    (2) A Bureau-funded school offering a secondary program.
    (b) Any tribal organization or Bureau-funded school described in 
paragraph (a) of this section may apply individually or jointly as part 
of a consortium with one or more eligible tribal organizations or 
schools.

[[Page 18]]

    (c)(1) A consortium shall enter into an agreement signed by all 
members of the consortium, and designating one member of the consortium 
as the applicant and grantee.
    (2) The agreement must detail the activities each member of the 
consortium plans to perform, and must bind each member to every 
statement and assurance made in the application.
    (3) The applicant shall submit the agreement with its application.

    Cross Reference: See 34 CFR 75.127-75.129--Group applications.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.3  What activities may the Secretary fund?

    (a) The Secretary provides financial assistance through grants, 
contracts, or cooperative agreements to plan, conduct, and administer 
projects or portions of projects that are authorized by and consistent 
with the purposes of the Act. In the case of a grant to a Bureau-funded 
school, the Secretary provides a minimum grant of $35,000.
    (b) Projects funded under this program are in addition to other 
programs, services, and activities made available under other provisions 
of the Act to--
    (1) Eligible Indians in need of vocational education; and
    (2) Eligible Indian tribes as community-based organizations that 
receive State vocational education assistance.
    (c) An award under this program may be used to provide a stipend to 
a student who--
    (1) Is enrolled in a vocational education project funded under this 
program; and
    (2) Has an acute economic need that cannot be met through work-study 
programs.
    (d) The amount of a stipend may be the greater of either the minimum 
hourly wage prescribed by State or local law, or the minimum hourly wage 
set under the Fair Labor Standards Act. A stipend may not be paid for 
time a student is not in attendance in a project.

(Authority: 20 U.S.C. 2313(b) (1) and (3))



Sec. 401.4  What regulations apply?

    The following regulations apply to the Indian Vocational Education 
Program:
    (a) The regulations in 34 CFR part 400 (except that 34 CFR parts 79 
and 82 do not apply to this program).
    (b) The regulations in this part 401.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.5  What definitions apply?

    (a) The definitions in 34 CFR 400.4 apply to this part.
    (b) The following definitions also apply to this part:
    Act of April 16, 1934 means the Federal law commonly known as the 
``Johnson-O'Malley Act'' that authorizes the Secretary of the Interior 
to make contracts for the education of Indians and other purposes (25 
U.S.C. 455-457).
    Acute economic need means an income that is at or below the national 
poverty level according to the latest available data from the Department 
of Commerce or the Department of Health and Human Services Poverty 
Guidelines.
    Bureau means the Bureau of Indian Affairs, Department of the 
Interior.
    Bureau-funded school means--
    (1) A Bureau-operated elementary or secondary day or boarding school 
or a Bureau-operated dormitory for students attending a school other 
than a Bureau school;
    (2) An elementary or secondary school or a dormitory that receives 
financial assistance for its operation under a contract or agreement 
with the Bureau under sections 102, 104(1), or 208 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450f, 450h(1), and 
458d); or
    (3) A school for which assistance is provided under the Tribally 
Controlled Schools Act of 1988.


(Authority: 20 U.S.C. 2313(b); 25 U.S.C. 2019 (3), (4), and (5))

    Indian means a person who is a member of an Indian tribe.


(Authority: 25 U.S.C. 450b(d))

    Indian tribe means any Indian tribe, band, Nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established

[[Page 19]]

pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688) that 
is federally recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians.


(Authority: 25 U.S.C. 450b(e))

    Stipend means a subsistence allowance for a student that is 
necessary for the student to participate in a project funded under this 
program.
    Tribal organization means the recognized governing body of any 
Indian tribe or any legally established organization of Indians that is 
controlled, sanctioned, or chartered by that governing body or that is 
democratically elected by the adult members of the Indian community to 
be served by the organization and that includes the maximum 
participation of Indians in all phases of its activities. However, in 
any case where a contract is let or grant made to an organization to 
perform services benefiting more than one Indian tribe, the approval of 
each of those Indian tribes must be a prerequisite to the letting or 
making of that contract or grant.

(Authority: 20 U.S.C. 2313(a)(1)(A), (b); 25 U.S.C. 450b(l))



               Subpart B_How Does One Apply for an Award?



Sec. 401.10  How are applications submitted?

    (a) An application from a tribal organization, other than a Bureau-
funded school, must be submitted to the Secretary by the Indian tribe.
    (b) An application for a project to serve more than one Indian tribe 
must be approved by each tribe to be served.
    (c) An application from a Bureau-funded school may be submitted 
directly to the Secretary.

(Authority: 20 U.S.C. 2313(b)(1); 25 U.S.C. 450b)



             Subpart C_How Does the Secretary Make an Award?



Sec. 401.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 401.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 401.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 401.21.
    (e) In addition to the 100 points to be awarded based on the 
criteria in Sec. 401.21, the Secretary awards--
    (1) Up to 5 points to applications that propose exemplary approaches 
that involve, coordinate with, or encourage tribal economic development 
plans; and
    (2) Five points to applications from tribally controlled community 
colleges that--
    (i) Are accredited or are candidates for accreditation by a 
nationally recognized accreditation organization as an institution of 
postsecondary vocational education; or
    (ii) Operate vocational education programs that are accredited or 
are candidates for accreditation by a nationally recognized 
accreditation organization and issue certificates for completion of 
vocational education programs.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (20 points) The Secretary reviews each 
application to determine the extent to which it--
    (1) Proposes measurable goals for student enrollment, completion, 
and placement (including placement in jobs

[[Page 20]]

or military specialties and in continuing education or training 
opportunities) that are realistic in terms of stated needs, resources, 
and job opportunities in each occupation for which training is to be 
provided;
    (2) Proposes goals that take into consideration any related goals or 
standards developed for Job Opportunities and Basic Skills (JOBS) 
programs (42 U.S.C. 681 et seq.) and Job Training Partnership Act (JTPA) 
(29 U.S.C. 1501 et seq.) training programs operating in the area, and, 
where appropriate, any goals set by the State board for vocational 
education for the occupation and geographic area;
    (3) Describes, for each occupation for which training is to be 
provided, how successful program completion will be determined in terms 
of academic and vocational competencies demonstrated by enrollees prior 
to completion and any academic or work credentials acquired by enrollees 
upon completion;
    (4) Demonstrates the active commitment in the project's planning and 
operation by advisory committees, tribal planning offices, the JOBS 
program office, the JTPA program director, and potential employers such 
as tribal enterprises, private enterprises (on or off reservation), and 
other organizations;
    (5) Is targeted to individuals with inadequate skills to assist 
those individuals in obtaining new employment; and
    (6) Includes a thorough description of the approach to be used 
including some or all of the following components:
    (i) Methods of participant selection.
    (ii) Assessment and feedback of participant progress.
    (iii) Coordination of vocational instruction, academic instruction, 
and support services such as counseling, transportation, and child care.
    (iv) Curriculum and, if appropriate, approaches for providing on-
the-job training experience.
    (b) Need. (15 points) The Secretary reviews each application to 
determine the extent to which the project addresses specific needs, 
including--
    (1) The job market and related needs (such as educational level) of 
the target population;
    (2) Characteristics of that population, including an estimate of 
those to be served by the project;
    (3) How the project will meet the needs of the target population; 
and
    (4) A description of any ongoing and planned activities relative to 
those needs, including, if appropriate, how the State plan developed 
under 34 CFR 403.30 through 403.34 is designed to meet those needs.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The establishment of objectives that are clearly related to 
project goals and activities and are measurable with respect to 
anticipated enrollments, completions, and placements;
    (2) A management plan that describes the chain of command, how staff 
will be managed, how coordination among staff will be accomplished, and 
timelines for each activity; and
    (3) The way the applicant intends to use its resources and personnel 
to achieve each objective.
    (d) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used on the project;
    (iii) The time, including justification for the time that each one 
of the key personnel, including the project director, will commit to the 
project; and
    (iv) Subject to the Indian preference provisions of the Indian Self-
Determination Act (25 U.S.C. 450 et seq.) that apply to grants and 
contracts to tribal organizations, how the applicant, as part of its 
nondiscriminatory employment practices, will ensure that its personnel 
are selected for employment without regard to race, color, national 
origin, gender, age, or disabling condition.
    (2) To determine personnel qualifications, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields particularly related to the objectives of the 
project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.

[[Page 21]]

    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is adequate to support the project activities;
    (2) Costs are reasonable in relation to the objectives of the 
project and the number of participants to be served; and
    (3) The budget narrative justifies the expenditures.
    (f) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the evaluation plan for the 
project, including the extent to which--
    (1) The plan identifies, at a minimum, types of data to be collected 
and reported with respect to the academic and vocational competencies 
demonstrated by participants and the number and kind of academic and 
work credentials acquired by participants who complete the training;
    (2) The plan identifies, at a minimum, types of data to be collected 
and reported with respect to the achievement of project goals for the 
enrollment, completion, and placement of participants. The data must be 
broken down by sex and by occupation for which the training was 
provided;
    (3) The methods of evaluation are appropriate for the project and, 
to the extent possible, are objective and produce data that are 
quantifiable; and
    (4) The methods of evaluation provide periodic data that can be used 
by the project for ongoing program improvement.
    (g) Employment opportunities. (10 points) The Secretary reviews each 
application to determine the quality of the plan for job placement of 
participants who complete training under this program, including--
    (1) The expected employment opportunities (including any military 
specialties) and any additional educational or training opportunities 
that are related to the participants' training;
    (2) Information and documentation concerning potential employers' 
commitment to hire participants who complete the training; and
    (3) An estimate of the percentage of trainees expected to be 
employed (including self-employed individuals) in the field for which 
they were trained following completion of the training.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(b))



Sec. 401.22  What additional factors may the Secretary consider?

    The Secretary may decide not to award a grant or cooperative 
agreement if--
    (a) The proposed project duplicates an effort already being made; or
    (b) Funding the project would create an inequitable distribution of 
funds under this part among Indian tribes.

(Authority: 20 U.S.C. 2313(b))



Sec. 401.23  Is the Secretary's decision not to make an award under
the Indian Vocational Education Program subject to a hearing?

    (a) After receiving written notice from an authorized official of 
the Department that the Secretary will not award a grant or cooperative 
agreement to an eligible applicant under Sec. 401.2(a)(1), an Indian 
tribal organization has 30 calendar days to make a written request to 
the Secretary for a hearing to review the Secretary's decision.
    (b) Within 10 business days of the Department's receipt of a hearing 
request, the Secretary designates a Department employee who is not 
assigned to the Office of Vocational and Adult Education to serve as a 
hearing officer. The hearing officer conducts a hearing and issues a 
written decision within 75 calendar days of the Department's receipt of 
the hearing request. The hearing officer establishes rules for the 
conduct of the hearing. The hearing officer conducts the hearing solely 
on the basis of written submissions unless the officer determines, in 
accordance with standards in 34 CFR 81.6(b), that oral argument or 
testimony is necessary.
    (c) The Secretary does not make any award under this part to an 
Indian tribal organization until the hearing officer issues a written 
decision on any appeal brought under this section.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(b); 25 U.S.C. 450f)

[[Page 22]]



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 401.30  How do the Indian Self-Determination Act and the Act
of April 16, 1934 affect awards under the Indian Vocational Education
Program?

    (a) Grants, cooperative agreements, or contracts with tribal 
organizations are subject to the terms and conditions of section 102 of 
the Indian Self-Determination Act (25 U.S.C. 450f). These awards must be 
conducted by the recipient or contractor in accordance with the 
provisions of sections 4, 5, and 6 of the Act of April 16, 1934, that 
are relevant to the projects administered under this part. Section 4 
contains requirements pertaining to submission of an education plan by a 
contractor. Section 5 pertains to participation of parents of Indian 
children. Section 6 pertains to reimbursement for educating non-resident 
students.
    (b) Grants to Bureau-funded schools are not subject to the 
requirements of the Indian Self-Determination Act or the Act of April 
16, 1934.

(Authority: 20 U.S.C. 2313 (b)(1)(A)(ii)(I) and (II))



Sec. 401.31  What are the evaluation requirements?

    (a) Each grantee shall annually provide and budget for either an 
internal or external evaluation, or both, of its activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The annual evaluation must include--
    (1) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on the 
academic and vocational competencies demonstrated and the academic and 
work credentials acquired;
    (2) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on 
participant enrollment, completion, and placement by sex and socio-
economic status for each occupation for which training has been 
provided;
    (3) The grantee's progress in achieving the objectives in its 
approved application, including any approved revisions of the 
application;
    (4) If applicable, actions taken by the grantee to address 
significant barriers impeding progress; and
    (5) The effectiveness of the project in promoting key elements for 
participants' job readiness, including--
    (i) Coordination of services;
    (ii) Improved attendance rates; and
    (iii) Improved basic and vocational skills competencies.

(Approved by the Office of Management and Budget under Control Number 
1830-0013)

(Authority: 20 U.S.C. 2313(b))



PART 402_NATIVE HAWAIIAN VOCATIONAL EDUCATION PROGRAM--
Table of Contents



                            Subpart A_General

Sec.
402.1  What is the Native Hawaiian Vocational Education Program?
402.2  Who is eligible for an award?
402.3  What activities may the Secretary fund?
402.4  What regulations apply?
402.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How does the Secretary Make an Award?

402.20  How does the Secretary evaluate an application?
402.21  What selection criteria does the Secretary use?

          Subpart D_What Conditions Must Be Met After an Award?

402.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2313(c), unless otherwise noted.

    Source: 57 FR 36733, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 402.1  What is the Native Hawaiian Vocational Education Program?

    The Native Hawaiian Vocational Education Program provides financial

[[Page 23]]

assistance to projects that provide vocational training and related 
activities for the benefit of native Hawaiians.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.2  Who is eligible for an award?

    Any organization that primarily serves and represents native 
Hawaiians and that is recognized by the Governor of the State of Hawaii 
is eligible to apply for an award under this program.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.3  What activities may the Secretary fund?

    The Secretary provides assistance through grants, contracts, or 
cooperative agreements to plan, conduct, and administer programs, or 
portions of programs, that provide vocational training and related 
activities for the benefit of native Hawaiians.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.4  What regulations apply?

    The following regulations apply to the Native Hawaiian Vocational 
Education Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part 402.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.5  What definitions apply?

    The following definitions apply to the Native Hawaiian Vocational 
Education Program:
    (a) The definitions in 34 CFR 400.4 apply to this part.
    (b) The following definition also applies to this part:
    Native Hawaiian means any individual who has any ancestors who were 
natives, prior to 1778, of the area that now comprises the State of 
Hawaii.

(Authority: 20 U.S.C. 2313(a)(1)(B))

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 402.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 402.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 402.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 402.21.

(Authority: 20 U.S.C. 2313(c))



Sec. 402.21  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria to evaluate an 
application:
    (a) Program design. (35 points) The Secretary reviews each 
application to determine the extent to which--
    (1) The application presents a complete program design, including 
identifying the services to be provided, who will provide them, how they 
will be provided, and the expected outcomes for each activity;
    (2) The proposed program is designed to meet the identified 
vocational education needs of native Hawaiians;
    (3) The application proposes an effective plan for coordination with 
the office of the Hawaii State director for vocational education; and
    (4) If vocational training is proposed within the project--
    (i) Proposes measurable goals for student enrollment, completion, 
and placement.
    (ii) Proposes goals that take into consideration any related 
standards and measures developed for Job Opportunities and Basic Skills 
(JOBS) programs (42 U.S.C. 681 et seq.) and any Job Training Partnership 
Act (JTPA) (29 U.S.C. 1501 et seq.) programs in that geographic area;
    (iii) Proposes goals that take into consideration any standards set 
by the State board for vocational education for the occupation and 
geographic area; and

[[Page 24]]

    (iv) Describes how successful program completion will be determined 
for each occupation for which training is to be provided, in terms of 
the academic and vocational competencies demonstrated by enrollees prior 
to successful completion and any academic or work credentials acquired 
upon completion.
    (b) Management plan. (25 points) The Secretary reviews each 
application to determine the quality of the management plan for the 
project, including--
    (1) The chain of command, how staff will be managed, how 
coordination among staff will be accomplished, and timelines for each 
activity;
    (2) A clear description of the interrelationship among goals, 
objectives, and activities;
    (3) The way the applicant plans to use the resources and personnel 
from the grant to achieve each objective; and
    (4) How any contracts awarded by the grantee will be awarded, 
monitored, and evaluated.
    (c) Key personnel. (10 points)
    (1) The Secretary reviews each application to determine the quality 
of key personnel the applicant plans to use on the project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used on the project;
    (iii) The time, including justification for the time, that each one 
of the key personnel, including the project director, will commit to the 
proposed project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that personnel for this project are selected for 
employment without regard to race, color, national origin, gender, age, 
or disabling condition.
    (2) To determine personnel qualifications, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields particularly related to the objectives of the 
project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (d) Evaluation plan. (10 points)
    (1) The Secretary reviews each application to determine the quality 
of the project's plan for an independent evaluation of the project, 
including, if applicable, the extent to which the plan includes 
activities during the formative stages of the project to help guide and 
improve the project, as well as a final evaluation that includes summary 
data and recommendations.
    (2) The Secretary reviews each application to determine whether, for 
any training programs proposed--
    (i) The plan identifies, at a minimum, types of data to be collected 
and reported with respect to the academic and vocational competencies 
demonstrated by participants and the number and kinds of academic and 
work credentials acquired by completers; and
    (ii) The plan identifies, at a minimum, types of data to be 
collected and reported with respect to enrollment, completion, and 
placement of participants by sex and socio-economic status for each 
occupation for which training is provided.
    (e) Budget and cost-effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is detailed and tied to the proposed activities;
    (2) The budget narrative is explanatory and justifies expenses;
    (3) The budget is adequate to support the project; and
    (4) Costs are reasonable in relation to the objectives of the 
project.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(c))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 402.30  What are the evaluation requirements?

    (a) Each grantee shall annually provide and budget for an external 
evaluation of its activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The annual evaluation must include--

[[Page 25]]

    (1) The grantee's progress in achieving the objectives in its 
approved application, including any approved revisions of the 
application; and
    (2) If applicable, actions taken by the grantee to address 
significant barriers impeding progress when training is provided by the 
project, including--
    (i) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on the 
academic and vocational competencies demonstrated and the academic and 
work credentials acquired; and
    (ii) Descriptions and analyses of the accuracy of records and the 
validity of measures used by the project to establish and report on 
participant enrollment, completion, and placement by sex and socio-
economic status for each occupation for which training has been 
provided.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2313(c))



PART 403_STATE VOCATIONAL AND APPLIED TECHNOLOGY EDUCATION PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
403.1  What is the State Vocational and Applied Technology Education 
          Program?
403.2  Who is eligible for an award?
403.3  What regulations apply?
403.4  What definitions apply?

       Subpart B_What Are the State's Organizational and Planning 
                            Responsibilities?

403.10  What is the State board?
403.11  What are the principal responsibilities of the State board?
403.12  What are the additional responsibilities of the State board?
403.13  What are the personnel requirements regarding the elimination of 
          sex discrimination and sex stereotyping?
403.14  What are the personnel requirements regarding coordination with 
          services for individuals with disabilities?
403.15  What are the personnel requirements regarding coordination with 
          services under chapter 1 of title I of the Elementary and 
          Secondary Education Act?
403.16  What are the personnel requirements regarding coordination with 
          programs for individuals of limited English proficiency?
403.17  What are the State's responsibilities regarding a State council 
          on vocational education?
403.18  What are the membership requirements of a State council on 
          vocational education?
403.19  What are the responsibilities of a State council on vocational 
          education?

              Subpart C_How Does a State Apply for a Grant?

403.30  What documents must a State submit to receive a grant?
403.31  How is the State plan developed?
403.32  What must the State plan contain?
403.33  What procedures does a State use to submit its State plan?
403.34  When are amendments to the State plan required?

        Subpart D_How Does the Secretary Make a Grant to a State?

403.50  How does the Secretary make allotments?
403.51  How does the Secretary make reallotments?
403.52  When does the Secretary approve State plans and amendments?

 Subpart E_What Kinds of Activities Does the Secretary Assist Under the 
                             Basic Programs?

                                 General

403.60  What are the basic programs?
403.61  What projects, services, and activities are permissible under 
          the basic programs?
403.62  What administrative provisions apply?
403.63  How does a State carry out the State Vocational and Applied 
          Technology Education Program?

             State Programs and State Leadership Activities

403.70  How must funds be used under the State Programs and State 
          Leadership Activities?
403.71  In what additional ways may funds be used under the State 
          Programs and State Leadership Activities?

 Single Parents, Displaced Homemakers, and Single Pregnant Women Program

403.80  Who is eligible for a subgrant or contract?
403.81  How must funds be used under the Single Parents, Displaced 
          Homemakers, and Single Pregnant Women Program?
403.82  In what settings may the Single Parents, Displaced Homemakers, 
          and Single Pregnant Women Program be offered?

[[Page 26]]

                           Sex Equity Program

403.90  Who is eligible for a subgrant or contract?
403.91  How must funds be used under the Sex Equity Program?
403.92  Under what circumstances may the age limit under the Sex Equity 
          Program be waived?

                     Programs for Criminal Offenders

403.100  What are the requirements for designating a State corrections 
          educational agency to administer the Programs for Criminal 
          Offenders?
403.101  How must funds be used under the Programs for Criminal 
          Offenders?
403.102  What other requirements apply to the Program for Criminal 
          Offenders?

    Secondary, Postsecondary, and Adult Vocational Education Programs

403.110  Who is eligible for a subgrant or contract?
403.111  How must funds be used under the Secondary School Vocational 
          Education Program and the Postsecondary and Adult Vocational 
          Education Programs?
403.112  How does a State allocate funds under the Secondary School 
          Vocational Education Program to local educational agencies?
403.113  How does a State allocate funds under the Secondary School 
          Vocational Education Program to area vocational education 
          schools and intermediate educational agencies?
403.114  How does a State determine the number of economically 
          disadvantaged students attending vocational education programs 
          under the Secondary School Vocational Education Program?
403.115  What appeal procedures must be established under the Secondary 
          School Vocational Education Program?
403.116  How does a State allocate funds under the Postsecondary and 
          Adult Vocational Education Programs?
403.117  What definitions apply to the Postsecondary and Adult 
          Vocational Education Programs?
403.118  Under what circumstances may the Secretary waive the 
          distribution requirements for the Postsecondary and Adult 
          Vocational Education Programs?
403.119  Under what circumstances may the State waive the distribution 
          requirements for Secondary School Vocational Education Program 
          or the Postsecondary and Adult Vocational Education Programs?
403.120  How does a State reallocate funds under the Secondary School 
          Vocational Education Program and the Postsecondary and Adult 
          Vocational Education Programs?

 Subpart F_What Kinds of Activities Does the Secretary Assist Under the 
                            Special Programs?

                                 General

403.130  What are the Special Programs?
403.131  Who is eligible for an award under the Special Programs?

 Vocational Education Support Programs by Community-Based Organizations

403.140  What activities does the Secretary support under the State 
          Assistance for Vocational Education Support Programs by 
          Community-Based Organizations?
403.141  What are the application requirements for the State Assistance 
          for Vocational Education Support Programs by Community-Based 
          Organizations?

               Consumer and Homemaking Education Programs

403.150  What activities does the Secretary support under the Consumer 
          and Homemaking Education Programs?
403.151  How must funds be used under the Consumer and Homemaking 
          Education Programs?

          Comprehensive Career Guidance and Counseling Programs

403.160  What activities does the Secretary support under the 
          Comprehensive Career Guidance and Counseling Programs?
403.161  How must funds be used under the Comprehensive Career Guidance 
          and Counseling Programs?

        Business-Labor-Education Partnership for Training Program

403.170  What activities does the Secretary support under the Business-
          Labor-Education Partnership for Training Program?
403.171  Who is eligible to apply to a State board for an award?
403.172  What special considerations must the State board give in 
          approving projects, services, and activities?
403.173  What expenses are allowable?
403.174  What additional fiscal requirements apply to the Business-
          Labor-Education Partnership for Training Program?

       Subpart G_What Financial Conditions Must Be Met by a State?

403.180  How must a State reserve funds for the basic programs?
403.181  What are the cost-sharing requirements applicable to the basic 
          programs?

[[Page 27]]

403.182  What is the maintenance of fiscal effort requirement?
403.183  Under what circumstances may the Secretary waive the 
          maintenance of effort requirement?
403.184  How does a State request a waiver of the maintenance of effort 
          requirement?
403.185  How does the Secretary compute maintenance of effort in the 
          event of a waiver?
403.186  What are the administrative cost requirements applicable to a 
          State?
403.187  How may a State provide technical assistance?
403.188  What is a State's responsibility for the cost of services and 
          activities for members of special populations?

       Subpart H_What Conditions Must Be Met by Local Recipients?

403.190  What are the requirements for receiving a subgrant or contract?
403.191  What are the requirements for program evaluation?
403.192  What are the requirements for program improvement?
403.193  What are the information requirements regarding special 
          populations?
403.194  What are the comparability requirements?
403.195  What are the administrative cost requirements applicable to 
          local recipients?
403.196  What are the requirements regarding supplanting?
403.197  What are the requirements for the use of equipment?

Subpart I_What Are the Administrative Responsibilities of a State Under 
     the State Vocational and Applied Technology Education Program?

403.200  What are the State's responsibilities for ensuring compliance 
          with the comparability requirements?
403.201  What are the State's responsibilities for developing and 
          implementing a statewide system of core standards and measures 
          of performance?
403.202  What must each State's system of core standards and measures of 
          performance include?
403.203  What are the State's responsibilities for a State assessment?
403.204  What are the State's responsibilities for program evaluation 
          and improvement?
403.205  What are the State's responsibilities for members of special 
          populations?
403.206  What are the State's responsibilities regarding a State 
          occupational information coordinating committee?
403.207  What are the State's responsibilities to the National Center or 
          Centers for Research in Vocational Education?
403.208  What are the requirements regarding supplanting?

Appendix A to Part 403--Examples for 34 CFR 403.111(a) and 403.111(c)(3)
Appendix B to Part 403--Examples for 34 CFR 403.194--Comparability 
          Requirements

    Authority: 20 U.S.C. 2301 et seq., unless otherwise noted.

    Source: 57 FR 36735, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 403.1  What is the State Vocational and Applied Technology
Education Program?

    (a) Under the State Vocational and Applied Technology Education 
Program, the Secretary makes grants to States, to assist them, local 
educational agencies, postsecondary educational institutions, and other 
agencies and institutions to administer and conduct vocational education 
programs that are authorized by the Act.
    (b) The State Vocational and Applied Technology Education Program 
consists of the programs under the basic programs for vocational 
education authorized by title II of the Act and listed in Sec. 403.60, 
and the special programs authorized by title III of the Act that are 
covered by the State plan and listed in Sec. 403.130.

(Authority: 20 U.S.C. 2301 et seq.)



Sec. 403.2  Who is eligible for an award?

    Except as otherwise provided in Sec. 403.131, a State is eligible 
for an award under the State Vocational and Applied Technology Education 
Program.

(Authority: 20 U.S.C. 2311 and 2311a)



Sec. 403.3  What regulations apply?

    The following regulations apply to the State Vocational and Applied 
Technology Education Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part 403.

(Authority: 20 U.S.C. 2301 et seq.)

[[Page 28]]



Sec. 403.4  What definitions apply?

    The definitions in 34 CFR 400.4 apply to the State Vocational and 
Applied Technology Education Program.

(Authority: 20 U.S.C. 2471)



       Subpart B_What Are the State's Organizational and Planning 
                            Responsibilities?



Sec. 403.10  What is the State board?

    A State that desires to participate in the programs authorized by 
the Act shall, consistent with State law, designate or establish a State 
board of vocational education (State board). The State board must be the 
sole State agency responsible for the administration or the supervision 
of the State's vocational and applied technology education program.

(Authority: 20 U.S.C. 2321(a))



Sec. 403.11  What are the principal responsibilities of the State 
board?

    The principal responsibilities of the State board must include--
    (a) The coordination of the development, submission, and 
implementation of the State plan;
    (b) The evaluation of the programs, services, and activities 
assisted under the Act, as required by Secs. 403.32 (a)(7) and (b)(9) 
and 403.201 through 403.204;
    (c) The development, in consultation with the State council on 
vocational education, of the State plan and its submission to the 
Secretary, as required by Secs. 403.30 through 403.34;
    (d) Consultation with the State council on vocational education and 
other appropriate agencies, groups, and individuals, including business, 
industry, and labor, involved in the planning, administration, 
evaluation, and coordination of programs funded under the Act;
    (e) Convening and meeting as a State board, consistent with 
applicable State law and procedure, when the State board determines it 
is necessary to meet to carry out its functions under the Act, but not 
less than four times annually; and
    (f) The adoption of those procedures the State board considers 
necessary to implement State level coordination with the State job 
training coordinating council in order to encourage cooperation between 
programs under the Act and programs under the Job Training Partnership 
Act (JTPA) (29 U.S.C. 1501 et seq.).

(Authority: 20 U.S.C. 2321(a))



Sec. 403.12  What are the additional responsibilities of the State
board?

    (a) The State board shall make available to each private industry 
council established within the State under section 102 of the JTPA a 
current listing of all programs assisted under the Act.
    (b)(1) The State board, in consultation with the State council on 
vocational education established under Sec. 403.17, shall establish a 
limited number of (but at least two) technical committees to advise the 
State council and the State board on the development of model curricula 
to address State labor market needs. The technical committees shall 
develop an inventory of skills that may be used by the State board to 
define state-of-the-art model curricula. This inventory must identify 
the type and level of knowledge and skills needed for entry, retention, 
and advancement in occupational areas taught in the State.
    (2) The State board shall establish procedures that are consistent 
with the purposes of the Act for membership, operation, and duration of 
the technical committees. Their membership must be composed of 
representatives of--
    (i) Employers from any relevant industry or occupation for which the 
committee is established;
    (ii) Trade or professional organizations representing any relevant 
occupations; and
    (iii) Organized labor, if appropriate.
    (c) Except for the functions described in Sec. 403.11, the State 
board may delegate any of its other administrative, operational, or 
supervisory responsibilities, in whole or in part, to one or more 
appropriate State agencies.
    (d) The State board shall carry out the responsibilities described 
in Secs. 403.13 through 403.18 and 403.200 through 403.208.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2321(a)(1), (f), (g))

[[Page 29]]



Sec. 403.13  What are the personnel requirements regarding the
elimination of sex discrimination and sex stereotyping?

    (a) A State that desires to participate in the State Vocational and 
Applied Technology Education Program shall assign one individual, within 
the appropriate agency established or designated by the State board 
under Sec. 403.12(c), to administer vocational education programs within 
the State, to work full-time to assist the State board to fulfill the 
purposes of the Act by--
    (1) Administering the program of vocational education for single 
parents, displaced homemakers, and single pregnant women described in 
Sec. 403.81, and the sex equity program described in Sec. 403.91;
    (2) Gathering, analyzing, and disseminating data on the--
    (i) Adequacy and effectiveness of vocational education programs in 
the State in meeting the education and employment needs of women, 
including the preparation of women for employment in technical 
occupations, new and emerging occupational fields, and occupations 
regarded as nontraditional for women; and
    (ii) Status of men and women students and employees in the programs 
described in paragraph (a)(2)(i) of this section;
    (3) Reviewing and commenting upon, and making recommendations 
concerning, the plans of local educational agencies, area vocational 
education schools, intermediate educational agencies, and postsecondary 
educational institutions to ensure that the needs of women and men for 
training in nontraditional jobs are met;
    (4)(i) Reviewing vocational educational programs, including career 
guidance and counseling, for sex stereotyping and sex bias, with 
particular attention to practices that tend to inhibit the entry of 
women in high technology occupations; and
    (ii) Submitting recommendations, to the State board for inclusion in 
the State plan, for programs and policies to overcome sex bias and sex 
stereotyping in the programs described in paragraph (a)(4)(i) of this 
section;
    (5) Submitting to the State board an assessment of the State's 
progress in meeting the purposes of the Act with regard to overcoming 
sex discrimination and sex stereotyping;
    (6) Reviewing proposed actions on grants, contracts, and the 
policies of the State board to ensure that the needs of women are 
addressed in the administration of the Act;
    (7) Developing recommendations for programs of information and 
outreach to women concerning vocational education and employment 
opportunities for women, including opportunities for careers as 
technicians and skilled workers in technical fields and new and emerging 
occupational fields;
    (8) Providing technical assistance and advice to local educational 
agencies, postsecondary institutions, and other interested parties in 
the State on expanding vocational opportunities for women;
    (9) Assisting administrators, instructors, and counselors in 
implementing programs and activities to increase access for women, 
including displaced homemakers and single heads of households, to 
vocational education and to increase male and female students' 
enrollment in nontraditional programs;
    (10) Developing an annual plan for the use of all funds available 
for programs described in Secs. 403.81 and 403.91;
    (11) Managing the distribution of funds pursuant to Secs. 403.81 and 
403.91;
    (12) Monitoring the use of funds distributed to recipients under 
Secs. 403.81 and 403.91;
    (13) Evaluating the effectiveness of programs and activities 
supported by funds under Secs. 403.81 and 403.91;
    (14) On a competitive basis, allocating and distributing to eligible 
recipients or community-based organizations subgrants or contracts to 
carry out the Programs for Single Parents, Displaced Homemakers, and 
Single Pregnant Women and the Sex Equity Program;
    (15) Ensuring that each subgrant or contract awarded under the 
Programs for Single Parents, Displaced Homemakers, and Single Pregnant 
Women and the Sex Equity Program is of sufficient size, scope, and 
quality to be effective;

[[Page 30]]

    (16) Developing procedures for the collection from eligible 
recipients or community-based organizations that receive funds under 
Secs. 403.81 and 403.91 of data appropriate to the individuals served in 
programs under Secs. 403.81 and 403.91 in order to permit an evaluation 
of effectiveness of those programs as required by paragraph (a)(13) of 
this section; and
    (17) Cooperating in the elimination of sex bias and sex stereotyping 
in Consumer and Homemaking Education Programs.
    (b) A State shall, in accordance with Sec. 403.180(b)(4)(i), reserve 
at least $60,000 to carry out the provisions of paragraph (a) of this 
section, including the provision of necessary and reasonable staff 
support.
    (c) For the purposes of this section, the term ``State'' includes 
only the fifty States and the District of Columbia.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2312(a)(4)(A), 2321(b), 2335b, 2362(a)(3))



Sec. 403.14  What are the personnel requirements regarding coordination
with services for individuals with disabilities?

    (a) A State desiring to participate in programs authorized by the 
Act shall designate or assign the head of the State office responsible 
for administering part B of the Individuals with Disabilities Education 
Act (IDEA) (20 U.S.C. 1400 et seq.) to review the implementation of the 
provisions of the Act as they relate to students with disabilities by 
reviewing all or a representative sample of applications of eligible 
recipients to ensure that--
    (1) Individuals with disabilities are receiving vocational 
educational services;
    (2) Applications of the eligible recipients provide assurances of 
compliance with the requirements of section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794) and the IDEA and regulations implementing 
those statutes, regarding equal access to programs; and
    (3) Eligible recipients have--
    (i) Identified the number of students with disabilities enrolled in 
the eligible recipients' vocational programs;
    (ii) Assessed the vocational needs of those students; and
    (iii) Developed an adequate plan to provide supplementary services 
sufficient to meet the needs of those students.
    (b) For the purposes of this section, the term ``State'' includes 
only the fifty States, the District of Columbia, and the Commonwealth of 
Puerto Rico.

(Authority: 20 U.S.C. 2321(c))



Sec. 403.15  What are the personnel requirements regarding coordination
with services under chapter 1 of title I of the Elementary and Secondary
Education Act?

    (a) A State desiring to participate in programs authorized by the 
Act shall designate or assign the head of the State office or other 
appropriate individual responsible for coordinating services under 
chapter 1 of title I of the Elementary and Secondary Education Act of 
1965, as amended (chapter 1) (20 U.S.C. 2701 et seq.) to review all or a 
representative sample of applications from eligible recipients to ensure 
that--
    (1) The number of economically disadvantaged students has been 
identified; and
    (2) The needs of economically disadvantaged students are being met 
as outlined in the applications of eligible recipients.
    (b) For the purposes of this section, the term ``State'' includes 
only the fifty States, the District of Columbia, and the Commonwealth of 
Puerto Rico.

(Authority: 20 U.S.C. 2321 (c) and (d))



Sec. 403.16  What are the personnel requirements regarding coordination
with programs for individuals of limited English proficiency?

    (a) A State desiring to participate in programs authorized by the 
Act shall designate or assign the head of the State office or other 
appropriate individual responsible for administering programs for 
students of limited English proficiency to review all or a 
representative sample of applications from eligible recipients to ensure 
that--
    (1) The number of students of limited English proficiency has been 
identified; and

[[Page 31]]

    (2) The needs of students of limited English proficiency for 
participation in vocational education programs are being met as outlined 
in the applications of eligible recipients.
    (b) For the purposes of this section, the term ``State'' includes 
only the fifty States, the District of Columbia, and the Commonwealth of 
Puerto Rico.

(Authority: 20 U.S.C. 2321 (c) and (e))



Sec. 403.17  What are the State's responsibilities regarding a State
council on vocational education?

    (a) A State desiring to participate in the State Vocational and 
Applied Technology Education Program shall establish a State council on 
vocational education. The State council must be appointed--
    (1) By the Governor; or
    (2) By the State board of education, in a State in which the members 
of the State board of education are elected, including election by the 
State legislature.
    (b) Each State shall certify to the Secretary the establishment and 
membership of the State council by June 1 prior to the beginning of each 
State plan period described in Sec. 403.30.
    (c) Each State shall recertify to the Secretary any new member of 
the State council not more than 60 days after a position on the State 
council is vacated.

(Authority: 20 U.S.C. 2322 (a), (b))



Sec. 403.18  What are the membership requirements of a State council
on vocational education?

    (a) Each State council must be composed of 13 individuals, and must 
be broadly representative of citizens and groups within the State having 
an interest in vocational education.
    (b) Each State council must consist of--
    (1) Seven individuals who are representative of the private sector 
in the State and who must constitute a majority of the membership--
    (i) Five of whom must be representatives of business, industry, 
trade organizations, and agriculture including--
    (A) One member who is representative of small business concerns; and
    (B) One member who is a private sector member of the State job 
training coordinating council established pursuant to section 122 of the 
JTPA; and
    (ii) Two of whom must be representatives of labor organizations; and
    (2) Six individuals, one of whom must be representative of special 
education, who are representative of--
    (i) Secondary and postsecondary vocational institutions (equitably 
distributed among those institutions);
    (ii) Career guidance and counseling organizations within the State; 
and
    (iii) Individuals who have special knowledge and qualifications with 
respect to the special educational and career development needs of 
special populations, including women, disadvantaged individuals, 
individuals with disabilities, individuals with limited English 
proficiency, and minorities.
    (c) The State council may include members of vocational student 
organizations and school boards but may not include employees of the 
State board of vocational education.
    (d) In selecting individuals to serve on the State council on 
vocational education, the State shall give due consideration to the 
appointment of individuals who serve on a private industry council under 
the JTPA, or on State councils established under other related Federal 
programs.

(Authority: 20 U.S.C. 2322(a))



Sec. 403.19  What are the responsibilities of a State council on 
vocational education?

    (a)(1) The State council on vocational education shall meet as soon 
as practical after the Secretary accepts its certification and shall 
select from among its membership a chairperson who must be a 
representative of the private sector.
    (2) The State council on vocational education shall adopt rules that 
govern the time, place, and manner of meeting, as well as council 
operating procedures and staffing. The rules must provide for at least 
one public meeting each year at which the public is given an opportunity 
to express views concerning the vocational education program of the 
State.

[[Page 32]]

    (b) Each State council on vocational education, during each State 
plan period described in Sec. 403.30 unless otherwise indicated in the 
regulations in this section, shall--
    (1) Meet with the State board or its representatives to advise on 
the development of the subsequent State plan, or any amendments to the 
current State plan, while the State plan or amendment is being 
developed;
    (2) Make recommendations to the State board and make reports to the 
Governor, the business community, and general public of the State, 
concerning--
    (i) The State plan;
    (ii) Policies the State should pursue to strengthen vocational 
education, with particular attention to programs for individuals with 
disabilities; and
    (iii) Initiatives and methods the private sector could undertake to 
assist in the modernization of vocational education programs;
    (3) Analyze and report on the distribution of all vocational 
education funds in the State and on the availability of vocational 
education activities and services within the State;
    (4) Consult with the State board on the establishment of evaluation 
criteria for vocational education programs within the State;
    (5) Submit recommendations to the State board on the conduct of 
vocational education programs conducted in the State that emphasize the 
use of business concerns and labor organizations;
    (6) Assess and report on the distribution of financial assistance 
under the Act, particularly the distribution of financial assistance 
between secondary vocational education programs and postsecondary 
vocational education programs;
    (7) Recommend procedures to the State board to ensure and enhance 
the participation of the public in the provision of vocational education 
at the local level within the State, particularly the participation of 
local employers and local labor organizations;
    (8) Report to the State board on the extent to which individuals who 
are members of special populations are provided with equal access to 
quality vocational education programs;
    (9) Analyze and review corrections education programs; and
    (10)(i) At least once every two years--
    (A) Evaluate the extent to which vocational education, employment, 
and training programs in the State represent a consistent, integrated, 
and coordinated approach to meeting the economic needs of the State;
    (B) Evaluate the vocational education program delivery system 
assisted under the Act, and the job training program delivery system 
assisted under the JTPA, in terms of the delivery systems' adequacy and 
effectiveness in achieving the purposes of both Acts; and
    (C) Make recommendations to the State board on the adequacy and 
effectiveness of the coordination that takes place between vocational 
education and the JTPA;
    (ii) Comment on the adequacy or inadequacy of State action in 
implementing the State plan;
    (iii) Make recommendations to the State board on ways to create 
greater incentives for joint planning and collaboration between the 
vocational education system and the job training system at the State and 
local levels; and
    (iv) Advise, in writing, the Governor, the State board, the State 
job training coordinating council, the Secretary, and the Secretary of 
Labor of these findings and recommendations.
    (c)(1) Each State council on vocational education may--
    (i) Obtain the services of the professional, technical, and clerical 
personnel necessary to enable it to carry out its functions under the 
Act;
    (ii) Contract for the services necessary to enable it to carry out 
its evaluation functions; and
    (iii) Submit a statement to the Secretary reviewing and commenting 
upon the State plan.
    (2)(i) The expenditure of funds awarded to a State council on 
vocational education by the Secretary must be solely determined by that 
State council and may not be diverted or reprogrammed for any other 
purpose by any State board, agency, or individual.
    (ii) Each State council on vocational education shall designate an 
appropriate State agency, or other public agency, eligible to receive 
funds under

[[Page 33]]

the Act, to act as its fiscal agent for purposes of disbursement, 
accounting, and auditing.
    (3) Each State council on vocational education shall carry out its 
functions, whether directly or by way of contract for services, 
independent of programmatic and administrative control by other State 
boards, agencies, and individuals.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2322(c)-(e) and (f)(2); 2323(c))



              Subpart C_How Does A State Apply for a Grant?



Sec. 403.30  What documents must a State submit to receive a grant?

    (a) A State that desires to participate in the State Vocational and 
Applied Technology Education Program shall submit to the Secretary a 
State plan for a three-year period, in the case of the initial plan, and 
a two-year period thereafter, together with annual revisions the State 
board determines to be necessary.
    (b) Each State shall carry out its programs under the State 
Vocational and Applied Technology Education Program on the basis of 
program years that coincide with program years under section 104(a) of 
the JTPA.
    (c) The provisions of 34 CFR 76.103 do not apply to the State 
Vocational and Applied Technology Education Program.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2323)



Sec. 403.31  How is the State plan developed?

    (a) In formulating the State plan, and any amendments to the State 
plan, the State board shall meet with, and utilize, the State council on 
vocational education established under Sec. 403.17.
    (b) After providing appropriate and sufficient notice to the public, 
the State board shall conduct at least two public hearings in the State 
for the purpose of affording all segments of the public and interested 
organizations and groups an opportunity to present their views and make 
recommendations regarding the State plan.
    (c) A State shall provide public notice of hearings on the State 
plan at least 30 days prior to the hearings.
    (d) In developing a State plan, the State shall conduct an 
assessment according to Sec. 403.203.
    (e) The State board shall develop the portion of each State plan 
relating to the amount and uses of any funds proposed to be reserved for 
adult education, postsecondary education, tech-prep education, and 
secondary education after consultation with the State agency responsible 
for supervision of community colleges, technical institutes, or other 
two-year postsecondary institutions primarily engaged in providing 
postsecondary vocational education and the State agency responsible for 
secondary education. If a State agency finds that a portion of the final 
State plan is objectionable, that agency shall file its objections with 
the State board.
    (f) The State board shall, in developing the State plan, take into 
consideration the relative training and retraining needs of secondary, 
adult, and postsecondary students.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2323(a)(2) and 2324(a))



Sec. 403.32  What must the State plan contain?

    (a) Assurances. To participate in the programs authorized under the 
State Vocational and Applied Technology Program, the State shall, in its 
State plan, provide assurances that--
    (1) The State board will comply with the applicable requirements of 
titles I, II, III, and V of the Act and regulations implementing those 
requirements (including the maintenance of fiscal effort requirement in 
Sec. 403.182);
    (2) Eligible recipients will comply with the requirements of titles 
I, II, III, and V of the Act and the regulations implementing those 
requirements;
    (3) The State board will develop measurable goals and accountability 
measures for meeting the needs of individuals who are members of special 
populations;

[[Page 34]]

    (4) The State board will conduct adequate monitoring of projects, 
services, and activities conducted by eligible recipients to ensure that 
the eligible recipients are meeting the goals described in paragraph 
(a)(3) of this section;
    (5) To the extent consistent with the number and location of 
individuals who are members of special populations enrolled in private 
secondary schools, the State will provide for the participation of those 
individuals in the vocational education projects, services, and 
activities assisted under Secs. 403.112 and 403.113;

    Cross Reference: See 34 CFR 76.650-76.662, Participation of Students 
Enrolled in Private Schools.

    (6) The State will comply with the provisions of Sec. 403.180, and 
will distribute all of the funds reserved for the Secondary School 
Vocational Education Program and the Postsecondary and Adult Vocational 
Education Programs to eligible recipients pursuant to Secs. 403.112, 
403.113, and 403.116;
    (7) The State will develop and implement a system of standards for 
performance and measures of performance for vocational education 
programs at the State level that meets the requirements of Secs. 403.201 
and 403.202;
    (8) In the use of funds available for programs for single parents, 
displaced homemakers, or single pregnant women under Sec. 403.81, the 
State will--
    (i) Emphasize assisting individuals with the greatest financial 
need; and
    (ii) Give special consideration to displaced homemakers who, because 
of divorce, separation, or the death or disability of a spouse, must 
prepare for paid employment;
    (9) The State will furnish relevant training and vocational 
education activities to men and women who desire to enter occupations 
that are not traditionally associated with their sex;
    (10) The State will fund programs of personnel development and 
curriculum development to further the goals identified in the State 
plan;
    (11) The State has thoroughly assessed the vocational education 
needs of identifiable segments of the population in the State that have 
the highest rates of unemployment, and those needs are reflected in and 
addressed by the State plan;
    (12) The State board will cooperate with the State council in 
carrying out the Board's duties under the State plan;
    (13) None of the funds expended under the Act will be used to 
acquire equipment (including computer software) in any instance in which 
that acquisition results in a direct financial benefit to any 
organization representing the interests of the purchasing entity or its 
employees or any affiliate of such an organization;
    (14) State and local funds will be used in the schools of each local 
educational agency that are receiving funds under the Act to provide 
services that, taken as a whole, are at least comparable to services 
being provided in schools in those agencies that are not receiving funds 
under the Act;

    Cross Reference: See Secs. 403.194 and 403.200.

    (15)(i) The State board will provide leadership (qualified by 
experience and knowledge in guidance and counseling), supervision, and 
resources for comprehensive career guidance, vocational counseling, and 
placement programs; and
    (ii) As a component of the assurances described in paragraph 
(a)(15)(i) of this section, the State board will annually assess and 
include in the State plan a report on the degree to which expenditures 
aggregated within the State for career guidance and vocational 
counseling from allotments under title II of the Act are not less than 
expenditures for guidance and counseling within the State under the Carl 
D. Perkins Vocational Education Act in Fiscal or Program Year 1988;


(Authority: H.R. Rep. No. 660, 101st Cong., 1st Sess. 111 (1990))

    (16) The State will provide for such fiscal control and fund 
accounting procedures as may be necessary to ensure the proper 
disbursement of, and accounting for, Federal funds paid to the State, 
including those funds paid by the State to eligible recipients under the 
Act;

[[Page 35]]

    (17) Funds made available under title II of the Act will be used to 
supplement, and to the extent practicable increase, the amount of State 
and local funds that would in the absence of those Federal funds be made 
available for the uses specified in the State plan and the local 
application, and in no case supplant those State or local funds;

    Cross Reference: See Secs. 403.196 and 403.208.

    (18) Individuals who are members of special populations will be 
provided with equal access to recruitment, enrollment, and placement 
activities;
    (19) Individuals who are members of special populations will be 
provided with equal access to the full range of vocational education 
programs available to individuals who are not members of special 
populations, including occupationally specific courses of study, 
cooperative education, apprenticeship programs, and, to the extent 
practicable, comprehensive career guidance and counseling services, and 
will not be discriminated against on the basis of their status as 
members of special populations;
    (20) Vocational education programs and activities for individuals 
with disabilities will be provided in the least restrictive environment 
in accordance with section 612(5)(B) of the IDEA and will, if 
appropriate, be included as a component of the individualized education 
program developed under section 614(a)(5) of that Act;
    (21) Students with disabilities who have individualized education 
programs developed under section 614(a)(5) of the IDEA, with respect to 
vocational education programs, will be afforded the rights and 
protections guaranteed those students under sections 612, 614, and 615 
of that Act;
    (22) Students with disabilities who do not have individualized 
education programs developed under section 614(a)(5) of the IDEA or who 
are not eligible to have such a program, with respect to vocational 
education programs, will be afforded the rights and protections 
guaranteed those students under section 504 of the Rehabilitation Act of 
1973 (29 U.S.C. 794) and, for the purpose of the State Vocational and 
Applied Technology Education Programs, those rights and protections will 
include making vocational education programs readily accessible to 
eligible individuals with disabilities through the provision of services 
described Sec. 403.190(b)(3);
    (23) Vocational education planning for individuals with disabilities 
will be coordinated among appropriate representatives of vocational 
education, special education, and State vocational rehabilitation 
agencies;
    (24) The provision of vocational education to each student with 
disabilities will be monitored to determine if that education is 
consistent with the individualized education program developed for the 
student under section 614(a)(5) of the IDEA, in any case in which an 
individualized education program exists;
    (25) The provision of vocational education will be monitored to 
ensure that disadvantaged students and students of limited English 
proficiency have access to that education in the most integrated setting 
possible;
    (26)(i) The requirements of the Act relating to individuals who are 
members of special populations--
    (A) Will be carried out under the general supervision of individuals 
in the appropriate State educational agency or State board who are 
responsible for students who are members of special populations; and
    (B) Will meet education standards of the State educational agency or 
State board;
    (ii) With respect to students with disabilities, the supervision 
carried out under paragraph (a)(26)(i) of this section will be carried 
out consistent with, and in conjunction with, supervision by the State 
educational agency or State board carried out under section 612(6) of 
the IDEA;
    (27) Funds received under the Business-Labor-Education Partnership 
for Training Program will be awarded on a competitive basis solely for 
vocational education programs, including programs that--
    (i) Provide apprenticeships and internships in industry;
    (ii) Provide new equipment;
    (iii) Provide teacher internships or teacher training;

[[Page 36]]

    (iv) Bring representatives of business and organized labor into the 
classroom;
    (v) Increase the access to, and quality of, programs for individuals 
who are members of special populations;
    (vi) Strengthen coordination between vocational education programs 
and the labor and skill needs of business and industry;
    (vii) Address the economic development needs of the area served by 
the partnership;
    (viii) Provide training and career counseling that will enable 
workers to retain their jobs;
    (ix) Provide training and career counseling that will enable workers 
to upgrade their jobs; and
    (x) Address the needs of new and emerging industries, particularly 
industries in high-technology fields;
    (28) In administering the Business-Labor-Education Partnership for 
Training Program, the State board will--
    (i) Give preference to partnerships that coordinate with local 
chambers of commerce (or the equivalent), local labor organizations, or 
local economic development plans;
    (ii) Give priority to programs offered by partnerships that provide 
job training in areas or skills where there are significant labor 
shortages; and
    (iii) Ensure an equitable distribution of assistance under this part 
between urban and rural areas;
    (29) Except as provided in paragraph (a)(30) of this section, not 
less than 50 percent of the aggregate cost of programs and projects 
assisted under the Business-Labor-Education Partnership for Training 
Program will be provided from non-Federal sources, and not less than 50 
percent of the non-Federal share will be provided by businesses or labor 
organizations participating in the partnerships; and
    (30) In the event that a partnership includes a small business or 
labor organization, 40 percent of the aggregate cost of the programs and 
projects assisted under the Business-Labor-Education Partnership for 
Training Program will be provided from non-Federal sources and not less 
than 50 percent of the non-Federal share will be provided by 
participating business or labor organizations.
    (b) Descriptions. To participate in programs authorized under the 
State Vocational and Applied Technology Education Program, the State 
must include the following descriptions in the State plan:
    (1) The procedures and criteria for, and the results of, each of the 
assessments required by Sec. 403.203, including the needs identified by 
the assessments.
    (2) The plans for the use of the funds and how those planned uses 
reflect the needs described in paragraph (b)(1) of this section.
    (3) The manner in which the State will comply with the requirements 
in the Act regarding access and services for individuals who are members 
of special populations and a description of the responsiveness of 
programs to the special needs of those students.
    (4) The estimated distribution, for each instructional level--
secondary, postsecondary, and adult--of funds to corrections educational 
agencies as prescribed by Sec. 403.100, of funds to local educational 
agencies, area vocational education schools, or intermediate educational 
agencies as prescribed by Secs. 403.112 and 403.113, and of funds to 
eligible institutions or consortia of eligible institutions as 
prescribed by Sec. 403.116.
    (5) The criteria the State board will use--
    (i) In approving applications of eligible recipients; and
    (ii) For spending the amounts reserved for the State under 
Sec. 403.180(b).
    (6) How funds expended for occupationally specific training will be 
used for occupations in which job openings are projected or available, 
based on a labor market analysis that is not limited to the area in 
which the school is located.


(Authority: H.R. Rep. No. 660, 101st Cong., 1st Sess. 109 (1990))

    (7) In each State plan submitted after Fiscal Year 1991, the 
progress the State has made in achieving the goals described in previous 
State plans.
    (8) The methods of administration necessary for the prompt and 
efficient administration of programs under the Act.

[[Page 37]]

    (9) How the State will implement program evaluations with eligible 
recipients as prescribed in Secs. 403.191, 403.192, 403.201(a) (3) and 
(4), and 403.204.
    (10) The methods proposed for the joint planning and coordination of 
programs carried out under the Act with programs conducted under the 
JTPA, the Adult Education Act (20 U.S.C. 1201 et seq.), chapter 1, the 
IDEA, and the Rehabilitation Act of 1973, and with apprenticeship 
programs.
    (11) Procedures by which an area vocational educational school, 
intermediate educational agency, or local educational agency may appeal 
decisions adverse to its interests with respect to programs assisted 
under the Act.

    Cross Reference: See 34 CFR 76.401.

    (12) How the State will comply with the provisions of 
Secs. 403.32(a)(18)-(26), 403.115, and 403.205.
    (13) The State's rationale for distribution of funds under the 
Secondary School Vocational Education Program and the Postsecondary and 
Adult Vocational Education Programs.
    (14) The State corrections educational agency or agencies designated 
to administer vocational education programs assisted under the Act, and 
the plan for the use of funds provided under Sec. 403.180(b)(5).
    (15) Any delegation of functions under Sec. 403.12(c).
    (16) The manner in which the State board will comply with the 
applicable requirements of titles I, II, III, and V of the Act 
(including the maintenance of fiscal effort requirements in 
Sec. 403.182).
    (17) A summary of recommendations made at public hearings on the 
State plan and the State board's response.
    (18) How the State will determine which LEAs are located in a rural 
sparsely-populated area for purposes of Sec. 403.112(d)(3).
    (19) Which indices of economic status the State will use to 
determine the number of economically disadvantaged students attending 
vocational educational programs for the purposes of Sec. 403.114.
    (20) What method the State will use to distribute minimal amounts 
for the purpose of Sec. 403.119(a).
    (21) As appropriate, what method the State will use to distribute 
funds under Sec. 403.118.
    (c) Consultations. A State desiring to participate in the State 
Vocational and Applied Technology Education Program shall include in its 
State plan--
    (1) A statement, if any, from the State advisory council on 
vocational education reviewing and commenting on the State plan;
    (2) As necessary, the State's reasons for not accepting the 
recommendations of the State Committee of Practitioners for modifying 
standards and measures to be used in the statewide system of core 
standards and measures of performance; and
    (3) As necessary, the State's response to any objections raised by 
State agencies consulted during the development of the State plan as 
required by Sec. 403.31(e).

(Authority: 20 U.S.C. 2321(a)(2); 2322(e); 2323(a)(2)(B), (b); 2324(a); 
2325(a), (d)(3); 2328(a); 2336(a)(1); 2341(b)(2), (d)(3); 2341b(a); 
2392(b); 2463; and 2468e(a)(1))

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38512, July 28, 1994]



Sec. 403.33  What procedures does a State use to submit its State
plan?

    (a)(1) The State board shall submit its State plan for review and 
comment to the State job training coordinating council under section 122 
of the JTPA not less than sixty days before the State plan is submitted 
to the Secretary.
    (2) If the matters raised by the comments of the State job training 
coordinating council are not addressed in the State plan, the State 
board shall submit those comments to the Secretary with the State plan.
    (b) The State board shall submit its State plan for review and 
comment to the State council on vocational education not less than sixty 
days before the State plan is submitted to the Secretary.

    Cross Reference: See Sec. 403.19(c)(1)(iii).

    (c) Each State plan must be submitted to the Secretary by May 1 
preceding the beginning of the first fiscal

[[Page 38]]

year for which the plan is to be in effect.
    (d) The State plan is considered to be the general application 
required by section 435 of the General Education Provisions Act (20 
U.S.C. 1232d).

(Authority: 20 U.S.C. 2322(d)(1) and (2)(A), (e); 2323(a)(2)(A); and 
2324(b))

(Approved by the Office of Management and Budget under Control No. 1830-
0029)



Sec. 403.34  When are amendments to the State plan required?

    The State board, in consultation with the State council, shall 
submit amendments to the State plan to the Secretary when required by 34 
CFR 76.140 or when changes in program conditions, labor market 
conditions, funding, or other factors require substantial amendment of 
an approved State plan. All amendments must be submitted for review by 
the State job training coordinating council and the State council on 
vocational education before submittal to the Secretary.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2323(c))



        Subpart D_How Does the Secretary Make a Grant to a State?



Sec. 403.50  How does the Secretary make allotments?

    (a)(1) From funds made available under section 3(c) of the Act for 
the basic programs listed in Sec. 403.60, and under section 3(d) of the 
Act for the special programs listed in Sec. 403.130, the Secretary 
allots funds each fiscal year according to the provisions of section 101 
of the Act to the 50 States, the Commonwealth of Puerto Rico, the 
District of Columbia, and the Virgin Islands.
    (2) Upon approval of its State plan and any annual amendments, the 
Secretary makes one or more grant awards from those allotments to a 
State.
    (b)(1) From funds made available under sections 3(b)(2) of the Act, 
the Secretary allots funds each fiscal year for State councils on 
vocational education according to the provisions of section 112(f)(1) of 
the Act.
    (2) The Secretary makes an award to a State council upon the State 
council's submission of an annual budget covering the proposed 
expenditures of the State council for the following program year, and 
when the Secretary has determined that the State plan is in 
substantially approvable form.
    (c) From funds made available under section 3(b)(1)(B) of the Act 
for the territories, the Secretary allots funds each fiscal year 
according to the provisions of section 101A(a) of the Act.
    (d)(1) The Secretary awards funds remaining after allotments are 
made under paragraph (c) of this section to the Center for the 
Advancement of Pacific Education (CAPE) or its successor entity, such as 
the Pacific Regional Educational Laboratory.
    (2) CAPE or its successor entity shall make grants for vocational 
education and training in Guam, American Samoa, Palau, the Commonwealth 
of the Northern Marianas, the Federated States of Micronesia, and the 
Republic of the Marshall Islands for the purpose of providing direct 
educational services, including--
    (i) Teacher and counselor training and retraining;
    (ii) Curriculum development; and
    (iii) Improving vocational education and training programs in 
secondary schools and institutions of higher education (as defined in 
Sec. 403.117(b)), or improving cooperative programs involving both 
secondary schools and institutions of higher education.
    (3) CAPE may not use more than five percent of the funds received 
under paragraph (d)(1) of this section for administrative costs.

(Authority: 20 U.S.C. 2311; 2311a; and 2461)



Sec. 403.51  How does the Secretary make reallotments?

    (a)(1) If the Secretary determines that any amount of a State's 
allotment under Sec. 403.50(a) will not be required for any fiscal year 
for carrying out the program for which the allotment was made, the 
Secretary reallots those funds to one or more States that demonstrate a 
current need for additional funds and the ability to use them promptly 
and effectively upon reallotment.

[[Page 39]]

    (2) The Secretary announces in the Federal Register the dates on 
which funds will be reallotted.
    (b)(1) No funds reallotted under paragraph (a) of this section may 
be used for any purpose other than the purposes for which they were 
appropriated.
    (2) Any amount reallotted to a State under paragraph (a) of this 
section remains available for obligation during the succeeding fiscal 
year and is deemed to be part of the State's allotment for the fiscal 
year in which the reallotted funds are obligated.

(Authority: 20 U.S.C. 2311(b))



Sec. 403.52  When does the Secretary approve State plans and 
amendments?

    (a)(1) The Secretary approves a State plan, or an amendment to a 
State plan, within sixty days of its receipt unless the plan or 
amendment is--
    (i) Inconsistent with the requirements and purposes of the Act; or
    (ii) Not of sufficient quality to meet the objectives of the Act, 
including the objective of developing and implementing program 
evaluations and improvements.
    (2) Before the Secretary finally disapproves a State plan, or an 
amendment to a State plan, the Secretary gives reasonable notice and an 
opportunity for a hearing to the State board.
    (b)(1) In reviewing a State plan, or an amendment to a State plan, 
the Secretary considers available comments from--
    (i) The State council on vocational education;
    (ii) The State agency responsible for supervision of community 
colleges, technical institutes, or other two-year postsecondary 
institutions primarily engaged in providing postsecondary vocational 
education;
    (iii) The State agency responsible for secondary education;
    (iv) The State Committee of Practitioners established under 34 CFR 
400.6; and
    (v) The State job training coordinating council.
    (2) In reviewing an amendment to a State plan, the Secretary 
considers available comments from the State job training coordinating 
council and the State council on vocational education.

(Authority: 20 U.S.C. 2323(c), 2324, and 2325(d)(3))



 Subpart E_What Kinds of Activities Does the Secretary Assist Under the 
                             Basic Programs?

                                 General



Sec. 403.60  What are the basic programs?

    The following basic programs are authorized by title II of the Act:
    (a) State Programs and State Leadership Activities.
    (b) Programs for Single Parents, Displaced Homemakers, and Single 
Pregnant Women.
    (c) Sex Equity Programs.
    (d) Programs for Criminal Offenders.
    (e) Secondary School Vocational Education Programs.
    (f) Postsecondary and Adult Vocational Education Programs.

(Authority: 20 U.S.C. 2302)



Sec. 403.61  What projects, services, and activities are permissible
under the basic programs?

    Projects, services, and activities described in Secs. 403.70, 
403.71, 403.81, 403.91, 403.101, and 403.111 may include--
    (a) Work-site programs such as cooperative vocational education, 
programs with community-based organizations, work-study, and 
apprenticeship programs;
    (b) Placement services and activities for students who have 
successfully completed vocational education programs; and
    (c) Programs that involve students in addressing the needs of the 
community in the production of goods or services that contribute to the 
community's welfare or that involve the students with other community 
development planning, institutions, and enterprises.

(Authority: 20 U.S.C. 2468e(c))



Sec. 403.62  What administrative provisions apply?

    (a) Any project assisted with funds made available for the basic 
programs must be of sufficient size, scope, and quality to give 
reasonable promise of meeting the vocational education

[[Page 40]]

needs of the students involved in the project.
    (b) Each State board receiving financial assistance for the basic 
programs may consider granting academic credit for vocational education 
courses that integrate core academic competencies.

(Authority: 20 U.S.C. 2468e (b) and (d))



Sec. 403.63  How does a State carry out the State Vocational 
and Applied Technology Education Program?

    (a) Unless otherwise indicated in the regulations in this part, a 
State board shall carry out projects, services, and activities under the 
State Vocational and Applied Technology Education Program--
    (1) Directly;
    (2) Through a school operated by the State board;
    (3) Through awards to State agencies or institutions, such as 
vocational schools or correctional institutions; or
    (4) Through awards to eligible recipients.
    (b) For the purpose of paragraph (a) of this section, a State board 
acts directly if it--
    (1) Carries out projects, services, or activities using its own 
staff (except at a school operated by the State board); or
    (2) Contracts for statewide projects, services, or activities such 
as research, curriculum development, and teacher training.
    (c) The regulations in this part also authorize a State to carry out 
certain projects, services, and activities under the State Vocational 
and Applied Technology Education Program by making an award to an entity 
other than an eligible recipient, such as a community-based 
organization, employers, private vocational training institutions, 
private postsecondary education institutions, labor organizations, and 
joint labor management apprenticeship programs.
    (d) If projects, services, and activities are carried out by a 
school operated by the State board under paragraph (a)(2) of this 
section or are carried out by a State agency or institution under 
paragraph (a)(3) of this section, the requirements dealing with local 
applications (Secs. 403.190 and 403.32(b)(5)(i)) apply in the same 
manner as to other eligible recipients.

(Authority: 20 U.S.C. 2323(b)(5), (6); 2335(a)(3); 2335b; 2342(c)(2)(N); 
and 2343)

             State Programs and State Leadership Activities



Sec. 403.70  How must funds be used under the State Programs and State
Leadership Activities?

    A State shall use funds reserved under section 102(a)(3) of the Act 
for the State Programs and State Leadership Activities in accordance 
with Sec. 403.180(b)(3) to conduct programs, projects, services, and 
activities that include--
    (a) Professional development activities--
    (1) For vocational teachers and academic teachers working with 
vocational education students, including corrections educators and 
counselors and educators and counselors in community-based 
organizations; and
    (2) That include inservice and preservice training of teachers in 
programs and techniques, including integration of vocational and 
academic curricula, with particular emphasis on training of minority 
teachers;
    (b) Development, dissemination, and field testing of curricula, 
especially curricula that--
    (1) Integrate vocational and academic methodologies; and
    (2) Provide a coherent sequence of courses through which academic 
and occupational skills may be measured; and
    (c) Assessment of programs conducted with assistance under the Act 
including the development of--
    (1) Performance standards and measures for those programs; and
    (2) Program improvement and accountability with respect to those 
programs.

(Authority: 20 U.S.C. 2331(b))



Sec. 403.71  In what additional ways may funds be used under the State
Programs and State Leadership Activities?

    In addition to the required activities in Sec. 403.70, a State may 
use funds reserved under section 102(a)(3) of the Act for the State 
Programs and State

[[Page 41]]

Leadership Activities in accordance with Sec. 403.180(b)(3) for 
programs, projects, services, and activities that include--
    (a) The promotion of partnerships among business, education 
(including educational agencies), industry, labor, community-based 
organizations, or governmental agencies;
    (b) The support for tech-prep education as described in 34 CFR part 
406;
    (c)(1) The support of vocational student organizations that are an 
integral part of the vocational education instructional program, 
especially with respect to efforts to increase minority participation in 
those organizations.
    (2) The support of vocational student organizations may include, but 
is not limited to, expenditures for--
    (i) The positions of State executive secretaries and State advisors 
for vocational student organizations;
    (ii) Leadership development workshops;
    (iii) The development of curriculum for vocational student 
organizations; and
    (iv) Field or laboratory work incidental to vocational training so 
long as the activity is supervised by vocational education personnel who 
are qualified in the occupational area and is available to all students 
in the instructional program without regard to membership in any student 
organization.
    (3) The support of vocational student organizations may not 
include--
    (i) Lodging, feeding, conveying, or furnishing transportation to 
conventions or other forms of social assemblage;
    (ii) Purchase of supplies, jackets, and other effects for students' 
personal ownership;
    (iii) Cost of non-instructional activities such as athletic, social, 
or recreational events;
    (iv) Printing and disseminating non-instructional newsletters;
    (v) Purchase of awards for recognition of students, advisors, and 
other individuals; or
    (vi) Payment of membership dues;
    (d) Leadership and instructional programs in technology education; 
and
    (e) Data collection.

(Authority: 20 U.S.C. 2331(c); H.R. Rep. No. 660, 101st Cong., 1st Sess. 
117 (1990))

 Single Parents, Displaced Homemakers, and Single Pregnant Women Program



Sec. 403.80  Who is eligible for a subgrant or contract?

    Eligible recipients and community-based organizations are eligible 
for an award under the Single Parents, Displaced Homemakers, and Single 
Pregnant Women Program.

(Authority: 20 U.S.C. 2335(a)(2), (3); 2335b(1))



Sec. 403.81  How must funds be used under the Single Parents,
Displaced Homemakers, and Single Pregnant Women Program?

    A State shall use funds reserved in accordance with 
Sec. 403.180(b)(2)(i) for individuals who are single parents, displaced 
homemakers, or single pregnant women only to--
    (a) Provide, subsidize, reimburse, or pay for preparatory services, 
including instruction in basic academic and occupational skills, 
necessary educational materials, and career guidance and counseling 
services in preparation for vocational education and training that will 
furnish single parents, displaced homemakers, and single pregnant women 
with marketable skills;
    (b) Make grants to eligible recipients for expanding preparatory 
services and vocational education services if the expansion directly 
increases the eligible recipients' capacity for providing single 
parents, displaced homemakers, and single pregnant women with marketable 
skills;
    (c) Make grants to community-based organizations for the provision 
of preparatory and vocational education services to single parents, 
displaced homemakers, and single pregnant women if the State determines 
that the community-based organizations have demonstrated effectiveness 
in providing comparable or related services to single parents, displaced 
homemakers, and single pregnant women, taking into account the 
demonstrated performance of such organizations in terms of cost, the 
quality of training, and the characteristics of the participants;
    (d) Make preparatory services and vocational education and training 
more

[[Page 42]]

accessible to single parents, displaced homemakers, and single pregnant 
women by assisting those individuals with dependent care, transportation 
services, or special services and supplies, books, and materials, or by 
organizing and scheduling the programs so that those programs are more 
accessible; or
    (e) Provide information to single parents, displaced homemakers, and 
single pregnant women to inform those individuals of vocational 
education programs, related support services, and career counseling.

(Authority: 20 U.S.C. 2335(a))



Sec. 403.82  In what settings may the Single Parents, Displaced 
Homemakers, and Single Pregnant Women Program be offered?

    The programs and services described in Sec. 403.81 may be provided 
in postsecondary or secondary school settings, including area vocational 
education schools, and community-based organizations that meet the 
requirements of Sec. 403.81(c), that serve single parents, displaced 
homemakers, and single pregnant women.

(Authority: 20 U.S.C. 2335(b))

                           Sex Equity Program



Sec. 403.90  Who is eligible for a subgrant or contract?

    Eligible recipients and community-based organizations are eligible 
for an award under the Sex Equity Program.

(Authority: 20 U.S.C. 2335b(1))



Sec. 403.91  How must funds be used under the Sex Equity Program?

    Except as provided in Sec. 403.92, each State shall use amounts 
reserved for the Sex Equity Program in accordance with 
Sec. 403.180(b)(2)(ii) only for--
    (a) Programs, services, comprehensive career guidance and 
counseling, and activities to eliminate sex bias and stereotyping in 
secondary and postsecondary vocational education;
    (b) Preparatory services and vocational education programs, 
services, and activities for girls and women, aged 14 through 25, 
designed to enable the participants to support themselves and their 
families; and
    (c) Support services for individuals participating in vocational 
education programs, services, and activities described in paragraphs (a) 
and (b) of this section, including dependent-care services and 
transportation.

(Authority: 20 U.S.C. 2335a(a))



Sec. 403.92  Under what circumstances may the age limit under the 
Sex Equity Program be waived?

    The individual appointed under Sec. 403.13(a) may waive the 
requirement in Sec. 403.91(b) with respect to age limitations if the 
individual determines (through appropriate research) that the waiver is 
essential to meet the objectives of Sec. 403.91.

(Authority: 20 U.S.C. 2335a(b))

                     Programs for Criminal Offenders



Sec. 403.100  What are the requirements for designating a State 
corrections educational agency to administer the Programs for 
Criminal Offenders?

    (a) The State Board shall designate one or more State corrections 
educational agencies to administer programs assisted under the Act for 
juvenile and adult criminal offenders in correctional institutions in 
the State including correctional institutions operated by local 
authorities.
    (b) Each State corrections educational agency that desires to be 
designated under paragraph (a) of this section shall submit to the State 
board a plan for the use of funds.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2336(a))



Sec. 403.101  How must funds be used under the Programs for Criminal
Offenders?

    In administering programs receiving funds reserved under 
Sec. 403.180(b)(5) for criminal offenders, each State corrections 
educational agency designated under Sec. 403.100(a) shall--
    (a) Give special consideration to providing--
    (1) Services to offenders who are completing their sentences and 
preparing for release; and

[[Page 43]]

    (2) Grants for the establishment of vocational education programs in 
correctional institutions that do not have such programs;
    (b) Provide vocational education programs for women who are 
incarcerated;
    (c) Improve equipment; and
    (d) In cooperation with eligible recipients, administer and 
coordinate vocational education services to offenders before and after 
their release.

(Authority: 20 U.S.C. 2336(b))



Sec. 403.102  What other requirements apply to the Program for 
Criminal Offenders?

    Each State corrections educational agency designated under 
Sec. 403.100(a) shall meet the requirements in Secs. 403.191 and 
403.192.

(Authority: 20 U.S.C. 2471(22))

    Secondary, Postsecondary, and Adult Vocational Education Programs



Sec. 403.110  Who is eligible for a subgrant or contract?

    (a) Subject to the requirements of paragraph (c) of this section, 
the following entities are eligible for an award under the Secondary 
School Vocational Education Program:
    (1) A local educational agency.
    (2) An area vocational education school or intermediate educational 
agency that meets the requirements in Sec. 403.113.
    (b) Subject to the requirements of paragraph (c) of this section, 
the following entities are eligible for an award under the Postsecondary 
and Adult Vocational Education Programs:
    (1) An institution of higher education as defined in 
Sec. 403.117(b), including a nonprofit institution that satisfies the 
conditions set forth in Sec. 403.111(d)(14).
    (2) A local educational agency serving adults.
    (3) An area vocational education school serving adults that offers 
or will offer a program that meets the requirements of Sec. 403.111 and 
seeks to receive assistance under the Secondary School Vocational 
Education Program or the Postsecondary and Adult Vocational Education 
Programs.
    (c) Only an entity that provides or will provide vocational 
education in a program that meets the requirements of Sec. 403.111 is 
eligible to receive an award under the Secondary School Vocational 
Education Program or the Postsecondary and Adult Vocational Education 
Program.

(Authority: 20 U.S.C. 2341(a) and (d); 2341a (a) and (d)(1); and 
2342(c))



Sec. 403.111  How must funds be used under the Secondary School
Vocational Education Program and the Postsecondary and Adult 
Vocational Education Programs?

    (a)(1) Each eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 shall use funds under that 
award to improve vocational education programs.
    (2) Projects assisted with funds awarded under Sec. 403.112, 
Sec. 403.113, or Sec. 403.116 must--
    (i) Provide for the full participation of individuals who are 
members of special populations by providing the supplementary and other 
services required by Sec. 403.190(b) necessary for them to succeed in 
vocational education; and

    Cross Reference: See appendix A to part 403 and Secs. 403.190(c) and 
403.193(e).

    (ii) Operate at a limited number of sites or with respect to a 
limited number of program areas.
    (3) If an eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 meets the requirements in 
this section and Secs. 403.190(b) and 403.193, it may use those Federal 
funds to serve students who are not members of special populations.
    (b) Each eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 shall give priority for 
assistance under those sections to sites or program areas that serve the 
highest concentrations of individuals who are members of special 
populations.

    Examples: Methods by which an eligible recipient may give priority 
to sites or program areas that serve the highest concentrations of 
individuals who are members of special populations include, but are not 
limited to, the following:
    Example 1: Method to give priority to a limited number of sites. 
Based on data from the preceding fiscal year--
    (a) First, a local educational agency ranks each site based on the 
percentage of the

[[Page 44]]

site's total enrollment of students who are members of special 
populations.
    (b) Second, the local educational agency establishes a funding cut-
off point for sites above the district-wide percentage of special 
populations enrollment. The local educational agency funds sites above 
the cut-off point but does not fund sites below that point.
    Example 2: Method to give priority to a limited number of program 
areas. Based on data from the preceding fiscal year--
    (a) First, a postsecondary institution ranks each program area based 
on the percentage of the program area's total enrollment of students who 
are members of special populations.
    (b) Second, the postsecondary institution establishes a funding cut-
off point for program areas that rank above the institution-wide average 
percentage of special populations enrollment. The postsecondary 
institution funds projects in a program area that is above the cut-off 
point but does not fund projects in program areas below that point.
    Example 3: Method to give priority to a limited number of sites. 
Based on data from the preceding fiscal year--
    (a) First, an LEA or postsecondary institution identifies a site 
with a high concentration of special populations;
    (b) Second, the LEA or postsecondary institution identifies a 
program area at the site (such as health occupations) in which the 
participation rate for members of special populations has been lower 
than the overall rate of participation for members of special 
populations at the site; and
    (c) Third, the LEA or postsecondary institution funds a project at 
the site designed to improve the participation rate of members of 
special populations in that program area.
    Note to examples in Sec. 403.111: Absolute counts of special 
population members may be used to determine the sites or program areas 
with the highest concentrations of special population members instead 
of, or in combination with, percentages of special population members.

    (c) Funds made available from an award under Sec. 403.112, 
Sec. 403.113, or Sec. 403.116 must be used to provide vocational 
education in programs that--
    (1) Are of sufficient size, scope, and quality as to be effective;
    (2) Integrate academic and vocational education in those programs 
through coherent sequences of courses so that students achieve both 
academic and occupational competencies; and
    (3) Provide for the equitable participation of members of special 
populations in vocational education consistent with the assurances and 
requirements in Secs. 403.190(b) and 403.193, so that these populations 
have an opportunity to enter vocational education that is equal to that 
afforded to the general student population.

    Cross Reference: See appendix A to part 403.

    (d) In carrying out the provisions of paragraph (c) of this section, 
an eligible recipient under Secs. 403.112, 403.113, or Sec. 403.116 may 
use funds for activities that include, but are not limited to--
    (1) Upgrading of curriculum;
    (2) Purchase of equipment, including instructional aids;
    (3) Inservice training of both vocational instructors and academic 
instructors working with vocational education students for integrating 
academic and vocational education;
    (4) Guidance and counseling;
    (5) Remedial courses;
    (6) Adaptation of equipment;
    (7) Tech-prep education programs;
    (8) Supplementary services designed to meet the needs of special 
populations;
    (9) Payment in whole or in part with funds under Sec. 403.112, 
Sec. 403.113, or Sec. 403.116 for a special populations coordinator, who 
must be a qualified counselor or teacher, to ensure that individuals who 
are members of special populations are receiving adequate services and 
job skill training;
    (10) Apprenticeship programs;
    (11) Programs that are strongly tied to economic development efforts 
in the State;
    (12) Programs that train adults and students for all aspects of an 
occupation in which job openings are projected or available;
    (13) Comprehensive mentor programs in institutions of higher 
education offering comprehensive programs in teacher preparation, which 
seek to use fully the skills and work experience of individuals 
currently or formerly employed in business and industry who are 
interested in becoming classroom instructors and to meet the need of 
vocational educators who wish to upgrade their teaching competencies; or
    (14) Provision of education and training through arrangements with 
private

[[Page 45]]

vocational training institutions, private postsecondary educational 
institutions, employers, labor organizations, and joint labor-management 
apprenticeship programs if those institutions, employers, labor 
organizations, or programs can make a significant contribution to 
obtaining the objectives of the State plan and can provide substantially 
equivalent training at a lesser cost, or can provide equipment or 
services not available in public institutions.

(Authority: 20 U.S.C. 2342)



Sec. 403.112  How does a State allocate funds under the Secondary 
School Vocational Education Program to local educational agencies?

    (a) Reservation of funds. From the portion of its allotment under 
Sec. 403.180(b)(1) for the basic programs, each fiscal year a State may 
reserve funds for the Secondary School Vocational Education Program.
    (b) General rule. Except as provided in paragraphs (c) and (d) of 
this section and Sec. 401.119, a State shall distribute funds reserved 
for the Secondary School Vocational Education Program to local 
educational agencies (LEAs) according to the following formula:
    (1) From 70 percent of the amount reserved, an LEA must be allocated 
an amount that bears the same relationship to the 70 percent as the 
amount the LEA was allocated under section 1005 of chapter 1 (20 U.S.C. 
2711) in the fiscal or program year preceding the fiscal or program year 
in which the allocation is made bears to the total amount received under 
section 1005 of chapter 1 by all LEAs in the State in that preceding 
year.
    (2) From 20 percent of the amount reserved, an LEA must be allocated 
an amount that bears the same relationship to the 20 percent as the 
number of students with disabilities who have individualized education 
programs under section 614(a)(5) of the IDEA served by the LEA in the 
fiscal or program year preceding the fiscal or program year in which the 
allocation is made bears to the total number of those students served by 
all LEAs in the State in that preceding year.
    (3) From 10 percent of the amount reserved, an LEA must be allocated 
an amount that bears the same relationship to the 10 percent as the 
number of students enrolled in schools and adults enrolled in vocational 
education training programs under the jurisdiction of the LEA in the 
fiscal or program year preceding the fiscal or program year in which the 
allocation is made bears to the number of students enrolled in schools 
in kindergarten through 12th grade and adults enrolled in vocational 
education training programs under the jurisdiction of all LEAs in the 
State in that preceding year.

    Example: Assume that a State has reserved $5,000,000 of its basic 
programs funds under Title II of the Act for secondary school programs.
    (a)(1) All LEAs in the State were allocated a total of $80,000,000 
under section 1005 of Chapter 1 in the preceding fiscal year. Of that 
amount, school district ``A'' was allocated $400,000.
    (2) The allocation for school district ``A'' is calculated by 
multiplying $3,500,000 (70 percent of $5,000,000) by .005 of the State 
total ($400,000  $80,000,000). The allocation for school district ``A'' 
would be $17,500 under paragraph (b)(1) of this section.
    (b)(1) All LEAs in a State served a total of 100,000 students with 
disabilities who have individualized education programs under section 
614(a)(5) of the IDEA in the preceding fiscal year. Of that total, 
school district ``A'' served 400 of those students in the preceding 
fiscal year.
    (2) The allocation for school district ``A'' is calculated by 
multiplying $1,000,000 (20 percent of $5,000,000) by .004 of the State 
total (400  100,000). The allocation for school district ``A'' would be 
$4,000 under paragraph (b)(2) of this section.
    (c)(1) All LEAs in a State enrolled a total of 1,000,000 students 
(including adults enrolled in vocational education training programs in 
those LEAs) in the preceding fiscal year. Of that number school district 
``A'' enrolled 3,500 of those students in the preceding fiscal year.
    (2) The allocation for school district ``A'' is calculated by 
multiplying 500,000 (10 percent of $5,000,000) by .0035 of the State 
total (3,500  1,000,000). The allocation for school district ``A'' 
would be $1,750 under paragraph (b)(3) of this section.

    (c) Exception to the general rule. In applying the provisions in 
paragraph (b) of this section, a State may not distribute funds to an 
LEA that operates only elementary schools, but shall instead distribute 
funds that would have been allocated for those ineligible LEAs as 
follows:

[[Page 46]]

    (1) If an LEA that operates only elementary schools sends its 
graduating students to a single local or regional educational agency 
that provides secondary school services to secondary school students in 
the same attendance area, a State shall distribute to that local or 
regional educational agency any amounts under paragraph (b) of this 
section that would otherwise have been allocated to LEAs operating only 
elementary schools.
    (2) If an LEA that operates only elementary schools sends its 
graduating students to two or more local or regional educational 
agencies that provide secondary school services to secondary students in 
the same attendance area, the State shall distribute to those local or 
regional educational agencies an amount based on the proportionate 
number of students each agency received in the previous year from the 
LEA that operates only elementary schools.
    (d)(1) Minimum grant amount. Except as provided in paragraph (d)(3) 
of this section, an LEA is not eligible for a grant under the Secondary 
School Vocational Education Program unless the amount allocated to the 
LEA under paragraph (b) of this section is not less than $15,000.
    (2)(i) An LEA may enter into a consortium with one or more LEAs for 
the purpose of providing services under the Secondary School Vocational 
Education Program in order to meet the minimum grant requirement in 
paragraph (d)(1) of this section.
    (ii) A consortium arrangement under paragraph (d)(2)(i) of this 
section must serve primarily as a structure for operating joint projects 
that provide services to all participating local educational agencies.
    (iii) A project operated by a consortium must meet the size, scope, 
and quality requirement of Sec. 403.111(c)(1).

    Example: Under the distribution formula for the Secondary School 
Vocational Education Program, three LEAs earn $5,000 each (which is less 
than the $15,000 minimum grant amount for each LEA). The LEAs form a 
consortium in order to receive an award. One of the LEAs is designated 
as the fiscal agent for the consortium and receives the $15,000 award 
for the consortium. The consortium may operate and fund with the $15,000 
a project or projects for the benefit of all participating LEAs. The 
fiscal agent of the consortium may not subgrant back to the 
participating LEAs the amounts they contributed to the consortium.

    (3) A State may waive paragraph (d)(1) of this section in any case 
in which the LEA--
    (i) Is located in a rural, sparsely populated area;
    (ii) Demonstrates that it is unable to enter into a consortium for 
purposes of providing services under the Secondary School Vocational 
Education Program; and
    (iii) Demonstrates that the projects to be assisted meet the size, 
scope, and quality requirements in Sec. 403.111(c)(1).
    (4) Any amounts that are not distributed by reason of paragraph 
(d)(1) of this section must be redistributed in accordance with the 
provisions in paragraph (b) of this section.

(Authority: 20 U.S.C. 2341 (a), (b), and (c))

    Cross Reference: See 34 CFR 403.113(d).



Sec. 403.113  How does a State allocate funds under the Secondary
School Vocational Education Program to area vocational education
schools and intermediate educational agencies?

    (a) A State shall distribute funds reserved under Sec. 403.112(a) 
directly to the appropriate area vocational education school or 
intermediate educational agency in any case in which--
    (1) The area vocational education school or intermediate educational 
agency and an LEA--
    (i) Have formed or will form a consortium for the purpose of 
receiving funds reserved under Sec. 403.112(a); or
    (ii) Have entered into or will enter into a cooperative arrangement 
for the purpose of receiving funds reserved under Sec. 403.112(a); and
    (2)(i) The area vocational education school or intermediate 
educational agency serves a proportion of students with disabilities and 
students who are economically disadvantaged that is approximately equal 
to or greater than the proportion of those students attending the 
secondary schools under the jurisdiction of all of the LEAs sending 
students to the area vocational education school or the intermediate 
educational agency; or

[[Page 47]]

    (ii) The area vocational education school or intermediate 
educational agency demonstrates that it is unable to meet the criterion 
in paragraph (a)(2)(i) of this section due to the lack of interest by 
students with disabilities and students who are economically 
disadvantaged in attending vocational education programs in that area 
vocational education school or intermediate educational agency.
    (b) If an area vocational education school or intermediate 
educational agency meets the requirements of paragraph (a) of this 
section, then the amount that would otherwise be allocated to the LEA 
may be distributed to the area vocational education school, the 
intermediate educational agency, and the LEA--
    (1) Based on each school's or entity's relative share of students 
with disabilities and students who are economically disadvantaged who 
are attending vocational education programs that meet the requirements 
of Sec. 403.111 (based, if practicable, on the average enrollment for 
the prior 3 years); or
    (2) On the basis of an agreement between the LEA and the area 
vocational education school or intermediate educational agency.
    (c) Notwithstanding paragraphs (a) and (b) of this section, and 
Secs. 403.114 and 403.115, prior to distributing funds to any LEA that 
would receive an allocation that is not sufficient to conduct a program 
that meets the requirements of Sec. 403.111(c), a State shall encourage 
the LEA to--
    (1) Form a consortium or enter a cooperative agreement with an area 
vocational education school or intermediate educational agency offering 
programs that meet the requirements of Sec. 403.111(c), and that are 
accessible to economically disadvantaged students and students with 
disabilities that would be served by the LEA; and
    (2) Transfer its allocation to an area vocational education school 
or intermediate educational agency.
    (d) If an LEA's allocation under Sec. 403.112 meets the minimum 
grant requirement in Sec. 403.112(d), and the allocation is distributed 
in part to an area vocational education school or an intermediate 
educational agency pursuant to paragraphs (a) and (b) of this section, 
the LEA may retain the amount not distributed to the area vocational 
education school or an intermediate educational agency even though that 
amount is less than the minimum grant required by Sec. 403.112(d).

(Authority: 20 U.S.C. 2341(d) (1), (2), and (5))



Sec. 403.114  How does a State determine the number of economically
disadvantaged students attending vocational education programs under
the Secondary School Vocational Education Program?

    (a) For the purposes of Sec. 403.113, a State may determine the 
number of economically disadvantaged students attending vocational 
education programs on any of the following bases:
    (1) Eligibility for one of the following:
    (i) Free or reduced-price meals under the National School Lunch Act 
(42 U.S.C. 1751 et seq.).
    (ii) The program for aid to Families with Dependent Children under 
part A of title IV of the Social Security Act (42 U.S.C. 601).
    (iii) Benefits under the Food Stamp Act of 1977 (7 U.S.C. 2011).
    (iv) To be counted for purposes of section 1005 of chapter 1.
    (v) Participation in programs assisted under title II of the JTPA.
    (2) Receipt of a Pell grant or assistance under a comparable State 
program of need-based financial assistance.
    (3) Status of an individual who is determined by the Secretary to be 
low-income according to the latest available data from the Department of 
Commerce or the Department of Health and Human Services Poverty 
Guidelines.
    (4) Other indices of economic status, including estimates of those 
indices, if the State demonstrates to the satisfaction of the Secretary 
that those indices are more representative of the number of economically 
disadvantaged students attending vocational education programs. The 
Secretary determines, on a case-by-case basis, whether other indices of 
economic status are more representative of the number of economically 
disadvantaged students attending vocational education programs, taking 
into consideration, for example, the statistical reliability of

[[Page 48]]

any data submitted by a grantee as well as the general acceptance of the 
indices by other agencies in the State or local area.
    (b) If a State elects to use more than one factor described in 
paragraph (a) of this section for purposes of determining the number of 
economically disadvantaged students enrolled in vocational education 
programs, the State shall ensure that the data used are not duplicative.

(Authority: 20 U.S.C. 2341(d)(3) and 2471(15))



Sec. 403.115  What appeal procedures must be established under the
Secondary School Vocational Education Program?

    The State board shall establish an appeals procedure for resolution 
of any dispute arising between an LEA and an area vocational education 
school or an intermediate educational agency with respect to the 
allocation procedures described in Secs. 403.112 and 403.113, including 
the decision of an LEA to leave a consortium.

(Authority: 20 U.S.C. 2341(d)(4))

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

    Cross Reference: See 34 CFR 76.401, Disapproval of an application--
opportunity for a hearing.



Sec. 403.116  How does a State allocate funds under the Postsecondary
and Adult Vocational Education Programs?

    (a) Reservation of funds. From the portion of its allotment under 
Sec. 403.180(b)(1) for the basic programs, each fiscal year a State may 
reserve funds for the Postsecondary and Adult Vocational Education 
Programs.
    (b) General rule. (1) A State shall distribute funds reserved for 
Postsecondary and Adult Vocational Education Programs to eligible 
institutions or consortia of eligible institutions within the State.
    (2) Except as provided in paragraph (c) of this section and 
Secs. 403.118 and 403.119, each eligible institution or consortium of 
eligible institutions must receive an amount that bears the same 
relationship to the amount of funds reserved for the Postsecondary and 
Adult Vocational Education Programs as the number of Pell Grant 
recipients and recipients of assistance from the Bureau of Indian 
Affairs enrolled in programs meeting the requirements of Sec. 403.111, 
including meeting the definition of vocational education in 34 CFR 
400.4, offered by the eligible institution or consortium of eligible 
institutions in the fiscal or program year preceding the fiscal or 
program year in which the allocation is made bears to the number of 
those recipients enrolled in these programs within the State in that 
preceding year.
    (c) Minimum grant amount. (1) A State may not provide a grant under 
paragraph (b) of this section to any institution or consortium of 
eligible institutions for an amount that is less than $50,000.
    (2) Any amounts that are not allocated by reason of paragraph (c)(1) 
of this section must be redistributed to eligible institutions or 
consortia of eligible institutions in accordance with the provisions of 
paragraph (b) of this section.
    (d) In order for a consortium of eligible institutions to receive 
assistance under this section, the consortium must operate joint 
projects that--
    (1) Provide services to all postsecondary institutions participating 
in the consortium; and
    (2) Are of sufficient size, scope, and quality as to be effective.

(Authority: 20 U.S.C. 2341a (a) and (c))

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 403.117  What definitions apply to the Postsecondary and Adult
Vocational Education Programs?

    For the purposes of Secs. 403.116, 403.118, and 403.120 the 
following definitions apply:
    (a) Eligible institution means an institution of higher education, 
an LEA serving adults, or an area vocational education school serving 
adults that offers or will offer a program that meets the requirements 
of Sec. 403.111 and seeks to receive assistance under Sec. 403.116.
    (b)(1) Institution of higher education means an educational 
institution in any State that--

[[Page 49]]

    (i) Admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of that certificate, or who are beyond the age of 
compulsory school attendance;
    (ii) Is legally authorized within the State to provide a program of 
education beyond secondary education;
    (iii) Provides an educational program for which it awards a 
bachelor's degree or provides not less than a two-year program which is 
acceptable for full credit toward such a degree, or in the case of a 
hospital or health care facility, that provides training of not less 
than one year for graduates of accredited health professions programs, 
leading to a degree or certificate upon completion of that training;
    (iv) Is a public or other nonprofit institution; and
    (v) Is accredited by a nationally recognized accrediting agency or 
association approved by the Secretary for this purpose or, if not so 
accredited--
    (A) Is an institution with respect to which the Secretary has 
determined that there is satisfactory assurance, considering the 
resources available to the institution, the period of time, if any, 
during which it has operated, the effort it is making to meet 
accreditation standards, and the purpose for which this determination is 
being made, that the institution will meet the accreditation standards 
of such an agency or association within a reasonable time; or
    (B) Is an institution whose credits are accepted, on transfer, by 
not less than three institutions that are so accredited, for credit on 
the same basis as if transferred from an institution so accredited.
    (2) This term also includes any school that provides not less than a 
one-year program of training to prepare students for gainful employment 
in a recognized occupation and that meets the provisions of paragraphs 
(b)(1) (i), (ii), (iv), and (v) of this definition. If the Secretary 
determines that a particular category of these schools does not meet the 
requirements of paragraph (b)(1)(v) because there is no nationally 
recognized accrediting agency or association qualified to accredit 
schools in that category, the Secretary, pending the establishment of 
such an accrediting agency or association, appoints an advisory 
committee, composed of persons specially qualified to evaluate training 
provided by schools in that category, that must--
    (i) Prescribe the standards of content, scope, and quality that must 
be met in order to qualify schools in that category to participate in 
the program pursuant to this part; and
    (ii) Determine whether particular schools not meeting the 
requirements of paragraph (b)(1)(v) of this definition meet those 
standards.


(Authority: 20 U.S.C. 1085)

    (c) Pell Grant recipient means a recipient of financial aid under 
subpart 1 of part A of title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070a-l et seq.).

(Authority: 20 U.S.C. 2341a(d))



Sec. 403.118  Under what circumstances may the Secretary waive the
distribution requirements for the Postsecondary and Adult Vocational
Education Programs?

    The Secretary may waive Sec. 403.116(b)(2) for any fiscal or program 
year for which a State submits to the Secretary an application for such 
a waiver that--
    (a) Demonstrates that the formula in Sec. 403.116(b)(2) does not 
result in a distribution of funds to the institutions or consortia of 
eligible institutions within the State that have the highest numbers of 
economically disadvantaged individuals and that an alternative formula 
would result in such a distribution.
    (b) Includes a proposal for an alternative formula that may include 
criteria relating to the number of individuals attending institutions or 
consortia of eligible institutions within the State who--
    (1) Receive need-based postsecondary financial aid provided from 
public funds;
    (2) Are members of families participating in the program for aid to 
families with dependent children under part A of title IV of the Social 
Security Act (42 U.S.C. 601);

[[Page 50]]

    (3) Are enrolled in postsecondary educational institutions that--
    (i) Are funded by the State;
    (ii) Do not charge tuition; and
    (iii) Serve only economically disadvantaged students;
    (4) Are enrolled in programs serving economically disadvantaged 
adults;
    (5) Are participants in programs assisted under the JTPA;
    (6) Are Pell Grant recipients; and
    (c) Proposes an alternative formula that--
    (1) Includes direct counts of students enrolled in the institutions 
or consortia of eligible institutions;
    (2) Directly relates to the status of students as economically 
disadvantaged individuals;
    (3) Is to be uniformly applied to all eligible institutions;
    (4) Does not include fund pools for specific types of institutions 
or consortia of eligible institutions;
    (5) Does not include the direct assignment of funds to a particular 
institution or consortium of eligible institutions on a non-formula 
basis; and
    (6) Identifies a more accurate count of economically disadvantaged 
individuals in the aggregate than does the formula in 
Sec. 403.116(b)(2).

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2341a(b))

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 403.119  Under what circumstances may the State waive the
distribution requirements for Secondary School Vocational Education
Program or the Postsecondary and Adult Vocational Education Programs?

    (a) This section applies in any fiscal or program year in which a 
State reserves 15 percent or less under Sec. 403.180(b)(1) for 
distribution under--
    (1) The Secondary School Vocational Education Program; or
    (2) The Postsecondary and Adult Vocational Education Programs.
    (b) Notwithstanding the provisions and Sec. 403.112, Sec. 403.113, 
or Sec. 403.116, as applicable, in order to result in a more equitable 
distribution of funds for programs serving the highest numbers of 
economically disadvantaged individuals, the State may distribute the 
funds described in paragraph (a) of this section--
    (1) On a competitive basis; or
    (2) Through any alternative method determined by the State.

(Authority: 20 U.S.C. 2341b)



Sec. 403.120  How does a State reallocate funds under the Secondary
School Vocational Education Program and the Postsecondary and Adult
Vocational Education  Programs?

    (a) In any fiscal or program year that an LEA, area vocational 
school, intermediate school district, or consortium of those entities, 
or an eligible institution, or consortium of eligible institutions, does 
not obligate all of the amounts it is allocated for that year under the 
Secondary School Vocational Education Program or the Postsecondary and 
Adult Vocational Education Programs, the LEA, area vocational education 
school, intermediate school district, or consortium of those entities, 
or the eligible institution, or consortium of eligible institutions, 
shall return any unobligated amounts to the State to be reallocated 
under Sec. 403.112(b), Sec. 403.113, or Sec. 403.116(b), as applicable.
    (b) In any fiscal or program year in which amounts allocated under 
Sec. 403.112(b), Sec. 403.113, Sec. 403.116(b), or Sec. 403.118 are 
returned to the State and the State is unable to reallocate those 
amounts according to those sections in time for the amounts to be 
obligated in the fiscal or program year, the State shall retain the 
amounts to be distributed in combination with amounts reserved under 
Sec. 403.112(b), Sec. 403.113, Sec. 403.116(b), or Sec. 403.118 for the 
following fiscal or program year.

(Authority: 20 U.S.C. 2341c)

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]

[[Page 51]]



 Subpart F_What Kinds of Activities Does the Secretary Assist Under the 
                            Special Programs?

                                 General



Sec. 403.130  What are the Special Programs?

    The following special programs are authorized by title III of the 
Act and are subject to the requirements of the State plan:
    (a) State Assistance for Vocational Education Support Programs by 
Community-Based Organizations.
    (b) Consumer and Homemaking Education Program.
    (c) Comprehensive Career Guidance and Counseling Programs.
    (d) Business-Labor-Education Partnerships for Training Program.

(Authority: 20 U.S.C. 2302(d)(A)-(D))



Sec. 403.131  Who is eligible for an award under the Special Programs?

    (a) The fifty States, the District of Columbia, Puerto Rico, and the 
Virgin Islands are eligible for an award under the--
    (1) State Assistance for Vocational Education Support and Programs 
by Community-Based Organizations;
    (2) Consumer and Homemaking Education Programs; and
    (3) Comprehensive Career Guidance and Counseling Programs.
    (b) States, as defined in 34 CFR 400.4(b), are eligible for the 
Business-Labor-Education Partnerships for Training Program.

(Authority: 20 U.S.C. 2302(d)(A)-(D))

 Vocational Education Support Programs by Community-Based Organizations



Sec. 403.140  What activities does the Secretary support under the 
State Assistance for Vocational Education Support Programs by Community
-Based Organizations?

    (a) The State shall provide, in accordance with its State plan, and 
from its allotment for this program, financial assistance to joint 
projects of eligible recipients and community-based organizations within 
the State that provide the following special vocational education 
services and activities:
    (1) Outreach programs that facilitate the entrance of youth into a 
program of transitional services and subsequent entrance into vocational 
education, employment, or other education and training.
    (2) Transitional services such as attitudinal and motivational 
prevocational training programs.
    (3) Prevocational educational preparation and basic skills 
development conducted in cooperation with business concerns.
    (4) Special prevocational preparations programs targeted to inner-
city youth, non-English speaking youth, Appalachian youth, and the youth 
of other urban and rural areas having a high density of poverty who need 
special prevocational education programs.
    (5) Career intern programs.
    (6) Model programs for school dropouts.
    (7) The assessment of students' needs in relation to vocational 
education and jobs.
    (8) Guidance and counseling to assist students with occupational 
choices and with the selection of a vocational education program.
    (b) Individuals with disabilities who are educationally or 
economically disadvantaged may participate in projects under this 
program.

(Authority: 20 U.S.C. 2352, 2471(6))



Sec. 403.141  What are the application requirements for the State
Assistance for Vocational Education Support Programs by Community-
Based Organizations?

    (a) Each community-based organization and eligible recipient that 
desire to participate in this program shall jointly prepare and submit 
an application to the State board at the time and in the manner 
established by the State board.
    (b) The State board also may establish requirements relating to the 
contents of the applications, except that each application must 
contain--
    (1) An agreement among the community-based organization and the 
eligible recipients in the area to be served that includes the 
designation of one or more fiscal agents for the project;

[[Page 52]]

    (2) A description of how the funds will be used, together with 
evaluation criteria to be applied to the project;
    (3) Assurances that the community-based organization will give 
special consideration to the needs of severely economically and 
educationally disadvantaged youth, ages sixteen through twenty-one, 
inclusive;
    (4) Assurances that business concerns will be involved, as 
appropriate, in services and activities for which assistance is sought;
    (5) A description of the efforts the community-based organization 
will make to collaborate with the eligible recipients participating in 
the joint project;
    (6) A description of the manner in which the services and activities 
for which assistance is sought will serve to enhance the enrollment of 
severely economically and educationally disadvantaged youth into the 
vocational education programs; and
    (7) Assurances that the projects conducted by the community-based 
organization will conform to the applicable standards of performance and 
measures of effectiveness required of vocational education programs in 
the State.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2351)

               Consumer and Homemaking Education Programs



Sec. 403.150  What activities does the Secretary support under the
Consumer and Homemaking Education Programs?

    (a) The State shall conduct, in accordance with its State plan, and 
from its allotment for this program, consumer and homemaking education 
projects that may include--
    (1) Instructional projects, services, and activities that prepare 
youth and adults for the occupation of homemaking;
    (2) Instruction in the areas of--
    (i) Food and nutrition;
    (ii) Individual and family health;
    (iii) Consumer education;
    (iv) Family living and parenthood education;
    (v) Child development and guidance;
    (vi) Housing and home management, including resource management; and
    (vii) Clothing and textiles.
    (b) The State shall use the funds for this program for projects, 
services, and activities--
    (1) For residents of economically depressed areas;
    (2) That encourage the participation of traditionally underserved 
populations;
    (3) That encourage, in cooperation with the individual appointed 
under Sec. 403.13(a), the elimination of sex bias and sex stereotyping;
    (4) That improve, expand, and update Consumer and Homemaking 
Education Programs, especially those that specifically address needs 
described in paragraphs (b) (1), (2), and (3) of this section; and
    (5) That address priorities and emerging concerns at the local, 
State, and national levels.
    (c) The State may use the funds described in paragraph (a) of this 
section for--
    (1) Program development and the improvement of instruction and 
curricula relating to--
    (i) Managing individual and family resources;
    (ii) Making consumer choices;
    (iii) Balancing work and family;
    (iv) Improving responses to individual and family crises (including 
family violence and child abuse);
    (v) Strengthening parenting skills (especially among teenage 
parents);
    (vi) Preventing teenage pregnancy;
    (vii) Assisting the aged, individuals with disabilities, and members 
of at risk populations (including the homeless);
    (viii) Improving individual, child, and family nutrition and 
wellness;
    (ix) Conserving limited resources;
    (x) Understanding the impact of new technology on life and work;
    (xi) Applying consumer and homemaking education skills to jobs and 
careers; and
    (xii) Other needs as determined by the State; and
    (2) Support services and activities designed to ensure the quality 
and effectiveness of programs, including--
    (i) The demonstration of innovative and exemplary projects;

[[Page 53]]

    (ii) Community outreach to underserved populations;
    (iii) The application of academic skills (such as reading, writing, 
mathematics, and science) through consumer and homemaking education 
programs;
    (iv) Curriculum development;
    (v) Research;
    (vi) Program evaluation;
    (vii) The development of instructional materials;
    (viii) Teacher education;
    (ix) The upgrading of equipment;
    (x) Teacher supervision;
    (xi) State leadership, including the activities of student 
organizations; and
    (xii) State administration, subject to Sec. 403.151(c).

(Authority: 20 U.S.C. 2361, 2362(a), (b))



Sec. 403.151  How must funds be used under the Consumer and Homemaking
Education Programs?

    (a) A State shall use not less than one-third of its allotment under 
the Consumer and Homemaking Education Program in economically depressed 
areas or areas with high rates of unemployment for projects, services, 
and activities designed to assist consumers, and to help improve the 
home environment and the quality of family life.
    (b)(1) The State board shall ensure that the experience and 
information gained through carrying out projects, services, and 
activities under this program are shared with program administrators for 
the purpose of program planning.
    (2) The State board shall use funds from its allotment under this 
program to provide State leadership and one or more full-time State 
administrators qualified by experience and educational preparation in 
home economics education.
    (3) For purposes of the Consumer and Homemaking Education Program, 
State leadership includes, but is not limited to, curriculum 
development, personnel development, research, dissemination activities, 
and technical assistance.
    (c) A State may use, in addition to funds reserved under 
Sec. 403.180(b)(4), not more than six percent of its allotment under 
this program for State administration of projects, services, and 
activities under this program.

(Authority: 20 U.S.C. 2362(c), 2363)

          Comprehensive Career Guidance and Counseling Programs



Sec. 403.160  What activities does the Secretary support under the
Comprehensive Career Guidance and Counseling Programs?

    (a) The State shall conduct, in accordance with its State plan, from 
its allotment for this program, career guidance and counseling projects, 
services, and activities that are--
    (1) Organized and administered by certified counselors; and
    (2) Designed to improve, expand, and extend career guidance and 
counseling programs to meet the career development, vocational 
education, and employment needs of vocational education students and 
potential students.
    (b) The purposes of the projects, services, and activities described 
in paragraph (a) of this section must be to--
    (1) Assist individuals to--
    (i) Acquire self-assessment, career planning, career decision-
making, and employability skills;
    (ii) Make the transition from education and training to work;
    (iii) Maintain the marketability of their current job skills in 
established occupations;
    (iv) Develop new skills to move away from declining occupational 
fields and enter new and emerging fields in high-technology areas and 
fields experiencing skill shortages;
    (v) Develop mid-career job search skills and to clarify career 
goals; and
    (vi) Obtain and use information on financial assistance for 
postsecondary and vocational education, and job training; and
    (2)(i) Encourage the elimination of sex, age, disabling conditions, 
and race bias and stereotyping;
    (ii) Provide for community outreach;
    (iii) Enlist the collaboration of the family, the community, 
business, industry, and labor; and
    (iv) Be accessible to all segments of the population, including 
women, minorities, individuals with disabilities, and economically 
disadvantaged individuals.

[[Page 54]]

    (c) The projects, services, and activities described in paragraph 
(a) of this section must consist of--
    (1) Instructional activities and other services at all educational 
levels to help students develop the skills described in paragraph (b)(1) 
of this section;
    (2) Services and activities designed to ensure the quality and 
effectiveness of career guidance and counseling projects such as--
    (i) Counselor education, including the education of counselors 
working with individuals with limited English proficiency;
    (ii) Training support personnel;
    (iii) Curriculum development;
    (iv) Research and demonstration projects;
    (v) Experimental projects;
    (vi) The development of instructional materials;
    (vii) The acquisition of equipment;
    (viii) State and local leadership;
    (ix) The development of career information delivery systems; and
    (x) Local administration, including supervision;
    (xi) State administration, including supervision, subject to 
Sec. 403.161(c);
    (3) Projects that provide opportunities for counselors to obtain 
firsthand experience in business and industry; and
    (4) Projects that provide students with an opportunity to become 
acquainted with business, industry, the labor market, and training 
opportunities, including secondary educational programs that--
    (i) Have at least one characteristic of an apprenticeable occupation 
as recognized by the Department of Labor or the State Apprenticeship 
Agency, in accordance with the National Apprenticeship Act (29 U.S.C. 
50);
    (ii) Are conducted in concert with local business, industry, labor, 
and other appropriate apprenticeship training entities; and
    (iii) Are designed to prepare participants for an apprenticeable 
occupation or provide information concerning apprenticeable occupations 
and their prerequisites.

(Authority: 20 U.S.C. 2382(a), (b))



Sec. 403.161  How must funds be used under the Comprehensive Career
Guidance and Counseling Programs?

    (a) A State shall use not less than twenty percent of its allotment 
under the Career Guidance and Counseling Program for projects, services, 
and activities designed to eliminate sex, age, and race bias and 
stereotyping under Sec. 403.160(b)(2) to ensure that projects, services, 
and activities under this program are accessible to all segments of the 
population, including women, disadvantaged individuals, individuals with 
disabilities, individuals with limited English proficiency, and 
minorities.
    (b)(1) The State board shall ensure that the experience and 
information gained through carrying out projects, services, and 
activities under this program are shared with program administrators for 
the purpose of program planning.
    (2) The State board shall use funds from its allotment under this 
program to provide State leadership that is qualified by experience and 
knowledge in guidance and counseling.
    (3) For purposes of Comprehensive Career Guidance and Counseling 
Programs, State leadership includes, but is not limited to curriculum 
development, personnel development, research, dissemination activities, 
and technical assistance; and
    (c) A State may use, in addition to funds reserved under 
Sec. 403.180(b)(4), not more than six percent of its allotment under 
this program for State administration of projects, services, and 
activities under this program.

(Authority: 20 U.S.C. 2382(c), 2383)

        Business-Labor-Education Partnership for Training Program



Sec. 403.170  What activities does the Secretary support under the
Business-Labor-Education Partnership for Training Program?

    The State board shall, in accordance with the State plan, from its 
allotment for this program, support the establishment and operation of 
projects, services, and activities, that--

[[Page 55]]

    (a) Provide incentives for the coordination of the Business-Labor-
Education Partnership for Training Program with related efforts under 
the--
    (1) National Tech-Prep Education Program in 34 CFR part 405;
    (2) State-Administered Tech-Prep Education Program in 34 CFR part 
406; and
    (3) JTPA; and
    (b) May only include, in addition to the activities described in 
Sec. 403.32(a)(27) through (30),--
    (1) Training and retraining of instructional and guidance personnel;
    (2) Curriculum development and the development or acquisition of 
instructional and guidance equipment and materials;
    (3) Acquisition and operation of communications and 
telecommunications equipment and other high technology equipment for 
programs authorized by this part;
    (4) Other activities authorized by title III of the Act as may be 
essential to the successful establishment and operation of projects, 
services, and activities under the Business-Labor-Education Partnership 
for Training Program, including activities and related services to 
ensure access of women, minorities, individuals with disabilities, and 
economically disadvantaged individuals; and
    (5) Providing vocational education to individuals in order to assist 
their entry into, or advancement in, high-technology occupations or to 
meet the technological need of other industries or businesses.

(Authority: 20 U.S.C. 2392(b) and 2393 (a), (d)(1))



Sec. 403.171  Who is eligible to apply to a State board for an award?

    (a) The State board awards subgrants or contracts to partnerships 
between--
    (1) An area vocational education school, a State agency, a local 
educational agency, a secondary school funded by the Bureau of Indian 
Affairs, an institution of higher education, a State corrections 
educational agency, or an adult learning center; and
    (2) Business, industry, labor organizations, or apprenticeship 
programs.
    (b) A partnership receiving an award from a State board must include 
as partners at least one entity from paragraph (a)(1) of this section 
and at least one entity from paragraph (a)(2) of this section, and may 
include more than one entity from each group.

(Authority: 20 U.S.C. 2392(a)(1))



Sec. 403.172  What special considerations must the State board give in
approving projects, services, and activities?

    The State board, in approving projects, services, and activities 
assisted under the Business-Labor-Education Partnership Training 
Program, shall give special consideration to the following:
    (a) The level and degree of business and industry participation in 
the development and operation of the program.
    (b) The current and projected demand within the State or relevant 
labor market area for workers with the level and type of skills the 
program is designed to produce.
    (c) The overall quality of the proposal, with particular emphasis on 
the probability of successful completion of the program by prospective 
trainees and the capability of the eligible recipient, with assistance 
from participating business or industry, to provide high quality 
training for skilled workers and technicians in high technology.
    (d) The commitment to serve, as demonstrated by special efforts to 
provide outreach, information, and counseling, and by the provision of 
remedial instruction and other assistance, all segments of the 
population, including women, minorities, individuals with disabilities, 
and economically disadvantaged individuals.
    (e) Projects, services, and activities to provide vocational 
education for individuals who have attained 55 years of age in order to 
assist their entry into, or advancement in, high-technology occupations 
or to meet the technological needs of other industries or businesses.

(Authority: 20 U.S.C. 2393-(b) and (d)(2))



Sec. 403.173  What expenses are allowable?

    The State board shall use funds awarded under the Business-Labor-
Education Partnership for Training Program only for--

[[Page 56]]

    (a) Expenses incurred in carrying out the programs, services, and 
activities described in Sec. 403.170, including, for example, expenses 
for--
    (1) The introduction of new vocational education programs, 
particularly in economically depressed urban and rural areas;
    (2) The introduction or improvement of basic skills instruction, 
including English-as-a-second-language instruction, in order for an 
individual to be eligible for employment, to continue employment, or to 
be eligible for career advancement;
    (3) Costs associated with coordination between vocational education 
programs, business, and industry, including advisory council meetings 
and newsletters; and
    (4) Transportation and child-care services for students necessary to 
ensure access of women, minorities, individuals with disabilities, and 
economically disadvantaged individuals to projects, services, and 
activities authorized by the Business-Labor-Education Partnership for 
Training Program; and
    (b)(1) Subject to paragraph (b)(2) of this section, expenditures for 
necessary and reasonable administrative costs of the State board and of 
eligible partners.
    (2) Total expenditures for administrative costs of the State board 
and of eligible partners may not exceed 10 percent of the State's 
allotment for this program in the first year and five percent of that 
allotment in each subsequent year.

(Authority: 20 U.S.C. 2392(d) and 2393(a)(1))



Sec. 403.174  What additional fiscal requirements apply to the 
Business-Labor-Education Partnership for Training Program?

    (a) The business and industrial share of the costs required in 
Sec. 403.32(a)(29) may be in the form of either allowable costs or the 
fair market value of in-kind contributions such as facilities, overhead, 
personnel, and equipment.
    (b) The State board shall use equal amounts from its allotment under 
this program and from its allotment for basic programs to provide the 
Federal share of cost of projects, services, and activities under this 
program.
    (c) If an eligible partner demonstrates to the satisfaction of the 
State that it is incapable of providing all or part of the non-Federal 
portion of the costs of projects, services, and activities, as required 
by Sec. 403.32(a)(29), the State board may designate funds available 
under parts A and C of title II of the Act or funds available from State 
sources in place of the non-Federal portion.

(Authority: 20 U.S.C. 2392(c))



       Subpart G_What Financial Conditions Must Be Met by a State?



Sec. 403.180  How must a State reserve funds for the basic programs?

    (a)(1) Except as provided in paragraph (a)(2) of this section, each 
State shall reserve from its allotment under the basic programs 
authorized by title II of the Act, for--
    (i) The Program for Single Parents, Displaced Homemakers, and Single 
Pregnant Women under Sec. 403.81, and the Sex Equity Program under 
Sec. 403.91, respectively, an amount that is not less than the amount 
the State reserved for each of those programs under section 202 of the 
Carl D. Perkins Vocational Education Act (CDPVEA) from its Fiscal Year 
(FY) 1991 grant from the FY 1990 appropriation; and
    (ii) The Program for Criminal Offenders under Sec. 403.101 an amount 
that is not less than--
    (A) The amount the State reserved for projects, services, or 
activities under section 202(6) of the CDPVEA from its FY 1991 grant 
from the FY 1990 appropriation; and
    (B) The amount of Federal funds under the CDPVEA, other than the one 
percent reserved under section 202(6) of the Act, that the State and its 
eligible recipients obligated for projects, services, and activities for 
criminal offenders in correctional institutions from its FY 1991 grant 
from the FY 1990 appropriation.
    (2) In any year in which a State receives an amount for purposes of 
carrying out programs under title II of the Act that is less than the 
amount the State received for those purposes in its FY 1991 grant award 
from the FY 1990

[[Page 57]]

appropriation under the CDPVEA, the State shall ratably reduce the 
amounts reserved under paragraph (a)(1) of this section in the same 
proportion that the amount for carrying out programs under title II of 
the Act is less than the amount the State received for those purposes 
from the FY 1990 appropriation.
    (b) Except as provided in paragraph (a) of this section, from its 
allotment for the basic programs authorized by title II of the Act, a 
State shall reserve--
    (1) At least 75 percent for the Secondary School Vocational 
Education Program and the Postsecondary and Adult Vocational Education 
Programs described in Sec. 403.111;
    (2) Ten and one-half percent for the Program for Single Parents, 
Displaced Homemakers, and Single Pregnant Women described in Sec. 403.81 
and the Sex Equity Program described in Sec. 403.91, as follows:
    (i) Not less than seven percent for the Program for Single Parents, 
Displaced Homemakers, and Single Pregnant Women.
    (ii) Not less than three percent for the Sex Equity Program;
    (3) Not more than eight and one-half percent for State Programs and 
State Leadership Activities described in Secs. 403.70 and 403.71;
    (4) Not more than five percent or $250,000, whichever is greater, 
for administration of the State plan, of which--
    (i) Not less than $60,000 must be available for carrying out the 
provisions in Sec. 403.13, regarding the personnel requirements for 
eliminating sex discrimination and sex stereotyping; and
    (ii) The remaining amounts may be used for the costs of--
    (A) Developing the State plan;
    (B) Reviewing local applications;
    (C) Monitoring and evaluating program effectiveness;
    (D) Providing technical assistance;
    (E) Ensuring compliance with all applicable Federal laws, including 
required services and activities for individuals who are members of 
special populations; and
    (F) Supporting the activities of the technical committees it 
establishes under Sec. 403.12(b)(1); and
    (5) One percent for Programs for Criminal Offenders described in 
Sec. 403.101.
    (c) The procedure for meeting the ``hold-harmless'' requirements in 
Sec. 403.180(a) and the $250,000 minimum for State administration 
provision in Sec. 403.180(b)(4) is as follows:
    (1) If the five percent reserved for administration is less than the 
$250,000 minimum allowed by paragraph (b)(4) of this section, or if any 
of the amounts reserved for the Program for Single Parents, Displaced 
Homemakers, and Single Pregnant Women in Sec. 403.81, the Sex Equity 
Program in Sec. 403.91, or the Program for Criminal Offenders in 
Sec. 403.101, respectively, is less than the amount reserved for that 
program in FY 1990 (funds from the FY 1990 appropriation awarded in the 
States FY 1991 grant), a State shall subtract any amount necessary to 
satisfy the $250,000 minimum for State administration or any of the 
``hold-harmless'' amounts from the total basic programs award received 
by the State.
    (2) The State shall reserve $250,000 for administration and shall 
reserve for any program not meeting the ``hold-harmless'' requirement an 
amount necessary to meet that requirement.
    (3) The State shall reserve from the remainder of the basic program 
award an amount for each of the remaining programs that is proportionate 
to the amount that program would have received in the absence of a 
shortfall in the amounts reserved for administration or to meet the 
``hold-harmless'' requirements in paragraph (a)(1) of this section.

    Example 1: (a) A State receives a basic programs award of 
$4,000,000. Five percent of the basic programs award equals $200,000, 
which is $50,000 less than the $250,000 minimum that may be reserved for 
State administration. To determine the amount of funds that will be 
reserved for each program under title II, parts A, B, and C of the Act, 
the State first subtracts $250,000 for State administration from the 
$4,000,000 basic programs award ($4,000,000 -$250,000 = $3,750,000).
    (b) Second, the State determines the amount that would have been 
reserved for each of the programs under title II, parts A,

[[Page 58]]

B, and C of the Act in the absence of a shortfall in the set-aside 
amount for administration, as follows:

3.0%  x  $4,000,000 =             $120,000  for Sex Equity Programs.
7.5%  x  $4,000,000 =              300,000  for Programs for Single
                                             Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
8.5%  x  $4,000,000 =              340,000  for State Programs and State
                                             Leadership Activities.
1.0%  x  $4,000,000 =               40,000  for Programs for Criminal
                                             Offenders.
75%  x  $4,000,000 =             3,000,000  for part C of title II.
                              -------------
                                 3,800,000
 

    (c) Third, the State converts each of these amounts into a 
percentage by dividing each amount by the sum of the amounts the 
programs would have received in the absence of a shortfall ($3,800,000) 
and multiplies the remaining basic programs award ($3,750,000) by these 
percentages to determine the amount to reserve for each program under 
parts A, B, and C of title II of the Act, as follows:

($120,000/$3,800,000)  x          $118,421  for Sex Equity Programs.
 $3,750,000 =
($300,000/$3,800,000)  x           296,053  for Programs for Single
 $3,750,000 =                                Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
($340,000/$3,800,000)  x           335,526  for State Programs and State
 $3,750,000 =                                Leadership Activities.
($40,000/$3,800,000)  x             39,474  for Programs for Criminal
 $3,750,000 =                                Offenders.
($3,000,000/$3,800,000)  x       2,960,526  for part C of title II.
 $3,750,000 =
                              -------------
                                 3,750,000
 

    This example assumes that amounts reserved meet the ``hold-
harmless'' requirement of section 102(c)(1) of the Act.
    Example 2: A State's seven percent reserve from its FY 1992 grant 
for the Program for Single Parents, Displaced Homemakers, and Single 
Pregnant Women is $1,400,000 and the amount reserved for that program 
from its FY 1991 grant was $1,581,000. Therefore, the amount of FY 1992 
funds reserved for that program is $181,000 less than the amount 
reserved in FY 1991. The State received a basic programs award of 
$20,000,000 in FY 1992. The other programs under title II, part B meet 
the ``hold-harmless'' requirement in Sec. 403.180(a)(1), and the amount 
reserved for State administration exceeds $250,000. The State determines 
the amount of funds to be reserved for each program under title II, 
parts A, B, and C of the Act as follows:
    (a) First, the State subtracts $1,581,000 from the $20,000,000 total 
basic programs award ($20,000,000 -$1,581,000 = $18,419,000).
    (b) Second, the State determines the amount that would have been 
reserved for each of the programs under parts A, B, and C of title II of 
the Act in the absence of a shortfall in the set-aside amount for the 
Program for Single Parents, Displaced Homemakers, and Single Pregnant 
Women, as follows:

5.0%  x  $20,000,000 =          $1,000,000  for administration.
3.5%  x  $20,000,000 =             700,000  for Sex Equity Programs.
8.5%  x  $20,000,000 =           1,700,000  for State Programs and State
                                             Leadership Activities.
1.0%  x  $20,000,000 =             200,000  for Programs for Criminal
                                             Offenders.
75.0%  x  $20,000,000 =         15,000,000  for part C of title II.
                              -------------
                                18,600,000
 

    (c) Third, the State converts each of these amounts into a 
percentage by dividing each amount by the sum of the amounts the 
programs would have earned in the absence of a shortfall ($18,600,000) 
and multiplies the remaining basic programs award ($18,419,000) by these 
percentages to determine the amount to reserve for each program under 
parts A, B, and C of title II of the Act, as follows:

($1,000,000/$18,600,000)  x       $990,269  for administration.
 $18,419,000 =
($700,000/$18,600,000)  x          693,188  for Sex Equity Programs.
 $18,419,000 =
($1,700,000/$18,600,000)  x      1,683,457  for State Programs and State
 $18,419,000 =                               Leadership Activities.
($200,000/$18,600,000)  x          198,054  for Programs for Criminal
 $18,419,000 =                               Offenders.
($15,000,000/$18,600,000)  x    14,854,032  for part C of title II.
 $18,419,000 =
                              -------------
                                18,419,000
 

    This example assumes that amounts reserved for the Sex Equity 
Program and Programs for Criminal Offenders meet the ``hold-harmless'' 
requirement of section 102(c) (1) and (2) of the Act.
    Example 3: A State's one percent reserved from its FY 1992 grant for 
Programs for Criminal Offenders is $200,000 and the amount reserved for 
that program under section 202(6) of the CDPVEA plus other amounts 
obligated for projects, services, and activities for criminal offenders 
in correctional institutions from its FY 1991 grant from the FY 1990 
appropriations totals $250,000. Therefore, the amount of FY 1992 funds 
reserved for that program is $50,000 less than the amount reserved and 
obligated for that program in FY 1991. The State received a basic 
programs award of $20,000,000 in FY

[[Page 59]]

1992. The other programs under title II, part B meet the ``hold-
harmless'' requirement of Sec. 403.180(a)(1) and the amount reserved for 
State administration exceeds $250,000. The State determines the amount 
of funds to be reserved for each program under title II, parts A, B, and 
C of the Act as follows:
    (a) First, the State subtracts $250,000 from the $20,000,000 total 
basic programs award ($20,000,000 -$250,000 = $19,750,000).
    (b) Second, the State determines the amount that would have been 
reserved for each of the programs under parts A, B, and C of title II of 
the Act in the absence of a shortfall in the set-aside amount for the 
Programs for Criminal Offenders, as follows:

5.0%  x  20,000,000 =           $1,000,000  for administration.
3.5%  x  20,000,000 =              700,000  for Sex Equity Programs.
7.0%  x  20,000,000 =            1,400,000  for Programs for Single
                                             Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
8.5%  x  20,000,000 =            1,700,000  for State Programs and State
                                             Leadership Activities.
75.0%  x  20,000,000 =          15,000,000  for part C of title II.
                              -------------
                                19,800,000
 

    (c) Third, the State converts each of these amounts into a 
percentage by dividing each amount by the sum of the amounts the 
programs would have earned in the absence of a shortfall ($19,800,000) 
and multiplies the remaining basic programs award ($19,750,000) by these 
percentages to determine the amount to reserve for each program under 
parts A, B, and C of title II of the Act, as follows:

($1,000,000/$19,800,000)  x       $997,475  for administration.
 $19,750,000 =
($700,000/$19,800,000)  x         $698,232  for Sex Equity Programs.
 $19,750,000 =
($1,400,000/$19,800,000)  x     $1,396,465  for Programs for Single
 $19,750,000 =                               Parents, Displaced
                                             Homemakers, and Single
                                             Pregnant Women.
($1,700,000/$19,800,000)  x     $1,695,707  for State Programs and State
 $19,750,000 =                               Leadership Activities.
($15,000,000/$19,800,000)  x   $14,962,121  for part C of title II.
  $19,750,000 =
                             --------------
                               $19,750,000
 

    This example assumes that amounts reserved for the Sex Equity 
Program and for the Program for Single Parents, Displaced Homemakers, 
and Single Pregnant Women meet the ``hold-harmless'' requirement of 
sections 102(c) (1) and (2) of the Act.

    (d) The procedure for meeting the ratable reduction provision in 
paragraph (a)(2) of this section is as follows:
    (1) If a State's basic programs award under title II of the Act for 
FY 1992 or in future years is less than that State's basic grant amount 
in FY 1991, a State shall determine the percentage that the basic 
programs award is of the FY 1991 basic programs award.
    (2) The State shall multiply the amounts reserved in FY 1991 for 
each of the three programs covered by the ``hold-harmless'' provisions 
in paragraph (a)(1) of this section by this percentage.
    (3) The State shall compare the amounts that would be reserved for 
these programs in FY 1992 to determine if these amounts are less than 
the ratably reduced hold-harmless amounts, and if so, shall proceed with 
the calculation required by paragraph (c) of this section except using 
the ratably reduced ``hold-harmless'' amounts.

(Authority: 20 U.S.C. 2312)



Sec. 403.181  What are the cost-sharing requirements applicable to
the basic programs?

    (a) A State shall match, from non-Federal sources and on a dollar-
for-dollar basis, the funds reserved for administration of the State 
plan under Sec. 403.180(b)(4).
    (b) The matching requirement under paragraph (a) of this section may 
be applied overall, rather than line-by-line, to State administrative 
expenditures.
    (c) A State shall provide from non-Federal sources for State 
administration under the Act an amount that is not less than the amount 
provided by the State from non-Federal sources for State administrative 
costs for the preceding fiscal or program year.

    Example for paragraph (b): From the five percent reserved for the 
administration of the State plan, a State must reserve $60,000 to carry 
out the provisions in Sec. 403.13. The $60,000 must be matched, but the 
matching funds need not be used for the activities described in 
Sec. 403.13.

(Authority: 20 U.S.C. 2312(b) and 2468d; H.R. Rep. No. 660, 101st Cong., 
2nd Sess. 103-104 (1990))

[[Page 60]]



Sec. 403.182  What is the maintenance of fiscal effort requirement?

    The Secretary may not make a payment under the Act to a State for 
any fiscal year unless the Secretary determines that the fiscal effort 
per student, or the aggregate expenditures of that State, from State 
sources, for vocational education for the fiscal year (or program year) 
preceding the fiscal year (or program year) for which the determination 
is made, at least equaled its effort or expenditures for vocational 
education for the second preceding fiscal year (or program year).

(Authority: 20 U.S.C. 2463(a))



Sec. 403.183  Under what circumstances may the Secretary waive the
maintenance of effort requirement?

    (a) The Secretary may waive the maintenance of effort requirement in 
Sec. 403.182 for a State for one year only if--
    (1) The Secretary determines that a waiver would be equitable due to 
exceptional or uncontrollable circumstances affecting the State's 
ability to maintain fiscal effort; and
    (2) The State has decreased its expenditures for vocational 
education from non-Federal sources by no more than five percent.
    (b) For purposes of this section, ``exceptional or uncontrollable 
circumstances'' include, but are not limited to, the following:
    (1) A natural disaster.
    (2) An unforeseen and precipitous decline in financial resources.
    (c) The Secretary does not consider tax initiatives or referenda to 
be exceptional or uncontrollable circumstances.

(Authority: 20 U.S.C. 2463(b))



Sec. 403.184  How does a State request a waiver of the maintenance 
of effort requirement?

    A State seeking a waiver of the maintenance of effort requirement in 
Sec. 403.182 shall--
    (a) Submit to the Secretary a request for a waiver; and
    (b) Include in the request--
    (1) The reason for the request;
    (2) Information that demonstrates that a waiver is justified; and
    (3) Any additional information the Secretary may require.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2463(b))



Sec. 403.185  How does the Secretary compute maintenance of effort
in the event of a waiver?

    If a State has been granted a waiver of the maintenance of effort 
requirement that allows it to receive a grant for a fiscal year, the 
Secretary determines whether the State has met that requirement for the 
grant to be awarded for the year after the year of the waiver by 
comparing the amount spent for vocational education from non-Federal 
sources in the first preceding fiscal year (or program year) with the 
amount spent in the third preceding fiscal year (or program year).

    Example: Because exceptional or uncontrollable circumstances 
prevented a State from maintaining its level of fiscal effort in a 
program year 1989 (July 1, 1988-June 30, 1989) at the level of its 
fiscal effort in program year 1988 (July 1, 1987-June 30, 1988), the 
Secretary granted the State a waiver of the maintenance of effort 
requirement that permits the State to receive its fiscal year 1990 grant 
(a grant that is awarded on or after July 1, 1990 from funds 
appropriated in the fiscal year 1990 appropriation). To be eligible to 
receive its fiscal year 1991 grant (the grant to be awarded for the year 
after the year of the waiver), the State's expenditures from the first 
preceding program year (July 1, 1989-June 30, 1990) must equal or exceed 
its expenditures from the third preceding program year (July 1, 1987 to 
June 30, 1988).

(Authority: 20 U.S.C. 2463(c))



Sec. 403.186  What are the administrative cost requirements applicable
to a State?

    (a) Basic Programs. A State may use only funds reserved under 
Sec. 403.180(b)(4) to administer the programs under title II of the Act, 
including Programs for Criminal Offenders.
    (b) Special Programs. (1) A State may use the funds reserved under 
Sec. 403.180(b)(4) to administer any of the special programs listed in 
Sec. 403.130.
    (2) In addition to the funds reserved under Sec. 403.180(b)(4), a 
State may use only an amount of funds from its allotment for the State 
Assistance for Vocational Education Support Programs

[[Page 61]]

by Community-Based Organizations that is necessary and reasonable for 
the proper and efficient State administration of that program.
    (3) In addition to the funds reserved under Sec. 403.180(b)(4), a 
State may use the amounts reserved for the Consumer and Homemaking 
Education Program, the Comprehensive Career Guidance and Counseling 
Program, and the Business-Labor-Education Partnership for Training 
Program under Secs. 403.151(c), 403.161(c), and 403.173(b), 
respectively, for the proper and efficient administration of each 
program.

(Authority: 20 U.S.C. 2302(d) (A)-(D) and 2312(a))



Sec. 403.187  How may a State provide technical assistance?

    (a) Except as provided in paragraph (b) of this section, a State may 
use only an amount of the funds reserved for each of the basic programs 
listed in Sec. 403.60 and the special programs listed in Sec. 403.130 to 
pay the costs of providing technical assistance that is necessary and 
reasonable to promote or enhance the quality and effectiveness of that 
program.
    (b) A State may not use funds reserved under Sec. 403.180(b)(1) for 
the Secondary School Vocational Education Program and the Postsecondary 
and Adult Vocational Education Program to pay the costs of providing 
technical assistance.
    (c) In providing technical assistance under paragraph (a) of this 
section, a State may not use amounts to an extent that would interfere 
with achieving the purposes of the program for which the funds were 
awarded.

(Authority: 20 U.S.C. 2302(d) (A)-(D), 2312(a), and 2323(b)(5))



Sec. 403.188  What is a State's responsibility for the cost of 
services and activities for members of special populations?

    A State is not required to use non-Federal funds to pay the cost of 
services and activities that it provides to members of special 
populations pursuant to Sec. 403.32(a) (18)-(26) or to pay the cost of 
services and activities that eligible recipients provide to members of 
special populations pursuant to Secs. 403.111 (a)(2)(i) and (c)(3), 
403.190(b), or 403.193, unless this requirement is imposed by other 
applicable laws.

(Authority: 20 U.S.C. 2328)



       Subpart H_What Conditions Must be Met by Local Recipients?



Sec. 403.190  What are the requirements for receiving a subgrant
or contract?

    (a) Each eligible recipient desiring financial assistance under the 
Secondary School Vocational Education Program or the Postsecondary and 
Adult Vocational Education Program must submit to the State board, 
according to requirements established by the State board, an application 
covering the same period as the State plan, for the use of that 
assistance. The State board shall determine requirements for local 
applications, except that each application must--
    (1) Contain a description of--
    (i) The vocational education program to be funded, including--
    (A) The extent to which the program incorporates each of the 
requirements described in Sec. 403.111 (a), (b), and (c); and
    (B) How the eligible recipient will use the funds available under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 and from other sources to 
improve the program with regard to each requirement and activity 
described in Sec. 403.111 (c) and (d);
    (ii) How the needs of individuals who are members of special 
populations will be assessed and the planned use of funds to meet those 
needs;
    (iii) How access to programs of good quality will be provided to 
students who are economically disadvantaged (including foster children), 
students with disabilities, and students of limited English proficiency 
through affirmative outreach and recruitment efforts;
    (iv) The program evaluation standards the applicant will use to 
measure its progress;
    (v) The methods to be used to coordinate vocational education 
services with relevant programs conducted under the JTPA, including 
cooperative arrangements established with private industry councils 
established under section 102(a) of that Act, in order to avoid 
duplication and to expand the

[[Page 62]]

range of and accessibility to vocational education services;
    (vi) The methods used to develop vocational educational programs in 
consultation with parents and students of special populations;
    (vii) How the eligible recipient coordinates with community-based 
organizations;
    (viii) The manner and the extent to which the eligible recipient 
considered the demonstrated occupational needs of the area in assisting 
programs funded under the Act;
    (ix) How the eligible recipient will provide a vocational education 
program that--
    (A) Integrates academic and occupational disciplines so that 
students participating in the program are able to achieve both academic 
and occupational competence; and
    (B) Offers coherent sequences of courses leading to a job skill; and
    (x) How the eligible recipient will monitor the provision of 
vocational education to individuals who are members of special 
populations, including the provision of vocational education to students 
with individualized education programs developed under the IDEA;
    (2) Provide assurances that--
    (i) The programs funded under Sec. 403.112, Sec. 403.113, or 
Sec. 403.116 will be carried out according to the requirements regarding 
special populations;
    (ii) The eligible recipient will provide a vocational program that--
    (A) Encourages students through counseling to pursue coherent 
sequences of courses;
    (B) Assists students who are economically disadvantaged, students of 
limited English proficiency, and students with disabilities to succeed 
through supportive services such as counseling, English-language 
instruction, child care, and special aids;
    (C) Is of a size, scope, and quality as to bring about improvement 
in the quality of education offered by the school; and
    (D) Seeks to cooperate with the sex equity program carried out under 
Sec. 403.91; and
    (iii) The eligible recipient will provide sufficient information to 
the State to enable the State to comply with the requirements in 
Sec. 403.113; and
    (3) Contain a report on the number of individuals in each of the 
special populations.
    (b) Each eligible recipient desiring financial assistance under 
title II of the Act must provide assurances to the State board that, 
with respect to any project that is funded under a basic program listed 
in Sec. 403.60 or a special program listed in Sec. 403.130, it will--
    (1) Assist students who are members of special populations to enter 
vocational education programs, and, with respect to students with 
disabilities, assist in fulfilling the transitional service requirement 
of section 626 of the IDEA;
    (2) Assess the special needs of students participating in projects 
receiving assistance under a basic program listed in Sec. 403.60 or a 
special program listed in Sec. 403.130, with respect to their successful 
completion of the vocational education program in the most integrated 
setting possible;
    (3) Provide supplementary services, as defined in 34 CFR 400.4(b), 
to students who are members of special populations;
    (4) Provide guidance, counseling, and career development activities 
conducted by professionally trained counselors and teachers who are 
associated with the provision of those special services; and
    (5) Provide counseling and instructional services designed to 
facilitate the transition from school to post-school employment and 
career opportunities.
    (c) Each eligible recipient desiring financial assistance under 
Title II of the Act must provide the services and activities described 
in paragraph (b) of this section, to the extent possible with funds 
awarded under the Act, and indicate in its local application whether any 
non-Federal funds will be used for this purpose.

    Cross Reference: See Sec. 403.193(e).

    (d) Each eligible recipient desiring financial assistance under the 
Act shall provide sufficient information to the State, as the State 
board requires, to demonstrate to the State board that

[[Page 63]]

the eligible recipient's projects comply with Sec. 403.32(a)(18)-(26).
    (e) Each eligible recipient desiring financial assistance under the 
Act shall--
    (1) Provide the assurance described in Sec. 403.14(a)(2); and
    (2) Include in its application, as appropriate--
    (i) The number of disabled students, economically disadvantaged 
students, and students with limited English proficiency in its 
vocational program;
    (ii) An assessment of the vocational needs of its students with 
disabilities, economically disadvantaged students, and students with 
limited English proficiency; and
    (iii) A plan to provide supplementary services sufficient to meet 
the needs identified in the assessment described in paragraph 
(e)(2)(ii).

(Authority: 20 U.S.C. 2321(c)(1), (d), (e); 2328; and 2343)

(Approved by the Office of Management and Budget under Control No. 1830-
0030)



Sec. 403.191  What are the requirements for program evaluation?

    (a)(1) Beginning in the 1992-1993 school year, each recipient of 
financial assistance under Sec. 403.112, Sec. 403.113, or Sec. 403.116 
shall evaluate annually the effectiveness of the particular projects, 
services, and activities receiving assistance under a basic program 
listed in Sec. 403.60, or a special program listed in Sec. 403.130, 
unless the State board determines pursuant to Sec. 403.201(a)(3) that a 
broader evaluation is required. A recipient may conduct the evaluation 
required under this paragraph by evaluating either the entire population 
of participants or a representative sample of participants.
    (2) The annual evaluation must be based on the standards and 
measures developed by the State board in accordance with Secs. 403.201 
and 403.202, including any modifications made by the recipient in 
accordance with paragraph (b) of this section.
    (b)(1) Each recipient may modify the State standards and measures 
based on--
    (i) Economic, geographic, or demographic factors; or
    (ii) The characteristics of the populations to be served.
    (2) Modifications must conform to the assessment criteria contained 
in the State plan.
    (c) Each recipient, as part of the annual evaluation required in 
paragraph (a) of this section, and with the full participation of 
representatives of special populations, shall--
    (1) Identify and adopt strategies to overcome barriers that are 
resulting in lower rates of access to, or success in, vocational 
education programs for members of special populations; and
    (2) Evaluate the progress of individuals who are members of special 
populations.
    (d) Each recipient, as a part of the annual evaluation required in 
paragraph (a) of this section, shall evaluate its progress in providing 
vocational education students with strong experience in and 
understanding of all aspects of the industries the students are 
preparing to enter.
    (e) Each recipient may use funds awarded under a basic program 
listed in Sec. 403.60 or a special program listed in Sec. 403.130 to 
support the cost of conducting the evaluation required under paragraphs 
(a) through (d) of this section to the extent that the costs are--
    (1) Reasonable and necessary;
    (2) Related to the purposes for which the funds were awarded; and
    (3) Consistent with applicable requirements, such as the requirement 
in Sec. 403.196 to use funds awarded under title II of the Act to 
supplement, and not to supplant, State and local funds.

(Authority: 20 U.S.C. 2325(a) and 2327(a))



Sec. 403.192  What are the requirements for program improvement?

    (a) If, beginning not less than one year after implementing the 
program evaluation required in Sec. 403.191, a recipient determines, 
through its annual evaluation, that it is not making substantial 
progress in meeting the standards and measures developed by the State 
under Secs. 403.201 and 403.202, the recipient shall develop a plan for 
program improvement for the succeeding school year.
    (b) The plan must be developed in consultation with teachers, 
parents, and students concerned with or affected by the program, and 
must describe how the recipient will identify

[[Page 64]]

and modify projects, services, and activities receiving assistance under 
the programs listed in Secs. 403.60 and 403.130 that are in need of 
improvement, including a description of--
    (1) Vocational education and career development strategies designed 
to achieve progress in improving the effectiveness of the recipient's 
projects, services, and activities receiving assistance under the 
programs listed in Secs. 403.60 and 403.130 evaluated under 
Sec. 403.191(a)(1); and
    (2) If necessary, the strategies designed to improve supplementary 
services provided to individuals who are members of special populations.

(Authority: 20 U.S.C. 2327(b))

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

    Cross Reference: See 34 CFR 403.204.



Sec. 403.193  What are the information requirements regarding special
populations?

    (a)(1) Each local educational agency that receives funds under Title 
II of the Act shall provide to students who are members of special 
populations and their parents information concerning--
    (i) The opportunities available in vocational education;
    (ii) The requirements for eligibility for enrollment in those 
vocational education programs;
    (iii) Special courses that are available;
    (iv) Special services that are available;
    (v) Employment opportunities; and
    (vi) Placement.
    (2) Each area vocational education school or intermediate 
educational agency that receives funds under title II of the Act shall 
provide the information described in paragraph (a)(1) of this section to 
the students who are members of special populations and their parents in 
any local educational agency whose allocation was distributed in its 
entirety under Sec. 403.113 to the area vocational education school or 
intermediate educational agency.
    (b) The information described in paragraph (a)(1) of this section 
must be provided at least one year before the students enter, or are of 
an appropriate age for, the grade level in which vocational education 
programs are first generally available in the State, but in no case 
later than the beginning of the ninth grade.
    (c) Each eligible institution or consortium of eligible institutions 
that receives funds under Title II of the Act shall--
    (1) Provide the information described in paragraph (a)(1) of this 
section to each individual who requests information concerning, or seeks 
admission to, vocational education programs offered by the institution 
or consortium of eligible institutions; and
    (2) If appropriate, assist in the preparation of applications 
relating to that admission.
    (d) Information described under paragraph (a)(1) of this section 
must, to the extent practicable, be in a language and form that parents 
and students understand.
    (e) An eligible recipient is not required by this part to use non-
Federal funds to pay the cost of services and activities required by 
this section and Secs. 403.111(a)(2)(i) and (c)(3) and 403.190(b) unless 
this requirement is imposed by other applicable laws.

(Authority: 20 U.S.C. 2328(b) and (c) and 2342(a) and (c)(1)(C))

[57 FR 36735, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 403.194  What are the comparability requirements?

    (a) A local educational agency may receive an award of Federal funds 
under the State plan only if--
    (1) The local educational agency uses State and local funds to 
provide services in secondary schools or sites served with Federal funds 
awarded under the State plan that, taken as a whole, are at least 
comparable to those services being provided in secondary schools or 
sites that are not being served with Federal funds awarded under the 
State plan; or
    (2) In the event that the local educational agency serves all its 
secondary schools or sites with Federal funds awarded under the State 
plan, the local educational agency uses State and local funds to provide 
services that, taken as a whole, are substantially comparable in each 
secondary school or site.

[[Page 65]]


    Cross Reference: See appendix B to part 403.

    (b) The comparability requirements in paragraph (a) of this section 
do not apply to--
    (1) A local educational agency with only one secondary school or 
site; or
    (2) A consortium composed of more than one local educational agency, 
except that, within a consortium, each local educational agency itself 
must meet the comparability requirements unless it is exempt under 
paragraph (b)(1) of this section.
    (c)(1) A local educational agency shall develop written procedures 
for complying with the comparability requirements in paragraph (a) of 
this section, including a process for demonstrating annually that State 
and local funds are used to provide services in served schools and sites 
that are at least comparable to the services provided with State and 
local funds in schools or sites in the local educational agency that are 
not served with funds awarded under the State plan.
    (2) In reaching the determination as to whether comparability 
requirements in paragraph (a) of this section were met, the local 
educational agency's written procedures--
    (i) Do not have to take into account unpredictable changes in 
student enrollment or personnel assignments that occur after the 
beginning of a school year; and
    (ii) May not take into account any State and local funds spent in 
carrying out the following types of programs:
    (A) Special local programs designed to meet the educational needs of 
educationally deprived children, including compensatory education for 
educationally deprived children, that were excluded in the preceding 
fiscal year from comparability determinations under section 
1018(d)(1)(B) of chapter 1 (20 U.S.C. 2728(d)(1)(B)).
    (B) Bilingual education for children of limited English proficiency.
    (C) Special education for children with disabilities.
    (D) State phase-in programs that were excluded in the preceding 
fiscal year from comparability determinations under section 
1018(d)(2)(B) of chapter 1 (20 U.S.C. 2728(d)(2)(B)).

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2323(b)(19))



Sec. 403.195  What are the administrative cost requirements applicable
to local recipients?

    (a) Except as provided in paragraphs (b) and (c) of this section, 
each eligible recipient, including a State corrections educational 
agency, that receives an award under a basic program listed in 
Sec. 403.60 or a special program listed in Sec. 403.130, may use no more 
than the amount of funds from each award that is necessary and 
reasonable for the proper and efficient administration of the projects, 
services, and activities for which the award was made.
    (b) Each eligible recipient that receives an award under 
Sec. 403.112, Sec. 403.113, or Sec. 403.116 may use no more than five 
percent of those funds for administrative costs.
    (c) Each eligible partner that receives an award under the Business-
Labor-Education Partnership for Training Program may use no more funds 
under that award for administrative costs than the amounts prescribed in 
Sec. 403.173(b).

(Authority: 20 U.S.C. 2342(c); 2393(a)(1) and (c))



Sec. 403.196  What are the requirements regarding supplanting?

    (a) Funds made available under title II of the Act must be used to 
supplement, and to the extent practicable increase the amount of State 
and local funds that would in the absence of funds under title II of the 
Act be made available for the purposes specified in the State plan and 
the local application.
    (b) Notwithstanding paragraph (a) of this section and 
Sec. 403.32(a)(17), funds made available under title II of the Act may 
be used to pay the costs of vocational education services required by an 
individualized education program developed pursuant to sections 612(4) 
and 614(a)(5) of the IDEA (20 U.S.C. 1412(4) and 1414(a)(5)), in a 
manner consistent with section 614(a)(1) of that Act, and services 
necessary to meet the

[[Page 66]]

requirements of section 504 of the Rehabilitation Act of 1973 with 
respect to ensuring equal access to vocational education.
    (c) Any expenditures pursuant to paragraph (b) of this section must 
increase the amount of funds that would otherwise be available to meet 
the costs of an individualized education program or to comply with 
section 504 of the Rehabilitation Act of 1973.

(Authority: 20 U.S.C. 2468e(a)(1))



Sec. 403.197  What are the requirements for the use of equipment?

    (a) Equipment purchased with funds under Sec. 403.112, Sec. 403.113, 
or Sec. 403.116, when not being used to carry out the purposes of the 
Act for which it was purchased, may be used for other vocational 
education purposes if the acquisition of the equipment was reasonable 
and necessary for the purpose of conducting a properly designed project 
or activity under the Secondary School Vocational Education Program or 
the Postsecondary and Adult Vocational Education Program.
    (b) Equipment purchased with funds under Sec. 403.112, Sec. 403.113, 
or Sec. 403.116, when not being used to carry out the purposes of the 
Act for which it was purchased or other vocational education purposes, 
may be used for other instructional purposes if--
    (1) The acquisition of the equipment was reasonable and necessary 
for the purpose of conducting a properly designed project or activity 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program; and
    (2) The other use of the equipment is after regular school hours or 
on weekends.
    (c) The use of equipment under paragraphs (a) and (b) of this 
section must--
    (1) Be incidental to the use of that equipment for the purposes 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program for which it was 
purchased;
    (2) Not interfere with the use of that equipment for the purposes 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program for which it was 
purchased; and
    (3) Not add to the cost of using that equipment for the purposes 
under the Secondary School Vocational Education Program or the 
Postsecondary and Adult Vocational Education Program for which it was 
purchased.

(Authority: 20 U.S.C. 2342(c)(3))



Subpart I_What Are the Administrative Responsibilities of a State Under 
     the State Vocational and Applied Technology Education Program?



Sec. 403.200  What are the State's responsibilities for ensuring
compliance with the comparability requirements?

    (a) The State board may not make a payment under the Act to a local 
educational agency unless the LEA is in compliance with Sec. 403.194. As 
indicated in Sec. 403.194(a), an LEA may demonstrate its compliance with 
the comparability requirements by filing an appropriate assurance.
    (b) The State board shall monitor each local educational agency's 
compliance with the comparability requirements in Sec. 403.194.
    (c) If, after a local educational agency receives an award of 
Federal funds under the State plan, the local educational agency is 
found not to be in compliance with the comparability requirements, the 
State board shall--
    (1) Withhold all or a portion of the local educational agency's 
grant award, but not less than the amount or percentage by which the 
local educational agency failed to achieve comparability under the local 
educational agency's procedures established pursuant to Sec. 403.194(c); 
or
    (2) Require repayment of the amount or percentage by which the local 
educational agency failed to achieve comparability if the local 
educational agency is found not to be in compliance after the period of 
availability of the funds awarded has ended.

(Authority: 20 U.S.C. 2323(b)(19))

[[Page 67]]



Sec. 403.201  What are the State's responsibilities for developing
and implementing a statewide system of core standards and measures
of performance?

    (a)(1) Each State board receiving funds under the Act shall develop 
and implement a statewide system of core standards and measures of 
performance for secondary, postsecondary, and adult vocational education 
programs.
    (2) This system must--
    (i) Be developed and implemented by September 25, 1992; and
    (ii) Apply to all programs assisted under the Act.
    (3) The State board must determine whether a recipient of funds 
under Sec. 403.112, Sec. 403.113, or Sec. 403.116 must evaluate more 
than the particular projects, services, and activities receiving 
assistance under a basic program listed in Sec. 403.60 or a special 
program listed in Sec. 403.130 in order to carry out a valid, reliable, 
and otherwise meaningful evaluation of the effectiveness of these 
projects, services, and activities as required by Sec. 403.191(a)(1), 
using the standards and measures developed pursuant to paragraph (a)(1) 
of this section.
    (4) If a State board determines under paragraph (a)(3) of this 
section that a recipient must evaluate more than the particular 
projects, services, and activities receiving assistance under a basic or 
special program, the State board shall--
    (i) Determine whether the entire local vocational education 
program--or which projects, services, and activities in addition to the 
ones assisted under a basic or special program--must be evaluated to 
assess the effectiveness of the particular projects, services, and 
activities receiving assistance under a basic program or a special 
program; and
    (ii) Require a recipient to conduct an evaluation consistent with 
the State board's determination under paragraph (a)(4)(i) of this 
section.
    (b) To assist in the development and implementation of the Statewide 
system addressed in paragraph (a) of this section, the State board shall 
appoint a State Committee of Practitioners (Committee), as prescribed in 
34 CFR 400.6.
    (c) The State board shall convene the Committee on a regular basis 
to review, comment on, and propose revisions to the State board's draft 
proposal for a system of core standards and measures of performance for 
vocational education programs assisted under the Act.
    (d) To assist the Committee in formulating recommendations for 
modifying standards and measures of performance, the State board shall 
provide the Committee with information concerning differing types of 
standards and measures including--
    (1) The advantages and disadvantages of each type of standard or 
measure; and
    (2) Instances in which those standards and measures--
    (i) Have been effective; and
    (ii) Have not been effective.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2325(a) and (d))



Sec. 403.202  What must each State's system of core standards
and measures of performance include?

    (a) The statewide system of core standards and measures of 
performance for vocational education programs must include--
    (1) Measures of learning and competency gains, including student 
progress in the achievement of basic and more advanced academic skills;
    (2) One or more measures of the following:
    (i) Student competency attainment.
    (ii) Job or work skill attainment or enhancement including student 
progress in achieving occupational skills necessary to obtain employment 
in the field for which the student has been prepared, including 
occupational skills in the industry the student is preparing to enter.
    (iii) Retention in school or completion of secondary school or its 
equivalent.
    (iv) Placement into additional training or education, military 
service, or employment;
    (3) Incentives or adjustments that are--
    (i) Designed to encourage service to targeted groups or special 
populations; and

[[Page 68]]

    (ii) Developed for each student, and, if appropriate, consistent 
with the student's individualized education program developed under 
section 614(a)(5) of the IDEA; and
    (4) Procedures for using existing resources and methods developed in 
other programs receiving Federal assistance.
    (b) In developing the standards and measures included in the system 
developed under paragraph (a) of this section, the State board shall 
take into consideration and shall provide, to the extent appropriate, 
for consistency with--
    (1) Standards and measures developed under job opportunities and 
basic skills training programs established and operated under a plan 
approved by the Secretary of Health and Human Services that meets the 
requirements of section 402(a)(19) of the Social Security Act (42 U.S.C. 
687); and
    (2) Standards prescribed by the Secretary of Labor under section 106 
of the JTPA.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

    Cross Reference: See 34 CFR 400.6.



Sec. 403.203  What are the State's responsibilities for a State
assessment?

    (a) Each State board receiving assistance under the Act shall 
conduct an assessment of the quality of vocational education programs 
throughout the State using measurable objective criteria.
    (b) In developing the assessment criteria, the State board shall--
    (1) Consult with representatives of the groups described in 34 CFR 
400.6(c); and
    (2) Use information gathered by the National Occupational 
Information Coordinating Committee and, if appropriate, other 
information.
    (c) Each State board shall--
    (1) Develop assessment criteria no later than the beginning of the 
1991-1992 school year; and
    (2) Widely disseminate those criteria.
    (d) Assessment criteria must include at least the following factors, 
but may include others:
    (1) Integration of academic and vocational education.
    (2) Sequential courses of study leading to both academic and 
occupational competencies.
    (3) Increased student work skill attainment and job placement.
    (4) Increased linkages between secondary and postsecondary 
educational institutions.
    (5) Instruction and experience, to the extent practicable, in all 
aspects of an industry the students are preparing to enter.
    (6) The ability of the eligible recipients to meet the needs of 
special populations with respect to vocational education.
    (7) Raising the quality of vocational education programs in schools 
with a high concentration of poor and low-achieving students.
    (8) The relevance of programs to the workplace and to the 
occupations for which students are to be trained, and the extent to 
which those programs reflect a realistic assessment of current and 
future labor market needs, including needs in areas of emerging 
technologies.
    (9) The ability of the vocational curriculum, equipment, and 
instructional materials to meet the demands of the work force.
    (10) Basic and higher order current and future workplace 
competencies that will reflect the hiring needs of employers.
    (11) The capability of vocational education programs to meet the 
needs of individuals who are members of special populations.
    (12) Other factors considered appropriate by the State board.
    (e) The assessment must include an analysis of--
    (1) The relative academic, occupational, training, and retraining 
needs of secondary, adult, and postsecondary students; and
    (2) The capability of vocational education programs to provide 
vocational education students, to the extent practicable, with--
    (i) Strong experience in, and understanding of, all aspects of the 
industry the students are preparing to enter (including planning, 
management, finances, technical and production skills, underlying 
principles of technology, labor and community issues,

[[Page 69]]

and health, safety, and environmental issues); and
    (ii) Strong development and use of problem-solving skills and basic 
and advanced academic skills (including skills in the areas of 
mathematics, reading, writing, science, and social studies) in a 
technological setting.
    (f)(1) Each State board shall complete the initial assessment 
required by paragraph (a) of this section before March 25, 1991, and, 
therefore, at least six months prior to the required submission of a new 
State plan to the Secretary.
    (2) Each State board shall conduct an assessment under this section 
prior to the submission of each new State plan to the Secretary.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2323(a)(3), (b)(3)(B), and 2326)



Sec. 403.204  What are the State's responsibilities for program 
evaluation and improvement?

    (a) If, one year after an eligible recipient has implemented its 
program improvement plan described in Sec. 403.192, the State finds that 
the eligible recipient has not made sufficient progress in meeting the 
standards and measures developed as required by Secs. 403.201 and 
403.202, the State shall work jointly with the recipient and with 
teachers, parents, and students concerned with or affected by the 
program, to develop a joint plan for program improvement.
    (b) Each joint plan required by paragraph (a) of this section must 
contain--
    (1) A description of the technical assistance and program activities 
the State will provide to enhance the performance of the eligible 
recipient;
    (2) A reasonable timetable to improve school performance under the 
plan;
    (3) A description of vocational education strategies designed to 
improve the performance of the program as measured by the local 
evaluation; and
    (4) If necessary, a description of strategies designed to improve 
supplementary services provided to individuals who are members of 
special populations.
    (c) The State, in conjunction with the eligible recipient, shall 
annually review and revise the joint plan developed under paragraph (a) 
of this section and provide appropriate assistance until the recipient 
sustains fulfillment of State and local standards and measures developed 
under Secs. 403.201 and 403.202 for more than one year.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2327(c), (d))



Sec. 403.205  What are the State's responsibilities for members 
of special populations?

    The State board shall--
    (a) Establish effective procedures, including an expedited appeals 
procedure, by which students who are members of special populations and 
their parents, teachers, and concerned area residents will be able to 
participate directly in State and local decisions that influence the 
character of programs under the Act affecting their interests; and
    (b) Provide technical assistance and design procedures necessary to 
ensure that those individuals referred to in paragraph (a) of this 
section are given access to the information needed to use those 
procedures.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2328(d))



Sec. 403.206  What are the State's responsibilities regarding a State
occupational information coordinating committee?

    (a) A State that receives funds under the Act shall establish a 
State occupational information coordinating committee composed of 
representatives of the State board, the State employment security 
agency, the State economic development agency, the State job training 
coordinating council, and the agency administering the vocational 
rehabilitation program.
    (b) With funds made available to it by the National Occupational 
Information Coordinating Committee, the State occupational information 
coordinating committee shall--
    (1) Implement an occupational information system in the State that 
will

[[Page 70]]

meet the common needs for the planning for, and the operation of, 
programs of the State board assisted under the Act and of the 
administering agencies under the JTPA; and
    (2) Use the occupational information system to implement a career 
information delivery system.

(Authority: 20 U.S.C. 2422(b))



Sec. 403.207  What are the State's responsibilities to the National
Center or Centers for Research in Vocational Education?

    A State shall forward to the National Center for Research in 
Vocational Education a copy of an abstract for each new research, 
curriculum development, or personnel development project it supports, 
and the final report on each project.

(Authority: 20 U.S.C. 2404(c))



Sec. 403.208  What are the requirements regarding supplanting?

    (a) The State board is subject to the prohibition against 
supplanting in Sec. 403.196.
    (b) The State board shall monitor each eligible recipient's 
compliance with the supplanting requirements in Sec. 403.196.

(Authority: 20 U.S.C. 2468e(a)(1))



    Sec. Appendix A to Part 403--Examples for 34 CFR 403.111(a) and 
                              403.111(c)(3)

    Illustration of providing full participation under 34 CFR 
403.111(a). An educationally disadvantaged student is enrolled in a 
course that is part of a vocational education program and is having 
trouble understanding a math concept (e.g., negative numbers) necessary 
to succeed in the course. To ensure the student's full participation in 
the course, a local educational agency may use funds awarded under 
Sec. 403.112 as needed to provide tutoring in negative numbers to enable 
the student to understand the concept well enough to complete the 
vocational education course.
    Illustrations of providing equitable participation under 34 CFR 
403.111(c)(3).

    Example 1: An area vocational education school conducts an informal 
meeting to provide the information required in Sec. 403.193(a) regarding 
the area vocational education school's vocational education programs, to 
parents of students who are members of special populations in a local 
educational agency whose allocation was distributed to the area 
vocational education school under Sec. 403.113. The area vocational 
education school conducts the meeting at a time and in a location 
convenient for these parents and students. At the meeting, the area 
vocational education school provides a staff person to assist students 
or their parents to complete any forms necessary to enroll in the area 
vocational education school's vocational education program.
    Example 2: A hearing-impaired student in a local educational agency 
could participate in the vocational education program only if an 
interpreter is provided for that student. The local educational agency 
cannot refuse to admit the student because of the need for an 
interpreter.



Sec. Appendix B to Part 403--Examples for 34 CFR 403.194--Comparability 
                              Requirements

    Methods by which a local educational agency can demonstrate its 
compliance with the comparability requirements in 34 CFR 403.194(a) 
include the following:
    Example 1: The local educational agency files with the State board a 
written assurance that it has established and implemented--
    (a) A district-wide salary schedule;
    (b) A policy to ensure equivalence among secondary schools or sites 
in teachers, administrators, and auxiliary personnel; and
    (c) A policy to ensure equivalency among secondary schools or sites 
in the provision of curriculum materials and instructional supplies.

    Example 2: The local educational agency establishes and implements 
other procedures for ensuring comparability, such as the following:
    (a) Comparing the average number of students per instructional staff 
in each secondary school or site served with Federal funds awarded under 
the State plan with the average number of students per instructional 
staff in secondary schools or sites not served with Federal funds 
awarded under the State plan. A served school is considered comparable 
if its average does not exceed 110 percent of the average of schools or 
sites in the local educational agency not served with Federal funds 
awarded under the State plan; or
    (b) Comparing the average instructional staff salary expenditures 
per student in each secondary school or site served with Federal funds 
awarded under the State plan with the average instructional staff salary 
expenditure per student in schools or sites in the local educational 
agency not served with Federal funds awarded under the State plan. A 
served school is considered comparable if its average is at least 90 
percent of the average of schools or sites not served with Federal funds 
awarded under the State plan.

[[Page 71]]



PART 406_STATE-ADMINISTERED TECH-PREP EDUCATION PROGRAM--
Table of Contents



                            Subpart A_General

Sec.
406.1  What is the State-Administered Tech-Prep Education Program?
406.2  Who is eligible for an award?
406.3  What activities may the Secretary fund?
406.4  What regulations apply?
406.5  What definitions apply?

              Subpart B_How Does a State Apply for a Grant?

406.10  What must the State application contain?

        Subpart C_How Does the Secretary Make a Grant to a State?

406.20  How does the Secretary make allotments?
406.21  How does the Secretary make reallotments?

 Subpart D_What Conditions Must Be Met After a State Receives an Award?

406.30  Who is eligible to apply to a State for an award?
406.31  How does a State carry out the State-Administered Tech-Prep 
          Education Program?
406.32  What are the local application requirements?
406.33  What are the reporting requirements?

    Authority: 20 U.S.C. 2394-2394e, unless otherwise noted.

    Source: 57 FR 36763, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 406.1  What is the State-Administered Tech-Prep Education
Program?

    If the annual appropriation for tech-prep education exceeds 
$50,000,000, the State-Administered Tech-Prep Education Program provides 
financial assistance for--
    (a) Planning and developing four-year or six-year programs designed 
to provide a tech-prep education program leading to a two-year associate 
degree or certificate; and
    (b) Planning and developing, in a systematic manner, strong, 
comprehensive links between secondary schools and postsecondary 
educational institutions.

(Authority: 20 U.S.C. 2394(b))

[57 FR 36763, Aug. 14, 1992, as amended at 59 FR 38513, July 28, 1994]



Sec. 406.2  Who is eligible for an award?

    A State board of vocational education (State board) in the fifty 
States, Puerto Rico, the District of Columbia, or the Virgin Islands is 
eligible for an allotment under this program.

(Authority: 20 U.S.C. 2394a(b))



Sec. 406.3  What activities may the Secretary fund?

    (a) The Secretary makes allotments to State boards to provide 
funding for consortia described in Sec. 406.30 for tech-prep education 
projects.
    (b) A State board assists projects that must--
    (1) Be carried out under an articulation agreement between the 
members of the consortium;
    (2) Consist of the two years or four years of secondary school 
preceding graduation and two years of higher education, or an 
apprenticeship training program of at least two years following 
secondary instruction, with a common core of required proficiency in 
mathematics, science, communications, and technologies designed to lead 
to an associate degree or certificate in a specific career field;
    (3) Include the development of tech-prep education program curricula 
appropriate to the needs of the consortium participants;
    (4) Include in-service training for teachers that--
    (i) Is designed to train teachers to implement tech-prep education 
program curricula effectively;
    (ii) Provides for joint training for teachers from all participants 
in the consortium; and
    (iii) May provide training on weekends, evenings, or during the 
summer in the form of sessions, institutes, or workshops;
    (5) Include training activities for counselors designed to enable 
counselors to more effectively--
    (i) Recruit students for tech-prep education programs;

[[Page 72]]

    (ii) Ensure that students successfully complete tech-prep education 
programs; and
    (iii) Ensure that students are placed in appropriate employment;
    (6) Provide equal access to the full range of tech-prep education 
programs to individuals who are members of special populations, 
including the development of tech-prep education program services 
appropriate to the needs of these individuals so that these individuals 
have an opportunity to enter tech-prep education that is equal to the 
opportunity afforded to the general student population; and
    (7) Provide preparatory services that assist all populations to 
participate in tech-prep education programs.
    (c) A project assisted under this part may also--
    (1) Provide for the acquisition of tech-prep education program 
equipment; and
    (2) Acquire, as part of the planning activities of the tech-prep 
education program, technical assistance from State or local entities 
that have successfully designed, established, and operated tech-prep 
education programs.

(Authority: 20 U.S.C. 2394a, 2394b)

[57 FR 36763, Aug. 14, 1992, as amended at 59 FR 38514, July 28, 1994]



Sec. 406.4  What regulations apply?

    The following regulations apply to the State-Administered Tech-Prep 
Education Program:
    (a) The regulations in this part 406.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2394-2394e)



Sec. 406.5  What definitions apply?

    (a) The definitions in 34 CFR 400.4 apply to this part.
    (b) The following definitions also apply to this part:
    Articulation agreement means a commitment to a program designed to 
provide students with a non-duplicative sequence of progressive 
achievement leading to competencies in a tech-prep education program.
    Community college--
    (1) Has the meaning provided in 34 CFR 400.4 for the term 
Institution of higher education for an institution that provides not 
less than a two-year program that is acceptable for full credit toward a 
bachelor's degree; and
    (2) Includes tribally controlled community colleges.
    Institution of higher education includes an institution offering 
apprenticeship programs of at least two years beyond the completion of 
secondary school, and includes, in addition to the institutions covered 
by the definition of the term institution of higher education in 34 CFR 
400.4, a--
    (1) Proprietary institution of higher education;
    (2) Postsecondary vocational institution;
    (3) Department, division, or other administrative unit in a college 
or university that provides primarily or exclusively an accredited 
program of education in professional nursing and allied subjects leading 
to the degree of bachelor of nursing, or to be an equivalent degree, or 
to a graduate degree in nursing; and
    (4) Department, division, or other administrative unit in a junior 
college, community college, college, or university that provides 
primarily or exclusively an accredited two-year program of education in 
professional nursing and allied subjects leading to an associate degree 
in nursing or an equivalent degree.
    Tech-prep education program means a combined secondary and 
postsecondary program that--
    (1) Leads to an associate degree or two-year certificate;
    (2) Provides technical preparation in at least one field of 
engineering technology, applied science, mechanical, industrial, or 
practical art or trade, or agriculture, health, or business;
    (3) Builds student competence in mathematics, science, and 
communications (including through applied academics) through a 
sequential course of study; and
    (4) Leads to placement in employment.

(Authority: 20 U.S.C. 1088 and 2394e)

[[Page 73]]



              Subpart B_How Does a State Apply for a Grant?



Sec. 406.10  What must the State application contain?

    To receive a grant under this program, a State board shall submit an 
application to the Secretary at such time, in such manner, as the 
Secretary prescribes. The State board may submit an application along 
with the State plan submitted in accordance with 34 CFR 403.30. The 
application must include a description of--
    (a) The requirements for State board approval of funding of a local 
tech-prep education project, including--
    (1) Whether the State board intends to make awards on a competitive 
basis or on the basis of a formula; and
    (2) If a formula is to be used, a description of that formula;
    (b) How the State board will perform the following:
    (1) Approve applications based on their potential to create an 
effective tech-prep education program as described in Sec. 406.3(b).
    (2) Give special consideration to applicants that--
    (i) Provide for effective employment placement activities or 
transfer of students to four-year baccalaureate degree programs;
    (ii) Are developed in consultation with business, industry, labor 
unions, and institutions of higher education that award baccalaureate 
degrees; and
    (iii) Address effectively the issues of dropout prevention and re-
entry and the needs of minority youth of limited English proficiency, 
youth with disabilities, and disadvantaged youth;
    (3) Ensure an equitable distribution of assistance between urban and 
rural consortium participants;
    (c) How the State board will ensure that local recipients meet the 
requirements of this program; and
    (d) How activities under this program will be coordinated with other 
tech-prep education programs, services, and activities provided under 
the State plan.

(Approved by the Office of Management and Budget under Control No. 1830-
0029)

(Authority: 20 U.S.C. 2394c (b)-(e))

[57 FR 36763, Aug. 14, 1992, as amended at 59 FR 38514, July 28, 1994]



        Subpart C_How Does the Secretary Make a Grant to a State?



Sec. 406.20  How does the Secretary make allotments?

    The Secretary determines the amount of each State's allotment 
according to a formula in section 101(a)(2) of the Act.

(Authority: 20 U.S.C. 2394a(b)(1))



Sec. 406.21  How does the Secretary make reallotments?

    (a)(1) If the Secretary determines that any amount of a State's 
allotment under Sec. 406.20 will not be required for any fiscal year for 
carrying out the program under this part, the Secretary reallots those 
funds to one or more States that demonstrate a current need for 
additional funds and the ability to use them promptly and effectively 
upon reallotment.
    (2) The Secretary announces in the Federal Register the dates on 
which funds will be reallotted.
    (b)(1) No funds reallotted under paragraph (a) of this section may 
be used for any purpose other than the purposes for which they were 
appropriated.
    (2) Any amount reallotted to a State under paragraph (a) of this 
section remains available for obligation during the succeeding fiscal 
year and is deemed to be part of the State's allotment for the fiscal 
year in which the reallotted funds are obligated.

(Authority: 20 U.S.C. 2311(a) and (d) and 2394a(b)(1))

[[Page 74]]



 Subpart D_What Conditions Must Be Met After a State Receives
 an Award?



Sec. 406.30  Who is eligible to apply to a State for an award?

    (a) A State board shall provide subgrants or contracts to consortia 
between--
    (1) A local educational agency, intermediate educational agency, 
area vocational education school serving secondary school students, or 
secondary school funded by the Bureau of Indian Affairs; and
    (2) A nonprofit institution of higher education that--
    (i) Is qualified as an institution of higher education as defined in 
Sec. 406.5, including institutions receiving assistance under the 
Tribally Controlled Community College Assistance Act of 1978 (25 U.S.C. 
1801 et seq.);
    (ii) Is not prohibited from receiving assistance under part B of the 
Higher Education Act of 1965 pursuant to the provisions of section 
435(a)(3) of that Act; and
    (iii) Offers a two-year associate degree program, a two-year 
certificate program, or a two-year apprenticeship training program that 
follows secondary instruction; or
    (3) A proprietary institution of higher education that--
    (i) Is qualified as an institution of higher education as defined in 
Sec. 406.5;
    (ii) Is not subject to a default management plan required by the 
Secretary; and
    (iii) Offers a two-year associate degree program.
    (b) A consortia must include at least one entity from paragraph 
(a)(1) of this section and at least one entity from either paragraph 
(a)(2) or (a)(3) of this section, and may include more than one entity 
from each group.

(Authority: 20 U.S.C. 2394a)



Sec. 406.31  How does a State carry out the State-Administered 
Tech-Prep Education Program?

    (a) A State board carries out the program by--
    (1) Providing State administration of its grant; and
    (2) Awarding subgrants or contracts to eligible consortia on a 
competitive basis or on the basis of a formula determined by the State 
board.
    (b) A State board may use funds reserved under 34 CFR 403.180(b)(3) 
to provide support for the State-administered Tech-Prep Education 
Program.
    (c) A State board may use no more than the amount of funds from its 
award under this part that is necessary and reasonable for--
    (1) The proper and efficient administration of this program; and
    (2) Technical assistance to promote or enhance the quality and 
effectiveness of the State's tech-prep education program.

(Authority: 20 U.S.C. 2331(c)(2); 2394a(b))



Sec. 406.32  What are the local application requirements?

    (a) Each consortium that desires to receive an award shall submit an 
application to the State board.
    (b) The application must be submitted at the time and contain the 
information prescribed by the State board, and must contain--
    (1) An articulation agreement between the participants in the 
consortium; and
    (2) A three-year plan for the development and implementation of 
activities under this part.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2394c(a)-(b))



Sec. 406.33  What are the reporting requirements?

    The State board shall, in conjunction with recipients of subgrants 
and contracts, with respect to assistance received under this part, 
submit to the Secretary reports as may be required by the Secretary to 
ensure that grantees are complying with the requirements of this part.

(Approved by the Office of Management and Budget under Control No. 1830-
0030)

(Authority: 20 U.S.C. 2394a-2394e)

[[Page 75]]



PART 410_TRIBALLY CONTROLLED POSTSECONDARY VOCATIONAL INSTITUTIONS
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
410.1  What is the Tribally Controlled Postsecondary Vocational 
          Institutions Program?
410.2  Who is eligible for an award?
410.3  What activities may the Secretary fund?
410.4  What regulations apply?
410.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

410.10  What must an application contain?

             Subpart C_How Does the Secretary Make an Award?

410.20  How does the Secretary apply the selection criteria in 
          Sec. 410.21?
410.21  What selection criteria does the Secretary use for institutional 
          support grants?
410.22  What additional factors does the Secretary consider?
410.23  How does the Secretary select grantees for institutional support 
          grants?
410.24  How does the Secretary award additional grants?

          Subpart D_What Conditions Must Be Met After an Award?

410.30  What expenses are allowable under an institutional support 
          grant?
410.31  What other provisions apply to this program?

    Authority: 20 U.S.C. 2397-2397h, unless otherwise noted.

    Source: 57 FR 36773, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 410.1  What is the Tribally Controlled Postsecondary Vocational
Institutions Program?

    The Tribally Controlled Postsecondary Vocational Institutions 
Program provides grants for the operation and improvement of tribally 
controlled postsecondary vocational institutions to ensure continued and 
expanded educational opportunities for Indian students, and to allow for 
the improvement and expansion of the physical resources of those 
institutions.

(Authority: 20 U.S.C. 2397 and 2397c)



Sec. 410.2  Who is eligible for an award?

    A tribally controlled postsecondary vocational institution is 
eligible for assistance under this part if it--
    (a) Is governed by a board of directors or trustees, a majority of 
whom are Indians;
    (b) Demonstrates adherence to stated goals, a philosophy, or a plan 
of operation that fosters individual Indian economic and self-
sufficiency opportunity, including programs that are appropriate to 
stated tribal goals of developing individual entrepreneurships and self-
sustaining economic infrastructures on reservations;
    (c) Has been in operation for at least three years;
    (d) Holds accreditation with or is a candidate for accreditation by 
a nationally recognized accrediting authority for postsecondary 
vocational education; and
    (e) Enrolls the full-time equivalency of not fewer than 100 
students, of whom a majority are Indians.

(Authority: 20 U.S.C. 2397b)



Sec. 410.3  What activities may the Secretary fund?

    The Secretary provides grants for basic support for the education 
and training of Indian students, including--
    (a) Training costs;
    (b) Educational costs;
    (c) Equipment costs;
    (d) Administrative costs; and
    (e) Costs of operation and maintenance of the institution.

(Authority: 20 U.S.C. 2397a)



Sec. 410.4  What regulations apply?

    The following regulations apply to the Tribally Controlled 
Postsecondary Vocational Institutions Program:
    (a) The regulations in this part 410.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2397-2397h)

[[Page 76]]



Sec. 410.5  What definitions apply?

    (a) The definitions in 34 CFR 400.4 apply to this part, except for 
the definition of the term Act.
    (b) The following definitions also apply to this part:
    Act means the Tribally Controlled Vocational Institutions Support 
Act of 1990.
    Indian means a person who is a member of an Indian tribe.
    Indian student count means a number equal to the total number of 
Indian students enrolled in each tribally controlled vocational 
institution, determined as follows:
    (1) The registrations of Indian students as in effect on October 1 
of each year.
    (2) Credits or clock hours toward a certificate earned in classes 
offered during a summer term must be counted toward the computation of 
the Indian student count in the succeeding fall term.
    (3) Credits or clock hours toward a certificate earned in classes 
during a summer term must be counted toward the computation of the 
Indian student count if the institution at which the student is in 
attendance has established criteria for the admission of the student on 
the basis of the student's ability to benefit from the education or 
training offered. The institution is presumed to have established those 
criteria if the admission procedures for those studies include 
counseling or testing that measures the student's aptitude to 
successfully complete the course in which the student has enrolled. 
Credit earned by the student for purposes of obtaining a high school 
degree or its equivalent may not be counted toward the computation of 
the Indian student count.
    (4) Indian students earning credits in any continuing education 
program of a tribally controlled vocational institution must be included 
in determining the sum of all credit or clock hours.
    (5) Credits or clock hours earned in a continuing education program 
must be converted to the basis that is in accordance with the 
institution's system for providing credit for participation in those 
programs.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaskan native village or 
regional or village corporation as defined in or established pursuant to 
the Alaskan Native Claims Settlement Act (43 U.S.C. 1601 et seq.), that 
is federally recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians.
    Tribally controlled postsecondary vocational institution means an 
institution of higher education that is formally controlled, or has been 
formally sanctioned or chartered by the governing body of an Indian 
tribe or tribes, and that offers technical degrees or certificate 
granting programs. This term does not include an institution that is a 
tribally controlled community college as defined in 34 CFR 400.4. (See 
Cong. Rec. S4116 (daily ed. April 5, 1990) (Statement of Senator 
Bingaman); Cong. Rec. H1708 (daily ed. May 9, 1989) (Statement of Rep. 
Richardson)).

(Authority: 20 U.S.C. 2397h and 25 U.S.C. 1801 (1) and (2))



               Subpart B_How Does One Apply for an Award?



Sec. 410.10  What must an application contain?

    (a) An application for a grant under the Tribally Controlled 
Postsecondary Vocational Institutions Program must include the 
following:
    (1) Documentation showing that the institution is eligible according 
to the requirements in Sec. 410.2.
    (2) A description of the fiscal control and fund accounting 
procedures to be used for all funds received under this program that 
will allow the Secretary to monitor expenditures and the Education 
Department Inspector General, the U.S. Comptroller General, or an 
independent non-Federal auditor to audit the institution's programs.
    (3) The institution's operating expenses for the preceding fiscal 
year, including allowable expenses listed in Sec. 410.30.
    (4) The institution's Indian student count.
    (b) An application for an institutional support grant must also 
contain a comprehensive development plan addressing the following:

[[Page 77]]

    (1) The institutional mission statement, i.e., a broad statement of 
purpose, that identifies the institution's distinguishing 
characteristics, including the characteristics of the students the 
institution serves and plans to serve and the programs of study it 
offers and proposes to offer.
    (2) Data for the past three academic years reflecting the number and 
required qualifications of the teaching and administrative staff, the 
number of students enrolled, attendance rates, dropout rates, graduation 
rates, rate of job placement or college enrollment after graduation, and 
the most significant scholastic problems affecting the student 
population.
    (3) A description of how the institution is responsive to the 
current and projected labor market needs in its geographic area, 
including the institution's plans for placement of students.
    (4) Assumptions concerning the institutional environment, the 
potential number of students to be served, enrollment trends, and 
economic factors that could affect the institution.
    (5) Major problems or deficiencies that inhibit the institution from 
realizing its mission.
    (6) Long-range and short-range goals that will chart the growth and 
development of the institution and address the problems identified under 
paragraph (b)(5) of this section.
    (7) Measurable objectives related to reaching each goal.
    (8) Time-frames for achieving the goals and objectives described in 
paragraphs (b)(6) and (7) of this section.
    (9) Priorities for implementing improvements concerning 
instructional and student support, capital expenditures, equipment, and 
other priority areas.
    (10) Major resource requirements necessary to achieve the 
institution's goals and objectives, including personnel, finances, 
equipment, and facilities.
    (11) A detailed budget identifying the costs to be paid with a grant 
under this program and resources available from other Federal, State, 
and local sources that will be used to achieve the institution's goals 
and objectives. Budget and cost information must be sufficiently 
detailed to enable the Secretary to determine the amount of payments 
pursuant to section 386(b)(2) of the Act. The statement must include 
information on allowable expenses listed in Sec. 410.30.
    (12) Strategies and resources for objectively evaluating the 
institution's progress towards, and success in, achieving its goals and 
objectives.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2397b, 2397c(a), 2397d(b)(2)(B), and 2397f)



             Subpart C_How Does the Secretary Make an Award?



Sec. 410.20  How does the Secretary apply the selection criteria
in Sec. 410.21?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 410.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 410.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion in Sec. 410.21 is indicated in parentheses 
after the heading for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 410.21.

(Authority: 20 U.S.C. 2397-2397h)



Sec. 410.21  What selection criteria does the Secretary use for 
institutional support grants?

    The Secretary uses the following criteria to evaluate an application 
for an institutional support grant:
    (a) Institutional goals and objectives. (10 points) The Secretary 
reviews each application to determine the extent to which the 
applicant's current and future institutional goals and objectives are--
    (1) Realistic and defined in terms of measurable results; and
    (2) Directly related to the problems to be solved.
    (b) Comprehensive development plan. (25 points) The Secretary 
reviews each application to determine the extent to

[[Page 78]]

which the plan is effectively designed to meet the applicant's current 
and future institutional goals and objectives, including instructional 
and student support needs, and equipment and capital requirements.
    (c) Implementation strategy. (20 points) The Secretary reviews each 
application to determine the extent to which an applicant's 
implementation strategy--
    (1) For each major activity funded under this program, is 
comprehensive and likely to be effective, taking into account the 
applicant's past performance and the data for the past three academic 
years reflecting the number and required qualifications of the teaching 
and administrative staff, the number of students enrolled, attendance 
rates, dropout rates, graduation rates, rate of job placement or college 
enrollment after graduation, and the most significant scholastic 
problems affecting the student population;
    (2) Includes a realistic timetable for each such activity; and
    (3) Includes a staff management plan likely to ensure effective 
administration of the project activities.
    (d) Budget and cost effectiveness. (20 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is adequate to support the proposed activities to be 
funded under this program, including capital expenditures and 
acquisition of equipment, if applicable;
    (2) Costs are necessary and reasonable in relation to similar 
activities the institution carried out in previous years; and
    (3) The budget narrative justifies the expenditures.
    (e) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the evaluation plan the 
institution plans to use to determine its progress towards, and success 
in, achieving its goals and objectives, including the extent to which--
    (1) The plan identifies, at a minimum, types of data to be 
collected, expected outcomes, and how those outcomes will be measured;
    (2) The methods of evaluation are appropriate and, to the extent 
possible, are objective and produce data that are quantifiable; and
    (3) The methods of evaluation provide periodic data that can be used 
for ongoing program improvement.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2397-2397h)



Sec. 410.22  What additional factors does the Secretary consider?

    (a) After evaluating applications according to the criteria in 
Sec. 410.21 and consulting, to the extent practicable, with boards of 
trustees and the tribal governments chartering the institutions being 
considered, the Secretary determines whether the most highly rated 
applications are equitably distributed among Indian tribes.
    (b) The Secretary may select other applications for funding if doing 
so would improve the distribution of projects among Indian tribes.
    (c) In addition to the criteria in Sec. 410.21, the Secretary 
considers whether funding a particular applicant duplicates an effort 
already being made.

(Authority: 20 U.S.C. 2397-2397h)



Sec. 410.23  How does the Secretary select grantees for institutional
support grants?

    (a) The Secretary selects at least two eligible applicants for 
funding.
    (b) If only one or two applicants are eligible, the Secretary 
selects each eligible applicant. The amount of each grant is determined 
by the quality of the application, based on the selection criteria in 
Sec. 410.22, and the respective needs of the applicants.
    (c) If there are more than two eligible applicants, the Secretary 
ranks each application using the selection criteria in Sec. 410.22. The 
Secretary funds two or more applicants. The number of grants made and 
the amount of each grant is determined by taking into account the 
quality of the applications and the respective needs of the applicants.
    (d) For fiscal years subsequent to the first year of funding, the 
Secretary follows the procedure in paragraphs (a) through (c) of this 
section, except that if appropriations for that fiscal year are not 
sufficient to pay in full the total amount that approved applicants are 
eligible to receive, the Secretary

[[Page 79]]

allocates the available grant amounts as required by section 388(a) of 
the Act.

(Authority: 20 U.S.C. 2397c(b))



Sec. 410.24  How does the Secretary award additional grants?

    If funds remain after providing grants to all eligible institutions, 
the Secretary makes awards as follows:
    (a) The Secretary allocates funds to institutions receiving their 
first grant under this part in an amount equal to the training equipment 
costs necessary to implement training programs.
    (b) If funds remain after the Secretary makes awards under paragraph 
(a) of this section, the Secretary reviews training equipment needs at 
each institution receiving assistance under this part at the end of the 
five-year period beginning on the first day of the first year for which 
the institution received a grant under this part, and provides 
allocations for other training equipment needs if it is demonstrated by 
the institution that its training equipment has become obsolete for its 
purposes, or that the development of other training programs is 
appropriate.

(Authority: 20 U.S.C. 2397d(d))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 410.30  What expenses are allowable under an institutional
support grant?

    An institutional support grant may only be used to pay expenses 
associated with the following:
    (a) The maintenance and operation of the program, including--
    (1) Development costs;
    (2) Costs of basic and special instruction, including special 
programs for individuals with disabilities and academic instruction;
    (3) Materials;
    (4) Student costs;
    (5) Administrative expenses;
    (6) Boarding costs;
    (7) Transportation;
    (8) Student services;
    (9) Day care and family support programs for students and their 
families, including contributions to the costs of education for 
dependents; and
    (10) Training equipment costs necessary to implement training 
programs.
    (b) Capital expenditures, including operations and maintenance, 
minor improvements and repair, and physical plant maintenance costs.
    (c) Costs associated with repair, upkeep, replacement, and upgrading 
of instructional equipment.

(Authority: 20 U.S.C. 2397d(a), (d))



Sec. 410.31  What other provisions apply to this program?

    (a) Except as specifically provided in the Act, eligibility for 
assistance under this part may not preclude any tribally controlled 
postsecondary vocational institution from receiving Federal financial 
assistance under any program authorized under the Higher Education Act 
of 1965 (20 U.S.C. 1001 et seq.) or any other applicable program for the 
benefit of institutions of higher education or vocational education.
    (b) No tribally controlled postsecondary vocational institution for 
which an Indian tribe has designated a portion of the funds appropriated 
for the tribe from funds appropriated under the Act of November 2, 1921 
(25 U.S.C. 13) may be denied a contract for that portion under the 
Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et 
seq.) (except as provided in that Act), or denied appropriate contract 
support to administer that portion of the appropriated funds.

(Authority: 20 U.S.C. 2397e)



PART 411_VOCATIONAL EDUCATION RESEARCH PROGRAM--Table of Contents



                            Subpart A_General

Sec.
411.1  What is the Vocational Education Research Program?
411.2  Who is eligible for an award?
411.3  What activities may the Secretary fund?
411.4  What regulations apply?
411.5  What definitions apply?

Subpart B [Reserved]

[[Page 80]]

             Subpart C_How Does the Secretary Make a Grant?

411.20  How does the Secretary evaluate an application?
411.21  What selection criteria does the Secretary use?
411.22  What additional factors may the Secretary consider?
411.23  How does the Secretary evaluate unsolicited applications?
411.24  How does the Secretary select an unsolicited application for 
          funding?

    Authority: 20 U.S.C. 2401 and 2402, unless otherwise noted.

    Source: 57 FR 36776, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 411.1  What is the Vocational Education Research Program?

    The Vocational Education Research Program is designed to--
    (a) Improve access to vocational educational programs for 
individuals with disabilities, individuals who are disadvantaged, men 
and women who are entering nontraditional occupations, adults who are in 
need of retraining, single parents, displaced homemakers, single 
pregnant women, individuals with limited English proficiency, and 
individuals who are incarcerated in correctional institutions;
    (b) Support research and development activities that make the United 
States more competitive in the world economy by developing more fully 
the academic and occupational skills of all segments of the population 
by concentrating resources on improving educational programs leading to 
academic and occupational skill competencies needed to work in a 
technologically advanced society;
    (c) Improve the competitive process by which research projects are 
awarded;
    (d) Encourage the dissemination of findings of research projects 
assisted under the Act to all States; and
    (e) Support research activities that are readily applicable to the 
vocational education setting and are of practical application to 
vocational education administrators, counselors, instructors, and others 
involved in vocational education.

(Authority: 20 U.S.C. 2401)



Sec. 411.2  Who is eligible for an award?

    (a) Any individual or public or private agency, organization, or 
institution may apply for an award under this part.
    (b) Any individual researcher, community college, State advisory 
council, or State or local educator may submit an unsolicited research 
application.

(Authority: 20 U.S.C. 2402(a), (b))



Sec. 411.3  What activities may the Secretary fund?

    The Secretary may directly, or through grants, cooperative 
agreements, or contracts, conduct applied research on aspects of 
vocational education that are specially related to the Act, including 
the following:
    (a) Applied research on--
    (1) Effective methods for providing quality vocational education to 
individuals with disabilities, disadvantaged individuals, men and women 
in nontraditional fields, adults, single parents, displaced homemakers, 
single pregnant women, individuals with limited English proficiency, and 
individuals who are incarcerated in correctional institutions;
    (2) The development and implementation of performance standards and 
measures that fit within the needs of State boards of vocational 
education or eligible recipients as defined in 34 CFR 400.4 in carrying 
out the provisions of the Act and on the relationship of those standards 
and measures to the data system established under section 421 of the 
Act. Research may include an evaluation of existing performance 
standards and measures and dissemination of that information to State 
boards of vocational education and eligible recipients;
    (3) Strategies for coordinating local, State, and Federal vocational 
education, employment training, and economic development programs to 
maximize their efficacy and for improving worker training and 
retraining;
    (4) The constructive involvement of the private sector in public 
vocational education;
    (5) Successful methods of reinforcing and enhancing basic and more 
advanced academic and problem-solving skills in vocational settings;

[[Page 81]]

    (6) Successful methods for providing students, to the maximum extent 
practicable, with experience in and understanding of all aspects of the 
industry those students are preparing to enter; and
    (7) The development of effective methods for providing quality 
vocational education to individuals with limited English proficiency, 
including research related to bilingual vocational training.
    (b) An evaluation of the use of performance standards and measures 
under the Act and the effect of those standards and measures on the 
participation of students in vocational education programs and on the 
outcomes of students in those programs, especially students who are 
members of special populations as defined in 34 CFR 400.4.

(Authority: 20 U.S.C. 2402(a))



Sec. 411.4  What regulations apply?

    The following regulations apply to the Vocational Education Research 
Program:
    (a) The regulations in this part 411.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2401 and 2402)



Sec. 411.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2401 and 2402)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make a Grant?



Sec. 411.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 411.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of the 
section, based on the criteria in Sec. 411.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 411.21.
    (e) The Secretary awards five points to applications submitted by 
public or private postsecondary institutions.

(Authority: 20 U.S.C. 2402)



Sec. 411.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) National need. (20 points) The Secretary reviews each 
application to determine the extent to which the project would make a 
contribution of national significance, as measured by such factors as--
    (1) The need for the project in relation to any program priority 
announced in the Federal Register; and
    (2) The likelihood that the project will make an important 
contribution to vocational education.
    (b) Plan of operation. (25 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) High quality in the design of the project;
    (2) An effective plan of management that ensures proper and 
efficient administration of the project;
    (3) A clear description of how the objectives of the project relate 
to the purposes of the program;
    (4) The quality of the applicant's plans to use its resources and 
personnel to achieve each objective; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.
    (c) Key personnel. (15 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used in the project;

[[Page 82]]

    (iii) The appropriateness of the time that each one of the key 
personnel, including the project director, will commit to the project; 
and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine personnel qualifications under paragraphs (c)(1)(i) 
and (ii) of this section, the Secretary considers--
    (i) Experience and training in fields related to the objectives of 
the project;
    (ii) Experience and training in project management; and
    (iii) Any other qualifications that pertain to the quality of the 
project.
    (d) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget for the project is adequate to support the project 
activities; and
    (2) Costs are reasonable and necessary in relation to the objectives 
of the project.
    (e) Evaluation plan. (5 points) The Secretary reviews each 
application to determine the quality of the evaluation plan for the 
project, including the extent to which the applicant's methods of 
evaluation--
    (1) Are clearly explained and appropriate to the project;
    (2) To the extent possible, are objective and produce data that are 
quantifiable;
    (3) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results;
    (4) If appropriate, identifies expected outcomes of the project 
participants and how those outcomes will be measured;
    (5) If appropriate, will provide a comparison between intended and 
observed results, and lead to the demonstration of a clear link between 
the observed results and the specific treatment of project participants; 
and
    (6) To the extent possible, include a third party evaluation.
    (f) Adequacy of resources. (5 points) The Secretary reviews each 
application to determine the adequacy of the resources that the 
applicant plans to devote to the project, including facilities, 
equipment, and supplies.
    (g) Dissemination plan. (5 points) The Secretary reviews each 
application to determine the quality of the dissemination plan for the 
project, including--
    (1) The extent to which the project is designed to yield outcomes 
that can be readily disseminated;
    (2) A clear description of the project outcomes; and
    (3) A detailed description of how information and materials will be 
disseminated, including--
    (i) Provisions for publicizing the project at the local, State, and 
national levels by conducting or delivering presentations at 
conferences, workshops, and other professional meetings and by preparing 
materials for journals articles, newsletters, and brochures;
    (ii) Provisions for demonstrating the methods and techniques used by 
the project to others interested in replicating these methods and 
techniques; and
    (iii) Provisions for assisting others to adopt and successfully 
implement the project or methods and techniques used by the project.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2402)



Sec. 411.22  What additional factors may the Secretary consider?

    After evaluating the applications according to the criteria in 
Sec. 411.21 the Secretary may select other than the most highly rated 
applications for funding if doing so would--
    (a) Improve the geographical distribution of projects funded under 
this program; or
    (b) Contribute to the funding of a variety of approaches for 
carrying out the activities under this part.

(Authority: 20 U.S.C. 2401 and 2402)



Sec. 411.23  How does the Secretary evaluate unsolicited applications?

    (a) At any time during a fiscal year, the Secretary may accept and 
consider

[[Page 83]]

for funding an unsolicited application that has not been submitted under 
a competition announced in the Federal Register for that fiscal year, if 
the project proposes activities described in Sec. 411.3.
    (b) Notwithstanding the provisions of 34 CFR 75.100, the Secretary 
may fund an unsolicited application without publishing an application 
notice in the Federal Register.
    (c) The Secretary may select an unsolicited application for funding 
in accordance with the procedures in Secs. 411.20(e) and 411.24.
    (d) The Secretary assigns the 15 points reserved under 
Sec. 411.20(b) as follows:
    (1) Ten points to the selection criterion in Sec. 411.21(a)--
national need.
    (2) Five points to the selection criterion in Sec. 411.21(b)--plan 
of operation.

(Authority: 20 U.S.C. 2402)



Sec. 411.24  How does the Secretary select an unsolicited application
for funding?

    (a) After evaluating an unsolicited research application on the 
basis of the criteria in Sec. 411.21, the Secretary compares that 
application to other unsolicited research applications the Secretary has 
received.
    (b) The Secretary may fund an unsolicited research application at 
any time during the fiscal year.

(Authority: 20 U.S.C. 2402)



PART 412_NATIONAL NETWORK FOR CURRICULUM COORDINATION IN VOCATIONAL
AND TECHNICAL EDUCATION--Table of Contents



                            Subpart A_General

Sec.
412.1  What is the National Network for Curriculum Coordination in 
          Vocational and Technical Education?
412.2  Who is eligible for an award?
412.3  What activities may the Secretary fund?
412.4  What is the National Network of Directors Council?
412.5  What regulations apply?
412.6  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

412.20  How does the Secretary evaluate an application?
412.21  What selection criteria does the Secretary use?

          Subpart D_What Conditions Must Be Met After an Award?

412.30  What additional activities must be carried out by Curriculum 
          Coordination Centers?
412.31  What existing dissemination systems must be used?

    Authority: 20 U.S.C. 2402(c), unless otherwise noted.

    Source: 57 FR 36778, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 412.1  What is the National Network for Curriculum Coordination 
in Vocational and Technical Education?

    The National Network for Curriculum Coordination in Vocational and 
Technical Education (Network) is a system of six curriculum coordination 
centers that disseminate information resulting from research and 
development activities carried out under the Act, in order to ensure 
broad access at the State and local levels to the information being 
disseminated.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.2  Who is eligible for an award?

    State and local educational agencies, postsecondary educational 
institutions, and other public and private agencies, organizations, and 
institutions are eligible for an award under this program.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.3  What activities may the Secretary fund?

    (a) The Secretary provides grants, cooperative agreements, or 
contracts to six regional curriculum coordination centers (CCCs).
    (b) Each CCC must--(1) Provide for national dissemination of 
information on effective vocational and technical education programs and 
materials, with particular attention to regional programs;
    (2) Be accessible by electronic means;

[[Page 84]]

    (3) Provide leadership and technical assistance in the design, 
development, and dissemination of curricula for vocational education;
    (4) Coordinate the sharing of information among the States with 
respect to vocational and technical education curricula;
    (5) Reduce duplication of effort in State activities for the 
development of vocational and technical education curricula; and
    (6) Promote the use of research findings with respect to vocational 
education curricula.
    (c) The six regional CCCs assisted with funds under this program 
must serve States according to the Department of Education's regional 
alignment as follows:
    (1) The Northeast Curriculum Coordination Center serves Connecticut, 
Maine, Massachusetts, New Hampshire, New Jersey, New York, Puerto Rico, 
Rhode Island, Vermont, and the Virgin Islands.
    (2) The Southeast Curriculum Coordination Center serves Alabama, 
Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, 
and Tennessee.
    (3) The East Central Curriculum Coordination Center serves Delaware, 
the District of Columbia, Indiana, Illinois, Maryland, Michigan, 
Minnesota, Ohio, Pennsylvania, Virginia, West Virginia, and Wisconsin.
    (4) The Midwest Curriculum Coordination Center serves Arkansas, 
Iowa, Kansas, Louisiana, Missouri, Nebraska, New Mexico, Oklahoma, and 
Texas.
    (5) The Northwest Curriculum Coordination Center serves Alaska, 
Colorado, Idaho, Montana, North Dakota, Oregon, South Dakota, Utah, 
Washington, and Wyoming.
    (6) The Western Curriculum Coordination Center serves American 
Samoa, Arizona, California, Guam, Hawaii, Nevada, the Northern Mariana 
Islands, and Palau until the Compact of Free Association with Palau 
takes effect.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.4  What is the National Network of Directors Council?

    (a) The National Network of Directors Council (Council) enhances the 
effectiveness of the Network by--
    (1) Planning for inter-center coordination, dissemination, and 
diffusion activities;
    (2) Providing leadership to ensure cohesiveness for overall Network 
functions;
    (3) Promoting the adoption and adaptation of curriculum materials;
    (4) Maintaining liaison with dissemination systems described in 
Sec. 412.32;
    (5) Convening at least twice a year; and
    (6) Planning for and participating in an annual meeting of CCCs that 
includes activities such as displays of current curriculum materials 
from each CCC, inservice training sessions, and hands-on experience with 
new technologies in vocational and technical education. This meeting 
must be held in a different region each year.
    (b) The Council is composed of the six CCC directors and a liaison 
from the Department. One of the CCC directors serves as chair for the 
Council and has responsibilities for submitting minutes of Council 
meetings to the Secretary.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.5  What regulations apply?

    The following regulations apply to the National Network for 
Curriculum Coordination in Vocational and Technical Education:
    (a) The regulations in this part 412.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.6  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2402(c))

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 412.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 412.21.

[[Page 85]]

    (b) The Secretary may award up to 100 points, including 15 points to 
be distributed in accordance with paragraph (d) of this section, based 
on the criteria in Sec. 412.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 412.21.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Regional need. (30 points) The Secretary reviews each 
application to determine the applicant's understanding of and 
responsiveness to the needs of the region, including the extent to which 
the applicant--
    (1) Demonstrates an understanding of the leadership responsibilities 
associated with serving as a resource center and facilitator for States 
in a region, including the region's need for inservice training, holding 
regional meetings, providing technical assistance, coordinating with 
State directors of vocational education, maintaining a lending library, 
and disseminating information regularly;
    (2) Proposes adequate mechanisms and procedures for reporting the 
results of curriculum networking services and activities of the 50 
States, District of Columbia, Puerto Rico, and the Outlying Areas;
    (3) Demonstrates the capacity to disseminate information on 
effective vocational education materials, including curriculum 
materials;
    (4) Demonstrates an understanding of the operation of the Vocational 
Education Curriculum Materials and ADVOCNET Systems and the need for 
establishing a Tech-Prep education clearinghouse; and
    (5) Demonstrates the capacity to undertake the responsibilities 
associated with participation as a member of the Network Directors 
Council described in Sec. 412.4.
    (b) Plan of operation. (25 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The quality of the design of the project;
    (2) The extent to which the management plan ensures proper and 
efficient administration of the project;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality of the applicant's plan to use its resources and 
personnel to achieve each objective; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.
    (c) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the proposed project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other key personnel to be 
used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (c)(1) (i) and (ii) of this section will commit to the 
project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine the personnel qualifications under paragraphs 
(c)(1)(i) and (ii) of this section, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in the fields related to the objectives of the project; 
and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (d) Institutional commitment. (10 points) The Secretary reviews each 
application to determine the extent to which the applicant--
    (1) Has experience with vocational education curriculum and 
dissemination;

[[Page 86]]

    (2) Will initiate and maintain liaison functions with regional 
States; and
    (3) Will provide adequate facilities, equipment, and supplies.
    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is cost effective and adequate to support the project 
activities; and
    (2) The budget contains costs that are reasonable in relation to the 
objectives of the project.
    (f) Evaluation plan. (5 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and is appropriate to the project; and
    (2) Identifies expected outcomes of the services provided and how 
those services will be measured.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2402(c))



          Subpart D_What Conditions Must Be Met After An Award?



Sec. 412.30  What additional activities must be carried out by 
Curriculum Coordination Centers?

    In carrying out the activities described in Sec. 412.3, each CCC 
must perform the following activities:
    (a) Assist States in the development, adaptation, adoption, 
dissemination, and use of curriculum materials and services and other 
information resulting from research and development activities carried 
out under the Act, including performing these activities during at least 
two regional meetings involving States served by the CCC. One of these 
regional meetings must be conducted jointly with the other five CCCs and 
their regional States at the meeting described in Sec. 412.4(a)(6).
    (b) Coordinate with other curriculum coordination centers funded 
under this part.
    (c) Coordinate with the State salaried State liaison representative 
(SLR), who is appointed by the State director of vocational education. 
The SLR has primary responsibilities for liaison activities within the 
States, including--
    (1) Obtaining new curriculum and research and development materials 
for Network sharing;
    (2) Informing localities and State agencies of Network services;
    (3) Disseminating CCC related materials;
    (4) Arranging for intrastate and interstate development and 
dissemination activities;
    (5) Arranging for technical assistance and inservice training 
workshops;
    (6) Participating in regional CCC meetings; and
    (7) Fostering adoption and adaptations of materials available 
through the CCC.
    (d) Maintain a lending library with a collection of vocational 
education curriculum, research, and development materials for use by the 
States served by the CCC.
    (e) Each CCC must participate in the Council activities described in 
Sec. 412.4.

(Authority: 20 U.S.C. 2402(c))



Sec. 412.31  What existing dissemination systems must be used?

    In carrying out its activities, each CCC must use existing 
dissemination systems, including the National Diffusion Network and the 
National Center or Centers for Research in Vocational Education, in 
order to ensure broad access at the State and local levels to the 
information being disseminated.

(Authority: 20 U.S.C. 2402(c))



PART 413_NATIONAL CENTER OR CENTERS FOR RESEARCH IN VOCATIONAL 
EDUCATION--Table of Contents



                            Subpart A_General

Sec.
413.1  What is the National Center or Centers for Research in Vocational 
          Education?
413.2  Who is eligible to apply for the National Center or Centers?
413.3  What kinds of activities are carried out?
413.4  How does the Secretary designate a National Center or Centers?
413.5  What regulations apply?
413.6  What definitions apply?

Subpart B [Reserved]

[[Page 87]]

             Subpart C_How Does the Secretary Make an Award?

413.20  How does the Secretary evaluate an application?
413.21  What selection criteria does the Secretary use to evaluate an 
          application proposing research and development activities?
413.22  What selection criteria does the Secretary use to evaluate an 
          application proposing dissemination and training activities?

          Subpart D_What Conditions Must Be Met After an Award?

413.30  What are the restrictions on the use of funds?
413.31  Must a National Center have a director?
413.32  What are the requirements for coordination?
413.33  What substantive studies must the National Center or Centers 
          conduct and submit?
413.34  What activities must be performed during the final year of an 
          award?

    Authority: 20 U.S.C. 2404, unless otherwise noted.

    Source: 57 FR 36780, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 413.1  What is the National Center or Centers for Research
in Vocational Education?

    The Secretary supports the establishment of one or two National 
Centers for Research in Vocational Education (National Center) in the 
areas of--
    (a) Applied research and development; and
    (b) Dissemination and training.

(Authority: 20 U.S.C. 2404)



Sec. 413.2  Who is eligible to apply for the National Center or Centers?

    An institution of higher education or consortium of institutions of 
higher education may apply to be a National Center under this part.

(Authority: 20 U.S.C. 2404(a)(5))

    Cross Reference: See 34 CFR 75.127 through 75.129, Group 
Applications.



Sec. 413.3  What kinds of activities are carried out?

    The Secretary provides a grant or cooperative agreement to a 
National Center or Centers that are designed to perform either one or 
both of the following activities:
    (a) Applied research and development activities. (1) A major purpose 
of the National Center is to design and conduct research and development 
activities that are consistent with the purposes of the Act, including--
    (i) Longitudinal studies that extend over a period of years;
    (ii) Supplementary and short-term activities; and
    (iii) Upon negotiation with the center, and if funds are provided 
pursuant to section 404(d) of the Act, such other topics as the 
Secretary may designate.
    (2) The National Center shall conduct applied research and 
development activities that include examination of the following:
    (i) Economic changes that affect the skills that employers seek and 
entrepreneurs need.
    (ii) Integration of academic and vocational education.
    (iii) Efficient and effective practices for addressing the needs of 
special populations.
    (iv) Efficient and effective methods for delivering vocational 
education.
    (v) Articulation of school and college instruction with high quality 
work experience.
    (vi) Recruitment, education, and enhancement of vocational teachers 
and other professionals in the field.
    (vii) Accountability processes in vocational education, including 
identification and evaluation of the use of appropriate performance 
standards for student, program, and State-level outcomes.
    (viii) Effective practices that educate students in all aspects of 
the industry the students are preparing to enter.
    (ix) Effective methods for identifying and inculcating literacy and 
other communication skills essential for effective job preparation and 
job performance.
    (x) Identification of strategic, high priority occupational skills 
and skills formation approaches needed to maintain the competitiveness 
of the United States workforce, sustain high-wage, high-technology jobs, 
and address national priorities such as technical jobs

[[Page 88]]

needed to protect and restore the environment.
    (xi) Identification of practices and strategies that address 
entrepreneurial development for minority-owned enterprises.
    (3) The applied research and development activities must include--
    (i) An emphasis on the recruitment, education, and enhancement of 
minority and female vocational teachers and professionals; and
    (ii) Activities that aid in the development of minorities and women 
for leadership roles in vocational education.
    (b) Dissemination and training activities. (1) A major purpose of 
the National Center is to design and conduct dissemination and training 
activities that are consistent with the purposes of the Act, including--
    (i) The broad dissemination of the results of the research and 
development conducted by the National Center;
    (ii) The development and utilization of a national level 
dissemination network including functions such as clearinghouses, 
databases, and telecommunications;
    (iii) Planning, developing, and conducting training activities; and
    (iv) Upon negotiation with the Center and if funds are provided 
pursuant to section 404(d) of the Act, such other topics as the 
Secretary may designate.
    (2) The National Center shall conduct dissemination and training 
activities that include the following:
    (i) Teacher and administrator training and leadership development.
    (ii) Technical assistance to ensure that programs serving special 
populations are effective in delivering well-integrated and 
appropriately articulated vocational and academic offerings for 
secondary, postsecondary, and adult students.
    (iii) Needs assessment, design, and implementation of new and 
revised programs with related curriculum materials to facilitate 
vocational-academic integration.
    (iv) Evaluation and follow-through to maintain and extend quality 
programs.
    (v) Assistance in technology transfer and articulation of program 
offerings from advanced technology centers to minority enterprises.
    (vi) Assistance to programs and States on the use of accountability 
indicators, including appropriate and innovative performance standards.
    (vii) Delivery of information and services using advanced 
technology, if appropriate, to increase the effectiveness and efficiency 
of knowledge transfer.
    (viii) Development of processes for synthesis of research, in 
cooperation with a broad array of users, including vocational and non-
vocational educators, employers and labor organizations.
    (ix) Dissemination of exemplary curriculum and instructional 
materials, and development and publication of curriculum materials (in 
conjunction with vocational and nonvocational constituency groups, if 
appropriate).
    (x) Technical assistance in recruiting, hiring, and advancing 
minorities in vocational education.
    (3) The training and leadership development activities must include 
an emphasis on--
    (i) Training minority and female teachers; and
    (ii) Programs and activities that aid in the development of 
minorities and women for leadership roles in vocational education.
    (4) Advanced technology may include audio-video cassettes, 
electronic networking, satellite-assisted programming, computer-based 
conferencing, and interactive video.

(Authority: 20 U.S.C. 2404 (b) and (c); House Report No. 101-660, 101st 
Cong. 2nd Sess. p. 143 (1990))



Sec. 413.4  How does the Secretary designate a National Center
or Centers?

    (a) The Secretary designates a National Center or Centers once every 
five years.
    (b) In designating the National Center or Centers for Research in 
Vocational Education, the Secretary may support--
    (1) One National Center that conducts both research and development 
activities and dissemination and training activities; or

[[Page 89]]

    (2) Two National Centers: one that conducts research and development 
activities and one that conducts dissemination and training activities.

(Authority: 20 U.S.C. 2404)



Sec. 413.5  What regulations apply?

    The following regulations apply to the National Center or Centers:
    (a) The regulations in this part 413.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2404)



Sec. 413.6  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part, except that the 
term ``institution of higher education'' has the same meaning as 
provided in 34 CFR 403.117(b).

(Authority: 20 U.S.C. 1085(b) and 2404)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 413.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Secs. 413.21 and 413.22.
    (b) The Secretary may award up to 100 points to each set of criteria 
in Secs. 413.21 and 413.22, including a reserved 10 points for each set 
of criteria to be distributed in accordance with paragraph (d) of this 
section.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Secs. 413.21 and 413.22.
    (e) The Secretary may hold two separate competitions, with the same 
closing date, for the National Center or Centers. One competition will 
be held for research and development activities and the second 
competition will be held for dissemination and training activities. An 
institution of higher education or consortium of higher education 
institutions may submit a research and development application; a 
dissemination and training application; or both as separate applications 
under separate covers.
    (f) The Secretary evaluates applications for the research and 
development center and the dissemination and training center 
independently against the criteria in Secs. 413.21 and 413.22 whether an 
institution or consortium of institutions is competing for either or 
both sets of activities.
    (g) In accordance with section 404(a)(5) of the Act, the Secretary 
will give preference in grant selection to institutions or consortia of 
institutions that demonstrate the ability to carry out both the research 
and development and the dissemination and training activities 
effectively, either directly or by contract.
    (h) An institution or consortium of institutions that has submitted 
two applications and applied for a single grant for the purpose of 
carrying out both activities and that has earned 80 points or higher on 
each of its two applications, will be deemed by the Secretary to have 
demonstrated the ability to carry out both activities effectively.
    (i) The Secretary will award a single grant to an institution or 
consortium of institutions that has both--
    (1) Demonstrated the ability to carry out both program activities 
effectively, in accordance with paragraph (h) of this section; and
    (2) Earned the highest combined score among those institutions or 
consortia of institutions that have demonstrated the ability to carry 
out both activities effectively.
    (j) If no institution or consortium of institutions is selected for 
a single grant award, the institution or consortia of institutions 
ranking highest in each of the two competitions will each receive a 
grant award.

(Authority: 20 U.S.C. 2404)



Sec. 413.21  What selection criteria does the Secretary use to evaluate
an application proposing research and development activities?

    The Secretary uses the following selection criteria in evaluating 
each research and development application:

[[Page 90]]

    (a) Program factors. (20 points) The Secretary reviews each 
application to determine the extent to which each of the required 
research and development activities described in Sec. 413.3(a)(2) will 
be of high quality and effective.
    (b) Plan of operation. (35 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
proposed center, including--
    (1) The applicant's plan for managing the National Center;
    (2) The procedures the applicant will use to implement the National 
Center particularly with regard to the public or private nonprofit 
institution of higher education with which it is associated and, in the 
case of a consortium, with the other member institutions of the 
consortium;
    (3) The applicant's plan for managing the National Center's 
activities and personnel, including--
    (i) Quality control procedures for its activities;
    (ii) Procedures for assuring compliance with timelines;
    (iii) Coordination procedures for communicating among staff, 
subcontractors, members of the consortium, if any, and the Department of 
Education;
    (iv) Procedures for ensuring that adequate progress is being made 
toward achieving the goals of the grantee by subcontractors, and members 
of a consortium; and
    (v) Procedures for ensuring that adequate budget, accounting, and 
recordkeeping procedures will be used;
    (4) The quality of the applicant's detailed plans for year one of 
the National Center, including--
    (i) Methodology and plan of operation;
    (ii) Tasks and timelines;
    (iii) Deliverables; and
    (iv) Dissemination plans for each project; and
    (5) The quality of the applicant's general plans for developing 
appropriate, coherent, and effective vocational education research and 
development activities, or dissemination and training activities, or 
both, for years two through five.
    (c) Key personnel. (10 points) The Secretary reviews each 
application to determine the qualifications of the key personnel the 
applicant plans to use for the National Center, including--
    (1) The extent to which the Director of the National Center has--
    (i) Appropriate professional qualifications, relevant project 
management experience, and administrative skills;
    (ii) A commitment to work full-time at the National Center;
    (iii) A clear commitment to the goals of the project; and
    (iv) Sufficient authority to effectively manage the activities of 
the National Center;
    (2) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability; and
    (3) The extent to which other key personnel to be used for the 
National Center--
    (i) Have experience and training in project management and in fields 
related to the proposed activities they will be carrying out; and
    (ii) Will commit sufficient time to the project.
    (d) Vocational education experience. (10 points) The Secretary 
reviews each application to determine the extent to which the applicant 
understands the state of knowledge and practice related to vocational 
education, including--
    (1) The applicant's experience in conducting applied research and 
development activities, dissemination and training activities, or both, 
in the field of vocational education of the type described in 
Sec. 413.3;
    (2) The applicant's capacity for conducting applied research and 
development activities, dissemination and training activities, or both, 
in the field of vocational education of the type described in 
Sec. 413.3; and
    (3) How the activities of the National Center will contribute to the 
advancement of relevant theory and practice in vocational education.
    (e) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The Center has an adequate budget that is cost effective;

[[Page 91]]

    (2) The budget is adequate to support the Center's activities; and
    (3) Costs are reasonable in relation to the objectives of the 
Center.
    (f) Coordination activities. (5 points) The Secretary reviews each 
application to determine the extent to which there is an effective plan 
for the coordination of activities described in Sec. 413.3 (a) and (b), 
and whether these activities are carried out between two institutions or 
within one institution.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2404)



Sec. 413.22  What selection criteria does the Secretary use to 
evaluate an application proposing dissemination and training
activities?

    The Secretary uses the following selection criteria in evaluating 
each dissemination and training application:
    (a) Program factors. (20 points) The Secretary reviews each 
application to determine the extent to which each of the required 
dissemination and training activities, described in Sec. 413.3(b), will 
be of high quality and effective.
    (b) The selection criteria and points in Sec. 413.21 (b), (c), (d), 
(e), and (f).

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2404)



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 413.30  What are the restrictions on the use of funds?

    (a) A National Center that performs both research and development 
activities and dissemination and training activities shall use at least 
two-thirds of its award for applied research and development.
    (b) Not more than 10 percent of each year's budget for a National 
Center may be used to respond to field-initiated needs unanticipated 
prior to the annual funding period and that are in the mission of the 
National Center, but not part of the scope of work of the grant or 
cooperative agreement.

(Authority: 20 U.S.C. 2404(a)(3) and (b))



Sec. 413.31  Must a National Center have a director?

    A National Center must have a full-time director who is appointed by 
the institution serving as the grantee.

(Authority: 20 U.S.C. 2404)



Sec. 413.32  What are the requirements for coordination?

    If the Secretary designates two National Centers, the two centers 
must coordinate their activities.

(Authority: 20 U.S.C. 2404)



Sec. 413.33  What substantive studies must the National Center 
or Centers conduct and submit?

    (a) The National Center conducting research and development 
activities shall annually prepare a study on the research conducted on 
approaches that lead to effective articulation for the education-to-work 
transition, including tech-prep programs, cooperative education or other 
work-based programs, such as innovative apprenticeship or mentoring 
approaches.
    (b) The National Center conducting dissemination and training 
activities shall annually prepare a study of its dissemination and 
training activities.
    (c) Annual studies described in paragraphs (a) and (b) of this 
section must be submitted to the Secretary of Education, the Secretary 
of Labor, the Secretary of Health and Human Services, the Committee on 
Labor and Human Resources of the Senate, and the Committee on Education 
and Labor of the House of Representatives.

(Authority: 20 U.S.C. 2404 (b)(2) and (c)(2))



Sec. 413.34  What activities must be performed during the final year
of an award?

    During the fifth year of the award cycle, the National Center or 
Centers shall develop and remain prepared to implement a contingency 
plan for completing all substantive work by the end of the eleventh 
month of that year and transferring all projects, services, and 
activities to a successor during the twelfth month of that year.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2404)

[[Page 92]]



PART 415_DEMONSTRATION CENTERS FOR THE TRAINING OF DISLOCATED WORKERS
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
415.1  What is the Demonstration Centers for the Training of Dislocated 
          Workers Program?
415.2  Who is eligible for an award?
415.3  What activities may the Secretary fund?
415.4  What regulations apply?
415.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

415.20  How does the Secretary evaluate an application?
415.21  What selection criteria does the Secretary use?
415.22  What additional factors may the Secretary consider?

          Subpart D_What Conditions Must Be Met After an Award?

415.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2413, unless otherwise noted.

    Source: 57 FR 36784, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 415.1  What is the Demonstration Centers for the Training 
of Dislocated Workers Program?

    The Demonstration Centers for the Training of Dislocated Workers 
Program provides financial assistance for establishing one or more 
demonstration centers for the retraining of dislocated workers.

(Authority: 20 U.S.C. 2413(a))



Sec. 415.2  Who is eligible for an award?

    A private nonprofit organization that is eligible to receive funding 
under title III of the Job Training Partnership Act (29 U.S.C. 1651 et 
seq.) is eligible to receive an award under this program.

(Authority: 20 U.S.C. 2413(d))



Sec. 415.3  What activities may the Secretary fund?

    (a) The Secretary provides grants or cooperative agreements for one 
or more centers that demonstrate the retraining of dislocated workers.
    (b) Each center funded by the Secretary must be designed and 
operated to provide for the use of appropriate existing Federal, State, 
and local programs and resources.
    (c) Each center may use funds to provide for--
    (1) The recruitment of unemployed workers;
    (2) Vocational evaluation;
    (3) Assessment and counseling services;
    (4) Vocational and technical training;
    (5) Support services; or
    (6) Job placement assistance.

(Authority: 20 U.S.C. 2413(a))



Sec. 415.4  What regulations apply?

    The following regulations apply to the Demonstration Centers for the 
Training of Dislocated Workers Program:
    (a) The regulations in this part 415.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2413)



Sec. 415.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2413)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 415.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 415.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 415.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score

[[Page 93]]

for each criterion is indicated in parentheses after the heading for 
each criterion.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 415.21.

(Authority: 20 U.S.C. 2413)



Sec. 415.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (10 points) The Secretary reviews each 
application to assess the extent to which the proposed demonstration 
center for the training of dislocated workers will--
    (1) Be located in a service area with a high concentration of 
dislocated workers, as supported by specific evidence of the need for 
the proposed demonstration center;
    (2) Provide vocational education and technical training to meet 
current and projected occupational needs;
    (3) Provide trainees with appropriate vocational evaluation, 
assessment, and counseling, support services, and job placement 
assistance;
    (4) Result in trainees becoming employed in jobs related to their 
training upon completion of their training; and
    (5) Use other appropriate Federal, State, and local programs to 
retrain, or provide services to, dislocated workers.
    (b) Educational significance. (10 points) The Secretary reviews each 
application to determine the extent to which the applicant--
    (1) Bases the proposed demonstration center for the training of 
dislocated workers on successful model vocational education programs 
that include components similar to the components required by this 
program, as evidenced by empirical data from those programs, in such 
factors as--
    (i) Student performance and achievement in vocational and technical 
training;
    (ii) High school graduation;
    (iii) Placement of students in jobs, including military service; and
    (iv) Successful transfer of students to a variety of postsecondary 
education programs;
    (2) Proposes project objectives that contribute to the improvement 
of education; and
    (3) Proposes to use innovative techniques to address educational 
problems and needs that are of national significance.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The quality of the project design, especially the establishment 
of measurable objectives for the project that are based on the project's 
overall goals;
    (2) The extent to which the plan of management is effective and 
ensures proper and efficient administration of the project over the 
award period;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality of the applicant's plan to use its resources and 
personnel to achieve each objective including the use of appropriate 
existing Federal, State, and local programs; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.
    (d) Evaluation plan. (15 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and is appropriate to the project;
    (2) To the extent possible, is objective and will produce data that 
are quantifiable;
    (3) Identifies expected outcomes of the participants and how those 
outcomes will be measured;
    (4) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results;
    (5) Will provide a comparison between intended and observed results, 
and lead to the demonstration of a clear link between the observed 
results and the specific treatment of project participants; and

[[Page 94]]

    (6) Will yield results that can be summarized and submitted to the 
Secretary for review by the Department's Program Effectiveness Panel as 
defined in 34 CFR 400.4(b).
    (e) Demonstration and dissemination. (10 points) The Secretary 
reviews each application for information to determine the effectiveness 
and efficiency of the plan for demonstrating and disseminating 
information about project activities and results throughout the project 
period, including--
    (1) High quality in the design of the dissemination plan and 
procedures for evaluating the effectiveness of the dissemination plan;
    (2) Provisions for publicizing the project at the local, State, and 
national levels by conducting or delivering presentations at 
conferences, workshops, and other professional meetings and by preparing 
materials for journal articles, newsletters, and brochures;
    (3) Identification of target groups and provisions for demonstrating 
the methods and techniques used by the project to others interested in 
replicating these methods and techniques, such as by inviting them to 
observe project activities;
    (4) A description of the types of materials the applicant plans to 
make available to help others replicate project activities and the 
methods for making the materials available; and
    (5) Provisions for assisting others to adopt and successfully 
implement the project or methods and techniques used by the project.
    (f) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications, in relation to project requirements, of the 
project director;
    (ii) The qualifications, in relation to project requirements, of 
each of the other key personnel to be used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (f)(1) (i) and (ii) of this section will commit to the 
project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine personnel qualifications under paragraphs (f)(1) 
(i) and (ii) of this section, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields related to the objectives of the project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (g) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is cost effective and adequate to support the project 
activities;
    (2) The budget contains costs that are reasonable and necessary in 
relation to the objectives of the project; and
    (3) The budget proposes using non-Federal resources available from 
appropriate employment, training, and education agencies in the State to 
provide project services and activities and to acquire demonstration 
center equipment and facilities.
    (h) Adequacy of resources and commitment. (5 points) (1) The 
Secretary reviews each application to determine the extent to which the 
applicant plans to devote adequate resources to the project. The 
Secretary considers the extent to which--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.
    (2) The Secretary reviews each application to determine the 
commitment to the project, including whether the--
    (i) Uses of non-Federal resources are adequate to provide project 
services and activities, especially resources of community organizations 
and State and local educational agencies; and
    (ii) Applicant has the capacity to continue, expand, and build upon 
the

[[Page 95]]

project when Federal assistance under this part ends.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2413)



Sec. 415.22  What additional factors may the Secretary consider?

    After evaluating the applications according to the criteria in 
Sec. 415.21, the Secretary may select applications other than the most 
highly rated applications if doing so would improve the geographical 
distribution of projects funded under this program.

(Authority: U.S.C. 2413)



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 415.30  What are the evaluation requirements?

    (a) Each grantee shall provide and budget for an independent 
evaluation of grant activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The evaluation must be based on student achievement, completion, 
and placement rates and project and product spread and transportability.
    (d) A proposed project evaluation design must be submitted to the 
Secretary for review and approval prior to the end of the first year of 
the project period.
    (e) A summary of evaluation activities and results that can be 
reviewed by the Department's Program Effectiveness Panel, as defined in 
34 CFR 400.4(b), must be submitted to the Secretary during the last year 
of the project period.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2413)



PART 421_BUSINESS AND EDUCATION STANDARDS PROGRAM--Table of Contents



                            Subpart A_General

Sec.
421.1  What is the Business and Education Standards Program?
421.2  Who is eligible for an award?
421.3  What activities may the Secretary fund?
421.4  What regulations apply?
421.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

421.20  How does the Secretary evaluate an application?
421.21  What selection criteria does the Secretary use?

          Subpart D_What Conditions Must Be Met After an Award?

421.30  What is the cost-sharing requirement?

    Authority: 20 U.S.C. 2416, unless otherwise noted.

    Source: 57 FR 36796, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 421.1  What is the Business and Education Standards Program?

    The Business and Education Standards Program provides financial 
assistance for organizing and operating business-education-labor 
technical committees that will develop national standards for 
competencies in industries and trades.

(Authority: 20 U.S.C. 2416)



Sec. 421.2  Who is eligible for an award?

    The following entities are eligible for an award under this program:
    (a) Industrial trade associations.
    (b) Labor organizations.
    (c) National joint apprenticeship committees.
    (d) Comparable national organizations, such as educational 
associations, industry councils, business and industry organizations, 
and associations of private or national research organizations.

(Authority: 20 U.S.C. 2416)



Sec. 421.3  What activities may the Secretary fund?

    The Secretary provides grants and cooperative agreements for 
projects that organize and operate business-labor-education technical 
committees that propose national standards for competencies in 
industries and trades, including standards for--

[[Page 96]]

    (a) Major divisions or specialty areas identified within occupations 
studied;
    (b) Minimum hours of study to be competent in those divisions or 
specialty areas;
    (c) Minimum tools and equipment required in those divisions or 
specialty areas;
    (d) Minimum qualifications for instructional staff; and
    (e) Minimum tasks to be included in any course of study purporting 
to prepare individuals for work in those divisions or specialty areas.

(Authority: 20 U.S.C. 2416)



Sec. 421.4  What regulations apply?

    The following regulations apply to the Business and Education 
Standards Program:
    (a) The regulations in this part 421.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2416)



Sec. 421.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2416)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 421.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperation agreement on the basis of the criteria in Sec. 421.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 421.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 421.21.

(Authority: 20 U.S.C. 2416)



Sec. 421.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (15 points) The Secretary reviews each 
application to assess the quality and effectiveness of the applicant's 
approach to developing national standards for competencies in industries 
and trades, including the extent to which the application proposes--
    (1) To develop standards for--
    (i) The competencies required for actual jobs, including the 
increased competency requirements created by the changing workplace;
    (ii) Major divisions or specialty areas identified within the 
occupations the applicant proposes to study;
    (iii) The minimum hours of study needed to be competent in those 
divisions or specialty areas;
    (iv) Minimum tools and equipment required in those divisions or 
specialty areas;
    (v) Minimum tasks to be included in any course of study purporting 
to prepare individuals for work in those divisions or specialty areas; 
and
    (vi) Minimum qualifications for instructional staff in those 
divisions or specialty areas; and
    (2) An adequate needs assessment of the program factors described in 
paragraph (a)(1) of this section as a part of the project.
    (b) Extent of need for the project. (15 points) The Secretary 
reviews each application to determine the extent to which the project 
meets specific needs, including--
    (1) The extent of the need for national standards for competencies 
in the major division or specialty areas identified within the 
occupations that the applicant proposes to study;
    (2) How the applicant identified and documented those needs;
    (3) How the standards to be developed will meet those needs, 
including the need of business for competent entry-level workers in the 
occupations to be studied; and
    (4) The benefits to business, labor, and education that will result 
from meeting those needs.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to

[[Page 97]]

determine the quality of the plan of operation for the project, 
including the extent to which--
    (1) The plan of management will be effective, will ensure proper and 
efficient administration of the program, and includes timelines that 
show starting and ending dates for all tasks;
    (2) The specific procedures proposed will accomplish the project's 
objectives, including how the procedures for selecting the business-
labor-education technical committees will ensure that the members are 
knowledgeable about the occupations to be studied and include 
representatives of business, labor, and education;
    (3) The applicant plans to organize and operate the business-labor-
education technical committees effectively in developing national 
standards for competencies in industries and trades;
    (4) The development of proposed competencies for major divisions or 
specialty areas within occupations will be coordinated with education 
and industrial trade associations, labor organizations, and businesses;
    (5) The methods the applicant proposes to use to select project 
participants, if applicable, will ensure that project participants who 
are otherwise eligible to participate are selected without regard to 
race, color, national origin, gender, age, or disability.
    (d) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the evaluation plan for the 
project, including the extent to which the plan includes specific 
procedures for--
    (1) A formative evaluation to help assess and improve the accuracy 
of standards for competencies; and
    (2) A summative evaluation conducted by an independent evaluator.
    (e) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the extent of the applicant's experience in 
fields related to the objectives of the project.
    (2) The Secretary reviews each application to determine the quality 
of key personnel the applicant plans to use including--
    (i) The qualifications, in relation to project requirements, of the 
project director, if one is to be used;
    (ii) The qualifications, in relation to project requirements, of 
each of the other key personnel to be used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (e)(2) (i) and (ii) of this section will commit to the 
project; and
    (iv) The experience and training of the project director and key 
personnel in project management.
    (f) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is adequate to support the project; and
    (2) Costs are reasonable in relation to the objectives of the 
project.
    (g) Dissemination plan. (10 points) The Secretary reviews each 
application to determine the quality of the dissemination plan for the 
project, including--
    (1) A clear description of the dissemination procedures;
    (2) A description of the types of materials the applicant plans to 
make available;
    (3) Provisions for publicizing the proposed national standards for 
competencies in industries and trades; and
    (4) Provisions for encouraging the adoption and use of the proposed 
standards by education and training programs.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2416)



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 421.30  What is the cost-sharing requirement?

    (a) The Secretary pays no more than 50 percent of the cost of a 
project.
    (b) Each recipient of an award under this part shall provide at 
least 50 percent of the cost of the business-labor-education technical 
committees established under the award.

(Authority: 20 U.S.C. 2416(c))

[[Page 98]]



PART 425_DEMONSTRATION PROJECTS FOR THE INTEGRATION OF VOCATIONAL
AND ACADEMIC LEARNING PROGRAM--Table of Contents



                            Subpart A_General

Sec.
425.1  What is the Demonstration Projects for the Integration of 
          Vocational and Academic Learning Program?
425.2  Who is eligible for an award?
425.3  What activities may the Secretary fund?
425.4  What regulations apply?
425.5  What definitions apply?

Subpart B [Reserved]

             Subpart C_How Does the Secretary Make an Award?

425.20  How does the Secretary evaluate an application?
425.21  What selection criteria does the Secretary use?
425.22  What additional factors does the Secretary consider?

          Subpart D_What Conditions Must Be Met After an Award?

425.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2420, unless otherwise noted.

    Source: 57 FR 36803, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 425.1  What is the Demonstration Projects for the Integration
of Vocational and Academic Learning Program?

    The Demonstration Projects for the Integration of Vocational and 
Academic Learning Program provides financial assistance to projects that 
develop, implement, and operate programs using different models of 
curricula that integrate vocational and academic learning.

(Authority: 20 U.S.C. 2420(a))



Sec. 425.2  Who is eligible for an award?

    (a) The following entities are eligible for an award under the 
Demonstration Projects for the Integration of Vocational and Academic 
Learning Program:
    (1) An institution of higher education.
    (2) An area vocational education school.
    (3) A secondary school funded by the Bureau of Indian Affairs.
    (4) A State board of vocational education.
    (5) A public or private nonprofit organization.
    (6) A local educational agency.
    (b) Consortia composed of the entities described in paragraph (a) of 
this section also are eligible for awards under this program.

(Authority: 20 U.S.C. 2420(a))



Sec. 425.3  What activities may the Secretary fund?

    (a) The Secretary provides grants or cooperative agreements to 
projects that develop, implement, and operate programs using different 
models of curricula that integrate vocational and academic learning by--
    (1) Designing integrated curricula and courses;
    (2) Providing inservice training for teachers of vocational 
education students and administrators in integrated curricula; and
    (3) Disseminating information regarding effective integrative 
strategies to other school districts through the National Diffusion 
Network (NDN) under section 1562 of the Elementary and Secondary 
Education Act of 1965, as amended (20 U.S.C. 2962), or, in the case of 
projects that will be funded for less than three years, disseminating 
information about the design of a project necessary for effective 
integrative strategies to be supported, so that they may be disseminated 
through the NDN.
    (b) Each project supported under this part must serve--
    (1) Individuals who are members of special populations;
    (2) Vocational students in secondary schools;
    (3) Vocational students at postsecondary institutions;
    (4) Individuals enrolled in adult programs; or
    (5) Single parents, displaced homemakers, and single pregnant women.

(Authority: 20 U.S.C. 2420(a), (b)(3) and (4))

[[Page 99]]



Sec. 425.4  What regulations apply?

    The following regulations apply to the Demonstration Projects for 
the Integration of Vocational and Academic Learning Program:
    (a) The regulations in this part 425.
    (b) The regulations in 34 CFR part 400.

(Authority: 20 U.S.C. 2420)



Sec. 425.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this part.

(Authority: 20 U.S.C. 2420)

Subpart B [Reserved]



             Subpart C_How Does the Secretary Make an Award?



Sec. 425.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application on the basis of the 
criteria in Sec. 425.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 425.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
score for each criterion is indicated in parentheses.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 425.21.

(Authority: 20 U.S.C. 2420)



Sec. 425.21  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application:
    (a) Program factors. (10 points) The Secretary reviews each 
application to assess the quality of the proposed project, including--
    (1) The extent to which the project involves creative or innovative 
methods for integrating vocational and academic learning; and
    (2) The quality of the services that the project will provide to--
    (i) Individuals who are members of special populations;
    (ii) Vocational students in secondary schools and at postsecondary 
institutions;
    (iii) Individuals enrolled in adult programs; or
    (iv) Single parents, displaced homemakers, and single pregnant 
women.
    (b) Educational significance. (10 points) The Secretary reviews each 
application to determine the extent to which the applicant--
    (1) Bases the proposed project on successful model vocational 
education programs that include components similar to the components 
required by this program, as evidenced by empirical data from those 
programs in such factors as--
    (i) Student performance and achievement;
    (ii) High school graduation;
    (iii) Placement of students in jobs, including military service; and
    (iv) Successful transfer of students to a variety of postsecondary 
education programs;
    (2) Proposes project objectives that contribute to the improvement 
of education; and
    (3) Proposes to use unique and innovative techniques that address 
the need to integrate vocational and academic learning, and produce 
benefits that are of national significance.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The quality of the project design, especially the establishment 
of measurable objectives for the project that are based on the project's 
overall goals;
    (2) The extent to which the plan of management is effective and 
ensures proper and efficient administration of the project over the 
award period;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality of the applicant's plan to use its resources and 
personnel to achieve each objective; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.

[[Page 100]]

    (d) Evaluation plan. (15 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Carries out the requirements in Sec. 425.30;
    (2) Is clearly explained and is appropriate to the project;
    (3) To the extent possible, is objective and will produce data that 
are quantifiable;
    (4) Includes quality measures to assess the effectiveness of the 
curricular developed by the project;
    (5) Identifies expected outcomes of the participants and how those 
outcomes will be measured;
    (6) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results;
    (7) Will provide a comparison between intended and observed results, 
and lead to the demonstration of a clear link between the observed 
results and the specific treatment of project participants; and
    (8) Will yield results that can be summarized and submitted to the 
Secretary for review by the Department's Program Effectiveness Panel as 
defined in 34 CFR 400.4(b).
    (e) Demonstration and dissemination. (10 points) The Secretary 
reviews each application for information to determine the effectiveness 
and efficiency of the plan for demonstrating and disseminating 
information about project activities and results throughout the project 
period, including--
    (1) High quality in the design of the dissemination plan and 
procedures for evaluating the effectiveness of the dissemination plan;
    (2) Identification of the audience to which the project activities 
will be disseminated and provisions for publicizing the project at the 
local, State, and national levels by conducting, or delivering 
presentations at, conferences, workshops, and other professional 
meetings and by preparing materials for journal articles, newsletters, 
and brochures;
    (3) Provisions for demonstrating the methods and techniques used by 
the project to others interested in replicating these methods and 
techniques, such as by inviting them to observe project activities;
    (4) A description of the types of materials the applicant plans to 
make available to help others replicate project activities and the 
methods for making the materials available; and
    (5) Provisions for assisting others to adopt and successfully 
implement the methods, approaches, and techniques developed by the 
project.
    (f) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications, in relation to project requirements, of the 
project director;
    (ii) The qualifications, in relation to project requirements, of 
each of the other key personnel to be used in the project;
    (iii) The appropriateness of the time that each person referred to 
in paragraphs (f)(1) (i) and (ii) of this section will commit to the 
project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
disability.
    (2) To determine personnel qualifications under paragraphs (f)(1) 
(i) and (ii) of this section, the Secretary considers--
    (i) The experience and training of key personnel in project 
management and in fields related to the objectives of the project; and
    (ii) Any other qualifications of key personnel that pertain to the 
quality of the project.
    (g) Budget and cost effectiveness. (10 points) The Secretary reviews 
each application to determine the extent to which the budget--
    (1) Is cost effective and adequate to support the project 
activities;
    (2) Contains costs that are reasonable and necessary in relation to 
the objectives of the project; and
    (3) Proposes using non-Federal resources available from appropriate 
employment, training, and education agencies in the State to provide 
project

[[Page 101]]

services and activities and to acquire project equipment and facilities, 
to ensure that funds awarded under this part are used to provide 
instructional services.
    (h) Adequacy of resources and commitment. (5 points) (1) The 
Secretary reviews each application to determine the extent to which the 
applicant plans to devote adequate resources to the project. The 
Secretary considers the extent to which--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.
    (2) The Secretary reviews each application to determine the 
commitment to the project including whether the--
    (i) Uses of non-Federal resources are adequate to provide project 
services and activities, especially resources of community organizations 
and State and local educational agencies; and
    (ii) Applicant has the capacity to continue, expand, and build upon 
the project when Federal assistance under this part ends.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2420)



Sec. 425.22  What additional factors does the Secretary consider?

    (a) After evaluating the applications according to the criteria in 
Sec. 425.21, the Secretary determines whether the most highly rated 
applications--
    (1) Are equitably distributed throughout the Nation;
    (2) Offer significantly different approaches to integrating 
vocational and academic curricula; and
    (3) Serve individuals described in Sec. 425.3(b).
    (b) The Secretary may select other applications for funding if doing 
so would improve the geographical distribution of, diversity of 
approaches in, or the diversity of populations to be served by projects 
funded under this program.

(Authority: 20 U.S.C. 2420(b))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 425.30  What are the evaluation requirements?

    (a) Each grantee shall provide and budget for an independent 
evaluation of grant activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) Each grantee shall employ adequate measures to evaluate the 
effectiveness of the curriculum approaches supported by the project.
    (d) The evaluation must be based on student achievement, completion, 
and placement rates and project and product spread and transportability.
    (e) A proposed project evaluation design must be submitted to the 
Secretary for review and approval prior to the end of the first year of 
the project period.
    (f) A summary of evaluation activities and results that can be 
reviewed by the Department's Program Effectiveness Panel, as defined in 
34 CFR 400.4(b), must be submitted to the Secretary during the last year 
of the project period.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2420(b)(5))

                           PART 426 [RESERVED]



PART 427_BILINGUAL VOCATIONAL TRAINING PROGRAM--Table of Contents



                            Subpart A_General

Sec.
427.1  What is the Bilingual Vocational Training Program?
427.2  Who is eligible for an award?
427.3  What activities may the Secretary fund?
427.4  What regulations apply?
427.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

427.10  What must an application contain?

             Subpart C_How Does the Secretary Make an Award?

427.20  How does the Secretary evaluate an application?

[[Page 102]]

427.21  What selection criteria does the Secretary use?
427.22  What additional factors does the Secretary consider?

          Subpart D_What Conditions Must Be Met After an Award?

427.30  What are the evaluation requirements?

    Authority: 20 U.S.C. 2441(a), unless otherwise noted.

    Source: 57 FR 36810, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 427.1  What is the Bilingual Vocational Training Program?

    The Bilingual Vocational Training Program provides financial 
assistance for bilingual vocational education and training for limited 
English proficient out-of-school youth and adults, to prepare these 
individuals for jobs in recognized occupations and new and emerging 
occupations.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.2  Who is eligible for an award?

    (a) The following entities are eligible for an award under this 
program:
    (1) State agencies.
    (2) Local educational agencies (LEAs).
    (3) Postsecondary educational institutions.
    (4) Private nonprofit vocational training institutions.
    (5) Other nonprofit organizations specially created to serve or 
currently serving individuals who normally use a language other than 
English.
    (b) Private for-profit agencies and organizations are eligible only 
for contracts under this program.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.3  What activities may the Secretary fund?

    (a) The Secretary provides grants, cooperative agreements, or 
contracts for--
    (1) Bilingual vocational training projects for limited English 
proficient out-of-school youth and adults who are available for training 
and employment;
    (2) Bilingual vocational education and training projects for limited 
English proficient out-of-school youth and adults who have already 
entered the labor market but who desire or need English language skills 
and job skills training or retraining to achieve employment in a 
recognized occupation or new and emerging occupations, adjust to 
changing work force needs, expand their range of skills, or advance in 
employment; and
    (3) Training stipends for participants in bilingual vocational 
training projects.
    (b) Bilingual vocational training projects must include instruction 
in the English language to ensure that participants in that training 
will be equipped to pursue occupations in an English language 
environment.
    (c) In the Commonwealth of Puerto Rico, the Bilingual Vocational 
Training Program may provide for the needs of students of limited 
Spanish proficiency.

(Authority: 20 U.S.C. 2441(a), (e)(2))



Sec. 427.4  What regulations apply?

    The following regulations apply to the Bilingual Vocational Training 
Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part 427.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this program.

(Authority: 20 U.S.C. 2441(a))



               Subpart B_How Does One Apply for an Award?



Sec. 427.10  What must an application contain?

    (a) An application must--
    (1) Provide an assurance that the activities and services for which 
assistance is sought will be administered by or under the supervision of 
the applicant;
    (2) Propose a project of a size, scope, and design that will make a 
substantial contribution toward carrying out the purpose of the 
Bilingual Vocational Training Program;

[[Page 103]]

    (3) Contain measurable goals for the enrollment, completion, and 
placement of program participants;
    (4) Include a comparison of how the applicant's goals take into 
consideration any related standards and measures in the geographic area 
for the Job Opportunities and Basic Skills Training (JOBS) program (42 
U.S.C. 681 et seq.) and any Job Training Partnership Act (JTPA) programs 
(29 U.S.C. 1501 et seq.) and any standards set by the State Board for 
Vocational Education for the occupational and geographic area;
    (5) Describe, for each occupation for which training is to be 
provided, how successful program completion will be determined and 
reported to the Secretary in terms of the academic and vocational 
competencies to be demonstrated by enrollees prior to successful 
completion and any academic or work credentials expected to be acquired 
upon completion; and
    (6) Be submitted to the State board for vocational education (State 
board) established under section 111 of the Act for review and comment, 
including comment on the relationship of the proposed project to the 
State's vocational education program.
    (b) An applicant shall include any comments received under paragraph 
(a)(6) of this section with the application.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(a), (d)(1) and (2))



             Subpart C_How Does the Secretary Make an Award?



Sec. 427.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 427.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 427.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition as announced through a notice published in 
the Federal Register, the Secretary may assign the reserved points among 
the criteria in Sec. 427.21.

(Authority: 20 U.S.C. 2441(a))



Sec. 427.21  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria to evaluate an 
application:
    (a) Need. (15 points) The Secretary reviews each application for 
specific information that shows the need for the proposed bilingual 
vocational training project in the local geographic area, including--
    (1) The employment training need of limited English proficient 
individuals to be met;
    (2) The labor market need to be met; and
    (3) The relationship of the proposed project to other employment 
training programs in the community.
    (b) Plan of operation. (15 points) (1) The Secretary reviews each 
application to determine the extent to which the project proposes 
measurable goals for student enrollment, completion, and placement and 
describes how the applicant sets the goals taking into consideration the 
standards and measures for JOBS programs and JTPA programs and any 
standards set by the State Board established under section 111 of the 
Act for the occupation and geographic area.
    (2) The Secretary reviews each application to determine the extent 
to which the project defines successful program completion (or describes 
how successful program completion will be defined and reported to the 
Secretary) in a way consistent with the goals of the program for each 
occupation for which training is to be provided.
    (3)(i) The Secretary reviews each application for specific 
information that, upon completion of their training, more than 65 
percent of the trainees will be employed in jobs (including military 
specialties) related to their training, or will be enrolled for further 
training related to their training under this program. This information 
must correspond to the information described in paragraph (a) of this 
section.

[[Page 104]]

    (ii) The estimated job placement rate must be supported by past 
records, actual employer job commitments, anticipated job openings, or 
other pertinent information.
    (4) The Secretary reviews each application for an effective plan of 
management that ensures proper and efficient administration of the 
project, including--
    (i) Clearly defined project objectives that relate to the purpose of 
the Bilingual Vocational Training Program;
    (ii) For each objective, the specific tasks to be performed in order 
to achieve the specified project objective;
    (iii) How the applicant plans to use its resources and personnel to 
achieve each objective; and
    (iv) If the applicant plans to use a project advisory committee, a 
clear plan for using a project advisory committee to assist in project 
development, to review curriculum materials, and to make recommendations 
about job placements.
    (c) Program factors. (20 points) (1) The Secretary reviews each 
application to determine the quality of training to be provided, 
including--
    (i) Provision of vocational skills instruction in English and the 
trainees' native languages;
    (ii) Provision of job-related English-as-a-second language 
instruction;
    (iii) Coordination of the job-related English-as-a-second language 
instruction with the vocational skills instruction;
    (iv) Recruitment procedures that are targeted towards limited 
English proficient out-of-school youth and adults who have the greatest 
need for bilingual vocational training;
    (v) Assessment procedures that evaluate the language and vocational 
training needs of the trainees;
    (vi) Provision of counseling activities and employability skills 
instruction that prepare trainees for employment in an English language 
environment; and
    (vii) Job development and job placement procedures that provide 
opportunities for career advancement or entrepreneurship.
    (2) The Secretary reviews each application to determine the 
project's potential to have a lasting impact in the local geographic 
area, including the potential impact of the project on--
    (i) Program participants;
    (ii) The agency or agencies responsible for administering the 
bilingual vocational training program;
    (iii) Other employment training services in the local area; and
    (iv) The community.
    (d) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the director and other key personnel to be 
used in the project;
    (ii) The appropriateness of the time that each person referred to in 
paragraph (d)(1)(i) of this section will commit to the project; and
    (iii) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that personnel will be selected without regard to 
race, color, national origin, gender, age, or disability.
    (2) To determine personnel qualifications under paragraph (d)(1)(i) 
of this section, the Secretary considers--
    (i) Experience and training in fields related to the objectives of 
the project;
    (ii) Experience and training in project management; and
    (iii) Any other qualifications that pertain to the quality of the 
project.
    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is sufficient to support the proposed project, and 
that it represents a cost effective use of Bilingual Vocational Training 
Program funds;
    (2) Costs are necessary and reasonable in relation to the objectives 
of the proposed project; and
    (3) The facilities, equipment, and supplies that the applicant plans 
to use are adequate for the proposed project.
    (f) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and appropriate for the project;
    (2) Identifies at a minimum, types of data to be collected and 
reported with

[[Page 105]]

respect to the English-language competencies and academic and vocational 
competencies demonstrated by participants and the number and kinds of 
academic and work credentials acquired by individuals who complete the 
training;
    (3) Identifies at a minimum, types of data to be collected and 
reported with respect to enrollment, completion, and placement of 
participants by sex, racial or ethnic group, socio-economic status, and 
if appropriate, by level of English proficiency, for each occupation for 
which training is provided;
    (4) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results; and
    (5) Makes use of an external evaluator.
    (g) Demonstration and dissemination. (10 points) The Secretary 
reviews each application for information to determine the effectiveness 
and efficiency of the plan for demonstrating and disseminating 
information about project activities and results throughout the project 
period, including--
    (1) High quality in the design of the demonstration and 
dissemination plan and procedures for evaluating the effectiveness of 
the dissemination plan;
    (2) Provisions for publicizing the project at the local, State, and 
national levels by conducting or delivering presentations at 
conferences, workshops, and other professional meetings and by preparing 
materials for journal articles, newsletters, and brochures;
    (3) Provisions for making available the methods and techniques used 
by the project to others interested in replicating these methods and 
techniques, such as by inviting them to observe project activities;
    (4) A description of the types of materials the applicant plans to 
make available to help others replicate project activities and the 
methods for making the materials available; and
    (5) Provisions for assisting others to adopt and successfully 
implement the project or methods and techniques used by the project.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(a))



Sec. 427.22  What additional factors does the Secretary consider?

    (a) After evaluating the applications according to the criteria in 
Sec. 427.21 and consulting with the appropriate State board established 
under section 111 of the Act, the Secretary determines whether the most 
highly rated applications are equitably distributed among populations of 
individuals with limited English proficiency within the affected State.
    (b) The Secretary may select other applications for funding if doing 
so would improve the--
    (1) Equitable distribution of assistance among populations of 
individuals with limited English proficiency within a State; or
    (2) Geographical distribution of projects funded under this program.

(Authority: 20 U.S.C. 2441(d)(5))



          Subpart D_What Conditions Must Be Met After an Award?



Sec. 427.30  What are the evaluation requirements?

    (a) Each grantee shall annually provide and budget for an 
independent evaluation of its activities.
    (b) The evaluation must be both formative and summative in nature.
    (c) The annual evaluation must include descriptions and analyses of 
the accuracy of records and validity of measures by the project to 
establish and report on the English-language competencies and academic 
and vocational competencies demonstrated and the academic and work 
credentials acquired.
    (d) The annual evaluation must contain descriptions and analyses of 
the accuracy of records and validity of measures used by the project to 
establish and report on participant enrollment, completion, and 
placement by sex, racial or ethnic group, socio-economic status, and, if 
appropriate, by

[[Page 106]]

level of English proficiency for each occupation for which training has 
been provided.
    (e) The annual evaluation must also include--
    (1) The grantee's progress in achieving the objectives in its 
approved application, including any approved revisions of the 
application;
    (2) If applicable, actions taken by the grantee to address 
significant barriers impeding progress; and
    (3) The effectiveness of the project in promoting key elements for 
participants' job readiness, including--
    (i) Coordination of services; and
    (ii) Improved English-language, academic, and vocational skills 
competencies.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(a))



PART 428_BILINGUAL VOCATIONAL INSTRUCTOR TRAINING PROGRAM--
Table of Contents



                            Subpart A_General

Sec.
428.1  What is the Bilingual Vocational Instructor Training Program?
428.2  Who is eligible for an award?
428.3  What activities may the Secretary fund?
428.4  What regulations apply?
428.5  What definitions apply?

               Subpart B_How Does One Apply for an Award?

428.10  What must an application contain?

             Subpart C_How Does the Secretary Make an Award?

428.20  How does the Secretary evaluate an application?
428.21  What selection criteria does the Secretary use?
428.22  What additional factors does the Secretary consider?

    Authority: 20 U.S.C. 2441(b), unless otherwise noted.

    Source: 57 FR 36812, Aug. 14, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 428.1  What is the Bilingual Vocational Instructor Training
Program?

    The Bilingual Vocational Instructor Training Program provides 
financial assistance for preservice and inservice training for personnel 
participating in or preparing to participate in bilingual vocational 
education and training programs for limited English proficient 
individuals.

(Authority: 20 U.S.C. 2441(b))



Sec. 428.2  Who is eligible for an award?

    (a) The following entities are eligible for grants, contracts, or 
cooperative agreements under this program:
    (1) State agencies.
    (2) Public and private nonprofit educational institutions.
    (b) Private for-profit educational institutions are eligible only 
for contracts under this program.

(Authority: 20 U.S.C. 2441(b)(1))



Sec. 428.3  What activities may the Secretary fund?

    (a) The Secretary provides assistance through grants, contracts, or 
cooperative agreements for--
    (1) Preservice and inservice training for instructors, aides, 
counselors, or other ancillary personnel participating in or preparing 
to participate in bilingual vocational training programs; and
    (2) Fellowships and traineeships for individuals participating in 
preservice or inservice training.
    (b) The Secretary does not make an award under this program unless 
the Secretary determines that the applicant has an ongoing vocational 
education program in the field in which participants will be trained, 
and can provide instructors with adequate language capabilities in the 
language other than English to be used in the bilingual vocational 
training project.

(Authority: 20 U.S.C. 2441(b))



Sec. 428.4  What regulations apply?

    The following regulations apply to the Bilingual Vocational Training 
Program:
    (a) The regulations in 34 CFR part 400.

[[Page 107]]

    (b) The regulations in this part 428.

(Authority: 20 U.S.C. 2441(b))



Sec. 428.5  What definitions apply?

    The definitions in 34 CFR 400.4 apply to this program.

(Authority: 20 U.S.C. 2441(b))



               Subpart B_How Does One Apply for an Award?



Sec. 428.10  What must an application contain?

    An application must--
    (a) Provide an assurance that the activities and services for which 
assistance is sought will be administered by or under the supervision of 
the applicant;
    (b) Propose a project of a size, scope and design that will make a 
substantial contribution toward carrying out the purpose of the 
Bilingual Vocational Instructor Training Program;
    (c) Describe the capabilities of the applicant, including vocational 
training or education courses offered by the applicant, accreditation, 
and any certification of courses by appropriate State agencies;
    (d) Describe the qualifications of principal staff to be used in the 
bilingual vocational instructor training project;
    (e) Describe the number of participants to be served, the minimum 
qualifications for project participants, and the selection process for 
project participants;
    (f) Include the projected amount of the fellowships or traineeships, 
if any;
    (g) Contain sufficient information for the Secretary to make the 
determination required by Sec. 428.3(b); and
    (h) Provide an assurance that preservice training will be provided 
to individuals who have indicated their intent to engage as personnel in 
a vocational education program that serves limited English proficient 
individuals.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(d)(1), (4))



             Subpart C_How Does the Secretary Make an Award?



Sec. 428.20  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 428.21.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) or this 
section, based on the criteria in Sec. 428.21.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, in a notice published in the Federal 
Register, the Secretary may assign the reserved 15 points among the 
criteria in Sec. 428.21.

(Authority: 20 U.S.C. 2441(b), (d)(5))



Sec. 428.21  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria in evaluating 
each application:
    (a) Need. (15 points) (1) The Secretary reviews each application to 
determine the need for the proposed bilingual vocational instructor 
training project, including--
    (i) The need for the project in the specific geographic area or 
areas to be served by the proposed project;
    (ii) The training needs of program participants to be served by the 
proposed project;
    (iii) How these needs will be met through the proposed project; and
    (iv) The relationship of the proposed project to other ongoing 
personnel development programs in the geographic area or areas to be 
served by the proposed project.
    (2) The Secretary reviews each application to determine the extent 
to which, upon completion of their training, program participants will 
work with programs that provide vocational education to limited English 
proficient individuals.
    (b) Program design. (20 points) The Secretary reviews each 
application to determine the quality of the program design and the 
potential of the project

[[Page 108]]

to have a lasting impact on the geographic area or areas to be served by 
the proposed project, including--
    (1) Potential to increase the skill level of program participants, 
with particular regard to the following areas:
    (i) Knowledge of the needs of limited English proficient individuals 
enrolled in vocational education programs, and how those needs should 
influence teaching strategies and program design.
    (ii) Understanding of bilingual vocational training methodologies.
    (iii) Techniques for preparing limited English proficient 
individuals for employment; and
    (2) Potential to increase access to vocational education for limited 
English proficient individuals.
    (c) Plan of operation. (15 points) The Secretary reviews each 
application for an effective plan of management that ensures proper and 
efficient administration of the project, including--
    (1) Clearly defined project objectives that relate to the purpose of 
the Bilingual Vocational Instructor Training Program;
    (2) For each objective, the specific tasks to be performed in order 
to achieve the specified project objective; and
    (3) How the applicant plans to use its resources and personnel to 
achieve each objective.
    (d) Key personnel. (10 points) (1) The Secretary reviews each 
application to determine the quality of key personnel the applicant 
plans to use on the project, including--
    (i) The qualifications of the director and other key personnel to be 
used in the project;
    (ii) The appropriateness of the time that each person referred to in 
paragraph (d)(1)(i) of this section will commit to the project; and
    (iii) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that personnel will be selected without regard to 
race, color, national origin, gender, age, or disability.
    (2) To determine personnel qualifications under paragraph (d)(1)(i) 
of this section, the Secretary considers--
    (i) Experience and training in fields related to the objectives of 
the project;
    (ii) Experience and training in project management; and
    (iii) Any other qualifications that pertain to the quality of the 
project.
    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is sufficient to support the proposed project, and 
that it represents a cost effective use of Bilingual Vocational 
Instructor Training Program funds;
    (2) Costs are necessary and reasonable in relation to the objectives 
of the proposed project; and
    (3) The facilities that the applicant plans to use are adequate for 
the proposed project;
    (f) Evaluation plan. (10 points) The Secretary reviews each 
application to determine the quality of the project's evaluation plan, 
including the extent to which the plan--
    (1) Is clearly explained and appropriate for the bilingual 
vocational instructor training project;
    (2) To the extent possible, is objective and will produce data that 
are quantifiable;
    (3) Identifies outcomes of the project in terms of enrollment, 
completion and after-training work commitments of participants by sex, 
racial or ethnic group, and by level and kinds of language proficiency;
    (4) Identifies expected learning and skills outcomes for 
participants and how those outcomes will be measured; and
    (5) Includes activities during the formative stages of the project 
to help guide and improve the project, as well as a summative evaluation 
that includes recommendations for replicating project activities and 
results.
    (g) Dissemination plan. (10 points) The Secretary reviews each 
application to determine the effectiveness and efficiency of the plan to 
disseminate information about the project and demonstrate project 
activities and results, including--
    (1) High quality in its design and procedures for evaluating the 
effectiveness of the dissemination plan; and
    (2) A description of the types of materials the applicant plans to 
develop

[[Page 109]]

and make available to help others replicate project activities, and the 
methods to be used to make the materials available.

(Approved by the Office of Management and Budget under Control No. 1830-
0013)

(Authority: 20 U.S.C. 2441(b))



Sec. 428.22  What additional factors does the Secretary consider?

    (a) After evaluating the applications according to the criteria in 
Sec. 428.21, and consulting with the appropriate State board established 
under section 111 of the Act, the Secretary determines whether the most 
highly rated applications are equitably distributed among populations of 
individuals with limited English proficiency within the affected State.
    (b) The Secretary may select other applications for funding if doing 
so would improve the--
    (1) Equitable distribution of assistance among populations of 
individuals with limited English proficiency within the affected State; 
or
    (2) Geographical distribution of projects funded under this program.

(Authority: 20 U.S.C. 2441(d)(5))



PART 429_BILINGUAL VOCATIONAL MATERIALS, METHODS, AND TECHNIQUES 
PROGRAM--Table of Contents



                            Subpart A_General

Sec.
429.1  What is the Bilingual Vocational Materials, Methods, and 
          Techniques Program?
429.2  Who is eligible to apply for assistance under this program?
429.3  What regulations apply to this program?
429.4  What definitions apply to this program?

Subpart B_What Kinds of Activities Does the Secretary Assist Under This 
                                Program?

429.10  What types of projects may be funded?
429.11  How does the Secretary establish priorities for this program?

                Subpart C_How Does One Apply for a Grant?

429.20  What must an application include?

             Subpart D_How Does the Secretary Make a Grant?

429.30  How does the Secretary evaluate an application?
429.31  What selection criteria does the Secretary use?

    Authority: Sec. 441(c) of the Carl D. Perkins Vocational Education 
Act, 20 U.S.C. 2441(c), as enacted by Pub. L. 98-524, unless otherwise 
noted.

    Source: 50 FR 33255, Aug. 16, 1985, unless otherwise noted. 
Redesignated at 57 FR 36771, Aug. 14, 1992.



                            Subpart A_General



Sec. 429.1  What is the Bilingual Vocational Materials, Methods,
and Techniques Program?

    The Bilingual Vocational Materials, Methods, and Techniques Program 
provides financial assistance for the development of instructional and 
curriculum materials, methods, or techniques for bilingual vocational 
training for individuals with limited English proficiency.

(Authority: Sec. 441(c)(1); 20 U.S.C. 2441(c)(1))



Sec. 429.2  Who is eligible to apply for assistance under this program?

    (a) The following are eligible to apply for grants, contracts, or 
cooperative agreements under this program:
    (1) State agencies.
    (2) Educational institutions.
    (3) Nonprofit organizations.
    (b) The following are eligible for contracts under this program:
    (1) Private for-profit organizations.
    (2) Individuals.

(Authority: Sec. 441(c)(1); 20 U.S.C. 2441(c)(1))



Sec. 429.3  What regulations apply to this program?

    The following regulations apply to the Bilingual Vocational 
Materials, Methods, and Techniques Program:
    (a) The regulations in 34 CFR part 400.
    (b) The regulations in this part.

(Authority: Sec. 441(c); 20 U.S.C. 2441(c))

[[Page 110]]



Sec. 429.4  What definitions apply to this program?

    The definitions in 34 CFR 400.4 apply to this program.

(Authority: Sec. 441(c); 20 U.S.C. 2441(c))



Subpart B_What Kinds of Activities Does the Secretary Assist Under This 
                                Program?



Sec. 429.10  What types of projects may be funded?

    The Secretary provides assistance through grants, contracts, or 
cooperative agreements for--
    (a) Research in bilingual vocational training;
    (b) The development of instructional and curriculum materials, 
methods, or techniques;
    (c) Training projects to familiarize State agencies and training 
institutions with research findings and with successful pilot and 
demonstration projects in bilingual vocational education and training; 
and
    (d) Experimental, developmental, pilot, and demonstration projects.

(Authority: Sec. 441.(c)(2); 20 U.S.C. 2441(c)(2))



Sec. 429.11  How does the Secretary establish priorities for this
program?

    (a) The Secretary may announce, through one or more notices 
published in the Federal Register, the priorities for this program, if 
any, from the types of projects described in Sec. 429.10.
    (b) The Secretary may establish a separate competition for one or 
more of the priorities selected. If a separate competition is 
established for one or more priorities, the Secretary may reserve all 
applications that relate to those priorities for review as part of the 
separate competition.

(Authority: Sec. 441(c)(2); 20 U.S.C. 2441(c)(2))

[50 FR 33255, Aug. 16, 1985. Redesignated at 57 FR 36771, Aug. 14, 1992, 
and amended at 59 FR 1652, Jan. 12, 1994]



                Subpart C_How Does One Apply for a Grant?



Sec. 429.20  What must an application include?

    An application under this part must--
    (a) Describe the qualifications of staff responsible for the 
project; and
    (b) Provide that the activities and services for which assistance is 
sought will be administered by or under the supervision of the 
applicant.

(Approved by the Office of Management and Budget under control number 
1830-0013)

(Authority: Sec. 441(d)(1), (3); 20 U.S.C. 2441(d)(1), (3))



             Subpart D_How Does the Secretary Make a Grant?



Sec. 429.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application for a grant or 
cooperative agreement on the basis of the criteria in Sec. 429.31.
    (b) The Secretary may award up to 100 points, including a reserved 
15 points to be distributed in accordance with paragraph (d) of this 
section, based on the criteria in Sec. 429.31.
    (c) Subject to paragraph (d) of this section, the maximum possible 
points for each criterion is indicated in parentheses after the heading 
for each criterion.
    (d) For each competition, as announced in a notice published in the 
Federal Register, the Secretary may assign the reserved 15 points among 
the criteria in Sec. 429.31.

(Authority: Sec. 441(c), 20 U.S.C. 2441(c))

[50 FR 33255, Aug. 16, 1985. Redesignated at 57 FR 36771, Aug. 14, 1992, 
and amended at 59 FR 1652, Jan. 12, 1994]



Sec. 429.31  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria in evaluating 
each application:
    (a) Need. (20 points) (1) The Secretary reviews each application for 
information that shows the need for the proposed services and activities 
for individuals with limited English proficiency.

[[Page 111]]

    (2) The Secretary looks for information that shows--
    (i) Specific evidence of the need; and
    (ii) Specific information about how the need will be met.
    (b) Plan of operation. (20 points)
    (1) The Secretary reviews each application for information that 
shows the quality of the plan of operation for the project.
    (2) The Secretary looks for information that shows--
    (i) High quality in the design of the project;
    (ii) An effective plan of management that ensures proper and 
efficient administration of the project;
    (iii) A clear description of how the objectives of the project 
relate to the purpose of the program;
    (iv) The way the applicant plans to use its resources and personnel 
to achieve each objective; and
    (v) A clear description of how the applicant will provide equal 
access and treatment for eligible project participants who are members 
of groups that have been traditionally underrepresented, such as--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Handicapped persons; and
    (D) The elderly.
    (c) Quality of key personnel. (20 points)
    (1) The Secretary reviews each application for information that 
shows the qualifications of the key personnel the applicant plans to use 
on the project.
    (2) The Secretary looks for information that shows--
    (i) The qualifications of the project director (if one is to be 
used);
    (ii) The qualifications of each of the other key personnel to be 
used in the project;
    (iii) The time that each person referred to in paragraphs (c)(2) (i) 
and (ii) of this section will commit to the project; and
    (iv) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally underrepresented, such as--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Handicapped persons; and
    (D) The elderly.
    (3) To determine personnel qualifications, the Secretary considers 
experience and training, in fields related to the objectives of the 
project, as well as other information that the applicant provides.
    (d) Budget and cost effectiveness. (10 points)
    (1) The Secretary reviews each application for information that 
shows that the project has an adequate budget and is cost effective.
    (2) The Secretary looks for information that shows--
    (i) The budget for the project is adequate to support the project 
activities; and
    (ii) Costs are reasonable in relation to the objectives of the 
project.
    (e) Evaluation plan. (10 points)
    (1) The Secretary reviews each application for information that 
shows the quality of the evaluation plan for the project.

    Cross Reference: See 34 CFR 75.590 (Evaluation by the grantee).

    (2) The Secretary looks for information that shows methods of 
evaluation that are appropriate for the project and, to the extent 
possible, are objective and produce data that are quantifiable.
    (f) Adequacy of resources. (5 points)
    (1) The Secretary reviews each application for information that 
shows that the applicant plans to devote adequate resources to the 
project.
    (2) The Secretary looks for information that shows--
    (i) The facilities that the applicant plans to use are adequate; and
    (ii) The equipment and supplies that the applicant plans to use are 
adequate.

(Authority: Sec. 441(c); 20 U.S.C. 2441(c))

(Approved by the Office of Management and Budget under control number 
1830-0013)

[50 FR 33255, Aug. 16, 1985; 50 FR 38802, Sept. 25, 1985]

                          PARTS 460 [RESERVED]

[[Page 112]]



PART 461_ADULT EDUCATION STATE-ADMINISTERED BASIC GRANT PROGRAM
--Table of Contents



                            Subpart A_General

Sec.
461.1  What is the Adult Education State-administered Basic Grant 
          Program?
461.2  Who is eligible for an award?
461.3  What are the general responsibilities of the State educational 
          agency?
461.4  What regulations apply?
461.5  What definitions apply?

              Subpart B_How Does a State Apply for a Grant?

461.10  What documents must a State submit to receive a grant?
461.11  How is the State plan developed?
461.12  What must the State plan contain?
461.13  What procedures does a State use to submit its State plan?
461.14  When are amendments to a State plan required?

        Subpart C_How Does the Secretary Make a Grant to a State?

461.20  How does the Secretary make allotments?
461.21  How does the Secretary make reallotments?
461.22  What criteria does the Secretary use in approving a State's 
          description of efforts relating to program reviews and 
          evaluations?
461.23  How does the Secretary approve State plans and amendments?

   Subpart D_How Does a State Make an Award to an Eligible Recipient?

461.30  Who is eligible for a subgrant or contract?
461.31  How does a State award funds?
461.32  What are programs for corrections education and education for 
          other institutionalized adults?
461.33  What are special experimental demonstration projects and teacher 
          training projects?

            Subpart E_What Conditions Must Be Met by a State?

461.40  What are the State and local administrative costs requirements?
461.41  What are the cost-sharing requirements?
461.42  What is the maintenance of effort requirement?
461.43  Under what circumstances may the Secretary waive the maintenance 
          of effort requirement?
461.44  How does a State request a waiver of the maintenance of effort 
          requirement?
461.45  How does the Secretary compute maintenance of effort in the 
          event of a waiver?
461.46  What requirements for program reviews and evaluations must be 
          met by a State?

   Subpart F_What Are the Administrative Responsibilities of a State?

461.50  What are a State's responsibilities regarding a State advisory 
          council on adult education and literacy?
461.51  What are the membership requirements of a State advisory 
          council?
461.52  What are the responsibilities of a State advisory council?
461.53  May a State establish an advisory body other than a State 
          advisory council?

    Authority: 20 U.S.C. 1201 et seq., unless otherwise noted.

    Source: 57 FR 24092, June 5, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 461.1  What is the Adult Education State-administered Basic
Grant Program?

    The Adult Education State-administered basic Grant Program (the 
program) is a cooperative effort between the Federal Government and the 
States to provide adult education. Federal funds are granted to the 
States on a formula basis. Based on need and resources available, States 
fund local programs of adult basic education, programs of adult 
secondary education, and programs for adults with limited English 
proficiency.

(Authority: 20 U.S.C. 1203)



Sec. 461.2  Who is eligible for an award?

    State educational agencies (SEAs) are eligible for awards under this 
part.

(Authority: 20 U.S.C. 1203)



Sec. 461.3  What are the general responsibilities of the State
educational agency?

    (a) A State that desires to participate in the program shall 
designate the SEA as the sole State agency responsible for the 
administration and supervision of the program under this part.

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    (b) The SEA has the following general responsibilities:
    (1) Development, submission, and implementation of the State 
application and plan, and any amendments to these documents.
    (2) Evaluation of activities, as described in section 352 of the Act 
and Sec. 461.46.
    (3) Consultation with the State advisory council, if a State 
advisory council has been established under section 332 of the Act and 
Sec. 461.50.
    (4) Consultation with other appropriate agencies, groups, and 
individuals involved in the planning, administration, evaluation, and 
coordination of programs funded under the Act.
    (5)(i) Assignment of personnel as may be necessary for State 
administration of programs under the Act.
    (ii) The SEA must ensure that--
    (A) These personnel are sufficiently qualified by education and 
experience; and
    (B) There is a sufficient number of these personnel to carry out the 
responsibilities of the State.
    (6) If the State imposes any rule or policy relating to the 
administration and operation of programs under the Act (including any 
rule or policy based on State interpretation of any Federal law, 
regulation, or guidance), the SEA shall identify the rule or policy as a 
State-imposed requirement.
    (7) By July 25, 1993, development and implementation, in 
consultation with a widely representative group of appropriate experts, 
educators, and administrators, of indicators of program quality to be 
used to evaluate programs assisted under this part, as required by 
section 352 of the Act and Sec. 461.46, to determine whether those 
programs are effective, including whether those programs are 
successfully recruiting, retaining, and improving the literacy skills of 
the individuals served under those programs.

(Authority: 20 U.S.C. 1205 (a) and (b)



Sec. 461.4  What regulations apply?

    The following regulations apply to the program:
    (a) The regulations in this part 461.
    (b) The regulations in 34 CFR part 460.

(Authority: 20 U.S.C. 1201 et seq.)



Sec. 461.5  What definitions apply?

    (a) The definitions in 34 CFR 460.4 apply to this part.
    (b) For the purposes of this part, ``State'' includes the Federated 
States of Micronesia and the Republic of the Marshall Island.

(Authority: 20 U.S.C. 1201 et seq.)



              Subpart B_How Does a State Apply for a Grant?



Sec. 461.10  What documents must a State submit to receive a grant?

    An SEA shall submit the following to the Secretary as one document:
    (a) A State plan, developed once every four years, that meets the 
requirements of the Act and contains the information required in 
Sec. 461.12.
    (b) A State application consisting of program assurances, signed by 
an authorized official of the SEA, to provide that--
    (1) The SEA will provide such methods of administration as are 
necessary for the proper and efficient administration of the Act;
    (2) Federal funds granted to the State under the Act will be used to 
supplement, and not supplant, the amount of State and local funds 
available for uses specified in the Act;
    (3) Programs, services, and activities funded in accordance with the 
uses specified in section 322 of the Act are designed to expand or 
improve the quality of adult education programs, including programs for 
educationally disadvantaged adults, to initiate new programs of high 
quality, or, if necessary, to maintain programs;
    (4) The SEA will provide such fiscal control and fund accounting 
procedures as may be necessary to ensure proper disbursement of, and 
accounting for, Federal funds paid to the State (including Federal funds 
paid by the State to eligible recipients under the Act);
    (5) The SEA has instituted policies and procedures to ensure that 
copies of the State plan and all statements of general policy, rules, 
regulations, and

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procedures will be made available to the public;
    (6) The SEA will comply with the maintenance of effort requirements 
in section 361(b) of the Act;

    Cross Reference: See Sec. 461.42 What is the maintenance of effort 
requirement?

    (7) Adults enrolled in adult basic education programs, including 
programs for adults with limited English proficiency, will not be 
charged tuition, fees, or any other charges, or be required to purchase 
any books or any other materials that are needed for participation in 
the program;
    (8) The SEA may use not more than 20 percent of the funds granted to 
the State under the Act for programs of equivalency for a certificate of 
graduation from secondary school;
    (9) As may be required by the Secretary, the SEA will report 
information concerning special experimental demonstration projects and 
teacher training projects supported under section 353 of the Act; and
    (10) The SEA annually will report information abut the State's adult 
education students, programs, expenditures, and goals, as may be 
required by the Secretary.

(Authority: 20 U.S.C. 1203a(b)(2), 1206(a), 1206b, 1207a, 1208, and 
1209(b))

(Approved by the Office of Management and Budget under control number 
1830-0026)



Sec. 461.11  How is the State plan developed?

    In formulating the State plan, the SEA shall--
    (a) Meet with and utilize the State advisory council, if a council 
is established under section 332 of the Act and Sec. 461.50;
    (b) After providing appropriate and sufficient notice to the public, 
conduct at least two public hearings in the State for the purpose of 
affording all segments of the public, including groups serving 
educationally disadvantaged adults, and interested organizations and 
groups, an opportunity to present their views and make recommendations 
regarding the State plan;
    (c) Make a thorough assessment of--
    (1) The needs of adults, including educationally disadvantaged 
adults, eligible to be served as well as adults proposed to be served 
and those currently served by the program; and
    (2) The capability of existing programs and institutions to meet 
those needs; and
    (d) State the changes and improvements required in adult education 
to fulfill the purposes of the Act and the options for implementing 
these changes and improvements.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1206a(a)(1) and (2), (b))



Sec. 461.12  What must the State plan contain?

    (a) Consistent with the assessment described in Sec. 461.11(c), a 
State plan must, for the four-year period covered by the plan--
    (1) Describe the adult education needs of all segments of the adult 
population in the State identified in the assessment, including the 
needs of those adults who are educationally disadvantaged:
    (2) Describe and provide for the fulfillment of the literacy needs 
of individuals in the State;
    (3) Set forth measurable goals for improving literacy levels, 
retention in literacy programs, and long-term learning gains of 
individuals in the State and describe a comprehensive approach for 
achieving those goals, including the development of indicators of 
program quality as required by section 331(a)(2) of the Act and 
Sec. 461.3(b)(7).
    (4) Describe the curriculum, equipment, and instruments that are 
being used by instructional personnel in programs and indicate how 
current these elements are;
    (5) Describe the means by which the delivery of adult education 
services will be significantly expanded (including efforts to reach 
typically underserved groups such as educationally disadvantaged adults, 
individuals of limited English proficiency, and adults with 
disabilities) through coordination by agencies, institutions, and 
organizations including the public school system, businesses, labor 
unions, libraries, institutions of higher education, public health 
authorities, employment or

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training programs, antipoverty programs, organizations providing 
assistance to the homeless, and community and voluntary organizations;
    (6) Describe the means by which representatives of the public and 
private sectors were involved in the development of the State plan and 
how they will continue to be involved in the implementation of the plan, 
especially in the expansion of the delivery of adult education services 
by cooperation and collaboration with those public and private agencies, 
institutions, and organizations;
    (7) Describe the capability of existing programs and institutions to 
meet the needs described in paragraph (a)(1) of this section, including 
the other Federal and non-Federal resources available to meet those 
needs;
    (8) Describe the outreach activities that the State intends to carry 
out during the period covered by the plan, including specialized 
efforts--such as flexible course schedules, auxiliary aids and services, 
convenient locations, adequate transportation, and child care services--
to attract and assist meaningful participation in adult education 
programs;
    (9)(i) Describe the manner in which the SEA will provide for the 
needs of adults of limited English proficiency or no English proficiency 
by providing programs designed to teach English and, as appropriate, to 
allow these adults to progress effectively through the adult education 
program or to prepare them to enter the regular program of adult 
education as quickly as possible.
    (ii) These programs may, to the extent necessary, provide 
instruction in the native language of these adults or may provide 
instruction exclusively in English.
    (iii) These programs must be carried out in coordination with 
programs assisted under the Bilingual Education Act and with bilingual 
vocational education programs under the Carl D. Perkins Vocational and 
Applied Technology Education Act;
    (10) Describe how the particular education needs of adult 
immigrants, the incarcerated, adults with disabilities, the chronically 
unemployed, homeless adults, the disadvantaged, and minorities in the 
State will be addressed;
    (11)(i) Describe the progress the SEA has made in achieving the 
goals set forth in each State plan subsequent to the initial State plan 
filed in 1989; and
    (ii) Describe how the assessment of accomplishments and the findings 
of program reviews and evaluations required by section 352 of the Act 
and Sec. 461.46 were considered in establishing the State's goals for 
adult education in the plan being submitted;
    (12) Describe the criteria the SEA will use in approving 
applications by eligible recipients and allocating funds made available 
under the Act to those recipients;
    (13) Describe the methods proposed for joint planning and 
coordination of programs carried out under the Act with programs 
conducted under applicable Federal and State programs, including the 
Carl D. Perkins Vocational and Applied Technology Education Act, the Job 
Training Partnership Act, the Rehabilitation Act of 1973, the 
Individuals with Disabilities Education Act, the Immigration Reform and 
Control Act of 1986, the Higher Education Act of 1965, and the Domestic 
Volunteer Service Act, to ensure maximum use of funds and to avoid 
duplication of services;
    (14) Describe the steps taken to utilize volunteers, particularly 
volunteers assigned to the Literacy Corps established under the Domestic 
Volunteer Service Act and volunteers trained in programs carried out 
under section 382 of the Act and 34 CFR part 476, but only to the extent 
that those volunteers supplement and do not supplant salaried employees;
    (15) Describe the measures to be taken to ensure that adult 
education programs, services, and activities under the Act will take 
into account the findings of program reviews and evaluations required by 
section 352 of the Act and Sec. 461.46;

    Cross Reference: See Sec. 461.22. What criteria does the Secretary 
use in approving a State's description of efforts relating to program 
reviews and evaluation?

    (16) Report the amount of administrative funds to be spent on 
program improvements;

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    (17) Contain assurances that financial assistance provided under 
this part is used to assist and expand existing programs and to develop 
new programs for--
    (i) Adults whose lack of basic skills renders them unemployable;
    (ii) Adults whose lack of basic skills keeps them, whether employed 
or unemployed, from functioning independently in society; and
    (iii) Adults whose lack of basic skills severely reduces their 
ability to have a positive effect on the literacy of their children;
    (18) Describe the SEA's policies, procedures, and activities for 
carrying out special experimental demonstration projects and teacher 
training projects that meet the requirements of Sec. 461.33;
    (19) Describe the SEA's policies, procedures, and activities for 
carrying out corrections education and education for other 
institutionalized adults that meet the requirements of Sec. 461.32;
    (20) Describe the SEA's planned use of Federal funds for 
administrative costs under Sec. 461.40(a), including any planned 
expenditures for a State advisory council under Sec. 461.50.

    Note: An additional source of funding exists under section 356(g) of 
the Act and 34 CFR part 464, but need not be reported under this 
paragraph.


and
    (21) Include a summary of recommendations received and the SEA's 
responses to the recommendations made through the State plan development 
process required under Sec. 461.11(b).
    (b) Each State plan must provide assurance that public or private 
non-profit entities eligible under Sec. 461.30--local educational 
agencies, public or private nonprofit agencies, community-based 
organizations, correctional education agencies, postsecondary 
educational institutions, institutions that serve educationally 
disadvantaged adults, and any other institution that has the ability to 
provide literacy services to adults and families--will be provided 
direct and equitable access to all Federal funds provided under this 
part, including--
    (1) The right to submit applications directly to the SEA for those 
funds; and
    (2) Use by the SEA of a process for selecting recipients of those 
funds that gives each agency, institution, and organization a fair 
chance of receiving an award.
    (c) To be eligible to participate in the State-administered 
Workplace Literacy Program under section 371(b) of the Act, an SEA shall 
comply with the requirements in 34 CFR 462.10.
    (d) To be eligible to participate in the State-administered English 
Literacy Program under section 372(a) of the Act, an SEA shall comply 
with the requirements in 34 CFR 463.10.
    (e) In order for a State, or the local recipients within the State, 
to be eligible to apply for funds under the Adult Migrant Farmworker and 
Immigrant Education Program under section 381 of the Act and 34 CFR part 
475, an SEA shall describe the types of projects appropriate for meeting 
the educational needs of adult migrant farm workers and immigrants under 
section 381 of the Act.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1203a(a)(1); 1204; 1205(c); 1206a(a)(2), 
(b)(1)(B), (c), (d); 1208; 1211(b)(3)(A); 1211a(a)(2); and 1213(a))



Sec. 461.13  What procedures does a State use to submit its State plan?

    (a) An SEA shall submit its State plan to the Secretary not later 
than 90 days prior to the first program year for which the plan is in 
effect.
    (b)(1) Not less than sixty days prior to submitting the State plan 
to the Secretary, the SEA shall give the State advisory council, if one 
is established under section 332 of the Act and Sec. 461.50, an 
opportunity to review and comment on the plan.
    (2) The SEA shall respond to all timely and substantive objections 
of the State advisory council and include with the State plan a copy of 
those objections and its response.
    (c)(1) Not less than sixty days prior to submitting the State plan 
to the Secretary, the SEA shall give the following entities an 
opportunity to review and comment on the plan:
    (i) The State board or agency for vocational education.

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    (ii) The State Job Training Coordinating Council under the Job 
Training Partnership Act.
    (iii) The State board or agency for postsecondary education.
    (2) Comments (to the extent those comments are received in a timely 
fashion) of entities listed in paragraph (c)(1) of this section and the 
SEA's response must be included with the State plan.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1206(b) and 1206a(a)(3) (A) and (B))



Sec. 461.14  When are amendments to a State plan required?

    (a) General. If an amendment to the State plan is necessary, the SEA 
shall submit the amendment to the Secretary not later than 90 days prior 
to the program year of operation to which the amendment applies.
    (b) Indicators of program quality. Each SEA shall amend its plan by 
July 25, 1993, to include the indicators of program quality required by 
section 331 of the Act and Sec. 461.3(b)(7). Cross-Reference: See 34 CFR 
76.140-76.142 Amendments.

(Approved by the Office of Management and Budget under control number 
1830-0026)

(Authority: 20 U.S.C. 1207(a))



        Subpart C_How Does the Secretary Make a Grant to a State?



Sec. 461.20  How does the Secretary make allotments?

    The Secretary determines the amount of each State's grant according 
to the formula in section 313(b) of the Act.

(Authority: 20 U.S.C. 1201b(b))



Sec. 461.21  How does the Secretary make reallotments?

    (a) Any amount of any State's allotment under section 313(b) of the 
Act that the Secretary determines is not required, for the period the 
allotment is available, for carrying out that State's plan, is 
reallotted to other States on dates that the Secretary may fix.
    (b) The Secretary determines any amounts to be reallotted on the 
basis of--
    (1) Reports, filed by the States, of the amounts required to carry 
out their State plans; and
    (2) Other information available to the Secretary.
    (c) Reallotments are made to other States in proportion to those 
State's original allotments for the fiscal year in which allotments 
originally were made, unless the Secretary reduces a State's 
proportionate share by the amount the Secretary estimates will exceed 
the sum the State needs and will be able to use under its plan.
    (d) The total of any reductions made under paragraph (c) of this 
section is reallotted among those States whose proportionate shares were 
not reduced.
    (e)(1) Any amount reallotted to a State during a fiscal year is 
deemed part of the State's allotment for that fiscal year.
    (2) A reallotment of funds from one State to another State does not 
extend the period of time in which the funds must be obligated.

(Authority: 20 U.S.C. 1201b(c))



Sec. 461.22  What criteria does the Secretary use in approving
a State's description of efforts relating to program reviews 
and evaluations?

    The Secretary considers the following criteria in approving a 
State's description of efforts relating to program reviews and 
evaluations under section 342(c)(13) of the Act and Sec. 461.12(a)(15):
    (a) The extent to which the State will have effective procedures for 
using the findings of program reviews and evaluations to identify, on a 
timely basis, those programs, services, and activities under the Act 
that are not meeting the educational goals set forth in the State plan 
and approved applications of eligible recipients.
    (b) The adequacy of the State's procedures for effecting timely 
changes that will enable programs, services, and activities identified 
under paragraph (a) of this section to meet the educational goals in the 
State plan and approved applications of eligible recipients.

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    (c) The extent to which the State will continue to review those 
programs, activities, and services, and affect further changes as 
necessary to meet those educational goals.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1206a(c)(13) and 1207a)



Sec. 461.23  How does the Secretary approve State plans and 
amendments?

    (a) The Secretary approves, within 60 days of receipt, a State plan 
or amendment that the Secretary determines complies with the applicable 
provisions of the Act and the regulations in this part.
    (b) In approving a State plan or amendment, the Secretary considers 
any information submitted in accordance with Sec. 461.13 (b) and (c).
    (c) The Secretary notifies the SEA, in writing, of the granting or 
withholding of approval.
    (d) The Secretary does not finally disapprove a State plan or 
amendment without first affording the State reasonable notice and 
opportunity for a hearing.

(Authority: 20 U.S.C. 1206(b), 1206a(a)(3), and 1207(b))



   Subpart D_How Does a State Make an Award to an Eligible Recipient?



Sec. 461.30  Who is eligible for a subgrant or contract?

    (a) The following public or private nonprofit entities are eligible 
to apply to the SEA for an award:
    (1) A local educational agency (LEA).
    (2) A public or private nonprofit agency.
    (3) A correctional education agency.
    (4) A community-based organization.
    (5) A postsecondary educational institution.
    (6) An institution that serves educationally disadvantaged adults.
    (7) Any other institution that has the ability to provide literacy 
services to adults and families.
    (b) A public or private nonprofit entity listed in paragraph (a) of 
this section may apply on behalf of a consortium that includes a for-
profit agency, organization, or institution that can make a significant 
contribution to attaining the objectives of the Act.
    (c)(1) Each State shall also use an amount of funds provided under 
this part, as determined by the State given the State's needs and 
resources for adult education, for competitive 2-year grants to public 
housing authorities for literacy programs and related activities. Any 
public housing authority that receives a grant under this paragraph 
shall consult with local adult education providers in conducting 
programs and activities with assistance provided under the grant. Any 
grant provided under this paragraph is referred to as a ``Gateway 
Grant.''
    (2) For the purposes of this part, ``public housing authority'' 
means a public housing agency, as defined in 42 U.S.C. 1437a(b)(6), that 
participates in public housing, as defined in 42 U.S.C. 1437a(b)(1).

(Authority: 20 U.S.C. 1203a(a)(1), (2), (3)(A))



Sec. 461.31  How does a State award funds?

    (a) In selecting local recipients, an SEA shall give preference to 
those local applicants that have demonstrated or can demonstrate a 
capability to recruit and serve educationally disadvantaged adults, 
particularly in areas with a high proportion of adults who do not have a 
certificate of graduation from a school providing secondary education or 
its equivalent.
    (b) An SEA shall award funds on the basis of applications submitted 
by eligible recipients.
    (c) In reviewing a local application, an SEA shall determine that 
the application contains the following:
    (1) A description of current programs, activities, and services 
receiving assistance from Federal, State, and local sources that provide 
adult education in the geographic area proposed to be served by the 
applicant.
    (2) A description of cooperative arrangements (including 
arrangements with business, industry, and volunteer literacy 
organizations as appropriate) that have been made to deliver services to 
adults.
    (3) Assurances that the adult educational programs, services, or 
activities that the applicant proposes to provide are coordinated with 
and do not

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duplicate programs, services, or activities made available to adults 
under other Federal, State, and local programs, including the Job 
Training Partnership Act, the Carl D. Perkins Vocational and Applied 
Technology Education Act, the Rehabilitation Act of 1973, the 
Individuals with Disabilities Education Act, the Indian Education Act, 
the Higher Education Act of 1965, and the Domestic Volunteer Service 
Act.
    (4) The projected goals of the applicant with respect to participant 
recruitment, retention, and educational achievement and how the 
applicant will measure and report progress in meeting its goals.
    (5) Any other information the SEA considers necessary.
    (d) In determining which programs receive assistance, the SEA shall 
consider--
    (1) The past effectiveness of applicants in providing services 
(especially with respect to recruitment and retention of educationally 
disadvantaged adults and the learning gains demonstrated by those 
adults);
    (2) The degree to which the applicant will coordinate and utilize 
other literacy and social services available in the community; and
    (3) The commitment of the applicant to serve individuals in the 
community who are most in need of literacy services.
    (e) In reviewing a local application, an SEA may consider the extent 
to which the application--
    (1) Identifies the needs of the population proposed to be served by 
the applicant;
    (2) Proposes activities that are designed to reach educationally 
disadvantaged adults;
    (3) Describes a project that gives special emphasis to adult basic 
education;
    (4) Describes adequate outreach activities, such as--
    (i) Flexible schedules to accommodate the greatest number of adults 
who are educationally disadvantaged;
    (ii) Location of facilities offering programs that are convenient to 
large concentrations of the adult populations identified by the State in 
its four-year State plan or how the locations of facilities will be 
convenient to public transportation; and
    (iii) The availability of day care and transportation services to 
participants in the project;
    (5) Describes proposed programs, activities, and services that 
address the identified needs;
    (6) Describes the resources available to the applicant--other than 
Federal and State adult education funds--to meet those needs (for 
example, funds provided under the Job Training Partnership Act, the Carl 
D. Perkins Vocational and Applied Technology Education Act, the 
Rehabilitation Act of 1973, the Individuals with Disabilities Education 
Act, the Indian Education Act, the Higher Education Act of 1965, or the 
Domestic Volunteer Service Act, and local cash or in-kind 
contributions); and
    (7) Describes project objectives that can be accomplished within the 
amount of the applicant's budget request.
    (f) An SEA may not approve an application for a consortium that 
includes a for-profit agency, organization or institution unless the 
State has first determined that--
    (1) The for-profit entity can make a significant contribution to 
attaining the objectives of the Act; and
    (2) The public or private nonprofit agency, organization, or 
institution will enter into a contract with the for-profit agency, 
organization, or institution for the establishment or expansion of 
programs.
    (g) If an SEA awards funds to a consortium that includes a for-
profit agency, organization, or institution, the award must be made 
directly to the public or private nonprofit agency, organization, or 
institution that applies on behalf of the consortium.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1203a(a) and 1206a(c)(4))



Sec. 461.32  What are programs for corrections education and 
education for other institutionalized adults?

    (a) An SEA shall use not less than 10 percent of its grant for 
educational

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programs for criminal offenders in corrections institutions and for 
other institutionalized adults. Those programs may include--
    (1) Academic programs for--(i) Basic education with special emphasis 
on reading, writing, vocabulary, and arithmetic;
    (ii) Special education, as defined by State law;
    (iii) Bilingual education or English-as-a-second-language 
instruction; and
    (iv) Secondary school credit;
    (2) Vocational training programs;
    (3) Library development and library service programs;
    (4) Corrections education programs, including training for teacher 
personnel specializing in corrections education, such as courses in 
social education, basis skills instruction, and abnormal psychology;
    (5) Guidance and counseling programs;
    (6) Supportive services for criminal offenders, with special 
emphasis on the coordination of educational services with agencies 
furnishing services to criminal offenders after their release; and
    (7) Cooperative programs with educational institutions, community-
based organizations of demonstrated effectiveness, and the private 
sector, that are designed to provide education and training.
    (b)(1) An SEA shall establish its own statewide criteria and 
priorities for administering programs for corrections education and 
education for other institutionalized adults.
    (2) The SEA shall determine that an application proposing a project 
under paragraph (a) of this section contains the information in 
Sec. 461.31(c) and any other information the SEA considers necessary.

(Authority: 20 U.S.C. 1203a(b)(1) and 1204)



Sec. 461.33  What are special experimental demonstration projects
and teacher training projects?

    (a) In accordance with paragraph (b) of this section, an SEA shall 
use at least 15 percent of its grant for--
    (1) Special projects that--
    (i) Will be carried out in furtherance of the purposes of the Act;
    (ii) Will be coordinated with other programs funded under the Act; 
and
    (iii)(A) Involve the use of innovative methods (including methods 
for educating adults with disabilities, homeless adults, and adults of 
limited English proficiency), systems, materials, or programs that may 
have national significance or will be of special value in promoting 
effective programs under the Act; or
    (B) Involve programs of adult education, including education for 
adults with disabilities, homeless adults, and adults of limited English 
proficiency, that are part of community school programs, carried out in 
cooperation with other Federal, State, or local programs that have 
unusual promise in promoting a comprehensive or coordinated approach to 
the problems of adults with educational deficiencies; and
    (2)(i) Training persons engaged, or preparing to engage, as 
personnel in programs designed to carry out the purposes of the Act; and
    (ii) Training professional teachers, volunteers, and administrators, 
with particular emphasis on--
    (A) Training--(1) Full-time professional adult educators;
    (2) Minority adult educators; and
    (3) Educators of adults with limited English proficiency; and
    (B) Training teachers to recognize and more effectively serve 
illiterate individuals with learning disabilities and individuals who 
have reading ability below the fifth grade level.
    (b) An SEA shall use at least--
    (1) 10 percent of its grant for the purposes in paragraph (a)(2) of 
this section; and
    (2) Five percent of its grant for the purposes in paragraph (a)(1) 
or (a)(2) of this section, or both.
    (c)(1) An SEA shall establish its own statewide criteria and 
priorities for providing and administering special experimental 
demonstration projects and teacher training projects.
    (2) The SEA shall determine that an application proposing a project 
under paragraph (a) of this section contains--
    (i) The information in Sec. 461.31(c); and
    (ii) Any other information the SEA considers necessary.

(Authority: 20 U.S.C. 1208)

[[Page 121]]



            Subpart E_What Conditions Must be Met by a State?



Sec. 461.40  What are the State and local administrative costs
requirements?

    (a)(1) Beginning with the fiscal year 1991 grant (a grant that is 
awarded on or after July 1, 1991 from funds appropriated in the fiscal 
year 1991 appropriation), an SEA may use no more than 5 percent of its 
grant or $50,000--whichever is greater--for necessary and reasonable 
State administrative costs.
    (2) For grants awarded from funds appropriated for fiscal years 
prior to fiscal year 1991 (grants awarded before July 1, 1991), an SEA 
may determine what percent of its grant is necessary and reasonable for 
State administrative costs.
    (b)(1) At least 95 percent of an eligible recipient's award from the 
SEA must be expended for adult education instructional activities.
    (2) The remainder may be used for local administrative costs--
noninstructional expenses, including planning, administration, 
evaluation, personnel development, and coordination--that are necessary 
and reasonable.
    (3) If the administrative cost limits under paragraph (b)(2) of this 
section are insufficient for adequate planning, administration, 
evaluation, personnel development, and coordination of programs 
supported under the Act, the SEA shall negotiate with local grant 
recipients in order to determine an adequate level of funds to be used 
for noninstructional purposes.

(Authority: 20 U.S.C. 1203b and 1205(c))



Sec. 461.41  What are the cost-sharing requirements?

    (a) The Federal share of expenditures made under a State plan for 
any of the 50 States, the District of Columbia, and the Commonwealth of 
Puerto Rico may not exceed--
    (1) 90 percent of the costs of programs carried out with the fiscal 
year 1988 grant (a grant that is awarded on or after July 1, 1988 from 
funds appropriated in the fiscal year 1988 appropriation);
    (2) 90 percent of the costs of programs carried out with the fiscal 
year 1989 (a grant that is awarded on or after July 1, 1989 from funds 
appropriated in the fiscal year 1989 appropriation);
    (3) 85 percent of the costs of programs carried out with the fiscal 
year 1990 grant (a grant that is awarded on or after July 1, 1990 from 
funds appropriated in the fiscal year 1990 appropriation);
    (4) 80 percent of the costs of programs carried out with the fiscal 
year 1991 grant (a grant that is awarded on or after July 1, 1991 from 
funds appropriated in the fiscal year 1991 appropriation); and
    (5) 75 percent of the costs of programs carried out with the fiscal 
year 1992 grant (a grant that is awarded on or after July 1, 1992 from 
funds appropriated in the fiscal year 1992 appropriation) and from each 
grant thereafter.
    (b) The Federal share for American Samoa, Guam, the Northern Mariana 
Islands, the Federated States of Micronesia, the Republic of the 
Marshall Islands, Palau, and the Virgin Islands is 100 percent.
    (c) The Secretary determines the non-Federal share of expenditures 
under the State plan by considering--
    (1) Expenditures from State, local, and other non-Federal sources 
for programs, services, and activities of adult education, as defined in 
the Act, made by public or private entities that receive from the State 
Federal funds made available under the Act or State funds for adult 
education; and
    (2) Expenditures made directly by the State for programs, services, 
and activities of adult education as defined in the Act.

(Authority: 20 U.S.C. 1209(a); 48 U.S.C. 1681)



Sec. 461.42  What is the maintenance of effort requirement?

    (a) Basic standard. (1)(i) Except as provided in Sec. 461.43, a 
State is eligible for a grant from appropriations for any fiscal year 
only if the Secretary determines that the State has expended for adult 
education from non-Federal sources during the second preceding fiscal 
year (or program year) an amount not less than the amount expended 
during the third preceding fiscal year (or program year).

[[Page 122]]

    (ii) The Secretary determines maintenance of effort on a per student 
expenditure basis or on a total expenditure basis.
    (2) For purposes of determining maintenance of effort, the ``second 
preceding fiscal year (or program year)'' is the fiscal year (or program 
year) two years prior to the year of the grant for which the Secretary 
is determining the State's eligibility. The ``third preceding fiscal 
year (or program year)'' is the fiscal year (or program year) three 
years prior to the year of the grant for which the Secretary is 
determining the State's eligibility.

    Example: Computation based on fiscal year. If a State chooses to use 
the fiscal year as the basis for its maintenance of effort computations, 
the Secretary determines whether a State is eligible for the fiscal year 
1992 grant (a grant that is awarded on or after July 1, 1992 from funds 
appropriated in the fiscal year 1992 appropriation) by comparing 
expenditures from the second preceding fiscal year--fiscal year 1990 
(October 1, 1989-September 30, 1990)--with expenditures from the third 
preceding fiscal year--fiscal year 1989 (October 1, 1988-September 30, 
1989). If there has been no decrease in expenditures from fiscal year 
1989 to fiscal year 1990, the State has maintained effort and is 
eligible for its fiscal year 1992 grant.
    Computation based on program year. If a State chooses to use a 
program year running from July 1 to June 30 as the basis for its 
maintenance of effort computation, the Secretary determines whether a 
State is eligible for funds for the fiscal year 1992 grant by comparing 
expenditures from the second preceding program year--program year 1990 
(July 1, 1989-June 30, 1990)--with expenditures from the third preceding 
program year--program year 1989 (July 1, 1988-June 30, 1989). If there 
has been no decrease in expenditures from program year 1989 to program 
year 1990, the State has maintained effort and is eligible for its 
fiscal year 1992 grant.

    (b) Expenditures to be considered. In determining a State's 
compliance with the maintenance of effort requirement, the Secretary 
considers the expenditures described in Sec. 461.41(c).

(Authority: 20 U.S.C. 1209(b))



Sec. 461.43  Under what circumstances may the Secretary waive the
maintenance of effort requirement?

    (a) The Secretary may waive, for one year only, the maintenance of 
effort requirement in Sec. 461.42 if the Secretary determines that a 
waiver would be equitable due to exceptional or uncontrollable 
circumstances. These circumstances include, but are not limited to, the 
following:
    (1) A natural disaster.
    (2) An unforeseen and precipitous decline in financial resources.
    (b) The Secretary does not consider a tax initiative or referendum 
to be an exceptional or uncontrollable circumstance.

(Authority: 20 U.S.C. 1209(b)(2))



Sec. 461.44  How does a State request a waiver of the maintenance
of effort requirement?

    An SEA seeking a waiver of the maintenance of effort requirement in 
Sec. 461.42 shall--
    (a) Submit to the Secretary a request for a waiver; and
    (b) Include in the request--
    (1) The reason for the request; and
    (2) Any additional information the Secretary may require.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1209(b)(2))



Sec. 461.45  How does the Secretary compute maintenance of effort
in the event of a waiver?

    If a State has been granted a waiver of the maintenance of effort 
requirement that allows it to receive a grant from appropriations for a 
fiscal year, the Secretary determines whether the State has meet that 
requirement for the grant to be awarded for the year after the year of 
the waiver by comparing the amount spent for adult education from non-
Federal sources in the second preceding fiscal year (or program year) 
with the amount spent in the fourth preceding fiscal year (or program 
year.)

    Example: Because exceptional or uncontrollable circumstances 
prevented a State from maintaining effort in fiscal year 1990 (October 
1, 1989-September 30, 1990) or in program year 1990 (July 1, 1989-June 
30, 1990) at the level of fiscal year 1989 (October 1, 1988-September 
30, 1989) or program year 1989 (July 1, 1988-June 30, 1989), 
respectively, the Secretary grants the State a waiver of the maintenance 
of effort requirement that permits the State to receive its fiscal year 
1992 grant (a grant that is awarded on or after July 1,

[[Page 123]]

1992 from funds appropriated in the fiscal year 1992 appropriation). In 
order to determine whether a State has met the maintenance of effort 
requirement and therefore is eligible to receive its fiscal year 1993 
grant (the grant to be awarded for the year after the year of the 
waiver), the Secretary compares the State's expenditures from the second 
preceding fiscal year (or program year--fiscal year 1991 (October 1, 
1990-September 30, 1991) or program year 1991 (July 1, 1990-June 30, 
1991)--with expenditures from the fourth preceding fiscal year--fiscal 
year 1989 (October 1, 1988-September 30, 1989) or program year 1989 
(July 1, 1988-June 30, 1989). If the expenditures from fiscal year (or 
program year) 1991 are not less than the expenditures from fiscal year 
(or program year) 1989, the State has maintained effort and is eligible 
for its fiscal year 1993 grant.

(Authority: 20 U.S.C. 1209(b)(2))



Sec. 461.46  What requirements for program reviews and evaluations
must be met by a State?

    (a) An SEA shall provide for program reviews and evaluations of all 
State-administered adult education programs, services, and activities it 
assists under the Act. The SEA shall use its program reviews and 
evaluations to assist LEAs and other recipients of funds in planning and 
operating the best possible programs of adult education and to improve 
the State's programs of adult education.
    (b) In reviewing programs, an SEA shall, during the four-year period 
of the State plan, gather and analyze data--including standardized test 
data--on the effectiveness of State-administered adult education 
programs, services, and activities to determine the extent to which--
    (1) The State's adult education programs are achieving the goals in 
the State plan, including the goal of serving educationally 
disadvantaged adults; and
    (2) Grant recipients have improved their capacity to achieve the 
purposes of the Act.
    (c)(1) An SEA shall, each year during the four-year period of the 
State plan, evaluate in qualitative and quantitative terms the 
effectiveness of programs, services, and activities conducted by at 
least 20 percent of the local recipients of funds so that at the end of 
that period 80 percent of all local recipients have been evaluated once.
    (2) An evaluation must consider the following factors:
    (i) Projected goals of the recipient as described in its application 
pursuant to section 322(a)(4) of the Act and Sec. 461.31(c)(4).
    (ii) Planning and content of the programs, services, and activities.
    (iii) Curriculum, instructional materials, and equipment.
    (iv) Adequacy and qualifications of all personnel.
    (v) Achievement of the goals set forth in the State plan.
    (vi) Extent to which educationally disadvantaged adults are being 
served.
    (vii) Extent to which local recipients of funds have improved their 
capacity to achieve the purposes of the Act.
    (viii) Success of the recipient in meeting the State's indicators of 
program quality after those indicators are developed as required by 
section 331(a)(2) of the Act and Sec. 461.3(b)(7).
    (ix) Other factors that affect program operations, as determined by 
the SEA.
    (d)(1) Within 90 days of the close of each program year, the SEA 
shall submit to the Secretary and make public within the State the 
following:
    (i) With respect to local recipients--
    (A) The number and percentage of local educational agencies, 
community-based organizations, volunteer groups, and other organizations 
that are grant recipients;
    (B) The amount of funds provided to local educational agencies, 
community-based organizations, volunteer groups, and other organizations 
that are grant recipients; and
    (C) The results of the evaluations carried out as required by 
paragraph (c)(1) of this section in the year preceding the year for 
which the data are submitted.
    (ii) The information required under Sec. 461.10(b)(10).
    (iii) A report on the SEA's activities under paragraph (b) of this 
section.
    (iv) A report on the SEA's activities under paragraph (c) of this 
section.
    (2) The reports described in paragraphs (d)(1)(ii) and (iii) of this 
section must include--

[[Page 124]]

    (i) The results of any program reviews and evaluations performed 
during the program year, and a description of how the SEA used the 
program reviews and evaluation process to make necessary changes to 
improve programs; and
    (ii) The comments and recommendations of the State advisory council, 
if a council has been established under Sec. 461.50.
    (e) If an SEA has established a State advisory council, the SEA 
shall--
    (1) Obtain approval of the plan for program reviews and evaluation 
from the State advisory council; and
    (2) Inform the State advisory council of the results of program 
reviews and evaluations so that the State advisory council may perform 
its duties under section 332(f)(7) of the Act.

    Note to Sec. 461.46: In addition to the Adult Education State-
administered Basic Grant Program in this part 461, State-administered 
adult education programs include the State-administered Workplace 
Literacy Program (See 34 CFR part 462) and the State-administered 
English Literacy Program (See 34 CFR part 463).

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1205a(f)(7) and 1207a)



   Subpart F_What are the Administrative Responsibilities of a State?



Sec. 461.50  What are a State's responsibilities regarding a State
advisory council on adult education and literacy?

    (a) A State that receives funds under section 313 of the Act may--
    (1) Establish a State advisory council on adult education and 
literacy; or
    (2) Designate an existing body as the State advisory council.
    (b) If a State elects to establish or designate a State advisory 
council on adult education, the following provisions apply:
    (1) The State advisory council must comply with Secs. 461.51 and 
461.52.
    (2) Members to the State advisory council must be appointed by, and 
be responsible to, the Governor. The Governor shall appoint members in 
accordance with section 332(e) of the Act.
    (3) Costs incurred for a State advisory council that are paid for 
with funds under this part must be counted as part of the allowable 
State administrative costs under the Act.
    (4) The Governor of the State shall determine the amount of funding 
available to a State advisory council.
    (5) A State advisory council's staffing may include professional, 
technical, and clerical personnel as may be necessary to enable the 
council to carry out its functions under the Act.
    (6) Members of a State advisory council and its staff, while serving 
on the business of the council, may receive subsistence, travel 
allowances, and compensation in accordance with State law and 
regulations and State practices applicable to persons performing 
comparable duties and services.

(Authority: 20 U.S.C. 1205a(a)(1), (d)(1), (e))



Sec. 461.51  What are the membership requirements of a State advisory
council?

    (a)(1) The membership of a State advisory council must be broadly 
representative of citizens and groups within the State having an 
interest in adult education and literacy. The council must consist of--
    (i) Representatives of public education;
    (ii) Representatives of private and public sector employment;
    (iii) Representatives of recognized State labor organizations;
    (iv) Representatives of private literacy organizations, voluntary 
literacy organizations, and community-based literacy organizations;
    (v) The Governor of a State, or the designee of the Governor;
    (vi) Representatives of--
    (A) The SEA;
    (B) The State job training agency;
    (C) The State human services agency;
    (D) The State public assistance agency;
    (E) The State library program; and
    (F) The State economic development agency;
    (vii) Officers of the State government whose agencies provide 
funding for literacy services or who may be designated by the Governor 
or the Chairperson of the council to serve whenever matters within the 
jurisdiction of the

[[Page 125]]

agency headed by such an officer are to be considered by the council; 
and
    (viii) Classroom teachers who have demonstrated outstanding results 
in teaching children or adults to read.
    (2) The State shall ensure that there is appropriate representation 
on the State advisory council of--
    (i) Urban and rural areas;
    (ii) Women;
    (iii) Persons with disabilities; and
    (iv) Racial and ethnic minorities.
    (b)(1) A State shall certify to the Secretary the establishment of, 
and membership of, its State advisory council.
    (2) The certification must be submitted to the Secretary prior to 
the beginning of any program year in which the State desires to receive 
a grant under the Act.
    (c) Members must be appointed for fixed and staggered terms and may 
serve until their successors are appointed. Any vacancy in the 
membership of the council must be filled in the same manner as the 
original appointment. Any member of the council may be removed for cause 
in accordance with procedures established by the council.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1205a (a)(1), (b), (c), and (e))



Sec. 461.52  What are the responsibilities of a State advisory council?

    (a) Subject to paragraphs (b) and (c) of this section, the State 
advisory council shall determine its own procedures, staffing needs 
(subject to funding levels authorized by the Governor of the State), and 
the number, time, place, and conduct of meetings.
    (b) The State advisory council shall meet at least four times each 
year. At least one of those meetings must provide an opportunity for the 
genral public to express views concerning adult education in the State.
    (c) One member more than one-half of the members on the council 
constitute a quorum for the purpose of transmitting recommendations and 
proposals to the Governor of the State, but a lesser number of members 
may constitute a quorum for other purposes.
    (d) A State advisory council shall--
    (1) Meet with the State agencies responsible for literacy training 
during the planning year to advise on the development of a State plan 
for literacy and for adult education that fulfills the literacy and 
adult educations needs of the State, especially with respect to the 
needs of the labor market, economic development goals, and the needs of 
the individuals in the State;
    (2) Advise the Governor, the SEA, and other State agencies 
concerning--
    (i) The development and implementation of measurable State literacy 
and adult education goals consistent with section 342(c)(2) of the Act, 
especially with respect to--
    (A) Improving levels of literacy in the State by ensuring that all 
appropriate State agencies have specific objectives and strategies for 
those goals in a comprehensive approach;
    (B) Improving literacy programs in the State; and
    (C) Fulfilling the long-term literacy goals of the State;
    (ii) The coordination and monitoring of State literacy training 
programs in order to progress toward the long-term literacy goals of the 
State;
    (iii) The improvement of the quality of literacy programs in the 
State by supporting the integration of services, staff training, and 
technology-based learning and the integration of resources of literacy 
programs conducted by various agencies of State government; and
    (iv) Private sector initiatives that would improve adult education 
programs and literacy programs, especially through public-private 
partnerships;
    (3) Review and comment on the plan submitted pursuant to section 
356(h) of the Act and submit those comments to the Secretary;
    (4) Measure progress on meeting the goals and objectives established 
pursuant to paragraph (d)(2)(i) of this section;
    (5) Recommend model systems for implementing and coordinating State 
literacy programs for replication at the local level;
    (6) Develop reporting requirements, standards for outcomes, 
performance measures, and program effectiveness in State program that 
are consistent with

[[Page 126]]

those proposed by the Federal Interagency Task Force on Literacy; and
    (7)(i) Approve the plan for the program reviews and evaluations 
required in section 352 of the Act and Sec. 461.46 and participate in 
implementing and disseminating the program reviews and evaluations. In 
approving the plan for the program reviews and evaluations, the State 
advisory council shall ensure that persons knowledgeable of the daily 
operation of adult education programs are involved;
    (ii) Advise the Governor, the State legislature, and the general 
public of the State with respect to the findings of the program reviews 
and evaluations; and
    (iii) Include in any reports of the program reviews and evaluations 
the council's comments and recommendations.

(Approved by the Office of Management and Budget under control number 
1830-0501)

(Authority: 20 U.S.C. 1205a (d) and (f), 1206a(a)(3)(B))



Sec. 461.53  May a State establish an advisory body other than a State
advisory council?

    (a) A State may establish an advisory body that is funded solely 
from non-Federal sources.
    (b) The advisory body described in paragraph (a) of this section is 
not required to comply with the requirements of section 332 of the Act 
and this part.
    (c) The non-Federal funds used to support the advisory body may not 
be included in the non-Federal share of expenditures described in 
Sec. 461.41(c).

(Authority: 20 U.S.C. 1205a and 1209)



PART 462_MEASURING EDUCATIONAL GAIN IN THE NATIONAL REPORTING SYSTEM
FOR ADULT EDUCATION--Table of Contents



                            Subpart A_General

Sec.
462.1  What is the scope of this part?
462.2  What regulations apply?
462.3  What definitions apply?
462.4  What are the transition rules for using tests to measure 
          educational gain for the National Reporting System for Adult 
          Education (NRS)?

Subpart B_What Process Does the Secretary Use To Review the Suitability 
                      of Tests for Use in the NRS?

462.10  How does the Secretary review tests?
462.11  What must an application contain?
462.12  What procedures does the Secretary use to review the suitability 
          of tests?
462.13  What criteria and requirements does the Secretary use for 
          determining the suitability of tests?
462.14  How often and under what circumstances must a test be reviewed 
          by the Secretary?

Subpart C [Reserved]

  Subpart D_What Requirements Must States and Local Eligible Providers 
                 Follow When Measuring Educational Gain?

462.40  Must a State have an assessment policy?
462.41  How must tests be administered in order to accurately measure 
          educational gain?
462.42  How are tests used to place students at an NRS educational 
          functioning level?
462.43-462.44  [Reserved]

    Authority: 29 U.S.C. 3292, et seq., unless otherwise noted.

    Source: 73 FR 2315, Jan. 14, 2008, unless otherwise noted.



                            Subpart A_General



Sec. 462.1  What is the scope of this part?

    The regulations in this part establish the--
    (a) Procedures the Secretary uses to determine the suitability of 
standardized tests for use in the National Reporting System for Adult 
Education (NRS) to measure educational gain of participants in an adult 
education program required to report under the NRS; and
    (b) Procedures States and local eligible providers must follow when 
measuring educational gain for use in the NRS.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55551, Aug. 19, 2016]



Sec. 462.2  What regulations apply?

    The following regulations apply to this part:

[[Page 127]]

    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 76 (State-Administered Programs).
    (2) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (3) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (4) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) 34 CFR part 84 (Governmentwide Requirements for Drug-Free 
Workplace (Financial Assistance)).
    (7) 34 CFR part 86 (Drug and Alcohol Abuse Prevention).
    (8) 34 CFR part 97 (Protection of Human Subjects).
    (9) 34 CFR part 98 (Student Rights in Research, Experimental 
Programs, and Testing).
    (10) 34 CFR part 99 (Family Educational Rights and Privacy).
    (b) The regulations in this part 462.
    (c)(1) 2 CFR part 180 (OMB Guidelines to Agencies on Governmentwide 
Debarment and Suspension (Nonprocurement)), as adopted at 2 CFR part 
3485; and
    (2) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.

(Authority: 29 U.S.C. 3292)

[81 FR 55551, Aug. 19, 2016]



Sec. 462.3  What definitions apply?

    (a) Definitions in the Adult Education and Family Literacy Act 
(Act). The following terms used in these regulations are defined in 
section 203 of the Adult Education and Family Literacy Act, 20 U.S.C. 
3292 (Act):

Adult education,
Eligible provider,
Individual of limited English proficiency,
Individual with a disability,
Literacy.

    (b) Other definitions. The following definitions also apply to this 
part:
    Adult basic education (ABE) means instruction designed for an adult 
whose educational functioning level is equivalent to a particular ABE 
literacy level listed in the NRS educational functioning level table in 
the Guidelines.
    Adult education population means individuals--
    (1) Who have attained 16 years of age;
    (2) Who are not enrolled or required to be enrolled in secondary 
school under State law; and
    (3) Who--
    (i) Are basic skills deficient;
    (ii) Do not have a secondary school diploma or its recognized 
equivalent, and have not achieved an equivalent level of education; or
    (iii) Are English language learners.
    Adult secondary education (ASE) means instruction designed for an 
adult whose educational functioning level is equivalent to a particular 
ASE literacy level listed in the NRS educational functioning level table 
in the Guidelines.
    Content domains, content specifications, or NRS skill areas mean, 
for the purpose of the NRS, reading, writing, and speaking the English 
language, mathematics, problem solving, English language acquisition, 
and other literacy skills as defined by the Secretary.
    Educational functioning levels mean the ABE, ASE, and ESL literacy 
levels, as provided in the Guidelines, that describe a set of skills and 
competencies that students demonstrate in the NRS skill areas.
    English as a Second Language (ESL) means instruction designed for an 
adult whose educational functioning level is equivalent to a particular 
ESL English language proficiency level listed in the NRS educational 
functioning level table in the Guidelines.
    Guidelines means the Implementation Guidelines: Measures and Methods 
for the National Reporting System for Adult Education (OMB Control 
Number: 1830-0027) (also known as NRS Implementation Guidelines) posted 
on the Internet at: www.nrsweb.org.
    Local eligible provider means an ``eligible provider'' as defined in 
the Act that operates an adult education program that is required to 
report under the NRS.
    State means ``State'' and ``Outlying area'' as defined in the Act.

[[Page 128]]

    Test means a standardized test, assessment, or instrument that has a 
formal protocol on how it is to be administered. These protocols 
include, for example, the use of parallel, equated forms, testing 
conditions, time allowed for the test, standardized scoring, and the 
amount of instructional time a student needs before post-testing. 
Violation of these protocols often invalidates the test scores. Tests 
are not limited to traditional paper and pencil (or computer-
administered) instruments for which forms are constructed prior to 
administration to examinees. Tests may also include adaptive tests that 
use computerized algorithms for selecting and administering items in 
real time; however, for such instruments, the size of the item pool and 
the method of item selection must ensure negligible overlap in items 
across pre- and post-testing.
    Test administrator means an individual who is trained to administer 
tests the Secretary determines to be suitable under this part.
    Test publisher means an entity, individual, organization, or agency 
that owns a registered copyright of a test or is licensed by the 
copyright holder to sell or distribute a test.

(Authority: 29 U.S.C. 3292, et seq., unless otherwise noted)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55551, Aug. 19, 2016]



Sec. 462.4  What are the transition rules for using tests to measure
educational gain for the National Reporting System for Adult 
Education (NRS)?

    A State or an eligible provider may continue to measure educational 
gain for the NRS using tests that the Secretary has identified in the 
most recent notice published in the Federal Register until the Secretary 
announces through a notice published in the Federal Register a date by 
which such tests may no longer be used.

(Authority: 29 U.S.C. 3292)

[81 FR 55551, Aug. 19, 2016]



Subpart B_What Process Does the Secretary Use To Review the Suitability 
                      of Tests for Use in the NRS?



Sec. 462.10  How does the Secretary review tests?

    (a) The Secretary only reviews tests under this part that are 
submitted by a test publisher.
    (b) A test publisher that wishes to have the suitability of its test 
determined by the Secretary under this part must submit an application 
to the Secretary, in the manner the Secretary may prescribe, by October 
1, 2016, April 1, 2017, October 1, 2017, April 1, 2018, October 1, 2018, 
and by October 1 of each year thereafter.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.11  What must an application contain?

    (a) Application content and format. In order for the Secretary to 
determine whether a standardized test is suitable for measuring the 
gains of participants in an adult education program required to report 
under the NRS, a test publisher must--
    (1) Include with its application information listed in paragraphs 
(b) through (i) of this section, and, if applicable, the information 
listed in paragraph (j) of this section;
    (2) Provide evidence that it holds a registered copyright of a test 
or is licensed by the copyright holder to sell or distribute a test.
    (3)(i) Arrange the information in its application in the order it is 
presented in paragraphs (b) through (j) of this section; or
    (ii) Include a table of contents in its application that identifies 
the location of the information required in paragraphs (b) through (j) 
of this section.
    (4) Submit to the Secretary four copies of its application.
    (b) General information. (1) A statement, in the technical manual 
for the test, of the intended purpose of the test and how the test will 
allow examinees to demonstrate the skills that are associated with the 
NRS educational functioning levels in the Guidelines.

[[Page 129]]

    (2) The name, address, e-mail address, and telephone and fax numbers 
of a contact person to whom the Secretary may address inquiries.
    (3) A summary of the precise editions, forms, levels, and, if 
applicable, sub-tests and abbreviated tests that the test publisher is 
requesting that the Secretary review and determine to be suitable for 
use in the NRS.
    (c) Development. Documentation of how the test was developed, 
including a description of--
    (1) The nature of samples of examinees administered the test during 
pilot or field testing, such as--
    (i) The number of examinees administered each item;
    (ii) How similar the sample or samples of examinees used to develop 
and evaluate the test were to the adult education population of interest 
to the NRS; and
    (iii) The steps, if any, taken to ensure that the examinees were 
motivated while responding to the test; and
    (2) The steps taken to ensure the quality of test items or tasks, 
such as--
    (i) The extent to which items or tasks on the test were reviewed for 
fairness and sensitivity; and
    (ii) The extent to which items or tasks on the test were screened 
for the adequacy of their psychometric properties.
    (3) The procedures used to assign items to--
    (i) Forms, for tests that are constructed prior to being 
administered to examinees; or
    (ii) Examinees, for adaptive tests in which items are selected in 
real time.
    (d) Maintenance. Documentation of how the test is maintained, 
including a description of--
    (1) How frequently, if ever, new forms of the test are developed;
    (2) The steps taken to ensure the comparability of scores across 
forms of the test;
    (3) The steps taken to maintain the security of the test;
    (4) A history of the test's use, including the number of times the 
test has been administered; and
    (5) For a computerized adaptive test, the procedures used to--
    (i) Select subsets of items for administration;
    (ii) Determine the starting point and termination conditions;
    (iii) Score the test; and
    (iv) Control for item exposure.
    (e) Match of content to the NRS educational functioning levels 
(content validity). Documentation of the extent to which the items or 
tasks on the test cover the skills in the NRS educational functioning 
levels in the Guidelines, including--
    (1) Whether the items or tasks on the test require the types and 
levels of skills used to describe the NRS educational functioning 
levels;
    (2) Whether the items or tasks measure skills that are not 
associated with the NRS educational functioning levels;
    (3) Whether aspects of a particular NRS educational functioning 
level are not covered by any of the items or tasks;
    (4) The procedures used to establish the content validity of the 
test;
    (5) The number of subject-matter experts who provided judgments 
linking the items or tasks to the NRS educational functioning levels and 
their qualifications for doing so, particularly their familiarity with 
adult education and the NRS educational functioning levels; and
    (6) The extent to which the judgments of the subject matter experts 
agree.
    (f) Match of scores to NRS educational functioning levels. 
Documentation of the adequacy of the procedure used to translate the 
performance of an examinee on a particular test to an estimate of the 
examinee's standing with respect to the NRS educational functioning 
levels in the Guidelines, including--
    (1) The standard-setting procedures used to establish cut scores for 
transforming raw or scale scores on the test into estimates of an 
examinee's NRS educational functioning level;
    (2) If judgment-based procedures were used--
    (i) The number of subject-matter experts who provided judgments, and 
their qualifications; and
    (ii) Evidence of the extent to which the judgments of subject-matter 
experts agree;

[[Page 130]]

    (3) The standard error of each cut score, and how it was 
established; and
    (4) The extent to which the cut scores might be expected to differ 
if they had been established by a different (though similar) panel of 
experts.
    (g) Reliability. Documentation of the degree of consistency in 
performance across different forms of the test in the absence of any 
external interventions, including--
    (1) The correlation between raw (or scale) scores across alternate 
forms of the test or, in the case of computerized adaptive tests, across 
alternate administrations of the test;
    (2) The consistency with which examinees are classified into the 
same NRS educational functioning levels across forms of the test. 
Information regarding classification consistency should be reported for 
each NRS educational functioning level that the test is being considered 
for use in measuring;
    (3) The adequacy of the research design leading to the estimates of 
the reliability of the test, including--
    (i) The size of the sample(s);
    (ii) The similarity between the sample(s) used in the data 
collection and the adult education population; and
    (iii) The steps taken to ensure the motivation of the examinees; and
    (4) Any other information explaining the methodology and procedures 
used to measure the reliability of the test.
    (h) Construct validity. Documentation of the appropriateness of a 
given test for measuring educational gain for the NRS, i.e., 
documentation that the test measures what it is intended to measure, 
including--
    (1) The extent to which the raw or scale scores and the educational 
functioning classifications associated with the test correlate (or 
agree) with scores or classifications associated with other tests 
designed or intended to assess educational gain in the same adult 
education population as the NRS;
    (2) The extent to which the raw or scale scores are related to other 
relevant variables, such as teacher evaluation, hours of instruction, or 
other measures that may be related to test performance;
    (3) The adequacy of the research designs associated with these 
sources of evidence (see paragraph (g)(3) of this section); and
    (4) Other evidence demonstrating that the test measures gains in 
educational functioning resulting from adult education and not from 
other construct-irrelevant variables, such as practice effects.
    (i) Other information. (1) A description of the manner in which test 
administration time was determined, and an analysis of the speededness 
of the test.
    (2) Additional guidance on the interpretation of scores resulting 
from any modifications of the tests for an individual with a disability.
    (3) The manual provided to test administrators containing procedures 
and instructions for test security and administration.
    (4) A description of the training or certification required of test 
administrators and scorers by the test publisher.
    (5) A description of retesting (e.g., re-administration of a test 
because of problems in the original administration such as the test 
taker becomes ill during the test and cannot finish, there are external 
interruptions during testing, or there are administration errors) 
procedures and the analysis upon which the criteria for retesting are 
based.
    (6) Such other evidence as the Secretary may determine is necessary 
to establish the test's compliance with the criteria and requirements 
the Secretary uses to determine the suitability of tests as provided in 
Sec. 462.13.
    (j) Previous tests. (1) For a test used to measure educational gain 
in the NRS before the effective date of these regulations that is 
submitted to the Secretary for review under this part, the test 
publisher must provide documentation of periodic review of the content 
and specifications of the test to ensure that the test continues to 
reflect NRS educational functioning levels.
    (2) For a test first published five years or more before the date it 
is submitted to the Secretary for review under this part, the test 
publisher must provide documentation of periodic review of the content 
and specifications

[[Page 131]]

of the test to ensure that the test continues to reflect NRS educational 
functioning levels.
    (3) For a test that has not changed in the seven years since the 
Secretary determined, under Sec. 462.13, that it was suitable for use in 
the NRS that is again being submitted to the Secretary for review under 
this part, the test publisher must provide updated data supporting the 
validity of the test for use in classifying adult learners with respect 
to the NRS educational functioning levels and the measurement of 
educational gain as defined in Sec. 462.43 of this part.
    (4) If a test has been substantially revised--for example by 
changing its mode of administration, administration procedures, 
structure, number of items, content specifications, item types, forms, 
sub-tests, or number of hours between pre- and post-testing from the 
most recent edition reviewed by the Secretary under this part--the test 
publisher must provide an analysis of the revisions, including the 
reasons for the revisions, the implications of the revisions for the 
comparability of scores on the current test to scores on the previous 
test, and results from validity, reliability, and equating or standard-
setting studies undertaken subsequent to the revisions.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.12  What procedures does the Secretary use to review the
suitability of tests?

    (a) Review. (1) When the Secretary receives a complete application 
from a test publisher, the Secretary selects experts in the field of 
educational testing and assessment who possess appropriate advanced 
degrees and experience in test development or psychometric research, or 
both, to advise the Secretary on the extent to which a test meets the 
criteria and requirements in Sec. 462.13.
    (2) The Secretary reviews and determines the suitability of a test 
only if an application--
    (i) Is submitted by a test publisher;
    (ii) Meets the deadline established by the Secretary;
    (iii) Includes a test that--
    (A) Has two or more secure, parallel, equated forms of the same 
test--either traditional paper and pencil or computer-administered 
instruments--for which forms are constructed prior to administration to 
examinees; or
    (B) Is an adaptive test that uses computerized algorithms for 
selecting and administering items in real time; however, for such an 
instrument, the size of the item pool and the method of item selection 
must ensure negligible overlap in items across pre- and post-testing;
    (iv) Includes a test that samples one or more of the major content 
domains of the NRS educational functioning levels of ABE, ASE or ESL 
with sufficient numbers of questions to represent adequately the domain 
or domains; and
    (v) Includes the information prescribed by the Secretary, including 
the information in Sec. 462.11 of this part.
    (b) Secretary's determination. (1) The Secretary determines whether 
a test meets the criteria and requirements in Sec. 462.13 after taking 
into account the advice of the experts described in paragraph (a)(1) of 
this section.
    (2) For tests that contain multiple sub-tests measuring content 
domains other than those of the NRS educational functioning levels, the 
Secretary determines the suitability of only those sub-tests covering 
the domains of the NRS educational functioning levels.
    (c) Suitable tests. If the Secretary determines that a test 
satisfies the criteria and requirements in Sec. 462.13 and, therefore, 
is suitable for use in the NRS, the Secretary--
    (1) Notifies the test publisher of the Secretary's decision; and
    (2) Annually publishes in the Federal Register and posts on the 
Internet at www.nrsweb.org a list of the names of tests and test forms 
and the educational functioning levels the tests are suitable to measure 
in the NRS. A copy of the list is also available from the U.S. 
Department of Education, Office of Career, Technical, and Adult 
Education, Division of Adult Education and Literacy, 400 Maryland Avenue 
SW., Room 11152, Potomac Center Plaza, Washington, DC 20202-7240.
    (d) Unsuitable tests. (1) If the Secretary determines that a test 
does not

[[Page 132]]

satisfy the criteria and requirements in Sec. 462.13 and, therefore, is 
not suitable for use in the NRS, the Secretary notifies the test 
publisher of the Secretary's decision and of the reasons why the test 
does not meet those criteria and requirements.
    (2) The test publisher may resubmit an application to have the 
suitability of its test determined by the Secretary under this part on 
October 1 in the year immediately following the year in which the 
Secretary notifies the publisher.
    (i) An analysis of why the information and documentation submitted 
meet the criteria and requirements in Sec. 462.13, notwithstanding the 
Secretary's earlier decision to the contrary; and
    (ii) Any additional documentation and information that address the 
Secretary's reasons for determining that the test was unsuitable.
    (3) The Secretary reviews the additional information submitted by 
the test publisher and makes a final determination regarding the 
suitability of the test for use in the NRS.
    (i) If the Secretary's decision is unchanged and the test remains 
unsuitable for use in the NRS, the Secretary notifies the test 
publisher, and this action concludes the review process.
    (ii) If the Secretary's decision changes and the test is determined 
to be suitable for use in the NRS, the Secretary follows the procedures 
in paragraph (c) of this section.
    (e) Revocation. (1) The Secretary's determination regarding the 
suitability of a test may be revoked if the Secretary determines that--
    (i) The information the publisher submitted as a basis for the 
Secretary's review of the test was inaccurate; or
    (ii) A test has been substantially revised--for example, by changing 
its mode of administration, administration procedures, structure, number 
of items, content specifications, item types, forms or sub-tests, or 
number of hours between pre- and post-testing.
    (2) The Secretary notifies the test publisher of the--
    (i) Secretary's decision to revoke the determination that the test 
is suitable for use in the NRS; and
    (ii) Reasons for the Secretary's revocation.
    (3) Within 30 days after the Secretary notifies a test publisher of 
the decision to revoke a determination that a test is suitable for use 
in the NRS, the test publisher may request that the Secretary reconsider 
the decision. This request must be accompanied by documentation and 
information that address the Secretary's reasons for revoking the 
determination that the test is suitable for use in the NRS.
    (4) The Secretary reviews the information submitted by the test 
publisher and makes a final determination regarding the suitability of 
the test for use in the NRS.
    (5) If the Secretary revokes the determination regarding the 
suitability of a test, the Secretary publishes in the Federal Register 
and posts on the Internet at www.nrsweb.org a notice of that revocation 
along with the date by which States and eligible providers must stop 
using the revoked test. A copy of the notice of revocation is also 
available from the U.S. Department of Education, Office of Career, 
Technical, and Adult Education, Division of Adult Education and 
Literacy, 400 Maryland Avenue SW., Room 11152, Potomac Center Plaza, 
Washington, DC 20202-7240.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.13  What criteria and requirements does the Secretary use
for determining the suitability of tests?

    In order for the Secretary to consider a test suitable for use in 
the NRS, the test or the test publisher, if applicable, must meet the 
following criteria and requirements:
    (a) The test must measure the NRS educational functioning levels of 
members of the adult education population.
    (b) The test must sample one or more of the major content domains of 
the NRS educational functioning levels of ABE, ASE or ESL with 
sufficient numbers of questions to adequately represent the domain or 
domains.
    (c)(1) The test must meet all applicable and feasible standards for 
test construction and validity provided in the

[[Page 133]]

1999 edition of the Standards for Educational and Psychological Testing, 
prepared by the Joint Committee on Standards for Educational and 
Psychological Testing of the American Educational Research Association, 
the American Psychological Association, and the National Council on 
Measurement in Education incorporated by reference in this section. The 
Director of the Federal Register approves this incorporation by 
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. You may 
obtain a copy from the American Psychological Association, Inc., 750 
First Street, NE., Washington, DC 20002. You may inspect a copy at the 
Department of Education, room 11159, 550 12th Street, SW., Washington, 
DC 20202 or at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call (202) 
741-6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html.
    (2) If requested by the Secretary, a test publisher must explain why 
it believes that certain standards in the 1999 edition of the Standards 
for Educational and Psychological Testing were not applicable or were 
not feasible to meet.
    (d) The test must contain the publisher's guidelines for retesting, 
including time between test-taking, which are accompanied by appropriate 
justification.
    (e) The test must--
    (1) Have two or more secure, parallel, equated forms of the same 
test--either traditional paper and pencil or computer administered 
instruments--for which forms are constructed prior to administration to 
examinees; or
    (2) Be an adaptive test that uses computerized algorithms for 
selecting and administering items in real time; however, for such an 
instrument, the size of the item pool and the method of item selection 
must ensure negligible overlap in items across pre- and post-testing. 
Scores associated with these alternate administrations must be 
equivalent in meaning.
    (f) For a test that has been modified for individuals with 
disabilities, the test publisher must--
    (1) Provide documentation that it followed the guidelines provided 
in the Testing Individuals With Disabilities section of the 1999 edition 
of the Standards for Educational and Psychological Testing;
    (2) Provide documentation of the appropriateness and feasibility of 
the modifications relevant to test performance; and
    (3)(i) Recommend educational functioning levels based on the 
information obtained from adult education students who participated in 
the pilot or field test and who have the disability for which the test 
has been modified; and
    (ii) Provide documentation of the adequacy of the procedures used to 
translate the performance of adult education students with the 
disability for whom the test has been modified to an estimate of the 
examinees' standing with respect to the NRS educational functioning 
levels.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]



Sec. 462.14  How often and under what circumstances must a test be
reviewed by the Secretary?

    (a) The Secretary's determination that a test is suitable for use in 
the NRS is in effect for a period of seven years from the date of the 
Secretary's written notification to the test publisher, unless otherwise 
indicated by the Secretary. After that time, if the test publisher wants 
the test to be used in the NRS, the test must be reviewed again by the 
Secretary so that the Secretary can determine whether the test continues 
to be suitable for use in the NRS.
    (b) If a test that the Secretary has determined is suitable for use 
in the NRS is substantially revised--for example, by changing its mode 
of administration, administration procedures, structure, number of 
items, content specifications, item types, forms, sub-tests, or number 
of hours between pre- and post-testing--and the test publisher wants the 
test to continue to be used in the NRS, the test publisher must submit, 
as provided in Sec. 462.11(j)(4), the substantially revised test or 
version of the test to the Secretary for review so that the Secretary

[[Page 134]]

can determine whether the test continues to be suitable for use in the 
NRS.

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]

Subpart C [Reserved]



  Subpart D_What Requirements Must States and Local Eligible Providers 
                 Follow When Measuring Educational Gain?



Sec. 462.40  Must a State have an assessment policy?

    (a) A State must have a written assessment policy that its local 
eligible providers must follow in measuring educational gain and 
reporting data in the NRS.
    (b) A State must submit its assessment policy to the Secretary for 
review and approval at the time it submits its annual statistical report 
for the NRS.
    (c) The State's assessment policy must--
    (1) Include a statement requiring that local eligible providers 
measure the educational gain of all students who receive 12 hours or 
more of instruction in the State's adult education program with a test 
that the Secretary has determined is suitable for use in the NRS;
    (2) Identify the pre- and post-tests that the State requires 
eligible providers to use to measure the educational functioning level 
gain of ABE, ASE, and ESL students;
    (3)(i) Indicate when, in calendar days or instructional hours, 
eligible providers must administer pre- and post-tests to students;
    (ii) Ensure that the time for administering the post-test is long 
enough after the pre-test to allow the test to measure educational 
functioning level gains according to the test publisher's guidelines; 
and
    (iii) Specify a standard for the percentage of students to be pre- 
and post-tested.
    (4) Specify the score ranges tied to educational functioning levels 
for placement and for reporting gains for accountability;
    (5) Identify the skill areas the State intends to require local 
eligible providers to assess in order to measure educational gain;
    (6) Include the guidance the State provides to local eligible 
providers on testing and placement of an individual with a disability or 
an individual who is unable to be tested because of a disability;
    (7) Describe the training requirements that staff must meet in order 
to be qualified to administer and score each test selected by the State 
to measure the educational gains of students;
    (8) Identify the alternate form or forms of each test that local 
eligible providers must use for post-testing;
    (9) Indicate whether local eligible providers must use a locator 
test for guidance on identifying the appropriate pre-test;
    (10) Describe the State's policy for the initial placement of a 
student at each NRS educational functioning level using test scores;
    (11) Describe the State's policy for using the post-test for 
measuring educational gain and for advancing students across educational 
functioning levels;
    (12) Describe the pre-service and in-service staff training that the 
State or local eligible providers will provide, including training--
    (i) For staff who either administer or score each of the tests used 
to measure educational gain;
    (ii) For teachers and other local staff involved in gathering, 
analyzing, compiling, and reporting data for the NRS; and
    (iii) That includes the following topics:
    (A) NRS policy, accountability policies, and the data collection 
process.
    (B) Definitions of measures.
    (C) Conducting assessments; and
    (13) Identify the State or local agency responsible for providing 
pre- and in-service training.

(Approved by the Office of Management and Budget under control number 
1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55552, Aug. 19, 2016]

[[Page 135]]



Sec. 462.41  How must tests be administered in order to accurately
measure educational gain?

    (a) General. A local eligible provider must measure the educational 
gains of students using only tests that the Secretary has determined are 
suitable for use in the NRS and that the State has identified in its 
assessment policy.
    (b) Pre-test. A local eligible provider must--
    (1) Administer a pre-test to measure a student's educational 
functioning level at intake, or as soon as possible thereafter;
    (2) Administer the pre-test to students at a uniform time, according 
to the State's assessment policy; and
    (3) Administer pre-tests to students in the skill areas identified 
in the State's assessment policy.
    (c) Post-test. A local eligible provider must--
    (1) Administer a post-test to measure a student's educational 
functioning level after a set time period or number of instructional 
hours;
    (2) Administer the post-test to students at a uniform time, 
according to the State's assessment policy;
    (3)(i) Administer post-tests with a secure, parallel, equated form 
of the same test--either traditional paper and pencil or computer-
administered instruments--for which forms are constructed prior to 
administration to examinees to pre-test and determine the initial 
placement of students; or
    (ii) Administer post-tests with an adaptive test that uses 
computerized algorithms for selecting and administering items in real 
time; however, for such an instrument, the size of the item pool and the 
method of item selection must ensure negligible overlap in items across 
pre- and post-testing; and
    (4) Administer post-tests to students in the same skill areas as the 
pre-test.
    (d) Other requirements. (1) A local eligible provider must 
administer a test using only staff who have been trained to administer 
the test.
    (2) A local eligible provider may use the results of a test in the 
NRS only if the test was administered in a manner that is consistent 
with the State's assessment policy and the test publisher's guidelines.

(Approved by the Office of Management and Budget under control number 
1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55553, Aug. 19, 2016]



Sec. 462.42  How are tests used to place students at an NRS 
educational functioning level?

    (a) A local eligible provider must use the results of the pre-test 
described in Sec. 462.41(b) to initially place students at the 
appropriate NRS educational functioning level.
    (b) A local eligible provider must use the results of the post-test 
described in Sec. 462.41(c)--
    (1) To determine whether students have completed one or more 
educational functioning levels or are progressing within the same level; 
and
    (2) To place students at the appropriate NRS educational functioning 
level.
    (c)(1) States and local eligible providers are not required to use 
all of the skill areas described in the NRS educational functioning 
levels to place students.
    (2) States and local eligible providers must test and report on the 
skill areas most relevant to the students' needs and to the programs' 
curriculum.
    (d)(1) If a State's assessment policy requires a local eligible 
provider to test a student in multiple skill areas and the student will 
receive instruction in all of the skill areas, the local eligible 
provider must place the student in an educational functioning level that 
is equivalent to the student's lowest test score for any of the skill 
areas tested under Sec. 462.41(b) and (c).
    (2) If a State's assessment policy requires a local eligible 
provider to test a student in multiple skill areas, but the student will 
receive instruction in fewer than all of the skill areas, the local 
eligible provider must place the student in an educational functioning 
level that is equivalent to the student's lowest test score for any of 
the skill areas--
    (i) Tested under Sec. 462.41(b) and (c); and

[[Page 136]]

    (ii) In which the student will receive instruction.

(Approved by the Office of Management and Budget under control number 
1830-0027)

(Authority: 29 U.S.C. 3292)

[73 FR 2315, Jan. 14, 2008, as amended at 81 FR 55553, Aug. 19, 2016]



Secs. 462.43-462.44  [Reserved]



PART 463_ADULT EDUCATION AND FAMILY LITERACY ACT--Table of Contents



              Subpart A_Adult Education General Provisions

Sec.
463.1  What is the purpose of the Adult Education and Family Literacy 
          Act?
463.2  What regulations apply to the Adult Education and Family Literacy 
          Act programs?
463.3  What definitions apply to the Adult Education and Family Literacy 
          Act programs?

Subpart B [Reserved]

     Subpart C_How Does a State Make an Award to Eligible Providers?

463.20  What is the process that the eligible agency must follow in 
          awarding grants or contracts to eligible providers?
463.21  What processes must be in place to determine the extent to which 
          a local application for grants or contracts to provide adult 
          education and literacy services is aligned with a local plan 
          under section 108 of WIOA?
463.22  What must be included in the eligible provider's application for 
          a grant or contract?
463.23  Who is eligible to apply for a grant or contract for adult 
          education and literacy activities?
463.24  How can an eligible provider establish that it has demonstrated 
          effectiveness?
463.25  What are the requirements related to local administrative cost 
          limits?
463.26  What activities are considered local administrative costs?

       Subpart D_What Are Adult Education and Literacy Activities?

463.30  What are adult education and literacy programs, activities, and 
          services?
463.31  What is an English language acquisition program?
463.32  How does a program that is intended to be an English language 
          acquisition program meet the requirement that the program lead 
          to attainment of a secondary school diploma or its recognized 
          equivalent and transition to postsecondary education and 
          training or leads to employment?
463.33  What are integrated English literacy and civics education 
          services?
463.34  What are workforce preparation activities?
463.35  What is integrated education and training?
463.36  What are the required components of an integrated education and 
          training program funded under title II?
463.37  How does a program providing integrated education and training 
          under title II meet the requirement that the three required 
          components be ``integrated''?
463.38  How does a program providing integrated education and training 
          under title II meet the requirement that an integrated 
          education and training program be ``for the purpose of 
          educational and career advancement''?

Subpart E [Reserved]

Subpart F_Programs for Corrections Education and the Education of Other 
                     Institutionalized Individuals?

463.60  What are programs for Corrections Education and the Education of 
          other Institutionalized Individuals?
463.61  How does the eligible agency award funds to eligible providers 
          under the program for Corrections Education and Education of 
          other Institutionalized Individuals?
463.62  What is the priority for programs that receive funding through 
          programs for Corrections Education and Education of other 
          Institutionalized Individuals?
463.63  How may funds under programs for Corrections Education and 
          Education of other Institutionalized Individuals be used to 
          support transition to re-entry initiatives and other post-
          release services with the goal of reducing recidivism?

 Subpart G_What Is the Integrated English Literacy and Civics Education 
                                Program?

463.70  What is the Integrated English Literacy and Civics Education 
          program?
463.71  How does the Secretary make an award under the Integrated 
          English Literacy and Civics Education program?
463.72  How does the eligible agency award funds to eligible providers 
          for the Integrated English Literacy and Civics Education 
          program?
463.73  What are the requirements for eligible providers that receive 
          funding through the Integrated English Literacy and Civics 
          Education program?
463.74  How does an eligible provider that receives funds through the 
          Integrated

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          English Literacy and Civics Education program meet the 
          requirement to use funds for Integrated English Literacy and 
          Civics Education in combination with integrated education and 
          training activities?
463.75  Who is eligible to receive education services through the 
          Integrated English Literacy and Civics Education program?

    Subpart H_Unified and Combined State Plans Under Title I of the 
                Workforce Innovation and Opportunity Act

463.100  What are the purposes of the Unified and Combined State Plans?
463.105  What are the general requirements for the Unified State Plan?
463.110  What are the program-specific requirements in the Unified State 
          Plan for the adult, dislocated worker, and youth programs 
          authorized under Workforce Innovation and Opportunity Act 
          title I?
463.115  What are the program-specific requirements in the Unified State 
          Plan for the Adult Education and Family Literacy Act program 
          authorized under Workforce Innovation and Opportunity Act 
          title II?
463.120  What are the program-specific requirements in the Unified State 
          Plan for the Employment Service program authorized under the 
          Wagner-Peyser Act, as amended by Workforce Innovation and 
          Opportunity Act title III?
463.125  What are the program-specific requirements in the Unified State 
          Plan for the State Vocational Rehabilitation program 
          authorized under title I of the Rehabilitation Act of 1973, as 
          amended by Workforce Innovation and Opportunity Act title IV?
463.130  What is the development, submission, and approval process of 
          the Unified State Plan?
463.135  What are the requirements for modification of the Unified State 
          Plan?
463.140  What are the general requirements for submitting a Combined 
          State Plan?
463.143  What is the development, submission, and approval process of 
          the Combined State Plan?
463.145  What are the requirements for modifications of the Combined 
          State Plan?

  Subpart I_Performance Accountability Under Title I of the Workforce 
                     Innovation and Opportunity Act

463.150  What definitions apply to Workforce Innovation and Opportunity 
          Act performance accountability provisions?
463.155  What are the primary indicators of performance under the 
          Workforce Innovation and Opportunity Act?
463.160  What information is required for State performance reports?
463.165  May a State establish additional indicators of performance?
463.170  How are State levels of performance for primary indicators 
          established?
463.175  What responsibility do States have to use quarterly wage record 
          information for performance accountability?
463.180  When is a State subject to a financial sanction under the 
          Workforce Innovation and Opportunity Act?
463.185  When are sanctions applied for a State's failure to submit an 
          annual performance report?
463.190  When are sanctions applied for failure to achieve adjusted 
          levels of performance?
463.195  What should States expect when a sanction is applied to the 
          Governor's Reserve Allotment?
463.200  What other administrative actions will be applied to States' 
          performance requirements?
463.205  What performance indicators apply to local areas and what 
          information must be included in local area performance 
          reports?
463.210  How are local performance levels established?
463.215  Under what circumstances are local areas eligible for State 
          Incentive Grants?
463.220  Under what circumstances may a corrective action or sanction be 
          applied to local areas for poor performance?
463.225  Under what circumstances may local areas appeal a 
          reorganization plan?
463.230  What information is required for the eligible training provider 
          performance reports?
463.235  What are the reporting requirements for individual records for 
          core Workforce Innovation and Opportunity Act (WIOA) title I 
          programs; the Wagner-Peyser Act Employment Service program, as 
          amended by WIOA title III; and the Vocational Rehabilitation 
          program authorized under title I of the Rehabilitation Act of 
          1973, as amended by WIOA title IV?
463.240  What are the requirements for data validation of State annual 
          performance reports?

 Subpart J_Description of the One-Stop Delivery System Under Title I of 
              the Workforce Innovation and Opportunity Act

463.300  What is the one-stop delivery system?
463.305  What is a comprehensive one-stop center and what must be 
          provided there?
463.310  What is an affiliated site and what must be provided there?
463.315  Can a stand-alone Wagner-Peyser Act Employment Service office 
          be designated as an affiliated one-stop site?
463.320  Are there any requirements for networks of eligible one-stop 
          partners or specialized centers?

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463.400  Who are the required one-stop partners?
463.405  Is Temporary Assistance for Needy Families a required one-stop 
          partner?
463.410  What other entities may serve as one-stop partners?
463.415  What entity serves as the one-stop partner for a particular 
          program in the local area?
463.420  What are the roles and responsibilities of the required one-
          stop partners?
463.425  What are the applicable career services that must be provided 
          through the one-stop delivery system by required one-stop 
          partners?
463.430  What are career services?
463.435  What are the business services provided through the one-stop 
          delivery system, and how are they provided?
463.440  When may a fee be charged for the business services in this 
          subpart?
463.500  What is the Memorandum of Understanding for the one-stop 
          delivery system and what must be included in the Memorandum of 
          Understanding?
463.505  Is there a single Memorandum of Understanding for the local 
          area, or must there be different Memoranda of Understanding 
          between the Local Workforce Development Board and each 
          partner?
463.510  How must the Memorandum of Understanding be negotiated?
463.600  Who may operate one-stop centers?
463.605  How is the one-stop operator selected?
463.610  When is the sole-source selection of one-stop operators 
          appropriate, and how is it conducted?
463.615  May an entity currently serving as one-stop operator compete to 
          be a one-stop operator under the procurement requirements of 
          this subpart?
463.620  What is the one-stop operator's role?
463.625  Can a one-stop operator also be a service provider?
463.630  Can State merit staff still work in a one-stop center where the 
          operator is not a governmental entity?
463.635  What is the compliance date of the provisions of this subpart?
463.700  What are the one-stop infrastructure costs?
463.705  What guidance must the Governor issue regarding one-stop 
          infrastructure funding?
463.710  How are infrastructure costs funded?
463.715  How are one-stop infrastructure costs funded in the local 
          funding mechanism?
463.720  What funds are used to pay for infrastructure costs in the 
          local one-stop infrastructure funding mechanism?
463.725  What happens if consensus on infrastructure funding is not 
          reached at the local level between the Local Workforce 
          Development Board, chief elected officials, and one-stop 
          partners?
463.730  What is the State one-stop infrastructure funding mechanism?
463.731  What are the steps to determine the amount to be paid under the 
          State one-stop infrastructure funding mechanism?
463.735  How are infrastructure cost budgets for the one-stop centers in 
          a local area determined in the State one-stop infrastructure 
          funding mechanism?
463.736  How does the Governor establish a cost allocation methodology 
          used to determine the one-stop partner programs' proportionate 
          shares of infrastructure costs under the State one-stop 
          infrastructure funding mechanism?
463.737  How are one-stop partner programs' proportionate shares of 
          infrastructure costs determined under the State one-stop 
          infrastructure funding mechanism?
463.738  How are statewide caps on the contributions for one-stop 
          infrastructure funding determined in the State one-stop 
          infrastructure funding mechanism?
463.740  What funds are used to pay for infrastructure costs in the 
          State one-stop infrastructure funding mechanism?
463.745  What factors does the State Workforce Development Board use to 
          develop the formula described in Workforce Innovation and 
          Opportunity Act, which is used by the Governor to determine 
          the appropriate one-stop infrastructure budget for each local 
          area operating under the State infrastructure funding 
          mechanism, if no reasonably implementable locally negotiated 
          budget exists?
463.750  When and how can a one-stop partner appeal a one-stop 
          infrastructure amount designated by the State under the State 
          infrastructure funding mechanism?
463.755  What are the required elements regarding infrastructure funding 
          that must be included in the one-stop Memorandum of 
          Understanding?
463.760  How do one-stop partners jointly fund other shared costs under 
          the Memorandum of Understanding?
463.800  How are one-stop centers and one-stop delivery systems 
          certified for effectiveness, physical and programmatic 
          accessibility, and continuous improvement?
463.900  What is the common identifier to be used by each one-stop 
          delivery system?

Subpart K [Reserved]

    Authority: 29 U.S.C. 102 and 103, unless otherwise noted.

    Source: 81 FR 55553, Aug. 19, 2016, unless otherwise noted.

[[Page 139]]



              Subpart A_Adult Education General Provisions



Sec. 463.1  What is the purpose of the Adult Education and Family
Literacy Act?

    The purpose of the Adult Education and Family Literacy Act (AEFLA) 
is to create a partnership among the Federal Government, States, and 
localities to provide, on a voluntary basis, adult education and 
literacy activities, in order to--
    (a) Assist adults to become literate and obtain the knowledge and 
skills necessary for employment and economic self-sufficiency;
    (b) Assist adults who are parents or family members to obtain the 
education and skills that--
    (1) Are necessary to becoming full partners in the educational 
development of their children; and
    (2) Lead to sustainable improvements in the economic opportunities 
for their family;
    (c) Assist adults in attaining a secondary school diploma or its 
recognized equivalent and in the transition to postsecondary education 
and training, through career pathways; and
    (d) Assist immigrants and other individuals who are English language 
learners in--
    (1) Improving their--
    (i) Reading, writing, speaking, and comprehension skills in English; 
and
    (ii) Mathematics skills; and
    (2) Acquiring an understanding of the American system of Government, 
individual freedom, and the responsibilities of citizenship.

(Authority: 29 U.S.C. 3271)



Sec. 463.2  What regulations apply to the Adult Education and Family
Literacy Act programs?

    The following regulations apply to the Adult Education and Family 
Literacy Act programs:
    (a) The following Education Department General Administrative 
Regulations (EDGAR):
    (1) 34 CFR part 75 (Direct Grant Programs), except that 34 CFR 
75.720(b), regarding the frequency of certain reports, does not apply.
    (2) 34 CFR part 76 (State-Administered Programs), except that 34 CFR 
76.101 (The general State application) does not apply.
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (6) 34 CFR part 82 (New Restrictions on Lobbying).
    (7) 34 CFR part 86 (Drug and Alcohol Prevention).
    (8) 2 CFR part 200 (Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards), as adopted at 2 
CFR part 3474.
    (b) The regulations in 34 CFR part 462.
    (c) The regulations in 34 CFR part 463.



Sec. 463.3  What definitions apply to the Adult Education and Family
Literacy Act programs?

    Definitions in the Workforce Innovation and Opportunity Act. The 
following terms are defined in Sections 3, 134, 203, and 225 of the 
Workforce Innovation and Opportunity Act (29 U.S.C. 3102, 3174, 3272, 
and 3305):

Adult Education
Adult Education and Literacy Activities
Basic Skills Deficient
Career Pathway
Core Program
Core Program Provision
Correctional Institution
Criminal Offender
Customized Training
Eligible Agency
Eligible Individual
Eligible Provider
English Language Acquisition Program
English Language Learner
Essential Components of Reading
Family Literacy Activities
Governor
Individual with a Barrier to Employment
Individual with a Disability
Institution of Higher Education
Integrated Education and Training
Integrated English Literacy and Civics Education
Literacy
Local Educational Agency
On-the-Job Training
Outlying Area
Postsecondary Educational Institution
State
Training Services
Workplace Adult Education and Literacy Activities

[[Page 140]]

Workforce Preparation Activities

    Definitions in EDGAR. The following terms are defined in 34 CFR 
77.1:

Applicant
Application
Award
Budget
Budget Period
Contract
Department
ED
EDGAR
Fiscal Year
Grant
Grantee
Nonprofit
Private
Project
Project Period
Public
Secretary
Subgrant
Subgrantee

    Other Definitions. The following definitions also apply:
    Act means the Workforce Innovation and Opportunity Act, Public Law 
113-128.
    Concurrent enrollment or co-enrollment refers to enrollment by an 
eligible individual in two or more of the six core programs administered 
under the Act.
    Digital literacy means the skills associated with using technology 
to enable users to find, evaluate, organize, create, and communicate 
information.
    Peer tutoring means an instructional model that utilizes one 
institutionalized individual to assist in providing or enhancing 
learning opportunities for other institutionalized individuals. A peer 
tutoring program must be structured and overseen by educators who assist 
with training and supervising tutors, setting educational goals, 
establishing an individualized plan of instruction, and monitoring 
progress.
    Re-entry and post-release services means services provided to a 
formerly incarcerated individual upon or shortly after release from a 
correctional institution that are designed to promote successful 
adjustment to the community and prevent recidivism. Examples include 
education, employment services, substance abuse treatment, housing 
support, mental and physical health care, and family reunification 
services.
    Title means title II of the Workforce Innovation and Opportunity 
Act, the Adult Education and Family Literacy Act, Public Law 113-128.

Subpart B [Reserved]



     Subpart C_How Does a State Make an Award to Eligible Providers?



Sec. 463.20  What is the process that the eligible agency must follow
in awarding grants or contracts to eligible providers?

    (a) From grant funds made available under section 222(a)(1) of the 
Act, each eligible agency must award competitive multiyear grants or 
contracts to eligible providers within the State or outlying area to 
enable the eligible providers to develop, implement, and improve adult 
education and literacy activities within the State or outlying area.
    (b) The eligible agency must require that each eligible provider 
receiving a grant or contract use the funding to establish or operate 
programs that provide adult education and literacy activities, including 
programs that provide such activities concurrently.
    (c) In conducting the competitive grant process, the eligible agency 
must ensure that--
    (1) All eligible providers have direct and equitable access to apply 
and compete for grants or contracts;
    (2) The same grant or contract announcement and application 
processes are used for all eligible providers in the State or outlying 
area; and
    (3) In awarding grants or contracts to eligible providers for adult 
education and literacy activities, funds shall not be used for the 
purpose of supporting or providing programs, services, or activities for 
individuals who are not eligible individuals as defined in the Act, 
except that such agency may use such funds for such purpose if such 
programs, services, or activities are related to family literacy 
activities. Prior to providing family literacy activities for 
individuals who are not eligible individuals, an eligible provider shall 
attempt to coordinate with programs and services that do not receive 
funding under this title.

[[Page 141]]

    (d) In awarding grants or contracts for adult education and literacy 
activities to eligible providers, the eligible agency must consider the 
following:
    (1) The degree to which the eligible provider would be responsive 
to--
    (i) Regional needs as identified in the local workforce development 
plan; and
    (ii) Serving individuals in the community who were identified in 
such plan as most in need of adult education and literacy activities, 
including individuals who--
    (A) Have low levels of literacy skills; or
    (B) Are English language learners;
    (2) The ability of the eligible provider to serve eligible 
individuals with disabilities, including eligible individuals with 
learning disabilities;
    (3) The past effectiveness of the eligible provider in improving the 
literacy of eligible individuals, especially those individuals who have 
low levels of literacy, and the degree to which those improvements 
contribute to the eligible agency meeting its State-adjusted levels of 
performance for the primary indicators of performance described in 
Sec. 677.155;
    (4) The extent to which the eligible provider demonstrates alignment 
between proposed activities and services and the strategy and goals of 
the local plan under section 108 of the Act, as well as the activities 
and services of the one-stop partners;
    (5) Whether the eligible provider's program--
    (i) Is of sufficient intensity and quality, and based on the most 
rigorous research available so that participants achieve substantial 
learning gains; and
    (ii) Uses instructional practices that include the essential 
components of reading instruction;
    (6) Whether the eligible provider's activities, including whether 
reading, writing, speaking, mathematics, and English language 
acquisition instruction delivered by the eligible provider, are based on 
the best practices derived from the most rigorous research available, 
including scientifically valid research and effective educational 
practice;
    (7) Whether the eligible provider's activities effectively use 
technology, services and delivery systems, including distance education, 
in a manner sufficient to increase the amount and quality of learning, 
and how such technology, services, and systems lead to improved 
performance;
    (8) Whether the eligible provider's activities provide learning in 
context, including through integrated education and training, so that an 
individual acquires the skills needed to transition to and complete 
postsecondary education and training programs, obtain and advance in 
employment leading to economic self-sufficiency, and to exercise the 
rights and responsibilities of citizenship;
    (9) Whether the eligible provider's activities are delivered by 
instructors, counselors, and administrators who meet any minimum 
qualifications established by the State, where applicable, and who have 
access to high-quality professional development, including through 
electronic means;
    (10) Whether the eligible provider coordinates with other available 
education, training, and social service resources in the community, such 
as by establishing strong links with elementary schools and secondary 
schools, postsecondary educational institutions, institutions of higher 
education, Local WDBs, one-stop centers, job training programs, and 
social service agencies, business, industry, labor organizations, 
community-based organizations, nonprofit organizations, and 
intermediaries, in the development of career pathways;
    (11) Whether the eligible provider's activities offer the flexible 
schedules and coordination with Federal, State, and local support 
services (such as child care, transportation, mental health services, 
and career planning) that are necessary to enable individuals, including 
individuals with disabilities or other special needs, to attend and 
complete programs;
    (12) Whether the eligible provider maintains a high-quality 
information management system that has the capacity to report measurable 
participant outcomes (consistent with section Sec. 666.100) and to 
monitor program performance; and
    (13) Whether the local area in which the eligible provider is 
located has a demonstrated need for additional

[[Page 142]]

English language acquisition programs and civics education programs.

(Authority: 29 U.S.C. 3321)



Sec. 463.21  What processes must be in place to determine the extent
to which a local application for grants or contracts to provide adult
education and literacy services is aligned with a local plan under
section 108 of WIOA?

    (a) An eligible agency must establish, within its grant or contract 
competition, a process that provides for the submission of all 
applications for funds under AEFLA to the appropriate Local Boards.
    (b) The process must include--
    (1) Submission of the applications to the appropriate Local Board 
for its review for consistency with the local plan within the 
appropriate timeframe; and
    (2) An opportunity for the local board to make recommendations to 
the eligible agency to promote alignment with the local plan.
    (c) The eligible agency must consider the results of the review by 
the Local Board in determining the extent to which the application 
addresses the required considerations in Sec. 463.20.

(Authority: 29 U.S.C. 3122(d)(11), 3321(e), 3322)



Sec. 463.22  What must be included in the eligible provider's
application for a grant or contract?

    (a) Each eligible provider seeking a grant or contract must submit 
an application to the eligible agency containing the information and 
assurances listed below, as well as any additional information required 
by the eligible agency, including:
    (1) A description of how funds awarded under this title will be 
spent consistent with the requirements of title II of AEFLA;
    (2) A description of any cooperative arrangements the eligible 
provider has with other agencies, institutions, or organizations for the 
delivery of adult education and literacy activities;
    (3) A description of how the eligible provider will provide services 
in alignment with the local workforce development plan, including how 
such provider will promote concurrent enrollment in programs and 
activities under title I, as appropriate;
    (4) A description of how the eligible provider will meet the State-
adjusted levels of performance for the primary indicators of performance 
identified in the State's Unified or Combined State Plan, including how 
such provider will collect data to report on such performance 
indicators;
    (5) A description of how the eligible provider will fulfill, as 
appropriate, required one-stop partner responsibilities to--
    (i) Provide access through the one-stop delivery system to adult 
education and literacy activities;
    (ii) Use a portion of the funds made available under the Act to 
maintain the one-stop delivery system, including payment of the 
infrastructure costs for the one-stop centers, in accordance with the 
methods agreed upon by the Local Board and described in the memorandum 
of understanding or the determination of the Governor regarding State 
one-stop infrastructure funding;
    (iii) Enter into a local memorandum of understanding with the Local 
Board, relating to the operations of the one-stop system;
    (iv) Participate in the operation of the one-stop system consistent 
with the terms of the memorandum of understanding, and the requirements 
of the Act; and
    (v) Provide representation to the State board;
    (6) A description of how the eligible provider will provide services 
in a manner that meets the needs of eligible individuals;
    (7) Information that addresses the 13 considerations listed in 
Sec. 463.20; and
    (8) Documentation of the activities required by Sec. 463.21(b).
    (b) [Reserved]

(Authority: 29 U.S.C. 3322)



Sec. 463.23  Who is eligible to apply for a grant or contract for 
adult education and literacy activities?

    An organization that has demonstrated effectiveness in providing 
adult education and literacy activities is eligible to apply for a grant 
or contract. These organizations may include, but are not limited to:

[[Page 143]]

    (a) A local educational agency;
    (b) A community-based organization or faith-based organization;
    (c) A volunteer literacy organization;
    (d) An institution of higher education;
    (e) A public or private nonprofit agency;
    (f) A library;
    (g) A public housing authority;
    (h) A nonprofit institution that is not described in any of 
paragraphs (a) through (g) of this section and has the ability to 
provide adult education and literacy activities to eligible individuals;
    (i) A consortium or coalition of the agencies, organizations, 
institutions, libraries, or authorities described in any of paragraphs 
(a) through (h) of this section; and
    (j) A partnership between an employer and an entity described in any 
of paragraphs (a) through (i) of this section.

(Authority: 29 U.S.C. 3272(5))



Sec. 463.24  How must an eligible provider establish that it has
demonstrated effectiveness?

    (a) For the purposes of this section, an eligible provider must 
demonstrate past effectiveness by providing performance data on its 
record of improving the skills of eligible individuals, particularly 
eligible individuals who have low levels of literacy, in the content 
domains of reading, writing, mathematics, English language acquisition, 
and other subject areas relevant to the services contained in the 
State's application for funds. An eligible provider must also provide 
information regarding its outcomes for participants related to 
employment, attainment of secondary school diploma or its recognized 
equivalent, and transition to postsecondary education and training.
    (b) There are two ways in which an eligible provider may meet the 
requirements in paragraph (a) of this section:
    (1) An eligible provider that has been funded under title II of the 
Act must provide performance data required under section 116 to 
demonstrate past effectiveness.
    (2) An eligible provider that has not been previously funded under 
title II of the Act must provide performance data to demonstrate its 
past effectiveness in serving basic skills deficient eligible 
individuals, including evidence of its success in achieving outcomes 
listed in paragraph (a) of this section.

(Authority: 29 U.S.C. 3272(5))



Sec. 463.25  What are the requirements related to local administrative
cost limits?

    Not more than five percent of a local grant to an eligible provider 
can be expended to administer a grant or contract under title II. In 
cases where five percent is too restrictive to allow for administrative 
activities, the eligible agency may increase the amount that can be 
spent on local administration. In such cases, the eligible provider must 
negotiate with the eligible agency to determine an adequate level of 
funds to be used for non-instructional purposes.

(Authority: 29 U.S.C. 3323)



Sec. 463.26  What activities are considered local administrative
costs?

    An eligible provider receiving a grant or contract under this part 
may consider costs incurred in connection with the following activities 
to be administrative costs:
    (a) Planning;
    (b) Administration, including carrying out performance 
accountability requirements;
    (c) Professional development;
    (d) Providing adult education and literacy services in alignment 
with local workforce plans, including promoting co-enrollment in 
programs and activities under title I, as appropriate; and
    (e) Carrying out the one-stop partner responsibilities described in 
Sec. 678.420, including contributing to the infrastructure costs of the 
one-stop delivery system.

(Authority: 29 U.S.C. 3323, 3322, 3151)



       Subpart D_What Are Adult Education and Literacy Activities?



Sec. 463.30  What are adult education and literacy programs, activities,
and services?

    The term ``adult education and literacy activities'' means programs, 
activities, and services that include:

[[Page 144]]

    (a) Adult education,
    (b) Literacy,
    (c) Workplace adult education and literacy activities,
    (d) Family literacy activities,
    (e) English language acquisition activities,
    (f) Integrated English literacy and civics education,
    (g) Workforce preparation activities, or
    (h) Integrated education and training.

(Authority: 29 U.S.C. 3272(2))



Sec. 463.31  What is an English language acquisition program?

    The term ``English language acquisition program'' means a program of 
instruction--
    (a) That is designed to help eligible individuals who are English 
language learners achieve competence in reading, writing, speaking, and 
comprehension of the English language; and
    (b) That leads to--
    (1) Attainment of a secondary school diploma or its recognized 
equivalent; and
    (2) Transition to postsecondary education and training; or
    (3) Employment.

(Authority: 29 U.S.C. 3272(6))



Sec. 463.32  How does a program that is intended to be an English 
language acquisition program meet the requirement that the program 
leads to attainment of a secondary school diploma or its recognized
equivalent and transition to postsecondary education and training
or leads to employment?

    To meet the requirement in Sec. 463.31(b) a program of instruction 
must:
    (a) Have implemented State adult education content standards that 
are aligned with State-adopted challenging academic content standards, 
as adopted under the Elementary and Secondary Education Act of 1965, as 
amended (ESEA) as described in the State's Unified or Combined State 
Plan and as evidenced by the use of a State or local curriculum, lesson 
plans, or instructional materials that are aligned with the State adult 
education content standards; or
    (b) Offer educational and career counseling services that assist an 
eligible individual to transition to postsecondary education or 
employment; or
    (c) Be part of a career pathway.

(Authority: 29 U.S.C. 3112(b)(2)(D)(ii), 3272)



Sec. 463.33  What are integrated English literacy and civics education
services?

    (a) Integrated English literacy and civics education services are 
education services provided to English language learners who are adults, 
including professionals with degrees or credentials in their native 
countries, that enable such adults to achieve competency in the English 
language and acquire the basic and more advanced skills needed to 
function effectively as parents, workers, and citizens in the United 
States.
    (b) Integrated English literacy and civics education services must 
include instruction in literacy and English language acquisition and 
instruction on the rights and responsibilities of citizenship and civic 
participation and may include workforce training.

(Authority: 29 U.S.C. 3272(12))



Sec. 463.34  What are workforce preparation activities?

    Workforce preparation activities include activities, programs, or 
services designed to help an individual acquire a combination of basic 
academic skills, critical thinking skills, digital literacy skills, and 
self-management skills, including competencies in:
    (a) Utilizing resources;
    (b) Using information;
    (c) Working with others;
    (d) Understanding systems;
    (e) Skills necessary for successful transition into and completion 
of postsecondary education or training, or employment; and
    (f) Other employability skills that increase an individual's 
preparation for the workforce.

(Authority: 29 U.S.C. 3272(17); P.L. 111-340)



Sec. 463.35  What is integrated education and training?

    The term ``integrated education and training'' refers to a service 
approach

[[Page 145]]

that provides adult education and literacy activities concurrently and 
contextually with workforce preparation activities and workforce 
training for a specific occupation or occupational cluster for the 
purpose of educational and career advancement.

(Authority: 29 U.S.C. 3272(11))



Sec. 463.36  What are the required components of an integrated
education and training program funded under title II?

    An integrated education and training program must include three 
components:
    (a) Adult education and literacy activities as described in 
Sec. 463.30.
    (b) Workforce preparation activities as described in Sec. 463.34.
    (c) Workforce training for a specific occupation or occupational 
cluster which can be any one of the training services defined in section 
134(c)(3)(D) of the Act.

(Authority: 29 U.S.C. 3272, 3174)



Sec. 463.37  How does a program providing integrated education and 
training under title II meet the requirement that the three required
components be ``integrated''?

    In order to meet the requirement that the adult education and 
literacy activities, workforce preparation activities, and workforce 
training be integrated, services must be provided concurrently and 
contextually such that--
    (a) Within the overall scope of a particular integrated education 
and training program, the adult education and literacy activities, 
workforce preparation activities, and workforce training:
    (1) Are each of sufficient intensity and quality, and based on the 
most rigorous research available, particularly with respect to improving 
reading, writing, mathematics, and English proficiency of eligible 
individuals;
    (2) Occur simultaneously; and
    (3) Use occupationally relevant instructional materials.
    (b) The integrated education and training program has a single set 
of learning objectives that identifies specific adult education content, 
workforce preparation activities, and workforce training competencies, 
and the program activities are organized to function cooperatively.

(Authority: 29 U.S.C. 3272)



Sec. 463.38  How does a program providing integrated education and
training under title II meet the requirement that the integrated 
education and training program be ``for the purpose of educational
and career advancement''?

    A provider meets the requirement that the integrated education and 
training program provided is for the purpose of educational and career 
advancement if:
    (a) The adult education component of the program is aligned with the 
State's content standards for adult education as described in the 
State's Unified or Combined State Plan; and
    (b) The integrated education and training program is part of a 
career pathway.

(Authority: 29 U.S.C. 3272, 3112)

Subpart E [Reserved]



Subpart F_What are Programs for Corrections Education and the Education 
                 of Other Institutionalized Individuals?



Sec. 463.60  What are programs for Corrections Education and the
Education of other Institutionalized Individuals?

    (a) Authorized under section 225 of the Act, programs for 
corrections education and the education of other institutionalized 
individuals require each eligible agency to carry out corrections 
education and education for other institutionalized individuals using 
funds provided under section 222 of the Act.
    (b) The funds described in paragraph (a) of this section must be 
used for the cost of educational programs for criminal offenders in 
correctional institutions and other institutionalized individuals, 
including academic programs for--
    (1) Adult education and literacy activities;
    (2) Special education, as determined by the eligible agency;
    (3) Secondary school credit;
    (4) Integrated education and training;

[[Page 146]]

    (5) Career pathways;
    (6) Concurrent enrollment;
    (7) Peer tutoring; and
    (8) Transition to re-entry initiatives and other post-release-
services with the goal of reducing recidivism.

(Authority: 29 U.S.C. 3302, 3305)



Sec. 463.61  How does the eligible agency award funds to eligible
providers under the program for Corrections Education and Education
of other Institutionalized Individuals?

    (a) States may award up to 20 percent of the 82.5 percent of the 
funds made available by the Secretary for local grants and contracts 
under section 231 of the Act for programs for corrections education and 
the education of other institutionalized individuals.
    (b) The State must make awards to eligible providers in accordance 
with subpart C.

(Authority: 29 U.S.C. 3302, 3321)



Sec. 463.62  What is the priority for programs that receive funding
through programs for Corrections Education and Education of other
Institutionalized Individuals?

    Each eligible agency using funds provided under Programs for 
Corrections Education and Education of Other Institutionalized 
Individuals to carry out a program for criminal offenders within a 
correctional institution must give priority to programs serving 
individuals who are likely to leave the correctional institution within 
five years of participation in the program.

(Authority: 29 U.S.C. 3305)



Sec. 463.63  How may funds under programs for Corrections Education
and Education of other Institutionalized Individuals be used to support
transition to re-entry initiatives and other post-release services 
with the goal of reducing recidivism?

    Funds under Programs for Corrections Education and the Education of 
Other Institutionalized Individuals may be used to support educational 
programs for transition to re-entry initiatives and other post-release 
services with the goal of reducing recidivism. Such use of funds may 
include educational counseling or case work to support incarcerated 
individuals' transition to re-entry and other post-release services. 
Examples include assisting incarcerated individuals to develop plans for 
post-release education program participation, assisting students in 
identifying and applying for participation in post-release programs, and 
performing direct outreach to community-based program providers on 
behalf of re-entering students. Such funds may not be used for costs for 
participation in post-release programs or services.

(Authority: 29 U.S.C. 3305)



 Subpart G_What Is the Integrated English Literacy and Civics Education 
                                Program?



Sec. 463.70  What is the Integrated English Literacy and Civics
Education program?

    (a) The Integrated English Literacy and Civics Education program 
refers to the use of funds provided under section 243 of the Act for 
education services for English language learners who are adults, 
including professionals with degrees and credentials in their native 
countries.
    (b) The Integrated English Literacy and Civics Education program 
delivers educational services as described in Sec. 463.33.
    (c) Such educational services must be delivered in combination with 
integrated education and training activities as described in 
Sec. 463.36.

(Authority: 29 U.S.C. 3272, 3333)



Sec. 463.71  How does the Secretary make an award under the Integrated
English Literacy and Civics Education program?

    (a) The Secretary awards grants under the Integrated English 
Literacy and Civics Education program to States that have an approved 
Unified State Plan in accordance with Sec. 463.90 through Sec. 463.145, 
or an approved Combined State Plan in accordance with Sec. 463.90 
through Sec. 463.145.
    (b) The Secretary allocates funds to States following the formula 
described in section 243(b) of the Act.

[[Page 147]]

    (1) Sixty-five percent is allocated on the basis of a State's need 
for integrated English literacy and civics education, as determined by 
calculating each State's share of a 10-year average of the data of the 
Office of Immigration Statistics of the Department of Homeland Security 
for immigrants admitted for legal permanent residence for the 10 most 
recent years; and
    (2) Thirty-five percent is allocated on the basis of whether the 
State experienced growth, as measured by the average of the three most 
recent years for which the data of the Office of Immigration Statistics 
of the Department of Homeland Security for immigrants admitted for legal 
permanent residence are available.
    (3) No State receives an allotment less than $60,000.

(Authority: 29 U.S.C. 3333)



Sec. 463.72  How does the eligible agency award funds to eligible
providers for the Integrated English Literacy and Civics Education
program?

    States must award funds for the Integrated English Literacy and 
Civics Education program to eligible providers in accordance with 
subpart C.

(Authority: 29 U.S.C. 3321)



Sec. 463.73  What are the requirements for eligible providers that
receive funding through the Integrated English Literacy and Civics
Education program?

    Eligible providers receiving funds through the Integrated English 
Literacy and Civics Education program must provide services that--
    (a) Include instruction in literacy and English language acquisition 
and instruction on the rights and responsibilities of citizenship and 
civic participation; and
    (b) Are designed to:
    (1) Prepare adults who are English language learners for, and place 
such adults in, unsubsidized employment in in-demand industries and 
occupations that lead to economic self-sufficiency; and
    (2) Integrate with the local workforce development system and its 
functions to carry out the activities of the program.

(Authority: 29 U.S.C. 3272, 3333)



Sec. 463.74  How does an eligible provider that receives funds through
the Integrated English Literacy and Civics Education program meet the
requirement to use funds for Integrated English Literacy and Civics 
Education in combination with integrated education and training
activities?

    An eligible provider that receives funds through the Integrated 
English Literacy and Civics Education program may meet the requirement 
to use funds for integrated English literacy and civics education in 
combination with integrated education and training activities by:
    (a) Co-enrolling participants in integrated education and training 
as described in subpart D of this part that is provided within the local 
or regional workforce development area from sources other than section 
243 of the Act; or
    (b) Using funds provided under section 243 of the Act to support 
integrated education and training activities as described in subpart D 
of this part.

(Authority: 29 U.S.C. 3333, 3121, 3122, 3123)



Sec. 463.75  Who is eligible to receive education services through
the Integrated English Literacy and Civics Education program?

    Individuals who otherwise meet the definition of ``eligible 
individual'' and are English language learners, including professionals 
with degrees and credentials obtained in their native countries, may 
receive Integrated English Literacy and Civics Education services.

(Authority: 29 U.S.C. 3272)



    Subpart H_Unified and Combined State Plans Under Title I of the 
                Workforce Innovation and Opportunity Act

    Authority: Secs. 102, 103, and 503, Pub. L. 113-128, 128 Stat. 1425 
(Jul. 22, 2014).

    Source: 81 FR 56046, Aug. 19, 2016, unless otherwise noted.

[[Page 148]]



Sec. 463.100  What are the purposes of the Unified and Combined
State Plans?

    (a) The Unified and Combined State Plans provide the framework for 
States to outline a strategic vision of, and goals for, how their 
workforce development systems will achieve the purposes of the Workforce 
Innovation and Opportunity Act (WIOA).
    (b) The Unified and Combined State Plans serve as 4-year action 
plans to develop, align, and integrate the State's systems and provide a 
platform to achieve the State's vision and strategic and operational 
goals. A Unified or Combined State Plan is intended to:
    (1) Align, in strategic coordination, the six core programs required 
in the Unified State Plan pursuant to Sec. 463.105(b), and additional 
Combined State Plan partner programs that may be part of the Combined 
State Plan pursuant to Sec. 463.140;
    (2) Direct investments in economic, education, and workforce 
training programs to focus on providing relevant education and training 
to ensure that individuals, including youth and individuals with 
barriers to employment, have the skills to compete in the job market and 
that employers have a ready supply of skilled workers;
    (3) Apply strategies for job-driven training consistently across 
Federal programs; and
    (4) Enable economic, education, and workforce partners to build a 
skilled workforce through innovation in, and alignment of, employment, 
training, and education programs.



Sec. 463.105  What are the general requirements for the Unified
State Plan?

    (a) The Unified State Plan must be submitted in accordance with 
Sec. 463.130 and WIOA sec. 102(c), as explained in joint planning 
guidelines issued by the Secretaries of Labor and Education.
    (b) The Governor of each State must submit, at a minimum, in 
accordance with Sec. 463.130, a Unified State Plan to the Secretary of 
Labor to be eligible to receive funding for the workforce development 
system's six core programs:
    (1) The adult, dislocated worker, and youth programs authorized 
under subtitle B of title I of WIOA and administered by the U.S. 
Department of Labor (DOL);
    (2) The Adult Education and Family Literacy Act (AEFLA) program 
authorized under title II of WIOA and administered by the U.S. 
Department of Education (ED);
    (3) The Employment Service program authorized under the Wagner-
Peyser Act of 1933, as amended by WIOA title III and administered by 
DOL; and
    (4) The Vocational Rehabilitation program authorized under title I 
of the Rehabilitation Act of 1973, as amended by title IV of WIOA and 
administered by ED.
    (c) The Unified State Plan must outline the State's 4-year strategy 
for the core programs described in paragraph (b) of this section and 
meet the requirements of sec. 102(b) of WIOA, as explained in the joint 
planning guidelines issued by the Secretaries of Labor and Education.
    (d) The Unified State Plan must include strategic and operational 
planning elements to facilitate the development of an aligned, 
coordinated, and comprehensive workforce development system. The Unified 
State Plan must include:
    (1) Strategic planning elements that describe the State's strategic 
vision and goals for preparing an educated and skilled workforce under 
sec. 102(b)(1) of WIOA. The strategic planning elements must be informed 
by and include an analysis of the State's economic conditions and 
employer and workforce needs, including education and skill needs.
    (2) Strategies for aligning the core programs and Combined State 
Plan partner programs as described in Sec. 463.140(d), as well as other 
resources available to the State, to achieve the strategic vision and 
goals in accordance with sec. 102(b)(1)(E) of WIOA.
    (3) Operational planning elements in accordance with sec. 102(b)(2) 
of WIOA that support the strategies for aligning the core programs and 
other resources available to the State to achieve the State's vision and 
goals and a description of how the State Workforce Development Board 
(WDB) will implement its functions, in accordance with sec. 101(d) of 
WIOA. Operational planning elements must include:

[[Page 149]]

    (i) A description of how the State strategy will be implemented by 
each core program's lead State agency;
    (ii) State operating systems, including data systems, and policies 
that will support the implementation of the State's strategy identified 
in paragraph (d)(1) of this section;
    (iii) Program-specific requirements for the core programs required 
by WIOA sec. 102(b)(2)(D);
    (iv) Assurances required by sec. 102(b)(2)(E) of WIOA, including an 
assurance that the lead State agencies responsible for the 
administration of the core programs reviewed and commented on the 
appropriate operational planning of the Unified State Plan and approved 
the elements as serving the needs of the population served by such 
programs, and other assurances deemed necessary by the Secretaries of 
Labor and Education under sec. 102(b)(2)(E)(x) of WIOA;
    (v) A description of joint planning and coordination across core 
programs, required one-stop partner programs, and other programs and 
activities in the Unified State Plan; and
    (vi) Any additional operational planning requirements imposed by the 
Secretary of Labor or the Secretary of Education under sec. 
102(b)(2)(C)(viii) of WIOA.
    (e) All of the requirements in this subpart that apply to States 
also apply to outlying areas.



Sec. 463.110  What are the program-specific requirements in the 
Unified State Plan for the adult, dislocated worker, and youth 
programs authorized under Workforce Innovation and Opportunity 
Act title I?

    The program-specific requirements for the adult, dislocated worker, 
and youth programs that must be included in the Unified State Plan are 
described in sec. 102(b)(2)(D) of WIOA. Additional planning requirements 
may be explained in joint planning guidelines issued by the Secretaries 
of Labor and Education.



Sec. 463.115  What are the program-specific requirements in the 
Unified State Plan for the Adult Education and Family Literacy
Act program authorized under Workforce Innovation and Opportunity
Act title II?

    The program-specific requirements for the AEFLA program in title II 
that must be included in the Unified State Plan are described in secs. 
102(b)(2)(C) and 102(b)(2)(D)(ii) of WIOA.
    (a) With regard to the description required in sec. 
102(b)(2)(D)(ii)(I) of WIOA pertaining to content standards, the Unified 
State Plan must describe how the eligible agency will, by July 1, 2016, 
align its content standards for adult education with State-adopted 
challenging academic content standards under the Elementary and 
Secondary Education Act of 1965, as amended.
    (b) With regard to the description required in sec. 102(b)(2)(C)(iv) 
of WIOA pertaining to the methods and factors the State will use to 
distribute funds under the core programs, for title II of WIOA, the 
Unified State Plan must include--
    (1) How the eligible agency will award multi-year grants on a 
competitive basis to eligible providers in the State; and
    (2) How the eligible agency will provide direct and equitable access 
to funds using the same grant or contract announcement and application 
procedure.



Sec. 463.120  What are the program-specific requirements in the 
Unified State Plan for the Employment Service program authorized under
the Wagner-Peyser Act, as amended by Workforce Innovation and 
Opportunity Act title III?

    The Employment Service program authorized under the Wagner-Peyser 
Act of 1933, as amended by WIOA title III, is subject to requirements in 
sec. 102(b) of WIOA, including any additional requirements imposed by 
the Secretary of Labor under secs. 102(b)(2)(C)(viii) and 
102(b)(2)(D)(iv) of WIOA, as explained in joint planning guidelines 
issued by the Secretaries of Labor and Education.

[[Page 150]]



Sec. 463.125  What are the program-specific requirements in the
Unified State Plan for the State Vocational Rehabilitation program
authorized under title I of the Rehabilitation Act of 1973,
as amended by Workforce Innovation and Opportunity Act title IV?

    The program specific-requirements for the vocational rehabilitation 
services portion of the Unified or Combined State Plan are set forth in 
sec. 101(a) of the Rehabilitation Act of 1973, as amended. All 
submission requirements for the vocational rehabilitation services 
portion of the Unified or Combined State Plan are in addition to the 
jointly developed strategic and operational content requirements 
prescribed by sec. 102(b) of WIOA.



Sec. 463.130  What is the development, submission, and approval
process of the Unified State Plan?

    (a) The Unified State Plan described in Sec. 463.105 must be 
submitted in accordance with WIOA sec. 102(c), as explained in joint 
planning guidelines issued jointly by the Secretaries of Labor and 
Education.
    (b) A State must submit its Unified State Plan to the Secretary of 
Labor pursuant to a process identified by the Secretary.
    (1) The initial Unified State Plan must be submitted no later than 
120 days prior to the commencement of the second full program year of 
WIOA.
    (2) Subsequent Unified State Plans must be submitted no later than 
120 days prior to the end of the 4-year period covered by a preceding 
Unified State Plan.
    (3) For purposes of paragraph (b) of this section, ``program year'' 
means July 1 through June 30 of any year.
    (c) The Unified State Plan must be developed with the assistance of 
the State WDB, as required by 20 CFR 679.130(a) and WIOA sec. 101(d), 
and must be developed in coordination with administrators with optimum 
policy-making authority for the core programs and required one-stop 
partners.
    (d) The State must provide an opportunity for public comment on and 
input into the development of the Unified State Plan prior to its 
submission.
    (1) The opportunity for public comment must include an opportunity 
for comment by representatives of Local WDBs and chief elected 
officials, businesses, representatives of labor organizations, 
community-based organizations, adult education providers, institutions 
of higher education, other stakeholders with an interest in the services 
provided by the six core programs, and the general public, including 
individuals with disabilities.
    (2) Consistent with the ``Sunshine Provision'' of WIOA in sec. 
101(g), the State WDB must make information regarding the Unified State 
Plan available to the public through electronic means and regularly 
occurring open meetings in accordance with State law. The Unified State 
Plan must describe the State's process and timeline for ensuring a 
meaningful opportunity for public comment.
    (e) Upon receipt of the Unified State Plan from the State, the 
Secretary of Labor will ensure that the entire Unified State Plan is 
submitted to the Secretary of Education pursuant to a process developed 
by the Secretaries.
    (f) The Unified State Plan is subject to the approval of both the 
Secretary of Labor and the Secretary of Education.
    (g) Before the Secretaries of Labor and Education approve the 
Unified State Plan, the vocational rehabilitation services portion of 
the Unified State Plan described in WIOA sec. 102(b)(2)(D)(iii) must be 
approved by the Commissioner of the Rehabilitation Services 
Administration.
    (h) The Secretaries of Labor and Education will review and approve 
the Unified State Plan within 90 days of receipt by the Secretary of 
Labor, unless the Secretary of Labor or the Secretary of Education 
determines in writing within that period that:
    (1) The plan is inconsistent with a core program's requirements;
    (2) The Unified State Plan is inconsistent with any requirement of 
sec. 102 of WIOA; or
    (3) The plan is incomplete or otherwise insufficient to determine 
whether it is consistent with a core program's requirements or other 
requirements of WIOA.
    (i) If neither the Secretary of Labor nor the Secretary of Education 
makes the written determination described in

[[Page 151]]

paragraph (h) of this section within 90 days of the receipt by the 
Secretaries, the Unified State Plan will be considered approved.



Sec. 463.135  What are the requirements for modification of the 
Unified State Plan?

    (a) In addition to the required modification review set forth in 
paragraph (b) of this section, a Governor may submit a modification of 
its Unified State Plan at any time during the 4-year period of the plan.
    (b) Modifications are required, at a minimum:
    (1) At the end of the first 2-year period of any 4-year State Plan, 
wherein the State WDB must review the Unified State Plan, and the 
Governor must submit modifications to the plan to reflect changes in 
labor market and economic conditions or other factors affecting the 
implementation of the Unified State Plan;
    (2) When changes in Federal or State law or policy substantially 
affect the strategies, goals, and priorities upon which the Unified 
State Plan is based;
    (3) When there are changes in the statewide vision, strategies, 
policies, State negotiated levels of performance as described in 
Sec. 463.170(b), the methodology used to determine local allocation of 
funds, reorganizations that change the working relationship with system 
employees, changes in organizational responsibilities, changes to the 
membership structure of the State WDB or alternative entity, and similar 
substantial changes to the State's workforce development system.
    (c) Modifications to the Unified State Plan are subject to the same 
public review and comment requirements in Sec. 463.130(d) that apply to 
the development of the original Unified State Plan.
    (d) Unified State Plan modifications must be approved by the 
Secretaries of Labor and Education, based on the approval standards 
applicable to the original Unified State Plan under Sec. 463.130. This 
approval must come after the approval of the Commissioner of the 
Rehabilitation Services Administration for modification of any portion 
of the plan described in sec. 102(b)(2)(D)(iii) of WIOA.



Sec. 463.140  What are the general requirements for submitting a 
Combined State Plan?

    (a) A State may choose to develop and submit a 4-year Combined State 
Plan in lieu of the Unified State Plan described in Secs. 463.105 
through 463.125.
    (b) A State that submits a Combined State Plan covering an activity 
or program described in paragraph (d) of this section that is, in 
accordance with WIOA sec. 103(c), approved or deemed complete under the 
law relating to the program will not be required to submit any other 
plan or application in order to receive Federal funds to carry out the 
core programs or the program or activities described under paragraph (d) 
of this section that are covered by the Combined State Plan.
    (c) If a State develops a Combined State Plan, it must be submitted 
in accordance with the process described in Sec. 463.143.
    (d) If a State chooses to submit a Combined State Plan, the plan 
must include the six core programs and one or more of the Combined State 
Plan partner programs and activities described in sec. 103(a)(2) of 
WIOA. The Combined State Plan partner programs and activities that may 
be included in the Combined State Plan are:
    (1) Career and technical education programs authorized under the 
Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 
2301 et seq.);
    (2) Temporary Assistance for Needy Families or TANF, authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.);
    (3) Employment and training programs authorized under sec. 6(d)(4) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Work programs authorized under sec. 6(o) of the Food and 
Nutrition Act of 2008 (7 U.S.C. 2015(o));
    (5) Trade adjustment assistance activities under chapter 2 of title 
II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (6) Services for veterans authorized under chapter 41 of title 38 
United States Code;
    (7) Programs authorized under State unemployment compensation laws 
(in

[[Page 152]]

accordance with applicable Federal law);
    (8) Senior Community Service Employment Programs under title V of 
the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.);
    (9) Employment and training activities carried out by the Department 
of Housing and Urban Development (HUD);
    (10) Employment and training activities carried out under the 
Community Services Block Grant Act (42 U.S.C. 9901 et seq.); and
    (11) Reintegration of offenders programs authorized under sec. 212 
of the Second Chance Act of 2007 (42 U.S.C. 17532).
    (e) A Combined State Plan must contain:
    (1) For the core programs, the information required by sec. 102(b) 
of WIOA and Secs. 463.105 through 463.125, as explained in the joint 
planning guidelines issued by the Secretaries;
    (2) For the Combined State Plan partner programs and activities, 
except as described in paragraph (h) of this section, the information 
required by the law authorizing and governing that program to be 
submitted to the appropriate Secretary, any other applicable legal 
requirements, and any common planning requirements described in sec. 
102(b) of WIOA, as explained in the joint planning guidelines issued by 
the Secretaries;
    (3) A description of the methods used for joint planning and 
coordination among the core programs, and with the required one-stop 
partner programs and other programs and activities included in the State 
Plan; and
    (4) An assurance that all of the entities responsible for planning 
or administering the programs described in the Combined State Plan have 
had a meaningful opportunity to review and comment on all portions of 
the plan.
    (f) Each Combined State Plan partner program included in the 
Combined State Plan remains subject to the applicable program-specific 
requirements of the Federal law and regulations, and any other 
applicable legal or program requirements, governing the implementation 
and operation of that program.
    (g) For purposes of Secs. 463.140 through 463.145 the term 
``appropriate Secretary'' means the head of the Federal agency who 
exercises either plan or application approval authority for the program 
or activity under the Federal law authorizing the program or activity 
or, if there are no planning or application requirements, who exercises 
administrative authority over the program or activity under that Federal 
law.
    (h) States that include employment and training activities carried 
out under the Community Services Block Grant (CSBG) Act (42 U.S.C. 9901 
et seq.) under a Combined State Plan would submit all other required 
elements of a complete CSBG State Plan directly to the Federal agency 
that administers the program, according to the requirements of Federal 
law and regulations.
    (i) States that submit employment and training activities carried 
out by HUD under a Combined State Plan would submit any other required 
planning documents for HUD programs directly to HUD, according to the 
requirements of Federal law and regulations.



Sec. 463.143  What is the development, submission, and approval
process of the Combined State Plan?

    (a) For purposes of Sec. 463.140(a), if a State chooses to develop a 
Combined State Plan it must submit the Combined State Plan in accordance 
with the requirements described below and sec. 103 of WIOA, as explained 
in the joint planning guidelines issued by the Secretaries of Labor and 
Education.
    (b) The Combined State Plan must be developed with the assistance of 
the State WDB, as required by 20 CFR 679.130(a) and WIOA sec. 101(d), 
and must be developed in coordination with administrators with optimum 
policy-making authority for the core programs and required one-stop 
partners.
    (c) The State must provide an opportunity for public comment on and 
input into the development of the Combined State Plan prior to its 
submission.
    (1) The opportunity for public comment for the portions of the 
Combined State Plan that cover the core programs must include an 
opportunity for comment by representatives of Local

[[Page 153]]

WDBs and chief elected officials, businesses, representatives of labor 
organizations, community-based organizations, adult education providers, 
institutions of higher education, other stakeholders with an interest in 
the services provided by the six core programs, and the general public, 
including individuals with disabilities.
    (2) Consistent with the ``Sunshine Provision'' of WIOA in sec. 
101(g), the State WDB must make information regarding the Combined State 
Plan available to the public through electronic means and regularly 
occurring open meetings in accordance with State law. The Combined State 
Plan must describe the State's process and timeline for ensuring a 
meaningful opportunity for public comment on the portions of the plan 
covering core programs.
    (3) The portions of the plan that cover the Combined State Plan 
partner programs are subject to any public comment requirements 
applicable to those programs.
    (d) The State must submit to the Secretaries of Labor and Education 
and to the Secretary of the agency with responsibility for approving the 
program's plan or deeming it complete under the law governing the 
program, as part of its Combined State Plan, any plan, application, 
form, or any other similar document that is required as a condition for 
the approval of Federal funding under the applicable program or 
activity. Such submission must occur in accordance with a process 
identified by the relevant Secretaries in paragraph (a) of this section.
    (e) The Combined State Plan will be approved or disapproved in 
accordance with the requirements of sec. 103(c) of WIOA.
    (1) The portion of the Combined State Plan covering programs 
administered by the Departments of Labor and Education must be reviewed, 
and approved or disapproved, by the appropriate Secretary within 90 days 
beginning on the day the Combined State Plan is received by the 
appropriate Secretary from the State, consistent with paragraph (f) of 
this section. Before the Secretaries of Labor and Education approve the 
Combined State Plan, the vocational rehabilitation services portion of 
the Combined State Plan described in WIOA sec. 102(b)(2)(D)(iii) must be 
approved by the Commissioner of the Rehabilitation Services 
Administration.
    (2) If an appropriate Secretary other than the Secretary of Labor or 
the Secretary of Education has authority to approve or deem complete a 
portion of the Combined State Plan for a program or activity described 
in Sec. 463.140(d), that portion of the Combined State Plan must be 
reviewed, and approved, disapproved, or deemed complete, by the 
appropriate Secretary within 120 days beginning on the day the Combined 
State Plan is received by the appropriate Secretary from the State 
consistent with paragraph (f) of this section.
    (f) The appropriate Secretaries will review and approve or deem 
complete the Combined State Plan within 90 or 120 days, as appropriate, 
as described in paragraph (e) of this section, unless the Secretaries of 
Labor and Education or appropriate Secretary have determined in writing 
within that period that:
    (1) The Combined State Plan is inconsistent with the requirements of 
the six core programs or the Federal laws authorizing or applicable to 
the program or activity involved, including the criteria for approval of 
a plan or application, or deeming the plan complete, if any, under such 
law;
    (2) The portion of the Combined State Plan describing the six core 
programs or the program or activity described in paragraph (a) of this 
section involved does not satisfy the criteria as provided in sec. 102 
or 103 of WIOA, as applicable; or
    (3) The Combined State Plan is incomplete, or otherwise insufficient 
to determine whether it is consistent with a core program's 
requirements, other requirements of WIOA, or the Federal laws 
authorizing, or applicable to, the program or activity described in 
Sec. 463.140(d), including the criteria for approval of a plan or 
application, if any, under such law.
    (g) If the Secretary of Labor, the Secretary of Education, or the 
appropriate Secretary does not make the written determination described 
in paragraph (f) of this section within the relevant period of time 
after submission of the

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Combined State Plan, that portion of the Combined State Plan over which 
the Secretary has jurisdiction will be considered approved.
    (h) The Secretaries of Labor and Education's written determination 
of approval or disapproval regarding the portion of the plan for the six 
core programs may be separate from the written determination of 
approval, disapproval, or completeness of the program-specific 
requirements of Combined State Plan partner programs and activities 
described in Sec. 463.140(d) and included in the Combined State Plan.
    (i) Special rule. In paragraphs (f)(1) and (3) of this section, the 
term ``criteria for approval of a plan or application,'' with respect to 
a State or a core program or a program under the Carl D. Perkins Career 
and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.), includes a 
requirement for agreement between the State and the appropriate 
Secretaries regarding State performance measures or State performance 
accountability measures, as the case may be, including levels of 
performance.



Sec. 463.145  What are the requirements for modifications of the 
Combined State Plan?

    (a) For the core program portions of the Combined State Plan, 
modifications are required, at a minimum:
    (1) By the end of the first 2-year period of any 4-year State Plan. 
The State WDB must review the Combined State Plan, and the Governor must 
submit modifications to the Combined State Plan to reflect changes in 
labor market and economic conditions or other factors affecting the 
implementation of the Combined State Plan;
    (2) When changes in Federal or State law or policy substantially 
affect the strategies, goals, and priorities upon which the Combined 
State Plan is based;
    (3) When there are changes in the statewide vision, strategies, 
policies, State negotiated levels of performance as described in 
Sec. 463.170(b), the methodology used to determine local allocation of 
funds, reorganizations that change the working relationship with system 
employees, changes in organizational responsibilities, changes to the 
membership structure of the State WDB or alternative entity, and similar 
substantial changes to the State's workforce development system.
    (b) In addition to the required modification review described in 
paragraph (a)(1) of this section, a State may submit a modification of 
its Combined State Plan at any time during the 4-year period of the 
plan.
    (c) For any Combined State Plan partner programs and activities 
described in Sec. 463.140(d) that are included in a State's Combined 
State Plan, the State--
    (1) May decide if the modification requirements under WIOA sec. 
102(c)(3) that apply to the core programs will apply to the Combined 
State Plan partner programs, as long as consistent with any other 
modification requirements for the programs, or may comply with the 
requirements applicable to only the particular program or activity; and
    (2) Must submit, in accordance with the procedure described in 
Sec. 463.143, any modification, amendment, or revision required by the 
Federal law authorizing, or applicable to, the Combined State Plan 
partner program or activity.
    (i) If the underlying programmatic requirements change (e.g., the 
authorizing statute is reauthorized) for Federal laws authorizing such 
programs, a State must either modify its Combined State Plan or submit a 
separate plan to the appropriate Federal agency in accordance with the 
new Federal law authorizing the Combined State Plan partner program or 
activity and other legal requirements applicable to such program or 
activity.
    (ii) If the modification, amendment, or revision affects the 
administration of only that particular Combined State Plan partner 
program and has no impact on the Combined State Plan as a whole or the 
integration and administration of the core and other Combined State Plan 
partner programs at the State level, modifications must be submitted for 
approval to only the appropriate Secretary, based on the approval 
standards applicable to the original Combined State Plan under 
Sec. 463.143, if the State elects, or in accordance with

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the procedures and requirements applicable to the particular Combined 
State Plan partner program.
    (3) A State also may amend its Combined State Plan to add a Combined 
State Plan partner program or activity described in Sec. 463.140(d).
    (d) Modifications of the Combined State Plan are subject to the same 
public review and comment requirements that apply to the development of 
the original Combined State Plan as described in Sec. 463.143(c) except 
that, if the modification, amendment, or revision affects the 
administration of a particular Combined State Plan partner program and 
has no impact on the Combined State Plan as a whole or the integration 
and administration of the core and other Combined State Plan partner 
programs at the State level, a State may comply instead with the 
procedures and requirements applicable to the particular Combined State 
Plan partner program.
    (e) Modifications for the core program portions of the Combined 
State Plan must be approved by the Secretaries of Labor and Education, 
based on the approval standards applicable to the original Combined 
State Plan under Sec. 463.143. This approval must come after the 
approval of the Commissioner of the Rehabilitation Services 
Administration for modification of any portion of the Combined State 
Plan described in sec. 102(b)(2)(D)(iii) of WIOA.



  Subpart I_Performance Accountability Under Title I of the Workforce 
                     Innovation and Opportunity Act

    Authority: Secs. 116, 189, and 503 of Pub. L. 113-128, 128 Stat. 
1425 (Jul. 22, 2014).

    Source: 81 FR 56051, Aug. 19, 2016, unless otherwise noted.



Sec. 463.150  What definitions apply to Workforce Innovation and 
Opportunity Act performance accountability provisions?

    (a) Participant. A reportable individual who has received services 
other than the services described in paragraph (a)(3) of this section, 
after satisfying all applicable programmatic requirements for the 
provision of services, such as eligibility determination.
    (1) For the Vocational Rehabilitation (VR) program, a participant is 
a reportable individual who has an approved and signed Individualized 
Plan for Employment (IPE) and has begun to receive services.
    (2) For the Workforce Innovation and Opportunity Act (WIOA) title I 
youth program, a participant is a reportable individual who has 
satisfied all applicable program requirements for the provision of 
services, including eligibility determination, an objective assessment, 
and development of an individual service strategy, and received 1 of the 
14 WIOA youth program elements identified in sec. 129(c)(2) of WIOA.
    (3) The following individuals are not participants:
    (i) Individuals in an Adult Education and Family Literacy Act 
(AEFLA) program who have not completed at least 12 contact hours;
    (ii) Individuals who only use the self-service system.
    (A) Subject to paragraph (a)(3)(ii)(B) of this section, self-service 
occurs when individuals independently access any workforce development 
system program's information and activities in either a physical 
location, such as a one-stop center resource room or partner agency, or 
remotely via the use of electronic technologies.
    (B) Self-service does not uniformly apply to all virtually accessed 
services. For example, virtually accessed services that provide a level 
of support beyond independent job or information seeking on the part of 
an individual would not qualify as self-service.
    (iii) Individuals who receive information-only services or 
activities, which provide readily available information that does not 
require an assessment by a staff member of the individual's skills, 
education, or career objectives.
    (4) Programs must include participants in their performance 
calculations.
    (b) Reportable individual. An individual who has taken action that 
demonstrates an intent to use program services and who meets specific 
reporting criteria of the program, including:

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    (1) Individuals who provide identifying information;
    (2) Individuals who only use the self-service system; or
    (3) Individuals who only receive information-only services or 
activities.
    (c) Exit. As defined for the purpose of performance calculations, 
exit is the point after which a participant who has received services 
through any program meets the following criteria:
    (1) For the adult, dislocated worker, and youth programs authorized 
under WIOA title I, the AEFLA program authorized under WIOA title II, 
and the Employment Service program authorized under the Wagner-Peyser 
Act, as amended by WIOA title III, exit date is the last date of 
service.
    (i) The last day of service cannot be determined until at least 90 
days have elapsed since the participant last received services; services 
do not include self-service, information-only services or activities, or 
follow-up services. This also requires that there are no plans to 
provide the participant with future services.
    (ii) [Reserved].
    (2)(i) For the VR program authorized under title I of the 
Rehabilitation Act of 1973, as amended by WIOA title IV (VR program):
    (A) The participant's record of service is closed in accordance with 
Sec. 463.56 because the participant has achieved an employment outcome; 
or
    (B) The participant's service record is closed because the 
individual has not achieved an employment outcome or the individual has 
been determined ineligible after receiving services in accordance with 
Sec. 463.43.
    (ii) Notwithstanding any other provision of this section, a 
participant will not be considered as meeting the definition of exit 
from the VR program if the participant's service record is closed 
because the participant has achieved a supported employment outcome in 
an integrated setting but not in competitive integrated employment.
    (3)(i) A State may implement a common exit policy for all or some of 
the core programs in WIOA title I and the Employment Service program 
authorized under the Wagner-Peyser Act, as amended by WIOA title III, 
and any additional required partner program(s) listed in sec. 
121(b)(1)(B) of WIOA that is under the authority of the U.S. Department 
of Labor (DOL).
    (ii) If a State chooses to implement a common exit policy, the 
policy must require that a participant is exited only when all of the 
criteria in paragraph (c)(1) of this section are met for the WIOA title 
I core programs and the Employment Service program authorized under the 
Wagner-Peyser Act, as amended by WIOA title III, as well as any 
additional required partner programs listed in sec. 121(b)(1)(B) of WIOA 
under the authority of DOL to which the common exit policy applies in 
which the participant is enrolled.
    (d) State. For purposes of this part, other than in regard to 
sanctions or the statistical adjustment model, all references to 
``State'' include the outlying areas of American Samoa, Guam, 
Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, 
and, as applicable, the Republic of Palau.



Sec. 463.155  What are the primary indicators of performance under
the Workforce Innovation and Opportunity Act?

    (a) All States submitting either a Unified or Combined State Plan 
under Secs. 463.130 and 463.143, must propose expected levels of 
performance for each of the primary indicators of performance for the 
adult, dislocated worker, and youth programs authorized under WIOA title 
I; the AEFLA program authorized under WIOA title II; the Employment 
Service program authorized under the Wagner-Peyser Act, as amended by 
WIOA title III; and the VR program authorized under title I of the 
Rehabilitation Act of 1973, as amended by WIOA title IV.
    (1) Primary indicators of performance. The six primary indicators of 
performance for the adult and dislocated worker programs, the AEFLA 
program, and the VR program are:
    (i) The percentage of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (ii) The percentage of participants who are in unsubsidized 
employment during the fourth quarter after exit from the program;

[[Page 157]]

    (iii) Median earnings of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (iv)(A) The percentage of those participants enrolled in an 
education or training program (excluding those in on-the-job training 
[OJT] and customized training) who attained a recognized postsecondary 
credential or a secondary school diploma, or its recognized equivalent, 
during participation in or within 1 year after exit from the program.
    (B) A participant who has attained a secondary school diploma or its 
recognized equivalent is included in the percentage of participants who 
have attained a secondary school diploma or recognized equivalent only 
if the participant also is employed or is enrolled in an education or 
training program leading to a recognized postsecondary credential within 
1 year after exit from the program;
    (v) The percentage of participants who, during a program year, are 
in an education or training program that leads to a recognized 
postsecondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational, or 
other forms of progress, towards such a credential or employment. 
Depending upon the type of education or training program, documented 
progress is defined as one of the following:
    (A) Documented achievement of at least one educational functioning 
level of a participant who is receiving instruction below the 
postsecondary education level;
    (B) Documented attainment of a secondary school diploma or its 
recognized equivalent;
    (C) Secondary or postsecondary transcript or report card for a 
sufficient number of credit hours that shows a participant is meeting 
the State unit's academic standards;
    (D) Satisfactory or better progress report, towards established 
milestones, such as completion of OJT or completion of 1 year of an 
apprenticeship program or similar milestones, from an employer or 
training provider who is providing training; or
    (E) Successful passage of an exam that is required for a particular 
occupation or progress in attaining technical or occupational skills as 
evidenced by trade-related benchmarks such as knowledge-based exams.
    (vi) Effectiveness in serving employers.
    (2) Participants. For purposes of the primary indicators of 
performance in paragraph (a)(1) of this section, ``participant'' will 
have the meaning given to it in Sec. 463.150(a), except that--
    (i) For purposes of determining program performance levels under 
indicators set forth in paragraphs (a)(1)(i) through (iv) and (vi) of 
this section, a ``participant'' does not include a participant who 
received services under sec. 225 of WIOA and exits such program while 
still in a correctional institution as defined in sec. 225(e)(1) of 
WIOA; and
    (ii) The Secretaries of Labor and Education may, as needed and 
consistent with the Paperwork Reduction Act (PRA), make further 
determinations as to the participants to be included in calculating 
program performance levels for purposes of any of the performance 
indicators set forth in paragraph (a)(1) of this section.
    (b) The primary indicators in paragraphs (a)(1)(i) through (iii) and 
(vi) of this section apply to the Employment Service program authorized 
under the Wagner-Peyser Act, as amended by WIOA title III.
    (c) For the youth program authorized under WIOA title I, the primary 
indicators are:
    (1) Percentage of participants who are in education or training 
activities, or in unsubsidized employment, during the second quarter 
after exit from the program;
    (2) Percentage of participants in education or training activities, 
or in unsubsidized employment, during the fourth quarter after exit from 
the program;
    (3) Median earnings of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (4) The percentage of those participants enrolled in an education or 
training program (excluding those in OJT and customized training) who 
obtained

[[Page 158]]

a recognized postsecondary credential or a secondary school diploma, or 
its recognized equivalent, during participation in or within 1 year 
after exit from the program, except that a participant who has attained 
a secondary school diploma or its recognized equivalent is included as 
having attained a secondary school diploma or recognized equivalent only 
if the participant is also employed or is enrolled in an education or 
training program leading to a recognized postsecondary credential within 
1 year from program exit;
    (5) The percentage of participants who during a program year, are in 
an education or training program that leads to a recognized 
postsecondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress towards such a credential or employment. 
Depending upon the type of education or training program, documented 
progress is defined as one of the following:
    (i) Documented achievement of at least one educational functioning 
level of a participant who is receiving instruction below the 
postsecondary education level;
    (ii) Documented attainment of a secondary school diploma or its 
recognized equivalent;
    (iii) Secondary or postsecondary transcript or report card for a 
sufficient number of credit hours that shows a participant is achieving 
the State unit's academic standards;
    (iv) Satisfactory or better progress report, towards established 
milestones, such as completion of OJT or completion of 1 year of an 
apprenticeship program or similar milestones, from an employer or 
training provider who is providing training; or
    (v) Successful passage of an exam that is required for a particular 
occupation or progress in attaining technical or occupational skills as 
evidenced by trade-related benchmarks such as knowledge-based exams.
    (6) Effectiveness in serving employers.



Sec. 463.160  What information is required for State performance
reports?

    (a) The State performance report required by sec. 116(d)(2) of WIOA 
must be submitted annually using a template the Departments of Labor and 
Education will disseminate, and must provide, at a minimum, information 
on the actual performance levels achieved consistent with Sec. 463.175 
with respect to:
    (1) The total number of participants served, and the total number of 
participants who exited each of the core programs identified in sec. 
116(b)(3)(A)(ii) of WIOA, including disaggregated counts of those who 
participated in and exited a core program, by:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24); and
    (ii) Co-enrollment in any of the programs in WIOA sec. 
116(b)(3)(A)(ii).
    (2) Information on the performance levels achieved for the primary 
indicators of performance for all of the core programs identified in 
Sec. 463.155 including disaggregated levels for:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24);
    (ii) Age;
    (iii) Sex; and
    (iv) Race and ethnicity.
    (3) The total number of participants who received career services 
and the total number of participants who exited from career services for 
the most recent program year and the 3 preceding program years, and the 
total number of participants who received training services and the 
total number of participants who exited from training services for the 
most recent program year and the 3 preceding program years, as 
applicable to the program;
    (4) Information on the performance levels achieved for the primary 
indicators of performance consistent with Sec. 463.155 for career 
services and training services for the most recent program year and the 
3 preceding program years, as applicable to the program;
    (5) The percentage of participants in a program who attained 
unsubsidized employment related to the training received (often referred 
to as training-related employment) through WIOA title I, subtitle B 
programs;

[[Page 159]]

    (6) The amount of funds spent on career services and the amount of 
funds spent on training services for the most recent program year and 
the 3 preceding program years, as applicable to the program;
    (7) The average cost per participant for those participants who 
received career services and training services, respectively, during the 
most recent program year and the 3 preceding program years, as 
applicable to the program;
    (8) The percentage of a State's annual allotment under WIOA sec. 
132(b) that the State spent on administrative costs; and
    (9) Information that facilitates comparisons of programs with 
programs in other States.
    (10) For WIOA title I programs, a State performance narrative, 
which, for States in which a local area is implementing a pay-for-
performance contracting strategy, at a minimum provides:
    (i) A description of pay-for-performance contract strategies being 
used for programs;
    (ii) The performance of service providers entering into contracts 
for such strategies, measured against the levels of performance 
specified in the contracts for such strategies; and
    (iii) An evaluation of the design of the programs and performance 
strategies and, when available, the satisfaction of employers and 
participants who received services under such strategies.
    (b) The disaggregation of data for the State performance report must 
be done in compliance with WIOA sec. 116(d)(6)(C).
    (c) The State performance reports must include a mechanism of 
electronic access to the State's local area and eligible training 
provider (ETP) performance reports.
    (d) States must comply with these requirements from sec. 116 of WIOA 
as explained in joint guidance issued by the Departments of Labor and 
Education, which may include information on reportable individuals as 
determined by the Secretaries of Labor and Education.



Sec. 463.165  May a State establish additional indicators 
of performance?

    States may identify additional indicators of performance for the six 
core programs. If a State does so, these indicators must be included in 
the Unified or Combined State Plan.



Sec. 463.170  How are State levels of performance for primary 
indicators established?

    (a) A State must submit in the State Plan expected levels of 
performance on the primary indicators of performance for each core 
program as required by sec. 116(b)(3)(A)(iii) of WIOA as explained in 
joint guidance issued by the Secretaries of Labor and Education.
    (1) The initial State Plan submitted under WIOA must contain 
expected levels of performance for the first 2 years of the State Plan.
    (2) States must submit expected levels of performance for the third 
and fourth year of the State Plan before the third program year 
consistent with Secs. 463.135 and 463.145.
    (b) States must reach agreement on levels of performance with the 
Secretaries of Labor and Education for each indicator for each core 
program. These are the negotiated levels of performance. The negotiated 
levels must be based on the following factors:
    (1) How the negotiated levels of performance compare with State 
levels of performance established for other States;
    (2) The application of an objective statistical model established by 
the Secretaries of Labor and Education, subject to paragraph (d) of this 
section;
    (3) How the negotiated levels promote continuous improvement in 
performance based on the primary indicators and ensure optimal return on 
investment of Federal funds; and
    (4) The extent to which the negotiated levels assist the State in 
meeting the performance goals established by the Secretaries of Labor 
and Education for the core programs in accordance with the Government 
Performance and Results Act of 1993, as amended.
    (c) An objective statistical adjustment model will be developed and 
disseminated by the Secretaries of Labor

[[Page 160]]

and Education. The model will be based on:
    (1) Differences among States in actual economic conditions, 
including but not limited to unemployment rates and job losses or gains 
in particular industries; and
    (2) The characteristics of participants, including but not limited 
to:
    (i) Indicators of poor work history;
    (ii) Lack of work experience;
    (iii) Lack of educational or occupational skills attainment;
    (iv) Dislocation from high-wage and high-benefit employment;
    (v) Low levels of literacy;
    (vi) Low levels of English proficiency;
    (vii) Disability status;
    (viii) Homelessness;
    (ix) Ex-offender status; and
    (x) Welfare dependency.
    (d) The objective statistical adjustment model developed under 
paragraph (c) of this section will be:
    (1) Applied to the core programs' primary indicators upon 
availability of data which are necessary to populate the model and apply 
the model to the local core programs;
    (2) Subject to paragraph (d)(1) of this section, used before the 
beginning of a program year in order to reach agreement on State 
negotiated levels for the upcoming program year; and
    (3) Subject to paragraph (d)(1) of this section, used to revise 
negotiated levels at the end of a program year based on actual economic 
conditions and characteristics of participants served, consistent with 
sec. 116(b)(3)(A)(vii) of WIOA.
    (e) The negotiated levels revised at the end of the program year, 
based on the statistical adjustment model, are the adjusted levels of 
performance.
    (f) States must comply with these requirements from sec. 116 of WIOA 
as explained in joint guidance issued by the Departments of Labor and 
Education.



Sec. 463.175  What responsibility do States have to use quarterly
wage record information for performance accountability?

    (a)(1) States must, consistent with State laws, use quarterly wage 
record information in measuring a State's performance on the primary 
indicators of performance outlined in Sec. 463.155 and a local area's 
performance on the primary indicators of performance identified in 
Sec. 463.205.
    (2) The use of social security numbers from participants and such 
other information as is necessary to measure the progress of those 
participants through quarterly wage record information is authorized.
    (3) To the extent that quarterly wage records are not available for 
a participant, States may use other information as is necessary to 
measure the progress of those participants through methods other than 
quarterly wage record information.
    (b) ``Quarterly wage record information'' means intrastate and 
interstate wages paid to an individual, the social security number (or 
numbers, if more than one) of the individual, and the name, address, 
State, and the Federal employer identification number of the employer 
paying the wages to the individual.
    (c) The Governor may designate a State agency (or appropriate State 
entity) to assist in carrying out the performance reporting requirements 
for WIOA core programs and ETPs. The Governor or such agency (or 
appropriate State entity) is responsible for:
    (1) Facilitating data matches;
    (2) Data quality reliability; and
    (3) Protection against disaggregation that would violate applicable 
privacy standards.



Sec. 463.180  When is a State subject to a financial sanction under
the Workforce Innovation and Opportunity Act?

    A State will be subject to financial sanction under WIOA sec. 116(f) 
if it fails to:
    (a) Submit the State annual performance report required under WIOA 
sec. 116(d)(2); or
    (b) Meet adjusted levels of performance for the primary indicators 
of performance in accordance with sec. 116(f) of WIOA.



Sec. 463.185  When are sanctions applied for a State's failure to 
submit an annual performance report?

    (a) Sanctions will be applied when a State fails to submit the State 
annual performance report required under sec.

[[Page 161]]

116(d)(2) of WIOA. A State fails to report if the State either:
    (1) Does not submit a State annual performance report by the date 
for timely submission set in performance reporting guidance; or
    (2) Submits a State annual performance report by the date for timely 
submission, but the report is incomplete.
    (b) Sanctions will not be applied if the reporting failure is due to 
exceptional circumstances outside of the State's control. Exceptional 
circumstances may include, but are not limited to:
    (1) Natural disasters;
    (2) Unexpected personnel transitions; and
    (3) Unexpected technology related issues.
    (c) In the event that a State may not be able to submit a complete 
and accurate performance report by the deadline for timely reporting:
    (1) The State must notify the Secretary of Labor or Secretary of 
Education as soon as possible, but no later than 30 days prior to the 
established deadline for submission, of a potential impact on the 
State's ability to submit its State annual performance report in order 
to not be considered failing to report.
    (2) In circumstances where unexpected events occur less than 30 days 
before the established deadline for submission of the State annual 
performance reports, the Secretaries of Labor and Education will review 
requests for extending the reporting deadline in accordance with the 
Departments of Labor and Education's procedures that will be established 
in guidance.



Sec. 463.190  When are sanctions applied for failure to achieve 
adjusted levels of performance?

    (a) States' negotiated levels of performance will be adjusted 
through the application of the statistical adjustment model established 
under Sec. 463.170 to account for actual economic conditions experienced 
during a program year and characteristics of participants, annually at 
the close of each program year.
    (b) Any State that fails to meet adjusted levels of performance for 
the primary indicators of performance outlined in Sec. 463.155 for any 
year will receive technical assistance, including assistance in the 
development of a performance improvement plan provided by the Secretary 
of Labor or Secretary of Education.
    (c) Whether a State has failed to meet adjusted levels of 
performance will be determined using the following three criteria:
    (1) The overall State program score, which is expressed as the 
percent achieved, compares the actual results achieved by a core program 
on the primary indicators of performance to the adjusted levels of 
performance for that core program. The average of the percentages 
achieved of the adjusted level of performance for each of the primary 
indicators by a core program will constitute the overall State program 
score.
    (2) However, until all indicators for the core program have at least 
2 years of complete data, the overall State program score will be based 
on a comparison of the actual results achieved to the adjusted level of 
performance for each of the primary indicators that have at least 2 
years of complete data for that program;
    (3) The overall State indicator score, which is expressed as the 
percent achieved, compares the actual results achieved on a primary 
indicator of performance by all core programs in a State to the adjusted 
levels of performance for that primary indicator. The average of the 
percentages achieved of the adjusted level of performance by all of the 
core programs on that indicator will constitute the overall State 
indicator score.
    (4) However, until all indicators for the State have at least 2 
years of complete data, the overall State indicator score will be based 
on a comparison of the actual results achieved to the adjusted level of 
performance for each of the primary indicators that have at least 2 
years of complete data in a State.
    (5) The individual indicator score, which is expressed as the 
percent achieved, compares the actual results achieved by each core 
program on each of the individual primary indicators to the adjusted 
levels of performance for

[[Page 162]]

each of the program's primary indicators of performance.
    (d) A performance failure occurs when:
    (1) Any overall State program score or overall State indicator score 
falls below 90 percent for the program year; or
    (2) Any of the States' individual indicator scores fall below 50 
percent for the program year.
    (e) Sanctions based on performance failure will be applied to States 
if, for 2 consecutive years, the State fails to meet:
    (1) 90 percent of the overall State program score for the same core 
program;
    (2) 90 percent of the overall State indicator score for the same 
primary indicator; or
    (3) 50 percent of the same indicator score for the same program.



Sec. 463.195  What should States expect when a sanction is applied
to the Governor's Reserve Allotment?

    (a) The Secretaries of Labor and Education will reduce the 
Governor's Reserve Allotment by five percent of the maximum available 
amount for the immediately succeeding program year if:
    (1) The State fails to submit the State annual performance reports 
as required under WIOA sec. 116(d)(2), as defined in Sec. 463.185;
    (2) The State fails to meet State adjusted levels of performance for 
the same primary performance indicator(s) under either 
Sec. 463.190(d)(1) for the second consecutive year as defined in 
Sec. 463.190; or
    (3) The State's score on the same indicator for the same program 
falls below 50 percent under Sec. 463.190(d)(2) for the second 
consecutive year as defined in Sec. 463.190.
    (b) If the State fails under paragraphs (a)(1) and either (a)(2) or 
(3) of this section in the same program year, the Secretaries of Labor 
and Education will reduce the Governor's Reserve Allotment by 10 percent 
of the maximum available amount for the immediately succeeding program 
year.
    (c) If a State's Governor's Reserve Allotment is reduced:
    (1) The reduced amount will not be returned to the State in the 
event that the State later improves performance or submits its annual 
performance report; and
    (2) The Governor's Reserve will continue to be set at the reduced 
level in each subsequent year until the Secretary of Labor or the 
Secretary of Education, depending on which program is impacted, 
determines that the State met the State adjusted levels of performance 
for the applicable primary performance indicators and has submitted all 
of the required performance reports.
    (d) A State may request review of a sanction the Secretary of Labor 
imposes in accordance with the provisions of 20 CFR 683.800.



Sec. 463.200  What other administrative actions will be applied to 
States' performance requirements?

    (a) In addition to sanctions for failure to report or failure to 
meet adjusted levels of performance, States will be subject to 
administrative actions in the case of poor performance.
    (b) States' performance achievement on the individual primary 
indicators will be assessed in addition to the overall State program 
score and overall State indicator score. Based on this assessment, as 
clarified and explained in guidance, for performance on any individual 
primary indicator, the Secretary of Labor or the Secretary of Education 
will require the State to establish a performance risk plan to address 
continuous improvement on the individual primary indicator.
      



Sec. 463.205  What performance indicators apply to local areas and 
what information must be included in local area performance reports?

    (a) Each local area in a State under WIOA title I is subject to the 
same primary indicators of performance for the core programs for WIOA 
title I under Sec. 463.155(a)(1) and (c) that apply to the State.
    (b) In addition to the indicators described in paragraph (a) of this 
section, under Sec. 463.165, the Governor may apply additional 
indicators of performance to local areas in the State.
    (c) States must annually make local area performance reports 
available to the public using a template that the

[[Page 163]]

Departments of Labor and Education will disseminate in guidance, 
including by electronic means. The State must provide electronic access 
to the public local area performance report in its annual State 
performance report.
    (d) The local area performance report must include:
    (1) The actual results achieved under Sec. 463.155 and the 
information required under Sec. 463.160(a);
    (2) The percentage of a local area's allotment under WIOA secs. 
128(b) and 133(b) that the local area spent on administrative costs; and
    (3) Other information that facilitates comparisons of programs with 
programs in other local areas (or planning regions if the local area is 
part of a planning region).
    (e) The disaggregation of data for the local area performance report 
must be done in compliance with WIOA sec. 116(d)(6)(C).
    (f) States must comply with any requirements from sec. 116(d)(3) of 
WIOA as explained in guidance, including the use of the performance 
reporting template, issued by DOL.



Sec. 463.210  How are local performance levels established?

    (a) The objective statistical adjustment model required under sec. 
116(b)(3)(A)(viii) of WIOA and described in Sec. 463.170(c) must be:
    (1) Applied to the core programs' primary indicators upon 
availability of data which are necessary to populate the model and apply 
the model to the local core programs;
    (2) Used in order to reach agreement on local negotiated levels of 
performance for the upcoming program year; and
    (3) Used to establish adjusted levels of performance at the end of a 
program year based on actual conditions, consistent with WIOA sec. 
116(c)(3).
    (b) Until all indicators for the core program in a local area have 
at least 2 years of complete data, the comparison of the actual results 
achieved to the adjusted levels of performance for each of the primary 
indicators only will be applied where there are at least 2 years of 
complete data for that program.
    (c) The Governor, Local Workforce Development Board (WDB), and chief 
elected official must reach agreement on local negotiated levels of 
performance based on a negotiations process before the start of a 
program year with the use of the objective statistical model described 
in paragraph (a) of this section. The negotiations will include a 
discussion of circumstances not accounted for in the model and will take 
into account the extent to which the levels promote continuous 
improvement. The objective statistical model will be applied at the end 
of the program year based on actual economic conditions and 
characteristics of the participants served.
    (d) The negotiations process described in paragraph (c) of this 
section must be developed by the Governor and disseminated to all Local 
WDBs and chief elected officials.
    (e) The Local WDBs may apply performance measures to service 
providers that differ from the performance indicators that apply to the 
local area. These performance measures must be established after 
considering:
    (1) The established local negotiated levels;
    (2) The services provided by each provider; and
    (3) The populations the service providers are intended to serve.



Sec. 463.215  Under what circumstances are local areas eligible
for State Incentive Grants?

    (a) The Governor is not required to award local incentive funds, but 
is authorized to provide incentive grants to local areas for performance 
on the primary indicators of performance consistent with WIOA sec. 
134(a)(3)(A)(xi).
    (b) The Governor may use non-Federal funds to create incentives for 
the Local WDBs to implement pay-for-performance contract strategies for 
the delivery of training services described in WIOA sec. 134(c)(3) or 
activities described in WIOA sec. 129(c)(2) in the local areas served by 
the Local WDBs. Pay-for-performance contract strategies must be 
implemented in accordance with 20 CFR part 683, subpart E and 
Sec. 463.160.

[[Page 164]]



Sec. 463.220  Under what circumstances may a corrective action 
or sanction be applied to local areas for poor performance?

    (a) If a local area fails to meet the adjusted levels of performance 
agreed to under Sec. 463.210 for the primary indicators of performance 
in the adult, dislocated worker, and youth programs authorized under 
WIOA title I in any program year, technical assistance must be provided 
by the Governor or, upon the Governor's request, by the Secretary of 
Labor.
    (1) A State must establish the threshold for failure to meet 
adjusted levels of performance for a local area before coming to 
agreement on the negotiated levels of performance for the local area.
    (i) A State must establish the adjusted level of performance for a 
local area, using the statistical adjustment model described in 
Sec. 463.170(c).
    (ii) At least 2 years of complete data on any indicator for any 
local core program are required in order to establish adjusted levels of 
performance for a local area.
    (2) The technical assistance may include:
    (i) Assistance in the development of a performance improvement plan;
    (ii) The development of a modified local or regional plan; or
    (iii) Other actions designed to assist the local area in improving 
performance.
    (b) If a local area fails to meet the adjusted levels of performance 
agreed to under Sec. 463.210 for the same primary indicators of 
performance for the same core program authorized under WIOA title I for 
a third consecutive program year, the Governor must take corrective 
actions. The corrective actions must include the development of a 
reorganization plan under which the Governor:
    (1) Requires the appointment and certification of a new Local WDB, 
consistent with the criteria established under 20 CFR 679.350;
    (2) Prohibits the use of eligible providers and one-stop partners 
that have been identified as achieving poor levels of performance; or
    (3) Takes such other significant actions as the Governor determines 
are appropriate.



Sec. 463.225  Under what circumstances may local areas appeal
a reorganization plan?

    (a) The Local WDB and chief elected official for a local area that 
is subject to a reorganization plan under WIOA sec. 116(g)(2)(A) may 
appeal to the Governor to rescind or revise the reorganization plan not 
later than 30 days after receiving notice of the reorganization plan. 
The Governor must make a final decision within 30 days after receipt of 
the appeal.
    (b) The Local WDB and chief elected official may appeal the final 
decision of the Governor to the Secretary of Labor not later than 30 
days after receiving the decision from the Governor. Any appeal of the 
Governor's final decision must be:
    (1) Appealed jointly by the Local WDB and chief elected official to 
the Secretary of Labor under 20 CFR 683.650; and
    (2) Must be submitted by certified mail, return receipt requested, 
to the Secretary of Labor, U.S. Department of Labor, 200 Constitution 
Ave. NW., Washington DC 20210, Attention: ASET. A copy of the appeal 
must be simultaneously provided to the Governor.
    (c) Upon receipt of the joint appeal from the Local WDB and chief 
elected official, the Secretary of Labor must make a final decision 
within 30 days. In making this determination the Secretary of Labor may 
consider any comments submitted by the Governor in response to the 
appeals.
    (d) The decision by the Governor on the appeal becomes effective at 
the time it is issued and remains effective unless the Secretary of 
Labor rescinds or revises the reorganization plan under WIOA sec. 
116(g)(2)(C).



Sec. 463.230  What information is required for the eligible training
provider performance reports?

    (a) States are required to make available and publish annually using 
a template the Departments of Labor and Education will disseminate 
including through electronic means, the ETP

[[Page 165]]

performance reports for ETPs who provide services under sec. 122 of WIOA 
that are described in 20 CFR 680.400 through 680.530. These reports at a 
minimum must include, consistent with Sec. 463.175 and with respect to 
each program of study that is eligible to receive funds under WIOA:
    (1) The total number of participants as defined by Sec. 463.150(a) 
who received training services under the adult and dislocated worker 
programs authorized under WIOA title I for the most recent year and the 
3 preceding program years, including:
    (i) The number of participants under the adult and dislocated worker 
programs disaggregated by barriers to employment;
    (ii) The number of participants under the adult and dislocated 
worker programs disaggregated by race, ethnicity, sex, and age;
    (iii) The number of participants under the adult and dislocated 
worker programs disaggregated by the type of training entity for the 
most recent program year and the 3 preceding program years;
    (2) The total number of participants who exit a program of study or 
its equivalent, including disaggregate counts by the type of training 
entity during the most recent program year and the 3 preceding program 
years;
    (3) The average cost-per-participant for participants who received 
training services for the most recent program year and the 3 preceding 
program years disaggregated by type of training entity;
    (4) The total number of individuals exiting from the program of 
study (or the equivalent) with respect to all individuals engaging in 
the program of study (or the equivalent); and
    (5) The levels of performance achieved for the primary indicators of 
performance identified in Sec. 463.155(a)(1)(i) through (iv) with 
respect to all individuals engaging in a program of study (or the 
equivalent).
    (b) Apprenticeship programs registered under the National 
Apprenticeship Act are not required to submit ETP performance 
information. If a registered apprenticeship program voluntarily submits 
performance information to a State, the State must include this 
information in the report.
    (c) The State must provide a mechanism of electronic access to the 
public ETP performance report in its annual State performance report.
    (d) States must comply with any requirements from sec. 116(d)(4) of 
WIOA as explained in guidance issued by DOL.
    (e) The Governor may designate one or more State agencies such as a 
State Education Agency or other State Educational Authority to assist in 
overseeing ETP performance and facilitating the production and 
dissemination of ETP performance reports. These agencies may be the same 
agencies that are designated as responsible for administering the ETP 
list as provided under 20 CFR 680.500. The Governor or such agencies, or 
authorities, is responsible for:
    (1) Facilitating data matches between ETP records and unemployment 
insurance (UI) wage data in order to produce the report;
    (2) The creation and dissemination of the reports as described in 
paragraphs (a) through (d) of this section;
    (3) Coordinating the dissemination of the performance reports with 
the ETP list and the information required to accompany the list, as 
provided in 20 CFR 680.500.



Sec. 463.235  What are the reporting requirements for individual 
records for core Workforce Innovation and Opportunity Act (WIOA) 
title I programs; the Wagner-Peyser Act Employment Service program,
as amended by WIOA title III; and the Vocational Rehabilitation program 
authorized under title I of the Rehabilitation Act of 1973, as 
amended by WIOA title IV?

    (a) On a quarterly basis, each State must submit to the Secretary of 
Labor or the Secretary of Education, as appropriate, individual records 
that include demographic information, information on services received, 
and information on resulting outcomes, as appropriate, for each 
reportable individual in either of the following programs administered 
by the Secretary of Labor or Secretary of Education: A WIOA title I core 
program; the Employment Service program authorized

[[Page 166]]

under the Wagner-Peyser Act, as amended by WIOA title III; or the VR 
program authorized under title I of the Rehabilitation Act of 1973, as 
amended by WIOA title IV.
    (b) For individual records submitted to the Secretary of Labor, 
those records may be required to be integrated across all programs 
administered by the Secretary of Labor in one single file.
    (c) States must comply with the requirements of sec. 116(d)(2) of 
WIOA as explained in guidance issued by the Departments of Labor and 
Education.



Sec. 463.240  What are the requirements for data validation of State
annual performance reports?

    (a) States must establish procedures, consistent with guidelines 
issued by the Secretary of Labor or the Secretary of Education, to 
ensure that they submit complete annual performance reports that contain 
information that is valid and reliable, as required by WIOA sec. 
116(d)(5).
    (b) If a State fails to meet standards in paragraph (a) of this 
section as determined by the Secretary of Labor or the Secretary of 
Education, the appropriate Secretary will provide technical assistance 
and may require the State to develop and implement corrective actions, 
which may require the State to provide training for its subrecipients.
    (c) The Secretaries of Labor and Education will provide training and 
technical assistance to States in order to implement this section. 
States must comply with the requirements of sec. 116(d)(5) of WIOA as 
explained in guidance.



 Subpart J_Description of the One-Stop Delivery System Under Title I of 
              the Workforce Innovation and Opportunity Act

    Authority: Secs. 503, 107, 121, 134, 189, Pub. L. 113-128, 128 Stat. 
1425 (Jul. 22, 2014).

    Source: 81 FR 56057, Aug. 19, 2016, unless otherwise noted.



Sec. 463.300  What is the one-stop delivery system?

    (a) The one-stop delivery system brings together workforce 
development, educational, and other human resource services in a 
seamless customer-focused service delivery network that enhances access 
to the programs' services and improves long-term employment outcomes for 
individuals receiving assistance. One-stop partners administer 
separately funded programs as a set of integrated streamlined services 
to customers.
    (b) Title I of the Workforce Innovation and Opportunity Act (WIOA) 
assigns responsibilities at the local, State, and Federal level to 
ensure the creation and maintenance of a one-stop delivery system that 
enhances the range and quality of education and workforce development 
services that employers and individual customers can access.
    (c) The system must include at least one comprehensive physical 
center in each local area as described in Sec. 463.305.
    (d) The system may also have additional arrangements to supplement 
the comprehensive center. These arrangements include:
    (1) An affiliated site or a network of affiliated sites, where one 
or more partners make programs, services, and activities available, as 
described in Sec. 463.310;
    (2) A network of eligible one-stop partners, as described in 
Secs. 463.400 through 463.410, through which each partner provides one 
or more of the programs, services, and activities that are linked, 
physically or technologically, to an affiliated site or access point 
that assures customers are provided information on the availability of 
career services, as well as other program services and activities, 
regardless of where they initially enter the public workforce system in 
the local area; and
    (3) Specialized centers that address specific needs, including those 
of dislocated workers, youth, or key industry sectors, or clusters.
    (e) Required one-stop partner programs must provide access to 
programs, services, and activities through electronic means if 
applicable and practicable. This is in addition to providing access to 
services through the

[[Page 167]]

mandatory comprehensive physical one-stop center and any affiliated 
sites or specialized centers. The provision of programs and services by 
electronic methods such as Web sites, telephones, or other means must 
improve the efficiency, coordination, and quality of one-stop partner 
services. Electronic delivery must not replace access to such services 
at a comprehensive one-stop center or be a substitute to making services 
available at an affiliated site if the partner is participating in an 
affiliated site. Electronic delivery systems must be in compliance with 
the nondiscrimination and equal opportunity provisions of WIOA sec. 188 
and its implementing regulations at 29 CFR part 38.
    (f) The design of the local area's one-stop delivery system must be 
described in the Memorandum of Understanding (MOU) executed with the 
one-stop partners, described in Sec. 463.500.



Sec. 463.305  What is a comprehensive one-stop center and what must
be provided there?

    (a) A comprehensive one-stop center is a physical location where job 
seeker and employer customers can access the programs, services, and 
activities of all required one-stop partners. A comprehensive one-stop 
center must have at least one title I staff person physically present.
    (b) The comprehensive one-stop center must provide:
    (1) Career services, described in Sec. 463.430;
    (2) Access to training services described in 20 CFR 680.200;
    (3) Access to any employment and training activities carried out 
under sec. 134(d) of WIOA;
    (4) Access to programs and activities carried out by one-stop 
partners listed in Secs. 463.400 through 463.410, including the 
Employment Service program authorized under the Wagner-Peyser Act, as 
amended by WIOA title III (Wagner-Peyser Act Employment Service 
program); and
    (5) Workforce and labor market information.
    (c) Customers must have access to these programs, services, and 
activities during regular business days at a comprehensive one-stop 
center. The Local Workforce Development Board (WDB) may establish other 
service hours at other times to accommodate the schedules of individuals 
who work on regular business days. The State WDB will evaluate the hours 
of access to service as part of the evaluation of effectiveness in the 
one-stop certification process described in Sec. 463.800(b).
    (d) ``Access'' to each partner program and its services means:
    (1) Having a program staff member physically present at the one-stop 
center;
    (2) Having a staff member from a different partner program 
physically present at the one-stop center appropriately trained to 
provide information to customers about the programs, services, and 
activities available through partner programs; or
    (3) Making available a direct linkage through technology to program 
staff who can provide meaningful information or services.
    (i) A ``direct linkage'' means providing direct connection at the 
one-stop center, within a reasonable time, by phone or through a real-
time Web-based communication to a program staff member who can provide 
program information or services to the customer.
    (ii) A ``direct linkage'' cannot exclusively be providing a phone 
number or computer Web site or providing information, pamphlets, or 
materials.
    (e) All comprehensive one-stop centers must be physically and 
programmatically accessible to individuals with disabilities, as 
described in 29 CFR part 38, the implementing regulations of WIOA sec. 
188.



Sec. 463.310  What is an affiliated site and what must be provided
there?

    (a) An affiliated site, or affiliate one-stop center, is a site that 
makes available to job seeker and employer customers one or more of the 
one-stop partners' programs, services, and activities. An affiliated 
site does not need to provide access to every required one-stop partner 
program. The frequency of program staff's physical presence in the 
affiliated site will be determined at the local level. Affiliated sites 
are access points in addition

[[Page 168]]

to the comprehensive one-stop center(s) in each local area. If used by 
local areas as a part of the service delivery strategy, affiliate sites 
must be implemented in a manner that supplements and enhances customer 
access to services.
    (b) As described in Sec. 463.315, Wagner-Peyser Act employment 
services cannot be a stand-alone affiliated site.
    (c) States, in conjunction with the Local WDBs, must examine lease 
agreements and property holdings throughout the one-stop delivery system 
in order to use property in an efficient and effective way. Where 
necessary and appropriate, States and Local WDBs must take expeditious 
steps to align lease expiration dates with efforts to consolidate one-
stop operations into service points where Wagner-Peyser Act employment 
services are colocated as soon as reasonably possible. These steps must 
be included in the State Plan.
    (d) All affiliated sites must be physically and programmatically 
accessible to individuals with disabilities, as described in 29 CFR part 
38, the implementing regulations of WIOA sec. 188.



Sec. 463.315  Can a stand-alone Wagner-Peyser Act Employment Service
office be designated as an affiliated one-stop site?

    (a) Separate stand-alone Wagner-Peyser Act Employment Service 
offices are not permitted under WIOA, as also described in 20 CFR 
652.202.
    (b) If Wagner-Peyser Act employment services are provided at an 
affiliated site, there must be at least one or more other partners in 
the affiliated site with a physical presence of combined staff more than 
50 percent of the time the center is open. Additionally, the other 
partner must not be the partner administering local veterans' employment 
representatives, disabled veterans' outreach program specialists, or 
unemployment compensation programs. If Wagner-Peyser Act employment 
services and any of these 3 programs are provided at an affiliated site, 
an additional partner or partners must have a presence of combined staff 
in the center more than 50 percent of the time the center is open.



Sec. 463.320  Are there any requirements for networks of eligible
one-stop partners or specialized centers?

    Any network of one-stop partners or specialized centers, as 
described in Sec. 463.300(d)(3), must be connected to the comprehensive 
one-stop center and any appropriate affiliate one-stop centers, for 
example, by having processes in place to make referrals to these centers 
and the partner programs located in them. Wagner-Peyser Act employment 
services cannot stand alone in a specialized center. Just as described 
in Sec. 463.315 for an affiliated site, a specialized center must 
include other programs besides Wagner-Peyser Act employment services, 
local veterans' employment representatives, disabled veterans' outreach 
program specialists, and unemployment compensation.



Sec. 463.400  Who are the required one-stop partners?

    (a) Section 121(b)(1)(B) of WIOA identifies the entities that are 
required partners in the local one-stop delivery systems.
    (b) The required partners are the entities responsible for 
administering the following programs and activities in the local area:
    (1) Programs authorized under title I of WIOA, including:
    (i) Adults;
    (ii) Dislocated workers;
    (iii) Youth;
    (iv) Job Corps;
    (v) YouthBuild;
    (vi) Native American programs; and
    (vii) Migrant and seasonal farmworker programs;
    (2) The Wagner-Peyser Act Employment Service program authorized 
under the Wagner-Peyser Act (29 U.S.C. 49 et seq.), as amended by WIOA 
title III;
    (3) The Adult Education and Family Literacy Act (AEFLA) program 
authorized under title II of WIOA;
    (4) The Vocational Rehabilitation (VR) program authorized under 
title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.), as 
amended by WIOA title IV;
    (5) The Senior Community Service Employment Program authorized under 
title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.);

[[Page 169]]

    (6) Career and technical education programs at the postsecondary 
level authorized under the Carl D. Perkins Career and Technical 
Education Act of 2006 (20 U.S.C. 2301 et seq.);
    (7) Trade Adjustment Assistance activities authorized under chapter 
2 of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (8) Jobs for Veterans State Grants programs authorized under chapter 
41 of title 38, U.S.C.;
    (9) Employment and training activities carried out under the 
Community Services Block Grant (42 U.S.C. 9901 et seq.);
    (10) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (11) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (12) Programs authorized under sec. 212 of the Second Chance Act of 
2007 (42 U.S.C. 17532); and
    (13) Temporary Assistance for Needy Families (TANF) authorized under 
part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), 
unless exempted by the Governor under Sec. 463.405(b).



Sec. 463.405  Is Temporary Assistance for Needy Families a required
one-stop partner?

    (a) Yes, TANF, authorized under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.), is a required partner.
    (b) The Governor may determine that TANF will not be a required 
partner in the State, or within some specific local areas in the State. 
In this instance, the Governor must notify the Secretaries of the U.S. 
Departments of Labor and Health and Human Services in writing of this 
determination.
    (c) In States, or local areas within a State, where the Governor has 
determined that TANF is not required to be a partner, local TANF 
programs may still work in collaboration or partnership with the local 
one-stop centers to deliver employment and training services to the TANF 
population unless inconsistent with the Governor's direction.



Sec. 463.410  What other entities may serve as one-stop partners?

    (a) Other entities that carry out a workforce development program, 
including Federal, State, or local programs and programs in the private 
sector, may serve as additional partners in the one-stop delivery system 
if the Local WDB and chief elected official(s) approve the entity's 
participation.
    (b) Additional partners may include, but are not limited to:
    (1) Employment and training programs administered by the Social 
Security Administration, including the Ticket to Work and Self-
Sufficiency Program established under sec. 1148 of the Social Security 
Act (42 U.S.C. 1320b-19);
    (2) Employment and training programs carried out by the Small 
Business Administration;
    (3) Supplemental Nutrition Assistance Program (SNAP) employment and 
training programs, authorized under secs. 6(d)(4) and 6(o) of the Food 
and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Client Assistance Program authorized under sec. 112 of the 
Rehabilitation Act of 1973 (29 U.S.C. 732);
    (5) Programs authorized under the National and Community Service Act 
of 1990 (42 U.S.C. 12501 et seq.); and
    (6) Other appropriate Federal, State or local programs, including, 
but not limited to, employment, education, and training programs 
provided by public libraries or in the private sector.



Sec. 463.415  What entity serves as the one-stop partner for a 
particular program in the local area?

    (a) The entity that carries out the program and activities listed in 
Sec. 463.400 or Sec. 463.410, and therefore serves as the one-stop 
partner, is the grant recipient, administrative entity, or organization 
responsible for administering the funds of the specified program in the 
local area. The term ``entity'' does not include the service providers 
that contract with, or are subrecipients of, the local administrative 
entity. For programs that do not include local administrative entities, 
the responsible State agency must be the partner. Specific entities for 
particular programs are identified in paragraphs (b) through

[[Page 170]]

(e) of this section. If a program or activity listed in Sec. 463.400 is 
not carried out in a local area, the requirements relating to a required 
one-stop partner are not applicable to such program or activity in that 
local one-stop delivery system.
    (b) For title II of WIOA, the entity or agency that carries out the 
program for the purposes of paragraph (a) of this section is the sole 
entity or agency in the State or outlying area responsible for 
administering or supervising policy for adult education and literacy 
activities in the State or outlying area. The State eligible entity or 
agency may delegate its responsibilities under paragraph (a) of this 
section to one or more eligible providers or consortium of eligible 
providers.
    (c) For the VR program, authorized under title I of the 
Rehabilitation Act of 1973, as amended by WIOA title IV, the entity that 
carries out the program for the purposes of paragraph (a) of this 
section is the designated State agencies or designated State units 
specified under sec. 101(a)(2) of the Rehabilitation Act that is 
primarily concerned with vocational rehabilitation, or vocational and 
other rehabilitation, of individuals with disabilities.
    (d) Under WIOA title I, the national programs, including Job Corps, 
the Native American program, YouthBuild, and Migrant and Seasonal 
Farmworker programs are required one-stop partners. The entity for the 
Native American program, YouthBuild, and Migrant and Seasonal Farmworker 
programs is the grantee of those respective programs. The entity for Job 
Corps is the Job Corps center.
    (e) For the Carl D. Perkins Career and Technical Education Act of 
2006, the entity that carries out the program for the purposes of 
paragraph (a) of this section is the eligible recipient or recipients at 
the postsecondary level, or a consortium of eligible recipients at the 
postsecondary level in the local area. The eligible recipient at the 
postsecondary level may also request assistance from the State eligible 
agency in completing its responsibilities under paragraph (a) of this 
section.



Sec. 463.420  What are the roles and responsibilities of the required
one-stop partners?

    Each required partner must:
    (a) Provide access to its programs or activities through the one-
stop delivery system, in addition to any other appropriate locations;
    (b) Use a portion of funds made available to the partner's program, 
to the extent consistent with the Federal law authorizing the partner's 
program and with Federal cost principles in 2 CFR parts 200 and 3474 
(requiring, among other things, that costs are allowable, reasonable, 
necessary, and allocable), to:
    (1) Provide applicable career services; and
    (2) Work collaboratively with the State and Local WDBs to establish 
and maintain the one-stop delivery system. This includes jointly funding 
the one-stop infrastructure through partner contributions that are based 
upon:
    (i) A reasonable cost allocation methodology by which infrastructure 
costs are charged to each partner based on proportionate use and 
relative benefit received;
    (ii) Federal cost principles; and
    (iii) Any local administrative cost requirements in the Federal law 
authorizing the partner's program. (This is further described in 
Sec. 463.700.)
    (c) Enter into an MOU with the Local WDB relating to the operation 
of the one-stop delivery system that meets the requirements of 
Sec. 463.500(b);
    (d) Participate in the operation of the one-stop delivery system 
consistent with the terms of the MOU, requirements of authorizing laws, 
the Federal cost principles, and all other applicable legal 
requirements; and
    (e) Provide representation on the State and Local WDBs as required 
and participate in Board committees as needed.



Sec. 463.425  What are the applicable career services that must be
provided through the one-stop delivery system by required one-stop
partners?

    (a) The applicable career services to be delivered by required one-
stop partners are those services listed in Sec. 463.430 that are 
authorized to be provided under each partner's program.

[[Page 171]]

    (b) One-stop centers provide services to individual customers based 
on individual needs, including the seamless delivery of multiple 
services to individual customers. There is no required sequence of 
services.



Sec. 463.430  What are career services?

    Career services, as identified in sec. 134(c)(2) of WIOA, consist of 
three types:
    (a) Basic career services must be made available and, at a minimum, 
must include the following services, as consistent with allowable 
program activities and Federal cost principles:
    (1) Determinations of whether the individual is eligible to receive 
assistance from the adult, dislocated worker, or youth programs;
    (2) Outreach, intake (including worker profiling), and orientation 
to information and other services available through the one-stop 
delivery system. For the TANF program, States must provide individuals 
with the opportunity to initiate an application for TANF assistance and 
non-assistance benefits and services, which could be implemented through 
the provision of paper application forms or links to the application Web 
site;
    (3) Initial assessment of skill levels including literacy, numeracy, 
and English language proficiency, as well as aptitudes, abilities 
(including skills gaps), and supportive services needs;
    (4) Labor exchange services, including--
    (i) Job search and placement assistance, and, when needed by an 
individual, career counseling, including--
    (A) Provision of information on in-demand industry sectors and 
occupations (as defined in sec. 3(23) of WIOA); and
    (B) Provision of information on nontraditional employment; and
    (ii) Appropriate recruitment and other business services on behalf 
of employers, including information and referrals to specialized 
business services other than those traditionally offered through the 
one-stop delivery system;
    (5) Provision of referrals to and coordination of activities with 
other programs and services, including programs and services within the 
one-stop delivery system and, when appropriate, other workforce 
development programs;
    (6) Provision of workforce and labor market employment statistics 
information, including the provision of accurate information relating to 
local, regional, and national labor market areas, including--
    (i) Job vacancy listings in labor market areas;
    (ii) Information on job skills necessary to obtain the vacant jobs 
listed; and
    (iii) Information relating to local occupations in demand and the 
earnings, skill requirements, and opportunities for advancement for 
those jobs;
    (7) Provision of performance information and program cost 
information on eligible providers of education, training, and workforce 
services by program and type of providers;
    (8) Provision of information, in usable and understandable formats 
and languages, about how the local area is performing on local 
performance accountability measures, as well as any additional 
performance information relating to the area's one-stop delivery system;
    (9) Provision of information, in usable and understandable formats 
and languages, relating to the availability of supportive services or 
assistance, and appropriate referrals to those services and assistance, 
including: Child care; child support; medical or child health assistance 
available through the State's Medicaid program and Children's Health 
Insurance Program; benefits under SNAP; assistance through the earned 
income tax credit; and assistance under a State program for TANF, and 
other supportive services and transportation provided through that 
program;
    (10) Provision of information and meaningful assistance to 
individuals seeking assistance in filing a claim for unemployment 
compensation.
    (i) ``Meaningful assistance'' means:
    (A) Providing assistance on-site using staff who are well-trained in 
unemployment compensation claims filing and the rights and 
responsibilities of claimants; or
    (B) Providing assistance by phone or via other technology, as long 
as the assistance is provided by trained and

[[Page 172]]

available staff and within a reasonable time.
    (ii) The costs associated in providing this assistance may be paid 
for by the State's unemployment insurance program, or the WIOA adult or 
dislocated worker programs, or some combination thereof.
    (11) Assistance in establishing eligibility for programs of 
financial aid assistance for training and education programs not 
provided under WIOA.
    (b) Individualized career services must be made available if 
determined to be appropriate in order for an individual to obtain or 
retain employment. These services include the following services, as 
consistent with program requirements and Federal cost principles:
    (1) Comprehensive and specialized assessments of the skill levels 
and service needs of adults and dislocated workers, which may include--
    (i) Diagnostic testing and use of other assessment tools; and
    (ii) In-depth interviewing and evaluation to identify employment 
barriers and appropriate employment goals;
    (2) Development of an individual employment plan, to identify the 
employment goals, appropriate achievement objectives, and appropriate 
combination of services for the participant to achieve his or her 
employment goals, including the list of, and information about, the 
eligible training providers (as described in 20 CFR 680.180);
    (3) Group counseling;
    (4) Individual counseling;
    (5) Career planning;
    (6) Short-term pre-vocational services including development of 
learning skills, communication skills, interviewing skills, punctuality, 
personal maintenance skills, and professional conduct services to 
prepare individuals for unsubsidized employment or training;
    (7) Internships and work experiences that are linked to careers (as 
described in 20 CFR 680.170);
    (8) Workforce preparation activities;
    (9) Financial literacy services as described in sec. 129(b)(2)(D) of 
WIOA and 20 CFR 681.500;
    (10) Out-of-area job search assistance and relocation assistance; 
and
    (11) English language acquisition and integrated education and 
training programs.
    (c) Follow-up services must be provided, as appropriate, including: 
Counseling regarding the workplace, for participants in adult or 
dislocated worker workforce investment activities who are placed in 
unsubsidized employment, for up to 12 months after the first day of 
employment.
    (d) In addition to the requirements in paragraph (a)(2) of this 
section, TANF agencies must identify employment services and related 
support being provided by the TANF program (within the local area) that 
qualify as career services and ensure access to them via the local one-
stop delivery system.



Sec. 463.435  What are the business services provided through the
one-stop delivery system, and how are they provided?

    (a) Certain career services must be made available to local 
employers, specifically labor exchange activities and labor market 
information described in Sec. 463.430(a)(4)(ii) and (a)(6). Local areas 
must establish and develop relationships and networks with large and 
small employers and their intermediaries. Local areas also must develop, 
convene, or implement industry or sector partnerships.
    (b) Customized business services may be provided to employers, 
employer associations, or other such organizations. These services are 
tailored for specific employers and may include:
    (1) Customized screening and referral of qualified participants in 
training services to employers;
    (2) Customized services to employers, employer associations, or 
other such organizations, on employment-related issues;
    (3) Customized recruitment events and related services for employers 
including targeted job fairs;
    (4) Human resource consultation services, including but not limited 
to assistance with:
    (i) Writing/reviewing job descriptions and employee handbooks;
    (ii) Developing performance evaluation and personnel policies;
    (iii) Creating orientation sessions for new workers;

[[Page 173]]

    (iv) Honing job interview techniques for efficiency and compliance;
    (v) Analyzing employee turnover;
    (vi) Creating job accommodations and using assistive technologies; 
or
    (vii) Explaining labor and employment laws to help employers comply 
with discrimination, wage/hour, and safety/health regulations;
    (5) Customized labor market information for specific employers, 
sectors, industries or clusters; and
    (6) Other similar customized services.
    (c) Local areas may also provide other business services and 
strategies that meet the workforce investment needs of area employers, 
in accordance with partner programs' statutory requirements and 
consistent with Federal cost principles. These business services may be 
provided through effective business intermediaries working in 
conjunction with the Local WDB, or through the use of economic 
development, philanthropic, and other public and private resources in a 
manner determined appropriate by the Local WDB and in cooperation with 
the State. Allowable activities, consistent with each partner's 
authorized activities, include, but are not limited to:
    (1) Developing and implementing industry sector strategies 
(including strategies involving industry partnerships, regional skills 
alliances, industry skill panels, and sectoral skills partnerships);
    (2) Customized assistance or referral for assistance in the 
development of a registered apprenticeship program;
    (3) Developing and delivering innovative workforce investment 
services and strategies for area employers, which may include career 
pathways, skills upgrading, skill standard development and certification 
for recognized postsecondary credential or other employer use, and other 
effective initiatives for meeting the workforce investment needs of area 
employers and workers;
    (4) Assistance to area employers in managing reductions in force in 
coordination with rapid response activities and with strategies for the 
aversion of layoffs, which may include strategies such as early 
identification of firms at risk of layoffs, use of feasibility studies 
to assess the needs of and options for at-risk firms, and the delivery 
of employment and training activities to address risk factors;
    (5) The marketing of business services to appropriate area 
employers, including small and mid-sized employers; and
    (6) Assisting employers with accessing local, State, and Federal tax 
credits.
    (d) All business services and strategies must be reflected in the 
local plan, described in 20 CFR 679.560(b)(3).



Sec. 463.440  When may a fee be charged for the business services
in this subpart?

    (a) There is no requirement that a fee-for-service be charged to 
employers.
    (b) No fee may be charged for services provided in Sec. 463.435(a).
    (c) A fee may be charged for services provided under Sec. 463.435(b) 
and (c). Services provided under Sec. 463.435(c) may be provided through 
effective business intermediaries working in conjunction with the Local 
WDB and may also be provided on a fee-for-service basis or through the 
leveraging of economic development, philanthropic, and other public and 
private resources in a manner determined appropriate by the Local WDB. 
The Local WDB may examine the services provided compared with the assets 
and resources available within the local one-stop delivery system and 
through its partners to determine an appropriate cost structure for 
services, if any.
    (d) Any fees earned are recognized as program income and must be 
expended by the partner in accordance with the partner program's 
authorizing statute, implementing regulations, and Federal cost 
principles identified in Uniform Guidance.



Sec. 463.500  What is the Memorandum of Understanding for the one-stop
delivery system and what must be included in the Memorandum of
Understanding?

    (a) The MOU is the product of local discussion and negotiation, and 
is an agreement developed and executed between the Local WDB and the 
one-stop partners, with the agreement of the chief elected official and 
the one-stop partners, relating to the operation of the one-stop 
delivery system in the

[[Page 174]]

local area. Two or more local areas in a region may develop a single 
joint MOU, if they are in a region that has submitted a regional plan 
under sec. 106 of WIOA.
    (b) The MOU must include:
    (1) A description of services to be provided through the one-stop 
delivery system, including the manner in which the services will be 
coordinated and delivered through the system;
    (2) Agreement on funding the costs of the services and the operating 
costs of the system, including:
    (i) Funding of infrastructure costs of one-stop centers in 
accordance with Secs. 463.700 through 463.755; and
    (ii) Funding of the shared services and operating costs of the one-
stop delivery system described in Sec. 463.760;
    (3) Methods for referring individuals between the one-stop operators 
and partners for appropriate services and activities;
    (4) Methods to ensure that the needs of workers, youth, and 
individuals with barriers to employment, including individuals with 
disabilities, are addressed in providing access to services, including 
access to technology and materials that are available through the one-
stop delivery system;
    (5) The duration of the MOU and procedures for amending it; and
    (6) Assurances that each MOU will be reviewed, and if substantial 
changes have occurred, renewed, not less than once every 3-year period 
to ensure appropriate funding and delivery of services.
    (c) The MOU may contain any other provisions agreed to by the 
parties that are consistent with WIOA title I, the authorizing statutes 
and regulations of one-stop partner programs, and the WIOA regulations.
    (d) When fully executed, the MOU must contain the signatures of the 
Local WDB, one-stop partners, the chief elected official(s), and the 
time period in which the agreement is effective. The MOU must be updated 
not less than every 3 years to reflect any changes in the signatory 
official of the Board, one-stop partners, and chief elected officials, 
or one-stop infrastructure funding.
    (e) If a one-stop partner appeal to the State regarding 
infrastructure costs, using the process described in Sec. 463.750, 
results in a change to the one-stop partner's infrastructure cost 
contributions, the MOU must be updated to reflect the final one-stop 
partner infrastructure cost contributions.



Sec. 463.505  Is there a single Memorandum of Understanding for 
the local area, or must there be different Memoranda of Understanding
between the Local Workforce Development Board and each partner?

    (a) A single ``umbrella'' MOU may be developed that addresses the 
issues relating to the local one-stop delivery system for the Local WDB, 
chief elected official and all partners. Alternatively, the Local WDB 
(with agreement of chief elected official) may enter into separate 
agreements between each partner or groups of partners.
    (b) Under either approach, the requirements described in 
Sec. 463.500 apply. Since funds are generally appropriated annually, the 
Local WDB may negotiate financial agreements with each partner annually 
to update funding of services and operating costs of the system under 
the MOU.



Sec. 463.510  How must the Memorandum of Understanding be negotiated?

    (a) WIOA emphasizes full and effective partnerships between Local 
WDBs, chief elected officials, and one-stop partners. Local WDBs and 
partners must enter into good-faith negotiations. Local WDBs, chief 
elected officials, and one-stop partners may also request assistance 
from a State agency responsible for administering the partner program, 
the Governor, State WDB, or other appropriate parties on other aspects 
of the MOU.
    (b) Local WDBs and one-stop partners must establish, in the MOU, how 
they will fund the infrastructure costs and other shared costs of the 
one-stop centers. If agreement regarding infrastructure costs is not 
reached when other sections of the MOU are ready, an interim 
infrastructure funding agreement may be included instead, as described 
in Sec. 463.715(c). Once agreement on infrastructure funding is reached, 
the Local WDB and one-stop partners

[[Page 175]]

must amend the MOU to include the infrastructure funding of the one-stop 
centers. Infrastructure funding is described in detail in Secs. 463.700 
through 463.760.
    (c) The Local WDB must report to the State WDB, Governor, and 
relevant State agency when MOU negotiations with one-stop partners have 
reached an impasse.
    (1) The Local WDB and partners must document the negotiations and 
efforts that have taken place in the MOU. The State WDB, one-stop 
partner programs, and the Governor may consult with the appropriate 
Federal agencies to address impasse situations related to issues other 
than infrastructure funding after attempting to address the impasse. 
Impasses related to infrastructure cost funding must be resolved using 
the State infrastructure cost funding mechanism described in 
Sec. 463.730.
    (2) The Local WDB must report failure to execute an MOU with a 
required partner to the Governor, State WDB, and the State agency 
responsible for administering the partner's program. Additionally, if 
the State cannot assist the Local WDB in resolving the impasse, the 
Governor or the State WDB must report the failure to the Secretary of 
Labor and to the head of any other Federal agency with responsibility 
for oversight of a partner's program.



Sec. 463.600  Who may operate one-stop centers?

    (a) One-stop operators may be a single entity (public, private, or 
nonprofit) or a consortium of entities. If the consortium of entities is 
one of one-stop partners, it must include a minimum of three of the one-
stop partners described in Sec. 463.400.
    (b) The one-stop operator may operate one or more one-stop centers. 
There may be more than one one-stop operator in a local area.
    (c) The types of entities that may be a one-stop operator include:
    (1) An institution of higher education;
    (2) An Employment Service State agency established under the Wagner-
Peyser Act;
    (3) A community-based organization, nonprofit organization, or 
workforce intermediary;
    (4) A private for-profit entity;
    (5) A government agency;
    (6) A Local WDB, with the approval of the chief elected official and 
the Governor; or
    (7) Another interested organization or entity, which is capable of 
carrying out the duties of the one-stop operator. Examples may include a 
local chamber of commerce or other business organization, or a labor 
organization.
    (d) Elementary schools and secondary schools are not eligible as 
one-stop operators, except that a nontraditional public secondary school 
such as a night school, adult school, or an area career and technical 
education school may be selected.
    (e) The State and Local WDBs must ensure that, in carrying out WIOA 
programs and activities, one-stop operators:
    (1) Disclose any potential conflicts of interest arising from the 
relationships of the operators with particular training service 
providers or other service providers (further discussed in 20 CFR 
679.430);
    (2) Do not establish practices that create disincentives to 
providing services to individuals with barriers to employment who may 
require longer-term career and training services; and
    (3) Comply with Federal regulations and procurement policies 
relating to the calculation and use of profits, including those at 20 
CFR 683.295, the Uniform Guidance at 2 CFR part 200, and other 
applicable regulations and policies.



Sec. 463.605  How is the one-stop operator selected?

    (a) Consistent with paragraphs (b) and (c) of this section, the 
Local WDB must select the one-stop operator through a competitive 
process, as required by sec. 121(d)(2)(A) of WIOA, at least once every 4 
years. A State may require, or a Local WDB may choose to implement, a 
competitive selection process more than once every 4 years.
    (b) In instances in which a State is conducting the competitive 
process described in paragraph (a) of this section, the State must 
follow the same policies

[[Page 176]]

and procedures it uses for procurement with non-Federal funds.
    (c) All other non-Federal entities, including subrecipients of a 
State (such as local areas), must use a competitive process based on 
local procurement policies and procedures and the principles of 
competitive procurement in the Uniform Guidance set out at 2 CFR 200.318 
through 200.326. All references to ``noncompetitive proposals'' in the 
Uniform Guidance at 2 CFR 200.320(f) will be read as ``sole source 
procurement'' for the purposes of implementing this section.
    (d) Entities must prepare written documentation explaining the 
determination concerning the nature of the competitive process to be 
followed in selecting a one-stop operator.



Sec. 463.610  When is the sole-source selection of one-stop operators
appropriate, and how is it conducted?

    (a) States may select a one-stop operator through sole source 
selection when allowed under the same policies and procedures used for 
competitive procurement with non-Federal funds, while other non-Federal 
entities including subrecipients of a State (such as local areas) may 
select a one-stop operator through sole selection when consistent with 
local procurement policies and procedures and the Uniform Guidance set 
out at 2 CFR 200.320.
    (b) In the event that sole source procurement is determined 
necessary and reasonable, in accordance with Sec. 463.605(c), written 
documentation must be prepared and maintained concerning the entire 
process of making such a selection.
    (c) Such sole source procurement must include appropriate conflict 
of interest policies and procedures. These policies and procedures must 
conform to the specifications in 20 CFR 679.430 for demonstrating 
internal controls and preventing conflict of interest.
    (d) A Local WDB may be selected as a one-stop operator through sole 
source procurement only with agreement of the chief elected official in 
the local area and the Governor. The Local WDB must establish sufficient 
conflict of interest policies and procedures and these policies and 
procedures must be approved by the Governor.



Sec. 463.615  May an entity currently serving as one-stop operator
compete to be a one-stop operator under the procurement requirements
of this subpart?

    (a) Local WDBs may compete for and be selected as one-stop 
operators, as long as appropriate firewalls and conflict of interest 
policies and procedures are in place. These policies and procedures must 
conform to the specifications in 20 CFR 679.430 for demonstrating 
internal controls and preventing conflict of interest.
    (b) State and local agencies may compete for and be selected as one-
stop operators by the Local WDB, as long as appropriate firewalls and 
conflict of interest policies and procedures are in place. These 
policies and procedures must conform to the specifications in 20 CFR 
679.430 for demonstrating internal controls and preventing conflict of 
interest.
    (c) In the case of single-area States where the State WDB serves as 
the Local WDB, the State agency is eligible to compete for and be 
selected as operator as long as appropriate firewalls and conflict of 
interest policies are in place and followed for the competition. These 
policies and procedures must conform to the specifications in 20 CFR 
679.430 for demonstrating internal controls and preventing conflicts of 
interest.



Sec. 463.620  What is the one-stop operator's role?

    (a) At a minimum, the one-stop operator must coordinate the service 
delivery of required one-stop partners and service providers. Local WDBs 
may establish additional roles of one-stop operator, including, but not 
limited to: Coordinating service providers across the one-stop delivery 
system, being the primary provider of services within the center, 
providing some of the services within the center, or coordinating 
service delivery in a multi-center area, which may include affiliated 
sites. The competition for a one-stop operator must clearly articulate 
the role of the one-stop operator.
    (b)(1) Subject to paragraph (b)(2) of this section, a one-stop 
operator may not perform the following functions: Convene system 
stakeholders to assist

[[Page 177]]

in the development of the local plan; prepare and submit local plans (as 
required under sec. 107 of WIOA); be responsible for oversight of 
itself; manage or significantly participate in the competitive selection 
process for one-stop operators; select or terminate one-stop operators, 
career services, and youth providers; negotiate local performance 
accountability measures; or develop and submit budget for activities of 
the Local WDB in the local area.
    (2) An entity serving as a one-stop operator, that also serves a 
different role within the one-stop delivery system, may perform some or 
all of these functions when it is acting in its other role, if it has 
established sufficient firewalls and conflict of interest policies and 
procedures. The policies and procedures must conform to the 
specifications in 20 CFR 679.430 for demonstrating internal controls and 
preventing conflict of interest.



Sec. 463.625  Can a one-stop operator also be a service provider?

    Yes, but there must be appropriate firewalls in place in regards to 
the competition, and subsequent oversight, monitoring, and evaluation of 
performance of the service provider. The operator cannot develop, 
manage, or conduct the competition of a service provider in which it 
intends to compete. In cases where an operator is also a service 
provider, there must be firewalls and internal controls within the 
operator-service provider entity, as well as specific policies and 
procedures at the Local WDB level regarding oversight, monitoring, and 
evaluation of performance of the service provider. The firewalls must 
conform to the specifications in 20 CFR 679.430 for demonstrating 
internal controls and preventing conflicts of interest.



Sec. 463.630  Can State merit staff still work in a one-stop center
where the operator is not a governmental entity?

    Yes. State merit staff can continue to perform functions and 
activities in the one-stop center. The Local WDB and one-stop operator 
must establish a system for management of merit staff in accordance with 
State policies and procedures. Continued use of State merit staff for 
the provision of Wagner-Peyser Act services or services from other 
programs with merit staffing requirements must be included in the 
competition for and final contract with the one-stop operator when 
Wagner-Peyser Act services or services from other programs with merit 
staffing requirements are being provided.



Sec. 463.635  What is the compliance date of the provisions of this
subpart?

    (a) No later than July 1, 2017, one-stop operators selected under 
the competitive process described in this subpart must be in place and 
operating the one-stop center.
    (b) By November 17, 2016, every Local WDB must demonstrate it is 
taking steps to prepare for competition of its one-stop operator. This 
demonstration may include, but is not limited to, market research, 
requests for information, and conducting a cost and price analysis.



Sec. 463.700  What are the one-stop infrastructure costs?

    (a) Infrastructure costs of one-stop centers are nonpersonnel costs 
that are necessary for the general operation of the one-stop center, 
including:
    (1) Rental of the facilities;
    (2) Utilities and maintenance;
    (3) Equipment (including assessment-related products and assistive 
technology for individuals with disabilities); and
    (4) Technology to facilitate access to the one-stop center, 
including technology used for the center's planning and outreach 
activities.
    (b) Local WDBs may consider common identifier costs as costs of one-
stop infrastructure.
    (c) Each entity that carries out a program or activities in a local 
one-stop center, described in Secs. 463.400 through 463.410, must use a 
portion of the funds available for the program and activities to 
maintain the one-stop delivery system, including payment of the 
infrastructure costs of one-stop centers. These payments must be in 
accordance with this subpart; Federal cost principles, which require 
that all costs must be allowable, reasonable,

[[Page 178]]

necessary, and allocable to the program; and all other applicable legal 
requirements.



Sec. 463.705  What guidance must the Governor issue regarding one-stop 
infrastructure funding?

    (a) The Governor, after consultation with chief elected officials, 
the State WDB, and Local WDBs, and consistent with guidance and policies 
provided by the State WDB, must develop and issue guidance for use by 
local areas, specifically:
    (1) Guidelines for State-administered one-stop partner programs for 
determining such programs' contributions to a one-stop delivery system, 
based on such programs' proportionate use of such system, and relative 
benefit received, consistent with Office of Management and Budget (OMB) 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200, including determining 
funding for the costs of infrastructure; and
    (2) Guidance to assist Local WDBs, chief elected officials, and one-
stop partners in local areas in determining equitable and stable methods 
of funding the costs of infrastructure at one-stop centers based on 
proportionate use and relative benefit received, and consistent with 
Federal cost principles contained in the Uniform Guidance at 2 CFR part 
200.
    (b) The guidance must include:
    (1) The appropriate roles of the one-stop partner programs in 
identifying one-stop infrastructure costs;
    (2) Approaches to facilitate equitable and efficient cost allocation 
that results in a reasonable cost allocation methodology where 
infrastructure costs are charged to each partner based on its 
proportionate use of the one-stop centers and relative benefit received, 
consistent with Federal cost principles at 2 CFR part 200; and
    (3) The timelines regarding notification to the Governor for not 
reaching local agreement and triggering the State funding mechanism 
described in Sec. 463.730, and timelines for a one-stop partner to 
submit an appeal in the State funding mechanism.



Sec. 463.710  How are infrastructure costs funded?

    Infrastructure costs are funded either through the local funding 
mechanism described in Sec. 463.715 or through the State funding 
mechanism described in Sec. 463.730.



Sec. 463.715  How are one-stop infrastructure costs funded in the
local funding mechanism?

    (a) In the local funding mechanism, the Local WDB, chief elected 
officials, and one-stop partners agree to amounts and methods of 
calculating amounts each partner will contribute for one-stop 
infrastructure funding, include the infrastructure funding terms in the 
MOU, and sign the MOU. The local funding mechanism must meet all of the 
following requirements:
    (1) The infrastructure costs are funded through cash and fairly 
evaluated non-cash and third-party in-kind partner contributions and 
include any funding from philanthropic organizations or other private 
entities, or through other alternative financing options, to provide a 
stable and equitable funding stream for ongoing one-stop delivery system 
operations;
    (2) Contributions must be negotiated between one-stop partners, 
chief elected officials, and the Local WDB and the amount to be 
contributed must be included in the MOU;
    (3) The one-stop partner program's proportionate share of funding 
must be calculated in accordance with the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal Awards 
in 2 CFR part 200 based upon a reasonable cost allocation methodology 
whereby infrastructure costs are charged to each partner in proportion 
to its use of the one-stop center, relative to benefits received. Such 
costs must also be allowable, reasonable, necessary, and allocable;
    (4) Partner shares must be periodically reviewed and reconciled 
against actual costs incurred, and adjusted to ensure that actual costs 
charged to any one-stop partners are proportionate to the use of the 
one-stop center and relative to the benefit received by the one-stop 
partners and their respective programs or activities.

[[Page 179]]

    (b) In developing the section of the MOU on one-stop infrastructure 
funding described in Sec. 463.755, the Local WDB and chief elected 
officials will:
    (1) Ensure that the one-stop partners adhere to the guidance 
identified in Sec. 463.705 on one-stop delivery system infrastructure 
costs.
    (2) Work with one-stop partners to achieve consensus and informally 
mediate any possible conflicts or disagreements among one-stop partners.
    (3) Provide technical assistance to new one-stop partners and local 
grant recipients to ensure that those entities are informed and 
knowledgeable of the elements contained in the MOU and the one-stop 
infrastructure costs arrangement.
    (c) The MOU may include an interim infrastructure funding agreement, 
including as much detail as the Local WDB has negotiated with one-stop 
partners, if all other parts of the MOU have been negotiated, in order 
to allow the partner programs to operate in the one-stop centers. The 
interim infrastructure funding agreement must be finalized within 6 
months of when the MOU is signed. If the interim infrastructure funding 
agreement is not finalized within that timeframe, the Local WDB must 
notify the Governor, as described in Sec. 463.725.



Sec. 463.720  What funds are used to pay for infrastructure costs in 
the local one-stop infrastructure funding mechanism?

    (a) In the local funding mechanism, one-stop partner programs may 
determine what funds they will use to pay for infrastructure costs. The 
use of these funds must be in accordance with the requirements in this 
subpart, and with the relevant partner's authorizing statutes and 
regulations, including, for example, prohibitions against supplanting 
non-Federal resources, statutory limitations on administrative costs, 
and all other applicable legal requirements. In the case of partners 
administering programs authorized by title I of WIOA, these 
infrastructure costs may be considered program costs. In the case of 
partners administering adult education and literacy programs authorized 
by title II of WIOA, these funds must include Federal funds made 
available for the local administration of adult education and literacy 
programs authorized by title II of WIOA. These funds may also include 
non-Federal resources that are cash, in-kind or third-party 
contributions. In the case of partners administering the Carl D. Perkins 
Career and Technical Education Act of 2006, funds used to pay for 
infrastructure costs may include funds available for local 
administrative expenses, non-Federal resources that are cash, in-kind or 
third-party contributions, and may include other funds made available by 
the State.
    (b) There are no specific caps on the amount or percent of overall 
funding a one-stop partner may contribute to fund infrastructure costs 
under the local funding mechanism, except that contributions for 
administrative costs may not exceed the amount available for 
administrative costs under the authorizing statute of the partner 
program. However, amounts contributed for infrastructure costs must be 
allowable and based on proportionate use of the one-stop centers and 
relative benefit received by the partner program, taking into account 
the total cost of the one-stop infrastructure as well as alternate 
financing options, and must be consistent with 2 CFR part 200, including 
the Federal cost principles.
    (c) Cash, non-cash, and third-party in-kind contributions may be 
provided by one-stop partners to cover their proportionate share of 
infrastructure costs.
    (1) Cash contributions are cash funds provided to the Local WDB or 
its designee by one-stop partners, either directly or by an interagency 
transfer.
    (2) Non-cash contributions are comprised of--
    (i) Expenditures incurred by one-stop partners on behalf of the one-
stop center; and
    (ii) Non-cash contributions or goods or services contributed by a 
partner program and used by the one-stop center.
    (3) Non-cash contributions, especially those set forth in paragraph 
(c)(2)(ii) of this section, must be valued consistent with 2 CFR 200.306 
to ensure they are fairly evaluated and meet the partners' proportionate 
share.

[[Page 180]]

    (4) Third-party in-kind contributions are:
    (i) Contributions of space, equipment, technology, non-personnel 
services, or other like items to support the infrastructure costs 
associated with one-stop operations, by a non-one-stop partner to 
support the one-stop center in general, not a specific partner; or
    (ii) Contributions by a non-one-stop partner of space, equipment, 
technology, non-personnel services, or other like items to support the 
infrastructure costs associated with one-stop operations, to a one-stop 
partner to support its proportionate share of one-stop infrastructure 
costs.
    (iii) In-kind contributions described in paragraphs (c)(4)(i) and 
(ii) of this section must be valued consistent with 2 CFR 200.306 and 
reconciled on a regular basis to ensure they are fairly evaluated and 
meet the proportionate share of the partner.
    (5) All partner contributions, regardless of the type, must be 
reconciled on a regular basis (i.e., monthly or quarterly), comparing 
actual expenses incurred to relative benefits received, to ensure each 
partner program is contributing its proportionate share in accordance 
with the terms of the MOU.



Sec. 463.725  What happens if consensus on infrastructure funding is
not reached at the local level between the Local Workforce Development
Board, chief elected officials, and one-stop partners?

    With regard to negotiations for infrastructure funding for Program 
Year (PY) 2017 and for each subsequent program year thereafter, if the 
Local WDB, chief elected officials, and one-stop partners do not reach 
consensus on methods of sufficiently funding local infrastructure 
through the local funding mechanism in accordance with the Governor's 
guidance issued under Sec. 463.705 and consistent with the regulations 
in Secs. 463.715 and 463.720, and include that consensus agreement in 
the signed MOU, then the Local WDB must notify the Governor by the 
deadline established by the Governor under Sec. 463.705(b)(3). Once 
notified, the Governor must administer funding through the State funding 
mechanism, as described in Secs. 463.730 through 463.738, for the 
program year impacted by the local area's failure to reach consensus.



Sec. 463.730  What is the State one-stop infrastructure funding
mechanism?

    (a) Consistent with sec. 121(h)(1)(A)(i)(II) of WIOA, if the Local 
WDB, chief elected official, and one-stop partners in a local area do 
not reach consensus agreement on methods of sufficiently funding the 
costs of infrastructure of one-stop centers for a program year, the 
State funding mechanism is applicable to the local area for that program 
year.
    (b) In the State funding mechanism, the Governor, subject to the 
limitations in paragraph (c) of this section, determines one-stop 
partner contributions after consultation with the chief elected 
officials, Local WDBs, and the State WDB. This determination involves:
    (1) The application of a budget for one-stop infrastructure costs as 
described in Sec. 463.735, based on either agreement reached in the 
local area negotiations or the State WDB formula outlined in 
Sec. 463.745;
    (2) The determination of each local one-stop partner program's 
proportionate use of the one-stop delivery system and relative benefit 
received, consistent with the Uniform Guidance at 2 CFR part 200, 
including the Federal cost principles, the partner programs' authorizing 
laws and regulations, and other applicable legal requirements described 
in Sec. 463.736; and
    (3) The calculation of required statewide program caps on 
contributions to infrastructure costs from one-stop partner programs in 
areas operating under the State funding mechanism as described in 
Sec. 463.738.
    (c) In certain situations, the Governor does not determine the 
infrastructure cost contributions for some one-stop partner programs 
under the State funding mechanism.
    (1) The Governor will not determine the contribution amounts for 
infrastructure funds for Native American program grantees described in 
20 CFR part 684. The appropriate portion of funds to be provided by 
Native American program grantees to pay for one-stop infrastructure must 
be determined as part of the development of the MOU

[[Page 181]]

described in Sec. 463.500 and specified in that MOU.
    (2) In States in which the policy-making authority is placed in an 
entity or official that is independent of the authority of the Governor 
with respect to the funds provided for adult education and literacy 
activities authorized under title II of WIOA, postsecondary career and 
technical education activities authorized under the Carl D. Perkins 
Career and Technical Education Act of 2006, or VR services authorized 
under title I of the Rehabilitation Act of 1973 (other than sec. 112 or 
part C), as amended by WIOA title IV, the determination of the amount 
each of the applicable partners must contribute to assist in paying the 
infrastructure costs of one-stop centers must be made by the official or 
chief officer of the entity with such authority, in consultation with 
the Governor.
    (d) Any duty, ability, choice, responsibility, or other action 
otherwise related to the determination of infrastructure costs 
contributions that is assigned to the Governor in Secs. 463.730 through 
463.745 also applies to this decision-making process performed by the 
official or chief officer described in paragraph (c)(2) of this section.



Sec. 463.731  What are the steps to determine the amount to be paid
under the State one-stop infrastructure funding mechanism?

    (a) To initiate the State funding mechanism, a Local WDB that has 
not reached consensus on methods of sufficiently funding local 
infrastructure through the local funding mechanism as provided in 
Sec. 463.725 must notify the Governor by the deadline established by the 
Governor under Sec. 463.705(b)(3).
    (b) Once a Local WDB has informed the Governor that no consensus has 
been reached:
    (1) The Local WDB must provide the Governor with local negotiation 
materials in accordance with Sec. 463.735(a).
    (2) The Governor must determine the one-stop center budget by 
either:
    (i) Accepting a budget previously agreed upon by partner programs in 
the local negotiations, in accordance with Sec. 463.735(b)(1); or
    (ii) Creating a budget for the one-stop center using the State WDB 
formula (described in Sec. 463.745) in accordance with 
Sec. 463.735(b)(3).
    (3) The Governor then must establish a cost allocation methodology 
to determine the one-stop partner programs' proportionate shares of 
infrastructure costs, in accordance with Sec. 463.736.
    (4)(i) Using the methodology established under paragraph (b)(2)(ii) 
of this section, and taking into consideration the factors concerning 
individual partner programs listed in Sec. 463.737(b)(2), the Governor 
must determine each partner's proportionate share of the infrastructure 
costs, in accordance with Sec. 463.737(b)(1), and
    (ii) In accordance with Sec. 463.730(c), in some instances, the 
Governor does not determine a partner program's proportionate share of 
infrastructure funding costs, in which case it must be determined by the 
entities named in Sec. 463.730(c)(1) and (2).
    (5) The Governor must then calculate the statewide caps on the 
amounts that partner programs may be required to contribute toward 
infrastructure funding, according to the steps found at 
Sec. 463.738(a)(1) through (4).
    (6) The Governor must ensure that the aggregate total of the 
infrastructure contributions according to proportionate share required 
of all local partner programs in local areas under the State funding 
mechanism do not exceed the cap for that particular program, in 
accordance with Sec. 463.738(b)(1). If the total does not exceed the 
cap, the Governor must direct each one-stop partner program to pay the 
amount determined under Sec. 463.737(a) toward the infrastructure 
funding costs of the one-stop center. If the total does exceed the cap, 
then to determine the amount to direct each one-stop program to pay, the 
Governor may:
    (i) Ascertain, in accordance with Sec. 463.738(b)(2)(i), whether the 
local partner or partners whose proportionate shares are calculated 
above the individual program caps are willing to voluntarily contribute 
above the capped amount to equal that program's proportionate share; or
    (ii) Choose from the options provided in Sec. 463.738(b)(2)(ii), 
including having the local area re-enter negotiations to

[[Page 182]]

reassess each one-stop partner's proportionate share and make 
adjustments or identify alternate sources of funding to make up the 
difference between the capped amount and the proportionate share of 
infrastructure funding of the one-stop partner.
    (7) If none of the solutions given in paragraphs (b)(6)(i) and (ii) 
of this section prove to be viable, the Governor must reassess the 
proportionate shares of each one-stop partner so that the aggregate 
amount attributable to the local partners for each program is less than 
that program's cap amount. Upon such reassessment, the Governor must 
direct each one-stop partner program to pay the reassessed amount toward 
the infrastructure funding costs of the one-stop center.



Sec. 463.735  How are infrastructure cost budgets for the one-stop
centers in a local area determined in the State one-stop
infrastructure funding mechanism?

    (a) Local WDBs must provide to the Governor appropriate and relevant 
materials and documents used in the negotiations under the local funding 
mechanism, including but not limited to: The local WIOA plan, the cost 
allocation method or methods proposed by the partners to be used in 
determining proportionate share, the proposed amounts or budget to fund 
infrastructure, the amount of total partner funds included, the type of 
funds or non-cash contributions, proposed one-stop center budgets, and 
any agreed upon or proposed MOUs.
    (b)(1) If a local area has reached agreement as to the 
infrastructure budget for the one-stop centers in the local area, it 
must provide this budget to the Governor as required by paragraph (a) of 
this section. If, as a result of the agreed upon infrastructure budget, 
only the individual programmatic contributions to infrastructure funding 
based upon proportionate use of the one-stop centers and relative 
benefit received are at issue, the Governor may accept the budget, from 
which the Governor must calculate each partner's contribution consistent 
with the cost allocation methodologies contained in the Uniform Guidance 
found in 2 CFR part 200, as described in Sec. 463.736.
    (2) The Governor may also take into consideration the extent to 
which the partners in the local area have agreed in determining the 
proportionate shares, including any agreements reached at the local 
level by one or more partners, as well as any other element or product 
of the negotiating process provided to the Governor as required by 
paragraph (a) of this section.
    (3) If a local area has not reached agreement as to the 
infrastructure budget for the one-stop centers in the local area, or if 
the Governor determines that the agreed upon budget does not adequately 
meet the needs of the local area or does not reasonably work within the 
confines of the local area's resources in accordance with the Governor's 
one-stop budget guidance (which is required to be issued by WIOA sec. 
121(h)(1)(B) and under Sec. 463.705), then, in accordance with 
Sec. 463.745, the Governor must use the formula developed by the State 
WDB based on at least the factors required under Sec. 463.745, and any 
associated weights to determine the local area budget.



Sec. 463.736  How does the Governor establish a cost allocation
methodology used to determine the one-stop partner programs' 
proportionate shares of infrastructure costs under the State 
one-stop infrastructure funding mechanism?

    Once the appropriate budget is determined for a local area through 
either method described in Sec. 463.735 (by acceptance of a budget 
agreed upon in local negotiation or by the Governor applying the formula 
detailed in Sec. 463.745), the Governor must determine the appropriate 
cost allocation methodology to be applied to the one-stop partners in 
such local area, consistent with the Federal cost principles permitted 
under 2 CFR part 200, to fund the infrastructure budget.



Sec. 463.737  How are one-stop partner programs' proportionate shares
of infrastructure costs determined under the State one-stop 
infrastructure funding mechanism?
          

    (a) The Governor must direct the one-stop partners in each local 
area that have not reached agreement under the local funding mechanism 
to pay

[[Page 183]]

what the Governor determines is each partner program's proportionate 
share of infrastructure funds for that area, subject to the application 
of the caps described in Sec. 463.738.
    (b)(1) The Governor must use the cost allocation methodology--as 
determined under Sec. 463.736--to determine each partner's proportionate 
share of the infrastructure costs under the State funding mechanism, 
subject to considering the factors described in paragraph (b)(2) of this 
section.
    (2) In determining each partner program's proportionate share of 
infrastructure costs, the Governor must take into account the costs of 
administration of the one-stop delivery system for purposes not related 
to one-stop centers for each partner (such as costs associated with 
maintaining the Local WDB or information technology systems), as well as 
the statutory requirements for each partner program, the partner 
program's ability to fulfill such requirements, and all other applicable 
legal requirements. The Governor may also take into consideration the 
extent to which the partners in the local area have agreed in 
determining the proportionate shares, including any agreements reached 
at the local level by one or more partners, as well as any other 
materials or documents of the negotiating process, which must be 
provided to the Governor by the Local WDB and described in 
Sec. 463.735(a).



Sec. 463.738  How are statewide caps on the contributions for one
-stop infrastructure funding determined in the State one-stop 
infrastructure funding mechanism?

    (a) The Governor must calculate the statewide cap on the 
contributions for one-stop infrastructure funding required to be 
provided by each one-stop partner program for those local areas that 
have not reached agreement. The cap is the amount determined under 
paragraph (a)(4) of this section, which the Governor derives by:
    (1) First, determining the amount resulting from applying the 
percentage for the corresponding one-stop partner program provided in 
paragraph (d) of this section to the amount of Federal funds provided to 
carry out the one-stop partner program in the State for the applicable 
fiscal year;
    (2) Second, selecting a factor (or factors) that reasonably 
indicates the use of one-stop centers in the State, applying such 
factor(s) to all local areas in the State, and determining the 
percentage of such factor(s) applicable to the local areas that reached 
agreement under the local funding mechanism in the State;
    (3) Third, determining the amount resulting from applying the 
percentage determined in paragraph (a)(2) of this section to the amount 
determined under paragraph (a)(1) of this section for the one-stop 
partner program; and
    (4) Fourth, determining the amount that results from subtracting the 
amount determined under paragraph (a)(3) of this section from the amount 
determined under paragraph (a)(1) of this section. The outcome of this 
final calculation results in the partner program's cap.
    (b)(1) The Governor must ensure that the funds required to be 
contributed by each partner program in the local areas in the State 
under the State funding mechanism, in aggregate, do not exceed the 
statewide cap for each program as determined under paragraph (a) of this 
section.
    (2) If the contributions initially determined under Sec. 463.737 
would exceed the applicable cap determined under paragraph (a) of this 
section, the Governor may:
    (i) Ascertain if the one-stop partner whose contribution would 
otherwise exceed the cap determined under paragraph (a) of this section 
will voluntarily contribute above the capped amount, so that the total 
contributions equal that partner's proportionate share. The one-stop 
partner's contribution must still be consistent with the program's 
authorizing laws and regulations, the Federal cost principles in 2 CFR 
part 200, and other applicable legal requirements; or
    (ii) Direct or allow the Local WDB, chief elected officials, and 
one-stop partners to: Re-enter negotiations, as necessary; reduce the 
infrastructure costs to reflect the amount of funds that are available 
for such costs without exceeding the cap levels; reassess the 
proportionate share of each one-stop partner; or identify alternative

[[Page 184]]

sources of financing for one-stop infrastructure funding, consistent 
with the requirement that each one-stop partner pay an amount that is 
consistent with the proportionate use of the one-stop center and 
relative benefit received by the partner, the program's authorizing laws 
and regulations, the Federal cost principles in 2 CFR part 200, and 
other applicable legal requirements.
    (3) If applicable under paragraph (b)(2)(ii) of this section, the 
Local WDB, chief elected officials, and one-stop partners, after 
renegotiation, may come to agreement, sign an MOU, and proceed under the 
local funding mechanism. Such actions do not require the redetermination 
of the applicable caps under paragraph (a) of this section.
    (4) If, after renegotiation, agreement among partners still cannot 
be reached or alternate financing cannot be identified, the Governor may 
adjust the specified allocation, in accordance with the amounts 
available and the limitations described in paragraph (d) of this 
section. In determining these adjustments, the Governor may take into 
account information relating to the renegotiation as well as the 
information described in Sec. 463.735(a).
    (c) Limitations. Subject to paragraph (a) of this section and in 
accordance with WIOA sec. 121(h)(2)(D), the following limitations apply 
to the Governor's calculations of the amount that one-stop partners in 
local areas that have not reached agreement under the local funding 
mechanism may be required under Sec. 463.736 to contribute to one-stop 
infrastructure funding:
    (1) WIOA formula programs and Wagner-Peyser Act Employment Service. 
The portion of funds required to be contributed under the WIOA youth, 
adult, or dislocated worker programs, or under the Wagner-Peyser Act (29 
U.S.C. 49 et seq.) must not exceed three percent of the amount of the 
program in the State for a program year.
    (2) Other one-stop partners. For required one-stop partners other 
than those specified in paragraphs (c)(1), (3), (5), and (6) of this 
section, the portion of funds required to be contributed must not exceed 
1.5 percent of the amount of Federal funds provided to carry out that 
program in the State for a fiscal year. For purposes of the Carl D. 
Perkins Career and Technical Education Act of 2006, the cap on 
contributions is determined based on the funds made available by the 
State for postsecondary level programs and activities under sec. 132 of 
the Carl D. Perkins Career and Technical Education Act and the amount of 
funds used by the State under sec. 112(a)(3) of the Perkins Act during 
the prior year to administer postsecondary level programs and 
activities, as applicable.
    (3) Vocational Rehabilitation
    (i) Within a State, for the entity or entities administering the 
programs described in WIOA sec. 121(b)(1)(B)(iv) and Sec. 463.400, the 
allotment is based on the one State Federal fiscal year allotment, even 
in instances where that allotment is shared between two State agencies, 
and the cumulative portion of funds required to be contributed must not 
exceed--
    (A) 0.75 percent of the amount of Federal funds provided to carry 
out such program in the State for Fiscal Year 2016 for purposes of 
applicability of the State funding mechanism for PY 2017;
    (B) 1.0 percent of the amount provided to carry out such program in 
the State for Fiscal Year 2017 for purposes of applicability of the 
State funding mechanism for PY 2018;
    (C) 1.25 percent of the amount provided to carry out such program in 
the State for Fiscal Year 2018 for purposes of applicability of the 
State funding mechanism for PY 2019;
    (D) 1.5 percent of the amount provided to carry out such program in 
the State for Fiscal Year 2019 and following years for purposes of 
applicability of the State funding mechanism for PY 2020 and subsequent 
years.
    (ii) The limitations set forth in paragraph (d)(3)(i) of this 
section for any given fiscal year must be based on the final VR 
allotment to the State in the applicable Federal fiscal year.
    (4) Federal direct spending programs. For local areas that have not 
reached a one-stop infrastructure funding agreement by consensus, an 
entity administering a program funded with direct Federal spending, as 
defined in sec. 250(c)(8) of the Balanced Budget and Emergency Deficit 
Control Act of 1985, as in effect on February 15, 2014 (2 U.S.C. 
900(c)(8)), must not be required

[[Page 185]]

to provide more for infrastructure costs than the amount that the 
Governor determined (as described in Sec. 463.737).
    (5) TANF programs. For purposes of TANF, the cap on contributions is 
determined based on the total Federal TANF funds expended by the State 
for work, education, and training activities during the prior Federal 
fiscal year (as reported to the Department of Health and Human Services 
(HHS) on the quarterly TANF Financial Report form), plus any additional 
amount of Federal TANF funds that the State TANF agency reasonably 
determines was expended for administrative costs in connection with 
these activities but that was separately reported to HHS as an 
administrative cost. The State's contribution to the one-stop 
infrastructure must not exceed 1.5 percent of these combined 
expenditures.
    (6) Community Services Block Grant (CSBG) programs. For purposes of 
CSBG, the cap on contributions will be based on the total amount of CSBG 
funds determined by the State to have been expended by local CSBG-
eligible entities for the provision of employment and training 
activities during the prior Federal fiscal year for which information is 
available (as reported to HHS on the CSBG Annual Report) and any 
additional amount that the State CSBG agency reasonably determines was 
expended for administrative purposes in connection with these activities 
and was separately reported to HHS as an administrative cost. The 
State's contribution must not exceed 1.5 percent of these combined 
expenditures.
    (d) For programs for which it is not otherwise feasible to determine 
the amount of Federal funding used by the program until the end of that 
program's operational year--because, for example, the funding available 
for education, employment, and training activities is included within 
funding for the program that may also be used for other unrelated 
activities--the determination of the Federal funds provided to carry out 
the program for a fiscal year under paragraph (a)(1) of this section may 
be determined by:
    (1) The percentage of Federal funds available to the one-stop 
partner program that were used by the one-stop partner program for 
education, employment, and training activities in the previous fiscal 
year for which data are available; and
    (2) Applying the percentage determined under paragraph (d)(1) of 
this section to the total amount of Federal funds available to the one-
stop partner program for the fiscal year for which the determination 
under paragraph (a)(1) of this section applies.



Sec. 463.740  What funds are used to pay for infrastructure costs in
the State one-stop infrastructure funding mechanism?

    (a) In the State funding mechanism, infrastructure costs for WIOA 
title I programs, including Native American Programs described in 20 CFR 
part 684, may be paid using program funds, administrative funds, or 
both. Infrastructure costs for the Senior Community Service Employment 
Program under title V of the Older Americans Act (42 U.S.C. 3056 et 
seq.) may also be paid using program funds, administrative funds, or 
both.
    (b) In the State funding mechanism, infrastructure costs for other 
required one-stop partner programs (listed in Secs. 463.400 through 
463.410) are limited to the program's administrative funds, as 
appropriate.
    (c) In the State funding mechanism, infrastructure costs for the 
adult education program authorized by title II of WIOA must be paid from 
the funds that are available for local administration and may be paid 
from funds made available by the State or non-Federal resources that are 
cash, in-kind, or third-party contributions.
    (d) In the State funding mechanism, infrastructure costs for the 
Carl D. Perkins Career and Technical Education Act of 2006 must be paid 
from funds available for local administration of postsecondary level 
programs and activities to eligible recipients or consortia of eligible 
recipients and may be paid from funds made available by the State or 
non-Federal resources that are cash, in-kind, or third-party 
contributions.

[[Page 186]]



Sec. 463.745  What factors does the State Workforce Development Board
use to develop the formula described in Workforce Innovation and 
Opportunity Act, which is used by the Governor to determine the 
appropriate one-stop infrastructure budget for each local area 
operating under the State infrastructure funding mechanism, 
if no reasonably implementable locally negotiated budget exists?

    The State WDB must develop a formula, as described in WIOA sec. 
121(h)(3)(B), to be used by the Governor under Sec. 463.735(b)(3) in 
determining the appropriate budget for the infrastructure costs of one-
stop centers in the local areas that do not reach agreement under the 
local funding mechanism and are, therefore, subject to the State funding 
mechanism. The formula identifies the factors and corresponding weights 
for each factor that the Governor must use, which must include: the 
number of one-stop centers in a local area; the population served by 
such centers; the services provided by such centers; and any factors 
relating to the operations of such centers in the local area that the 
State WDB determines are appropriate. As indicated in 
Sec. 463.735(b)(1), if the local area has agreed on such a budget, the 
Governor may accept that budget in lieu of applying the formula factors.



Sec. 463.750  When and how can a one-stop partner appeal a one-stop
infrastructure amount designated by the State under the State 
infrastructure funding  mechanism?

    (a) The Governor must establish a process, described under sec. 
121(h)(2)(E) of WIOA, for a one-stop partner administering a program 
described in Secs. 463.400 through 463.410 to appeal the Governor's 
determination regarding the one-stop partner's portion of funds to be 
provided for one-stop infrastructure costs. This appeal process must be 
described in the Unified State Plan.
    (b) The appeal may be made on the ground that the Governor's 
determination is inconsistent with proportionate share requirements in 
Sec. 463.735(a), the cost contribution limitations in Sec. 463.735(b), 
the cost contribution caps in Sec. 463.738, consistent with the process 
described in the State Plan.
    (c) The process must ensure prompt resolution of the appeal in order 
to ensure the funds are distributed in a timely manner, consistent with 
the requirements of 20 CFR 683.630.
    (d) The one-stop partner must submit an appeal in accordance with 
State's deadlines for appeals specified in the guidance issued under 
Sec. 463.705(b)(3), or if the State has not set a deadline, within 21 
days from the Governor's determination.



Sec. 463.755  What are the required elements regarding infrastructure
funding that must be included in the one-stop Memorandum of 
Understanding?

    The MOU, fully described in Sec. 463.500, must contain the following 
information whether the local areas use either the local one-stop or the 
State funding method:
    (a) The period of time in which this infrastructure funding 
agreement is effective. This may be a different time period than the 
duration of the MOU.
    (b) Identification of an infrastructure and shared services budget 
that will be periodically reconciled against actual costs incurred and 
adjusted accordingly to ensure that it reflects a cost allocation 
methodology that demonstrates how infrastructure costs are charged to 
each partner in proportion to its use of the one-stop center and 
relative benefit received, and that complies with 2 CFR part 200 (or any 
corresponding similar regulation or ruling).
    (c) Identification of all one-stop partners, chief elected 
officials, and Local WDB participating in the infrastructure funding 
arrangement.
    (d) Steps the Local WDB, chief elected officials, and one-stop 
partners used to reach consensus or an assurance that the local area 
followed the guidance for the State funding process.
    (e) Description of the process to be used among partners to resolve 
issues during the MOU duration period when consensus cannot be reached.
    (f) Description of the periodic modification and review process to 
ensure equitable benefit among one-stop partners.

[[Page 187]]



Sec. 463.760  How do one-stop partners jointly fund other shared costs
under the Memorandum of Understanding?

    (a) In addition to jointly funding infrastructure costs, one-stop 
partners listed in Secs. 463.400 through 463.410 must use a portion of 
funds made available under their programs' authorizing Federal law (or 
fairly evaluated in-kind contributions) to pay the additional costs 
relating to the operation of the one-stop delivery system. These other 
costs must include applicable career services and may include other 
costs, including shared services.
    (b) For the purposes of paragraph (a) of this section, shared 
services' costs may include the costs of shared services that are 
authorized for and may be commonly provided through the one-stop partner 
programs to any individual, such as initial intake, assessment of needs, 
appraisal of basic skills, identification of appropriate services to 
meet such needs, referrals to other one-stop partners, and business 
services. Shared operating costs may also include shared costs of the 
Local WDB's functions.
    (c) Contributions to the additional costs related to operation of 
the one-stop delivery system may be cash, non-cash, or third-party in-
kind contributions, consistent with how these are described in 
Sec. 463.720(c).
    (d) The shared costs described in paragraph (a) of this section must 
be allocated according to the proportion of benefit received by each of 
the partners, consistent with the Federal law authorizing the partner's 
program, and consistent with all other applicable legal requirements, 
including Federal cost principles in 2 CFR part 200 (or any 
corresponding similar regulation or ruling) requiring that costs are 
allowable, reasonable, necessary, and allocable.
    (e) Any shared costs agreed upon by the one-stop partners must be 
included in the MOU.



Sec. 463.800  How are one-stop centers and one-stop delivery systems
certified for effectiveness, physical and programmatic accessibility,
and continuous improvement?

    (a) The State WDB, in consultation with chief elected officials and 
Local WDBs, must establish objective criteria and procedures for Local 
WDBs to use when certifying one-stop centers.
    (1) The State WDB, in consultation with chief elected officials and 
Local WDBs, must review and update the criteria every 2 years as part of 
the review and modification of State Plans pursuant to Sec. 463.135.
    (2) The criteria must be consistent with the Governor's and State 
WDB's guidelines, guidance, and policies on infrastructure funding 
decisions, described in Sec. 463.705. The criteria must evaluate the 
one-stop centers and one-stop delivery system for effectiveness, 
including customer satisfaction, physical and programmatic 
accessibility, and continuous improvement.
    (3) When the Local WDB is the one-stop operator as described in 20 
CFR 679.410, the State WDB must certify the one-stop center.
    (b) Evaluations of effectiveness must include how well the one-stop 
center integrates available services for participants and businesses, 
meets the workforce development needs of participants and the employment 
needs of local employers, operates in a cost-efficient manner, 
coordinates services among the one-stop partner programs, and provides 
access to partner program services to the maximum extent practicable, 
including providing services outside of regular business hours where 
there is a workforce need, as identified by the Local WDB. These 
evaluations must take into account feedback from one-stop customers. 
They must also include evaluations of how well the one-stop center 
ensures equal opportunity for individuals with disabilities to 
participate in or benefit from one-stop center services. These 
evaluations must include criteria evaluating how well the centers and 
delivery systems take actions to comply with the disability-related 
regulations implementing WIOA sec. 188, set forth at 29 CFR part 38. 
Such actions include, but are not limited to:

[[Page 188]]

    (1) Providing reasonable accommodations for individuals with 
disabilities;
    (2) Making reasonable modifications to policies, practices, and 
procedures where necessary to avoid discrimination against persons with 
disabilities;
    (3) Administering programs in the most integrated setting 
appropriate;
    (4) Communicating with persons with disabilities as effectively as 
with others;
    (5) Providing appropriate auxiliary aids and services, including 
assistive technology devices and services, where necessary to afford 
individuals with disabilities an equal opportunity to participate in, 
and enjoy the benefits of, the program or activity; and
    (6) Providing for the physical accessibility of the one-stop center 
to individuals with disabilities.
    (c) Evaluations of continuous improvement must include how well the 
one-stop center supports the achievement of the negotiated local levels 
of performance for the indicators of performance for the local area 
described in sec. 116(b)(2) of WIOA and part 463. Other continuous 
improvement factors may include a regular process for identifying and 
responding to technical assistance needs, a regular system of continuing 
professional staff development, and having systems in place to capture 
and respond to specific customer feedback.
    (d) Local WDBs must assess at least once every 3 years the 
effectiveness, physical and programmatic accessibility, and continuous 
improvement of one-stop centers and the one-stop delivery systems using 
the criteria and procedures developed by the State WDB. The Local WDB 
may establish additional criteria, or set higher standards for service 
coordination, than those set by the State criteria. Local WDBs must 
review and update the criteria every 2 years as part of the Local Plan 
update process described in Sec. 463.580. Local WDBs must certify one-
stop centers in order to be eligible to use infrastructure funds in the 
State funding mechanism described in Sec. 463.730.
    (e) All one-stop centers must comply with applicable physical and 
programmatic accessibility requirements, as set forth in 29 CFR part 38, 
the implementing regulations of WIOA sec. 188.



Sec. 463.900  What is the common identifier to be used by each one-stop
delivery system?

    (a) The common one-stop delivery system identifier is ``American Job 
Center.''
    (b) As of November 17, 2016, each one-stop delivery system must 
include the ``American Job Center'' identifier or ``a proud partner of 
the American Job Center network'' on all primary electronic resources 
used by the one-stop delivery system, and on any newly printed, 
purchased, or created materials.
    (c) As of July 1, 2017, each one-stop delivery system must include 
the ``American Job Center'' identifier or ``a proud partner of the 
American Job Center network'' on all products, programs, activities, 
services, electronic resources, facilities, and related property and new 
materials used in the one-stop delivery system.
    (d) One-stop partners, States, or local areas may use additional 
identifiers on their products, programs, activities, services, 
facilities, and related property and materials.

Subpart K [Reserved]

                           PART 464 [RESERVED]

                           PART 472 [RESERVED]

                           PART 477 [RESERVED]

                        PARTS 489	499 [RESERVED]

[[Page 189]]



CHAPTER V--OFFICE OF BILINGUAL EDUCATION AND MINORITY LANGUAGES AFFAIRS, 
                         DEPARTMENT OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
500-599         [Reserved]

[[Page 191]]

                        PARTS 500	599 [RESERVED]

[[Page 193]]



 CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
600             Institutional eligibility under the Higher 
                    Education Act of 1965, as amended.......         195
601             Institution and lender requirements relating 
                    to education loans......................         230
602             The Secretary's recognition of accrediting 
                    agencies................................         238
603             Secretary's recognition procedures for State 
                    agencies................................         262
604             Federal-State relationship agreements.......         265
606             Developing Hispanic-serving institutions 
                    program.................................         267
607             Strengthening institutions program..........         278
608             Strengthening historically Black colleges 
                    and universities program................         292
609             Strengthening historically Black graduate 
                    institutions program....................         299
611             Teacher quality enhancement grants program..         304
614             Preparing tomorrow's teachers to use 
                    technology..............................         319
628             Endowment challenge grant program...........         320
636             [Reserved]

637             Minority science and engineering improvement 
                    program.................................         329
642             Training program for Federal TRIO programs..         334
643             Talent search...............................         342
644             Educational opportunity centers.............         354
645             Upward bound program........................         364
646             Student support services program............         380
647             Ronald E. McNair Postbaccalaureate 
                    Achievement Program.....................         392
648             Graduate assistance in areas of national 
                    need....................................         401
649

[Reserved]

650             Jacob K. Javits fellowship program..........         412
654             Robert C. Byrd honors scholarship program...         418
655             International education programs--general 
                    provisions..............................         423

[[Page 194]]

656             National resource centers program for 
                    foreign language and area studies or 
                    foreign language and international 
                    studies.................................         425
657             Foreign language and area studies 
                    fellowships program.....................         433
658             Undergraduate international studies and 
                    foreign language program................         439
660             The international research and studies 
                    program.................................         443
661             Business and international education program         448
662             Fulbright-Hays doctoral dissertation 
                    research abroad fellowship program......         450
663             Fulbright-Hays faculty research abroad 
                    fellowship program......................         454
664             Fulbright-Hays group projects abroad program         458
668             Student assistance general provisions.......         463
669             Language resource centers program...........         726
673             General provisions for the Federal Perkins 
                    loan program, Federal work-study 
                    program, and Federal supplemental 
                    educational opportunity grant program...         728
674             Federal Perkins loan program................         734
675             Federal work-study programs.................         797
676             Federal supplemental educational opportunity 
                    grant program...........................         811
677-679         [Reserved]

[[Page 195]]



PART 600_INSTITUTIONAL ELIGIBILITY UNDER THE HIGHER EDUCATION ACT
OF 1965, AS AMENDED--Table of Contents



                            Subpart A_General

Sec.
600.1  Scope.
600.2  Definitions.
600.3  [Reserved]
600.4  Institution of higher education.
600.5  Proprietary institution of higher education.
600.6  Postsecondary vocational institution.
600.7  Conditions of institutional ineligibility.
600.8  Treatment of a branch campus.
600.9  State authorization.
600.10  Date, extent, duration, and consequence of eligibility.
600.11  Special rules regarding institutional accreditation or 
          preaccreditation.

            Subpart B_Procedures for Establishing Eligibility

600.20  Notice and application procedures for establishing, 
          reestablishing, maintaining, or expanding institutional 
          eligibility and certification.
600.21  Updating application information.

                    Subpart C_Maintaining Eligibility

600.30  [Reserved]
600.31  Change in ownership resulting in a change in control for private 
          nonprofit, private for-profit and public institutions.
600.32  Eligibility of additional locations.

                      Subpart D_Loss of Eligibility

600.40  Loss of eligibility.
600.41  Termination and emergency action proceedings.

Subpart E_Eligibility of Foreign Institutions To Apply To Participate in 
            the Federal Family Education Loan (FFEL) Programs

600.51  Purpose and scope.
600.52  Definitions.
600.53  Requesting an eligibility determination.
600.54  Criteria for determining whether a foreign institution is 
          eligible to apply to participate in the Direct Loan Program.
600.55  Additional criteria for determining whether a foreign graduate 
          medical school is eligible to apply to participate in the 
          Direct Loan Program.
600.56  Additional criteria for determining whether a foreign veterinary 
          school is eligible to apply to participate in the FFEL 
          programs.
600.57  Additional criteria for determining whether a foreign nursing 
          school is eligible to apply to participate in the Direct Loan 
          Program.
600.58  Duration of eligibility determination.

    Authority: 20 U.S.C. 1001, 1002, 1003, 1088, 1091, 1094, 1099b, and 
1099c, unless otherwise noted.

    Source: 53 FR 11210, Apr. 5, 1988, unless otherwise noted.



                            Subpart A_General

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.1  Scope.

    This part establishes the rules and procedures that the Secretary 
uses to determine whether an educational institution qualifies in whole 
or in part as an eligible institution of higher education under the 
Higher Education Act of 1965, as amended (HEA). An eligible institution 
of higher education may apply to participate in programs authorized by 
the HEA (HEA programs).

(Authority: 20 U.S.C. 1088, 1094, 1099b, 1099c, and 1141)



Sec. 600.2  Definitions.

    The following definitions apply to terms used in this part:
    Accredited: The status of public recognition that a nationally 
recognized accrediting agency grants to an institution or educational 
program that meets the agency's established requirements.
    Award year: The period of time from July 1 of one year through June 
30 of the following year.
    Branch Campus: A location of an institution that is geographically 
apart and independent of the main campus of the institution. The 
Secretary considers a location of an institution to be independent of 
the main campus if the location--
    (1) Is permanent in nature;
    (2) Offers courses in educational programs leading to a degree, 
certificate, or other recognized educational credential;
    (3) Has its own faculty and administrative or supervisory 
organization; and
    (4) Has its own budgetary and hiring authority.

[[Page 196]]

    Clock hour: A period of time consisting of--
    (1) A 50- to 60-minute class, lecture, or recitation in a 60-minute 
period;
    (2) A 50- to 60-minute faculty-supervised laboratory, shop training, 
or internship in a 60-minute period; or
    (3) Sixty minutes of preparation in a correspondence course.
    Correspondence course: (1) A course provided by an institution under 
which the institution provides instructional materials, by mail or 
electronic transmission, including examinations on the materials, to 
students who are separated from the instructor. Interaction between the 
instructor and student is limited, is not regular and substantive, and 
is primarily initiated by the student. Correspondence courses are 
typically self-paced.
    (2) If a course is part correspondence and part residential 
training, the Secretary considers the course to be a correspondence 
course.
    (3) A correspondence course is not distance education.
    Credit hour: Except as provided in 34 CFR 668.8(k) and (l), a credit 
hour is an amount of work represented in intended learning outcomes and 
verified by evidence of student achievement that is an institutionally 
established equivalency that reasonably approximates not less than--
    (1) One hour of classroom or direct faculty instruction and a 
minimum of two hours of out of class student work each week for 
approximately fifteen weeks for one semester or trimester hour of 
credit, or ten to twelve weeks for one quarter hour of credit, or the 
equivalent amount of work over a different amount of time; or
    (2) At least an equivalent amount of work as required in paragraph 
(1) of this definition for other academic activities as established by 
the institution including laboratory work, internships, practica, studio 
work, and other academic work leading to the award of credit hours.
    Direct assessment program: A program as described in 34 CFR 668.10.
    Distance education means education that uses one or more of the 
technologies listed in paragraphs (1) through (4) of this definition to 
deliver instruction to students who are separated from the instructor 
and to support regular and substantive interaction between the students 
and the instructor, either synchronously or asynchronously. The 
technologies may include--
    (1) The internet;
    (2) One-way and two-way transmissions through open broadcast, closed 
circuit, cable, microwave, broadband lines, fiber optics, satellite, or 
wireless communications devices;
    (3) Audio conferencing; or
    (4) Video cassettes, DVDs, and CD-ROMs, if the cassettes, DVDs, or 
CD-ROMs are used in a course in conjunction with any of the technologies 
listed in paragraphs (1) through (3) of this definition.
    Educational program: (1) A legally authorized postsecondary program 
of organized instruction or study that:
    (i) Leads to an academic, professional, or vocational degree, or 
certificate, or other recognized educational credential, or is a 
comprehensive transition and postsecondary program, as described in 34 
CFR part 668, subpart O; and
    (ii) May, in lieu of credit hours or clock hours as a measure of 
student learning, utilize direct assessment of student learning, or 
recognize the direct assessment of student learning by others, if such 
assessment is consistent with the accreditation of the institution or 
program utilizing the results of the assessment and with the provisions 
of Sec. 668.10.
    (2) The Secretary does not consider that an institution provides an 
educational program if the institution does not provide instruction 
itself (including a course of independent study) but merely gives credit 
for one or more of the following: Instruction provided by other 
institutions or schools; examinations or direct assessments provided by 
agencies or organizations; or other accomplishments such as ``life 
experience.''
    Eligible institution: An institution that--
    (1) Qualifies as--
    (i) An institution of higher education, as defined in Sec. 600.4;
    (ii) A proprietary institution of higher education, as defined in 
Sec. 600.5; or

[[Page 197]]

    (iii) A postsecondary vocational institution, as defined in 
Sec. 600.6; and
    (2) Meets all the other applicable provisions of this part.
    Federal Family Education Loan (FFEL) Programs: The loan programs 
(formerly called the Guaranteed Student Loan (GSL) programs) authorized 
by title IV-B of the HEA, including the Federal Stafford Loan, Federal 
PLUS, Federal Supplemental Loans for Students (Federal SLS), and Federal 
Consolidation Loan programs, in which lenders use their own funds to 
make loans to enable students or their parents to pay the costs of the 
students' attendance at eligible institutions. The Federal Stafford 
Loan, Federal PLUS, Federal SLS, and Federal Consolidation Loan programs 
are defined in 34 CFR part 668.
    Incarcerated student: A student who is serving a criminal sentence 
in a Federal, State, or local penitentiary, prison, jail, reformatory, 
work farm, or other similar correctional institution. A student is not 
considered incarcerated if that student is in a half-way house or home 
detention or is sentenced to serve only weekends.
    Legally authorized: The legal status granted to an institution 
through a charter, license, or other written document issued by the 
appropriate agency or official of the State in which the institution is 
physically located.
    Nationally recognized accrediting agency: An agency or association 
that the Secretary recognizes as a reliable authority to determine the 
quality of education or training offered by an institution or a program 
offered by an institution. The Secretary recognizes these agencies and 
associations under the provisions of 34 CFR part 602 and publishes a 
list of the recognized agencies in the Federal Register.
    Nonprofit institution: An institution that--
    (1)(i) Is owned and operated by one or more nonprofit corporations 
or associations, no part of the net earnings of which benefits any 
private shareholder or individual;
    (ii) Is legally authorized to operate as a nonprofit organization by 
each State in which it is physically located; and
    (iii) Is determined by the U.S. Internal Revenue Service to be an 
organization to which contributions are tax-deductible in accordance 
with section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 
501(c)(3)); or
    (2) For a foreign institution--
    (i) An institution that is owned and operated only by one or more 
nonprofit corporations or associations; and
    (ii)(A) If a recognized tax authority of the institution's home 
country is recognized by the Secretary for purposes of making 
determinations of an institution's nonprofit status for title IV 
purposes, is determined by that tax authority to be a nonprofit 
educational institution; or
    (B) If no recognized tax authority of the institution's home country 
is recognized by the Secretary for purposes of making determinations of 
an institution's nonprofit status for title IV purposes, the foreign 
institution demonstrates to the satisfaction of the Secretary that it is 
a nonprofit educational institution.
    (3) Is determined by the U.S. Internal Revenue Service to be an 
organization to which contributions are tax-deductible in accordance 
with section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 
501(c)(3)).
    One-academic-year training program: An educational program that is 
at least one academic year as defined under 34 CFR 668.2.
    Preaccredited: A status that a nationally recognized accrediting 
agency, recognized by the Secretary to grant that status, has accorded 
an unaccredited public or private nonprofit institution that is 
progressing toward accreditation within a reasonable period of time.
    Recognized equivalent of a high school diploma: The following are 
the equivalent of a high school diploma--
    (1) A General Education Development Certificate (GED);
    (2) A State certificate received by a student after the student has 
passed a State-authorized examination that the State recognizes as the 
equivalent of a high school diploma;
    (3) An academic transcript of a student who has successfully 
completed at least a two-year program that is acceptable for full credit 
toward a bachelor's degree; or
    (4) For a person who is seeking enrollment in an educational program

[[Page 198]]

that leads to at least an associate degree or its equivalent and who has 
not completed high school but who excelled academically in high school, 
documentation that the student excelled academically in high school and 
has met the formalized, written policies of the institution for 
admitting such students.
    Recognized occupation: An occupation that is--
    (1) Identified by a Standard Occupational Classification (SOC) code 
established by the Office of Management and Budget (OMB) or an 
Occupational Information Network O*Net-SOC code established by the 
Department of Labor, which is available at www.onetonline.org or its 
successor site; or
    (2) Determined by the Secretary in consultation with the Secretary 
of Labor to be a recognized occupation.
    Regular student: A person who is enrolled or accepted for enrollment 
at an institution for the purpose of obtaining a degree, certificate, or 
other recognized educational credential offered by that institution.
    Secretary: The Secretary of the Department of Education or an 
official or employee of the Department of Education acting for the 
Secretary under a delegation of authority.
    State: A State of the Union, American Samoa, the Commonwealth of 
Puerto Rico, the District of Columbia, Guam, the Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, the Republic of the 
Marshall Islands, the Federated States of Micronesia, and the Republic 
of Palau. The latter three are also known as the Freely Associated 
States.
    Teach-out plan: A written plan developed by an institution that 
provides for the equitable treatment of students if an institution, or 
an institutional location that provides 100 percent of at least one 
program, ceases to operate before all students have completed their 
program of study, and may include, if required by the institution's 
accrediting agency, a teach-out agreement between institutions.
    Title IV, HEA program: Any of the student financial assistance 
programs listed in 34 CFR 668.1(c).

(Authority: 20 U.S.C. 1001, 1002, 1071, et seq., 1078-2, 1088, 1091, 
1094, 1099b, 1099c, 1141; 26 U.S.C. 501(c))

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40622, July 29, 1998; 
64 FR 58615, Oct. 29, 1999; 71 FR 45692, Aug. 9, 2006; 74 FR 55425, Oct. 
27, 2009; 74 FR 55932, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010, 75 FR 
67192, Nov. 1, 2010; 79 FR 65006, Oct. 31, 2014]

    Effective Date Note: At 81 FR 92262, Dec. 19, 2016, Sec. 600.2 was 
amended by adding, in alphabetical order, a definition of ``State 
authorization reciprocity agreement'', effective July 1, 2018. For the 
convenience of the user, the added text is set forth as follows:



Sec. 600.2  Definitions.

                                * * * * *

    State authorization reciprocity agreement: An agreement between two 
or more States that authorizes an institution located and legally 
authorized in a State covered by the agreement to provide postsecondary 
education through distance education or correspondence courses to 
students residing in other States covered by the agreement and does not 
prohibit any State in the agreement from enforcing its own statutes and 
regulations, whether general or specifically directed at all or a 
subgroup of educational institutions.



Sec. 600.3  [Reserved]



Sec. 600.4  Institution of higher education.

    (a) An institution of higher education is a public or private 
nonprofit educational institution that--
    (1) Is in a State, or for purposes of the Federal Pell Grant, 
Federal Supplemental Educational Opportunity Grant, Federal Work-Study, 
and Federal TRIO programs may also be located in the Federated States of 
Micronesia or the Marshall Islands;
    (2) Admits as regular students only persons who--
    (i) Have a high school diploma;
    (ii) Have the recognized equivalent of a high school diploma; or
    (iii) Are beyond the age of compulsory school attendance in the 
State in which the institution is physically located;
    (3) Is legally authorized to provide an educational program beyond 
secondary

[[Page 199]]

education in the State in which the institution is physically located in 
accordance with Sec. 600.9;
    (4)(i) Provides an educational program--
    (A) For which it awards an associate, baccalaureate, graduate, or 
professional degree;
    (B) That is at least a two-academic-year program acceptable for full 
credit toward a baccalaureate degree; or
    (C) That is at least a one academic year training program that leads 
to a certificate, or other nondegree recognized credential, and prepares 
students for gainful employment in a recognized occupation; and
    (ii) May provide a comprehensive transition and postsecondary 
program, as described in 34 CFR part 668, subpart O; and
    (5) Is--
    (i) Accredited or preaccredited; or
    (ii) Approved by a State agency listed in the Federal Register in 
accordance with 34 CFR part 603, if the institution is a public 
postsecondary vocational educational institution that seeks to 
participate only in Federal student assistance programs.
    (b) An institution is physically located in a State if it has a 
campus or other instructional site in that State.
    (c) The Secretary does not recognize the accreditation or 
preaccreditation of an institution unless the institution agrees to 
submit any dispute involving the final denial, withdrawal, or 
termination of accreditation to initial arbitration before initiating 
any other legal action.

(Authority: 20 U.S.C. 1091, 1094, 1099b, 1141(a))

[59 FR 22336, Apr. 29, 1994, as amended at 64 FR 58615, Oct. 29, 1999; 
74 FR 55932, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010]



Sec. 600.5  Proprietary institution of higher education.

    (a) A proprietary institution of higher education is an educational 
institution that--
    (1) Is not a public or private nonprofit educational institution;
    (2) Is in a State;
    (3) Admits as regular students only persons who--
    (i) Have a high school diploma;
    (ii) Have the recognized equivalent of a high school diploma; or
    (iii) Are beyond the age of compulsory school attendance in the 
State in which the institution is physically located;
    (4) Is legally authorized to provide an educational program beyond 
secondary education in the State in which the institution is physically 
located in accordance with Sec. 600.9;
    (5)(i)(A) Provides an eligible program of training, as defined in 34 
CFR 668.8, to prepare students for gainful employment in a recognized 
occupation; or
    (B)(1) Has provided a program leading to a baccalaureate degree in 
liberal arts, as defined in paragraph (e) of this section, continuously 
since January 1, 2009; and
    (2) Is accredited by a recognized regional accrediting agency or 
association, and has continuously held such accreditation since October 
1, 2007, or earlier; and
    (ii) May provide a comprehensive transition and postsecondary 
program for students with intellectual disabilities, as provided in 34 
CFR part 668, subpart O;
    (6) Is accredited; and
    (7) Has been in existence for at least two years.
    (b)(1) The Secretary considers an institution to have been in 
existence for two years only if--
    (i) The institution has been legally authorized to provide, and has 
provided, a continuous educational program to prepare students for 
gainful employment in a recognized occupation during the 24 months 
preceding the date of its eligibility application; and
    (ii) The educational program that the institution provides on the 
date of its eligibility application is substantially the same in length 
and subject matter as the program that the institution provided during 
the 24 months preceding the date of its eligibility application.
    (2)(i) The Secretary considers an institution to have provided a 
continuous educational program during the 24 months preceding the date 
of its eligibility application even if the institution did not provide 
that program during normal vacation periods, or periods when the 
institution temporarily

[[Page 200]]

closed due to a natural disaster that directly affected the institution 
or the institution's students.
    (ii) The Secretary considers an institution to have satisfied the 
provisions of paragraph (b)(1)(ii) of this section if the institution 
substantially changed the subject matter of the educational program it 
provided during that 24-month period because of new technology or the 
requirements of other Federal agencies.
    (3) In determining whether an applicant institution satisfies the 
requirement contained in paragraph (b)(1) of this section, the 
Secretary--
    (i) Counts any period during which the applicant institution has 
been certified as a branch campus; and
    (ii) Except as provided in paragraph (b)(3)(i) of this section, does 
not count any period during which the applicant institution was a part 
of another eligible proprietary institution of higher education, 
postsecondary vocational institution, or vocational school.
    (c) An institution is physically located in a State if it has a 
campus or other instructional site in that State.
    (d) The Secretary does not recognize the accreditation of an 
institution unless the institution agrees to submit any dispute 
involving the final denial, withdrawal, or termination of accreditation 
to initial arbitration before initiating any other legal action.
    (e) For purposes of this section, a ``program leading to a 
baccalaureate degree in liberal arts'' is a program that the 
institution's recognized regional accreditation agency or organization 
determines, is a general instructional program in the liberal arts 
subjects, the humanities disciplines, or the general curriculum, falling 
within one or more of the following generally-accepted instructional 
categories comprising such programs, but including only instruction in 
regular programs, and excluding independently-designed programs, 
individualized programs, and unstructured studies:
    (1) A program that is a structured combination of the arts, 
biological and physical sciences, social sciences, and humanities, 
emphasizing breadth of study.
    (2) An undifferentiated program that includes instruction in the 
general arts or general science.
    (3) A program that focuses on combined studies and research in the 
humanities subjects as distinguished from the social and physical 
sciences, emphasizing languages, literatures, art, music, philosophy, 
and religion.
    (4) Any single instructional program in liberal arts and sciences, 
general studies, and humanities not listed in paragraph (e)(1) through 
(e)(3) of this section.

(Approved by the Office of Management and Budget under control number 
1845-0012)

(Authority: 20 U.S.C. 1088, 1091)

[59 FR 22336, Apr. 29, 1994; 59 FR 32082, June 22, 1994, as amended at 
59 FR 47801, Sept. 19, 1994; 59 FR 61177, Nov. 29, 1994; 61 FR 29901, 
June 12, 1996; 61 FR 60569, Nov. 29, 1996; 64 FR 58615, Oct. 29, 1999; 
74 FR 55932, Oct. 29, 2009; 76 FR 66946, Oct. 29, 2010]



Sec. 600.6  Postsecondary vocational institution.

    (a) A postsecondary vocational institution is a public or private 
nonprofit educational institution that--
    (1) Is in a State;
    (2) Admits as regular students only persons who--
    (i) Have a high school diploma;
    (ii) Have the recognized equivalent of a high school diploma; or
    (iii) Are beyond the age of compulsory school attendance in the 
State in which the institution is physically located;
    (3) Is legally authorized to provide an educational program beyond 
secondary education in the State in which the institution is physically 
located in accordance with Sec. 600.9;
    (4)(i) Provides an eligible program of training, as defined in 34 
CFR 668.8, to prepare students for gainful employment in a recognized 
occupation; and
    (ii) May provide a comprehensive transition and postsecondary 
program for students with intellectual disabilities, as provided in 34 
CFR part 668, subpart O;
    (5) Is--
    (i) Accredited or preaccredited; or

[[Page 201]]

    (ii) Approved by a State agency listed in the Federal Register in 
accordance with 34 CFR part 603, if the institution is a public 
postsecondary vocational educational institution that seeks to 
participate only in Federal assistance programs; and
    (6) Has been in existence for at least two years.
    (b)(1) The Secretary considers an institution to have been in 
existence for two years only if--
    (i) The institution has been legally authorized to provide, and has 
provided, a continuous education or training program to prepare students 
for gainful employment in a recognized occupation during the 24 months 
preceding the date of its eligibility application; and
    (ii) The education or training program it provides on the date of 
its eligibility application is substantially the same in length and 
subject matter as the program it provided during the 24 months preceding 
the date of its eligibility application.
    (2)(i) The Secretary considers an institution to have provided a 
continuous education or training program during the 24 months preceding 
the date of its eligibility application even if the institution did not 
provide that program during normal vacation periods, or periods when the 
institution temporarily closed due to a natural disaster that affected 
the institution or the institution's students.
    (ii) The Secretary considers an institution to have satisfied the 
provisions of paragraph (b)(1)(ii) of this section if the institution 
substantially changed the subject matter of the educational program it 
provided during that 24-month period because of new technology or the 
requirements of other Federal agencies.
    (3) In determining whether an applicant institution satisfies the 
requirement contained in paragraph (b)(1) of this section, the 
Secretary--
    (i) Counts any period during which the applicant institution 
qualified as an eligible institution of higher education;
    (ii) Counts any period during which the applicant institution was 
part of another eligible institution of higher education, provided that 
the applicant institution continues to be part of an eligible 
institution of higher education;
    (iii) Counts any period during which the applicant institution has 
been certified as a branch campus; and
    (iv) Except as provided in paragraph (b)(3)(iii) of this section, 
does not count any period during which the applicant institution was a 
part of another eligible proprietary institution of higher education or 
postsecondary vocational institution.
    (c) An institution is physically located in a State or other 
instructional site if it has a campus or instructional site in that 
State.
    (d) The Secretary does not recognize the accreditation or 
preaccreditation of an institution unless the institution agrees to 
submit any dispute involving the final denial, withdrawal, or 
termination of accreditation to initial arbitration before initiating 
any other legal action.

(Authority: 20 U.S.C. 1088, 1091, 1094(c)(3))

[59 FR 22336, Apr. 29, 1994, as amended at 64 FR 58616, Oct. 29, 1999; 
74 FR 55933, Oct. 29, 2009; 75 FR 66946, Oct. 29, 2010]



Sec. 600.7  Conditions of institutional ineligibility.

    (a) General rule. For purposes of title IV of the HEA, an 
educational institution that otherwise satisfies the requirements 
contained in Secs. 600.4, 600.5, or 600.6 nevertheless does not qualify 
as an eligible institution under this part if--
    (1) For its latest complete award year--
    (i) More than 50 percent of the institution's courses were 
correspondence courses as calculated under paragraph (b) of this 
section;
    (ii) Fifty percent or more of the institution's regular enrolled 
students were enrolled in correspondence courses;
    (iii) More than twenty-five percent of the institution's regular 
enrolled students were incarcerated;
    (iv) More than fifty percent of its regular enrolled students had 
neither a high school diploma nor the recognized equivalent of a high 
school diploma, and the institution does not provide a four-year or two-
year educational program for which it awards a bachelor's

[[Page 202]]

degree or an associate degree, respectively;
    (2) The institution, or an affiliate of the institution that has the 
power, by contract or ownership interest, to direct or cause the 
direction of the management of policies of the institution--
    (A) Files for relief in bankruptcy, or
    (B) Has entered against it an order for relief in bankruptcy; or
    (3) The institution, its owner, or its chief executive officer--
    (i) Has pled guilty to, has pled nolo contendere to, or is found 
guilty of, a crime involving the acquisition, use, or expenditure of 
title IV, HEA program funds; or
    (ii) Has been judicially determined to have committed fraud 
involving title IV, HEA program funds.
    (b) Special provisions regarding correspondence courses and 
students--(1) Calculating the number of correspondence courses. For 
purposes of paragraphs (a)(1) (i) and (ii) of this section--
    (i) A correspondence course may be a complete educational program 
offered by correspondence, or one course provided by correspondence in 
an on-campus (residential) educational program;
    (ii) A course must be considered as being offered once during an 
award year regardless of the number of times it is offered during that 
year; and
    (iii) A course that is offered both on campus and by correspondence 
must be considered two courses for the purpose of determining the total 
number of courses the institution provided during an award year.
    (2) Exceptions. (i) The provisions contained in paragraphs (a)(1) 
(i) and (ii) of this section do not apply to an institution that 
qualifies as a ``technical institute or vocational school used 
exclusively or principally for the provision of vocational education to 
individuals who have completed or left high school and who are available 
for study in preparation for entering the labor market'' under section 
3(3)(C) of the Carl D. Perkins Vocational and Applied Technology 
Education Act of 1995.
    (ii) The Secretary waives the limitation contained in paragraph 
(a)(1)(ii) of this section for an institution that offers a 2-year 
associate-degree or a 4-year bachelor's-degree program if the students 
enrolled in the institution's correspondence courses receive no more 
than 5 percent of the title IV, HEA program funds received by students 
at that institution.
    (c) Special provisions regarding incarcerated students--(1) 
Exception. The Secretary may waive the prohibition contained in 
paragraph (a)(1)(iii) of this section, upon the application of an 
institution, if the institution is a nonprofit institution that provides 
four-year or two-year educational programs for which it awards a 
bachelor's degree, an associate degree, or a postsecondary diploma.
    (2) Waiver for entire institution. If the nonprofit institution that 
applies for a waiver consists solely of four-year or two-year 
educational programs for which it awards a bachelor's degree, an 
associate degree, or a postsecondary diploma, the Secretary waives the 
prohibition contained in paragraph (a)(1)(iii) of this section for the 
entire institution.
    (3) Other waivers. If the nonprofit institution that applies for a 
waiver does not consist solely of four-year or two-year educational 
programs for which it awards a bachelor's degree, an associate degree, 
or a postsecondary diploma, the Secretary waives the prohibition 
contained in paragraph (a)(1)(iii) of this section--
    (i) For the four-year and two-year programs for which it awards a 
bachelor's degree, an associate degree or a postsecondary diploma; and
    (ii) For the other programs the institution provides, if the 
incarcerated regular students enrolled in those other programs have a 
completion rate of 50 percent or greater.
    (d) Special provision for a nonprofit institution if more than 50 
percent of its enrollment consists of students who do not have a high 
school diploma or its equivalent. (1) Subject to the provisions 
contained in paragraphs (d)(2) and (d)(3) of this section, the Secretary 
waives the limitation contained in paragraph (a)(1)(iv) of this section 
for a nonprofit institution if that institution demonstrates to the 
Secretary's satisfaction that it exceeds that limitation because it 
serves, through contracts with Federal, State, or local government

[[Page 203]]

agencies, significant numbers of students who do not have a high school 
diploma or its recognized equivalent.
    (2) Number of critical students. The Secretary grants a waiver under 
paragraph (d)(1) of this section only if no more than 40 percent of the 
institution's enrollment of regular students consists of students who--
    (i) Do not have a high school diploma or its equivalent; and
    (ii) Are not served through contracts described in paragraph (d)(3) 
of this section.
    (3) Contracts with Federal, State, or local government agencies. For 
purposes of granting a waiver under paragraph (d)(1) of this section, 
the contracts referred to must be with Federal, State, or local 
government agencies for the purpose of providing job training to low-
income individuals who are in need of that training. An example of such 
a contract is a job training contract under the Job Training Partnership 
Act (JPTA).
    (e) Special provisions. (1) For purposes of paragraph (a)(1)of this 
section, when counting regular students, the institution shall--
    (i) Count each regular student without regard to the full-time or 
part-time nature of the student's attendance (i.e., ``head count'' 
rather than ``full-time equivalent'');
    (ii) Count a regular student once regardless of the number of times 
the student enrolls during an award year; and
    (iii) Determine the number of regular students who enrolled in the 
institution during the relevant award year by--
    (A) Calculating the number of regular students who enrolled during 
that award year; and
    (B) Excluding from the number of students in paragraph 
(e)(1)(iii)(A) of this section, the number of regular students who 
enrolled but subsequently withdrew or were expelled from the institution 
and were entitled to receive a 100 percent refund of their tuition and 
fees less any administrative fee that the institution is permitted to 
keep under its fair and equitable refund policy.
    (2) For the purpose of calculating a completion rate under paragraph 
(c)(3)(ii) of this section, the institution shall--
    (i) Determine the number of regular incarcerated students who 
enrolled in the other programs during the last completed award year;
    (ii) Exclude from the number of regular incarcerated students 
determined in paragraph (e)(2)(i) of this section, the number of those 
students who enrolled but subsequently withdrew or were expelled from 
the institution and were entitled to receive a 100 percent refund of 
their tuition and fees, less any administrative fee the institution is 
permitted to keep under the institution's fair and equitable refund 
policy;
    (iii) Exclude from the total obtained in paragraph (e)(2)(ii) of 
this section, the number of those regular incarcerated students who 
remained enrolled in the programs at the end of the applicable award 
year;
    (iv) From the total obtained in paragraph (e)(2)(iii) of this 
section, determine the number of regular incarcerated students who 
received a degree, certificate, or other recognized educational 
credential awarded for successfully completing the program during the 
applicable award year; and
    (v) Divide the total obtained in paragraph (e)(2)(iv) of this 
section by the total obtained in paragraph (e)(2)(iii) of this section 
and multiply by 100.
    (f)(1) If the Secretary grants a waiver to an institution under this 
section, the waiver extends indefinitely provided that the institution 
satisfies the waiver requirements in each award year.
    (2) If an institution fails to satisfy the waiver requirements for 
an award year, the institution becomes ineligible on June 30 of that 
award year.
    (g)(1) For purposes of paragraph (a)(1) of this section, and any 
applicable waiver or exception under this section, the institution shall 
substantiate the required calculations by having the certified public 
accountant who prepares its audited financial statement under 34 CFR 
668.15 or its title IV, HEA program compliance audit under 34 CFR 668.23 
report on the accuracy of those determinations.
    (2) The certified public accountant's report must be based on 
performing an

[[Page 204]]

``attestation engagement'' in accordance with the American Institute of 
Certified Public Accountants (AICPA's) Statement on Standards for 
Attestation Engagements. The certified public accountant shall include 
that attestation report with or as part of the audit report referenced 
in paragraph (g)(1) of this section.
    (3) The certified public accountant's attestation report must 
indicate whether the institution's determinations regarding paragraph 
(a)(1) of this section and any relevant waiver or exception under 
paragraphs (b), (c), and (d) of this section are accurate; i.e., fairly 
presented in all material respects.
    (h) Notice to the Secretary. An institution shall notify the 
Secretary--
    (1) By July 31 following the end of an award year if it falls within 
one of the prohibitions contained in paragraph (a)(1)of this section, or 
fails to continue to satisfy a waiver or exception granted under this 
section; or
    (2) Within 10 days if it falls within one of the prohibitions 
contained in paragraphs (a)(2) or (a)(3) of this section.
    (i) Regaining eligibility. (1) If an institution loses its 
eligibility because of one of the prohibitions contained in paragraph 
(a)(1) of this section, to regain its eligibility, it must demonstrate--
    (i) Compliance with all eligibility requirements;
    (ii) That it did not fall within any of the prohibitions contained 
in paragraph (a)(1) of this section for at least one award year; and
    (iii) That it changed its administrative policies and practices to 
ensure that it will not fall within any of the prohibitions contained in 
paragraph (a)(1) of this section.
    (2) If an institution loses its eligibility because of one of the 
prohibitions contained in paragraphs (a)(2) and (a)(3) of this section, 
this loss is permanent. The institution's eligibility cannot be 
reinstated.

(Approved by the Office of Management and Budget under control number 
1840-0098)

(Authority: 20 U.S.C. 1088)

[59 FR 22336, Apr. 29, 1994; 59 FR 32082, June 22, 1994, as amended at 
59 FR 47801, Sept. 19, 1994; 60 FR 34430, June 30, 1995; 64 FR 58616, 
Oct. 29, 1999; 71 FR 45692, Aug. 9, 2006]



Sec. 600.8  Treatment of a branch campus.

    A branch campus of an eligible proprietary institution of higher 
education or a postsecondary vocational institution must be in existence 
for at least two years as a branch campus after the branch is certified 
as a branch campus before seeking to be designated as a main campus or a 
free-standing institution.

(Authority: 20 U.S.C. 1099c)

[64 FR 58616, Oct. 29, 1999, as amended at 67 FR 67070, Nov. 1, 2002]



Sec. 600.9  State authorization.

    (a)(1) An institution described under Secs. 600.4, 600.5, and 600.6 
is legally authorized by a State if the State has a process to review 
and appropriately act on complaints concerning the institution including 
enforcing applicable State laws, and the institution meets the 
provisions of paragraphs (a)(1)(i), (a)(1)(ii), or (b) of this section.
    (i)(A) The institution is established by name as an educational 
institution by a State through a charter, statute, constitutional 
provision, or other action issued by an appropriate State agency or 
State entity and is authorized to operate educational programs beyond 
secondary education, including programs leading to a degree or 
certificate.
    (B) The institution complies with any applicable State approval or 
licensure requirements, except that the State may exempt the institution 
from any State approval or licensure requirements based on the 
institution's accreditation by one or more accrediting agencies 
recognized by the Secretary or based upon the institution being in 
operation for at least 20 years.
    (ii) If an institution is established by a State on the basis of an 
authorization to conduct business in the State or to operate as a 
nonprofit charitable

[[Page 205]]

organization, but not established by name as an educational institution 
under paragraph (a)(1)(i) of this section, the institution--
    (A) By name, must be approved or licensed by the State to offer 
programs beyond secondary education, including programs leading to a 
degree or certificate; and
    (B) May not be exempt from the State's approval or licensure 
requirements based on accreditation, years in operation, or other 
comparable exemption.
    (2) The Secretary considers an institution to meet the provisions of 
paragraph (a)(1) of this section if the institution is authorized by 
name to offer educational programs beyond secondary education by--
    (i) The Federal Government; or
    (ii) As defined in 25 U.S.C. 1802(2), an Indian tribe, provided that 
the institution is located on tribal lands and the tribal government has 
a process to review and appropriately act on complaints concerning an 
institution and enforces applicable tribal requirements or laws.
    (b)(1) Notwithstanding paragraph (a)(1)(i) and (ii) of this section, 
an institution is considered to be legally authorized to operate 
educational programs beyond secondary education if it is exempt from 
State authorization as a religious institution under the State 
constitution or by State law.
    (2) For purposes of paragraph (b)(1) of this section, a religious 
institution is an institution that--
    (i) Is owned, controlled, operated, and maintained by a religious 
organization lawfully operating as a nonprofit religious corporation; 
and
    (ii) Awards only religious degrees or certificates including, but 
not limited to, a certificate of Talmudic studies, an associate of 
Biblical studies, a bachelor of religious studies, a master of divinity, 
or a doctor of divinity.
    (c) If an institution is offering postsecondary education through 
distance or correspondence education to students in a State in which it 
is not physically located or in which it is otherwise subject to State 
jurisdiction as determined by the State, the institution must meet any 
State requirements for it to be legally offering postsecondary distance 
or correspondence education in that State. An institution must be able 
to document to the Secretary the State's approval upon request.

(Authority: 20 U.S.C. 1001 and 1002)

[75 FR 66946, Oct. 29, 2010]

    Effective Date Note: At 81 FR 92262, Dec. 19, 2016, Sec. 600.9 was 
amended by revising paragraph (c) and adding paragraph (d), effective 
July 1, 2018. For the convenience of the user, the added and revised 
text is set forth as follows:



Sec. 600.9  State authorization.

                                * * * * *

    (c)(1)(i) If an institution that meets the requirements under 
paragraph (a)(1) of this section offers postsecondary education through 
distance education or correspondence courses to students residing in a 
State in which the institution is not physically located or in which the 
institution is otherwise subject to that State's jurisdiction as 
determined by that State, except as provided in paragraph (c)(1)(ii) of 
this section, the institution must meet any of that State's requirements 
for it to be legally offering postsecondary distance education or 
correspondence courses in that State. The institution must, upon 
request, document the State's approval to the Secretary; or
    (ii) If an institution that meets the requirements under paragraph 
(a)(1) of this section offers postsecondary education through distance 
education or correspondence courses in a State that participates in a 
State authorization reciprocity agreement, and the institution is 
covered by such agreement, the institution is considered to meet State 
requirements for it to be legally offering postsecondary distance 
education or correspondence courses in that State, subject to any 
limitations in that agreement and to any additional requirements of that 
State. The institution must, upon request, document its coverage under 
such an agreement to the Secretary.
    (2) If an institution that meets the requirements under paragraph 
(a)(1) of this section offers postsecondary education through distance 
education or correspondence courses to students residing in a State in 
which the institution is not physically located, for the institution to 
be considered legally authorized in that State, the institution must 
document that there is a State process for review and appropriate action 
on complaints from any of those enrolled students concerning the 
institution--
    (i) In each State in which the institution's enrolled students 
reside; or
    (ii) Through a State authorization reciprocity agreement which 
designates for this

[[Page 206]]

purpose either the State in which the institution's enrolled students 
reside or the State in which the institution's main campus is located.
    (d) An additional location or branch campus of an institution that 
meets the requirements under paragraph (a)(1) of this section and that 
is located in a foreign country, i.e., not in a State, must comply with 
Secs. 600.8, 600.10, 600.20, and 600.32, and the following requirements:
    (1) For any additional location at which 50 percent or more of an 
educational program (as defined in Sec. 600.2) is offered, or will be 
offered, or at a branch campus--
    (i) The additional location or branch campus must be legally 
authorized by an appropriate government authority to operate in the 
country where the additional location or branch campus is physically 
located, unless the additional location or branch campus is physically 
located on a U.S. military base, facility, or area that the foreign 
country has granted the U.S. military to use and the institution can 
demonstrate that it is exempt from obtaining such authorization from the 
foreign country;
    (ii) The institution must provide to the Secretary, upon request, 
documentation of such legal authorization to operate in the foreign 
country, demonstrating that the foreign governmental authority is aware 
that the additional location or branch campus provides postsecondary 
education and that the government authority does not object to those 
activities;
    (iii) The additional location or branch campus must be approved by 
the institution's recognized accrediting agency in accordance with 
Secs. 602.24(a) and 602.22(a)(2)(viii), as applicable;
    (iv) The additional location or branch campus must meet any 
additional requirements for legal authorization in that foreign country 
as the foreign country may establish;
    (v) The institution must report to the State in which the main 
campus of the institution is located at least annually, or more 
frequently if required by the State, the establishment or operation of 
each foreign additional location or branch campus; and
    (vi) The institution must comply with any limitations the State 
places on the establishment or operation of the foreign additional 
location or branch campus.
    (2) An additional location at which less than 50 percent of an 
educational program (as defined in Sec. 600.2) is offered or will be 
offered must meet the requirements for legal authorization in that 
foreign country as the foreign country may establish.
    (3) In accordance with the requirements of 34 CFR 668.41, the 
institution must disclose to enrolled and prospective students at 
foreign additional locations and foreign branch campuses the information 
regarding the student complaint process described in 34 CFR 668.43(b), 
of the State in which the main campus of the institution is located.
    (4) If the State in which the main campus of the institution is 
located limits the authorization of the institution to exclude the 
foreign additional location or branch campus, the foreign additional 
location or branch campus is not considered to be legally authorized by 
the State.



Sec. 600.10  Date, extent, duration, and consequence of eligibility.

    (a) Date of eligibility. (1) If the Secretary determines that an 
applicant institution satisfies all the statutory and regulatory 
eligibility requirements, the Secretary considers the institution to be 
an eligible institution as of the date--
    (i) The Secretary signs the institution's program participation 
agreement described in 34 CFR part 668, subpart B, for purposes of 
participating in any title IV, HEA program; and
    (ii) The Secretary receives all the information necessary to make 
that determination for purposes other than participating in any title 
IV, HEA program.
    (2) [Reserved]
    (b) Extent of eligibility. (1) If the Secretary determines that the 
entire applicant institution, including all its locations and all its 
educational programs, satisfies the applicable requirements of this 
part, the Secretary extends eligibility to all educational programs and 
locations identified on the institution's application for eligibility.
    (2) If the Secretary determines that only certain educational 
programs or certain locations of an applicant institution satisfy the 
applicable requirements of this part, the Secretary extends eligibility 
only to those educational programs and locations that meet those 
requirements and identifies the eligible educational programs and 
locations in the eligibility notice sent to the institution under 
Sec. 600.21.
    (3) Eligibility does not extend to any location that an institution 
establishes after it receives its eligibility designation if the 
institution provides at least 50 percent of an educational program at 
that location, unless--
    (i) The Secretary approves that location under Sec. 600.20(e)(4); or
    (ii) The location is licensed and accredited, the institution does 
not have

[[Page 207]]

to apply to the Secretary for approval of that location under 
Sec. 600.20(c), and the institution has reported to the Secretary that 
location under Sec. 600.21.
    (c) Educational programs. (1) An eligible institution that seeks to 
establish the eligibility of an educational program must--
    (i) For a gainful employment program under 34 CFR part 668, subpart 
Q of this chapter, update its application under Sec. 600.21, and meet 
any time restrictions that prohibit the institution from establishing or 
reestablishing the eligibility of the program as may be required under 
34 CFR 668.414;
    (ii) Pursuant to a requirement regarding additional programs 
included in the institution's program participation agreement under 34 
CFR 668.14, obtain the Secretary's approval; and
    (iii) For a direct assessment program under 34 CFR 668.10, and for a 
comprehensive transition and postsecondary program under 34 CFR 668.232, 
obtain the Secretary's approval.
    (2) Except as provided under Sec. 600.20(c), an eligible institution 
does not have to obtain the Secretary's approval to establish the 
eligibility of any program that is not described in paragraph (c)(1)(i), 
(ii), or (iii) of this section.
    (3) An institution must repay to the Secretary all HEA program funds 
received by the institution for an educational program, and all the 
title IV, HEA program funds received by or on behalf of students who 
enrolled in that program if the institution--
    (i) Fails to comply with the requirements in paragraph (c)(1) of 
this section; or
    (ii) Incorrectly determines that an educational program that is not 
subject to approval under paragraph (c)(1) of this section is an 
eligible program for title IV, HEA program purposes.
    (d) Duration of eligibility. (1) If an institution participates in 
the title IV, HEA programs, the Secretary's designation of the 
institution as an eligible institution under the title IV, HEA programs 
expires when the institution's program participation agreement, as 
described in 34 CFR part 668, subpart B, expires.
    (2) If an institution participates in an HEA program other than a 
title IV, HEA program, the Secretary's designation of the institution as 
an eligible institution, for purposes of that non-title IV, HEA program, 
does not expire as long as the institution continues to satisfy the 
statutory and regulatory requirements governing its eligibility.
    (e) Consequence of eligibility. (1) If, as a part of its 
institutional eligibility application, an institution indicates that it 
wishes to participate in a title IV, HEA program and the Secretary 
determines that the institution satisfies the applicable statutory and 
regulatory requirements governing institutional eligibility, the 
Secretary will determine whether the institution satisfies the standards 
of administrative capability and financial responsibility contained in 
34 CFR part 668, subpart B.
    (2) If, as part of its institutional eligibility application, an 
institution indicates that it does not wish to participate in any title 
IV, HEA program and the Secretary determines that the institution 
satisfies the applicable statutory and regulatory requirements governing 
institutional eligibility, the institution is eligible to apply to 
participate in any HEA program listed by the Secretary in the 
eligibility notice it receives under Sec. 600.21. However, the 
institution is not eligible to participate in those programs, or receive 
funds under those programs, merely by virtue of its designation as an 
eligible institution under this part.

(Approved by the Office of Management and Budget under control number 
1845-0098)

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, and 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 
65 FR 65671, Nov. 1, 2000; 71 FR 45692, Aug. 9, 2006; 75 FR 66676, Oct. 
29, 2010; 79 FR 65006, Oct. 31, 2014]



Sec. 600.11  Special rules regarding institutional accreditation
or preaccreditation.

    (a) Change of accrediting agencies. For purposes of 
Secs. 600.4(a)(5)(i), 600.5(a)(6), and 600.6(a)(5)(i), the Secretary 
does not recognize the accreditation or preaccreditation of an otherwise 
eligible institution if that institution is in the process of changing 
its accrediting agency, unless the institution provides to the 
Secretary--

[[Page 208]]

    (1) All materials related to its prior accreditation or 
preaccreditation; and
    (2) Materials demonstrating reasonable cause for changing its 
accrediting agency.
    (b) Multiple accreditation. The Secretary does not recognize the 
accreditation or preaccreditation of an otherwise eligible institution 
if that institution is accredited or preaccredited as an institution by 
more than one accrediting agency, unless the institution--
    (1) Provides to each such accrediting agency and the Secretary the 
reasons for that multiple accreditation or preaccreditation;
    (2) Demonstrates to the Secretary reasonable cause for that multiple 
accreditation or preaccreditation; and
    (3) Designates to the Secretary which agency's accreditation or 
preaccreditation the institution uses to establish its eligibility under 
this part.
    (c) Loss of accreditation or preaccreditation. (1) An institution 
may not be considered eligible for 24 months after it has had its 
accreditation or preaccreditation withdrawn, revoked, or otherwise 
terminated for cause, unless the accrediting agency that took that 
action rescinds that action.
    (2) An institution may not be considered eligible for 24 months 
after it has withdrawn voluntarily from its accreditation or 
preaccreditation status under a show-cause or suspension order issued by 
an accrediting agency, unless that agency rescinds its order.
    (d) Religious exception. (1) If an otherwise eligible institution 
loses its accreditation or preaccreditation, the Secretary considers the 
institution to be accredited or preaccredited for purposes of complying 
with the provisions of Secs. 600.4, 600.5, and 600.6 if the Secretary 
determines that its loss of accreditation or preaccreditation--
    (i) Is related to the religious mission or affiliation of the 
institution; and
    (ii) Is not related to its failure to satisfy the accrediting 
agency's standards.
    (2) If the Secretary considers an unaccredited institution to be 
accredited or preaccredited under the provisions of paragraph (d)(1) of 
this section, the Secretary will consider that unaccredited institution 
to be accredited or preaccredited for a period sufficient to allow the 
institution to obtain alternative accreditation or preaccreditation, 
except that period may not exceed 18 months.

(Authority: 20 U.S.C. 1099b)



            Subpart B_Procedures for Establishing Eligibility

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.20  Notice and application procedures for establishing, 
reestablishing, maintaining, or expanding institutional eligibility
and certification.

    (a) Initial eligibility application. (1) An institution that wishes 
to establish its eligibility to participate in any HEA program must 
submit an application to the Secretary for a determination that it 
qualifies as an eligible institution under this part.
    (2) If the institution also wishes to be certified to participate in 
the title IV, HEA programs, it must indicate that intent on the 
application, and submit all the documentation indicated on the 
application to enable the Secretary to determine that it satisfies the 
relevant certification requirements contained in 34 CFR part 668, 
subparts B and L.
    (3) A freestanding foreign graduate medical school, or a foreign 
institution that includes a foreign graduate medical school, must 
include in its application to participate--
    (i)(A) A list of all medical school educational sites and where they 
are located, including all sites at which its students receive clinical 
training, except those clinical training sites that are not used 
regularly, but instead are chosen by individual students who take no 
more than two electives at the location for no more than a total of 
eight weeks; and
    (B) The type of clinical training (core, required clinical rotation, 
not required clinical rotation) offered at each site listed on the 
application in accordance with paragraph (a)(3)(i)(A) of this section; 
and
    (ii) Whether the school offers--
    (A) Only post-baccalaureate/equivalent medical programs, as defined 
in Sec. 600.52;

[[Page 209]]

    (B) Other types of programs that lead to employment as a doctor of 
osteopathic medicine or doctor of medicine; or
    (C) Both; and
    (iii) Copies of the formal affiliation agreements with hospitals or 
clinics providing all or a portion of a clinical training program 
required under Sec. 600.55(e)(1).
    (b) Reapplication. (1) A currently designated eligible institution 
that is not participating in the title IV, HEA programs must apply to 
the Secretary for a determination that the institution continues to meet 
the requirements in this part if the Secretary requests the institution 
to reapply. If the institution wishes to be certified to participate in 
the title IV, HEA programs, it must submit an application to the 
Secretary and must submit all the supporting documentation indicated on 
the application to enable the Secretary to determine that it satisfies 
the relevant certification requirements contained in subparts B and L of 
34 CFR part 668.
    (2) A currently designated eligible institution that participates in 
the title IV, HEA programs must apply to the Secretary for a 
determination that the institution continues to meet the requirements in 
this part and in 34 CFR part 668 if the institution wishes to--
    (i) Continue to participate in the title IV, HEA programs beyond the 
scheduled expiration of the institution's current eligibility and 
certification designation;
    (ii) Reestablish eligibility and certification as a private 
nonprofit, private for-profit, or public institution following a change 
in ownership that results in a change in control as described in 
Sec. 600.31; or
    (iii) Reestablish eligibility and certification after the 
institution changes its status as a proprietary, nonprofit, or public 
institution.
    (3) A freestanding foreign graduate medical school, or a foreign 
institution that includes a foreign graduate medical school, must 
include in its reapplication to participate--
    (i)(A) A list of all of the foreign graduate medical school's 
educational sites and where they are located, including all sites at 
which its students receive clinical training, except those clinical 
training sites that are not used regularly, but instead are chosen by 
individual students who take no more than two electives at the location 
for no more than a total of eight weeks; and
    (B) The type of clinical training (core, required clinical rotation, 
not required clinical rotation) offered at each site listed on the 
application in accordance with paragraph (b)(3)(i)(A) of this section; 
and
    (ii) Whether the school offers--
    (A) Only post-baccalaureate/equivalent medical programs, as defined 
in Sec. 600.52;
    (B) Other types of programs that lead to employment as a doctor of 
osteopathic medicine or doctor of medicine; or
    (C) Both; and
    (iii) Copies of the formal affiliation agreements with hospitals or 
clinics providing all or a portion of a clinical training program 
required under Sec. 600.55(e)(1).
    (c) Application to expand eligibility. A currently designated 
eligible institution that wishes to expand the scope of its eligibility 
and certification and disburse title IV, HEA Program funds to students 
enrolled in that expanded scope must apply to the Secretary and wait for 
approval to--
    (1) Add an educational program or a location at which the 
institution offers or will offer 50 percent or more of an educational 
program if one of the following conditions applies, otherwise it must 
report to the Secretary under Sec. 600.21:
    (i) The institution participates in the title IV, HEA programs under 
a provisional certification, as provided in 34 CFR 668.13.
    (ii) The institution receives title IV, HEA program funds under the 
reimbursement or cash monitoring payment method, as provided in 34 CFR 
part 668, subpart K.
    (iii) The institution acquires the assets of another institution 
that provided educational programs at that location during the preceding 
year and participated in the title IV, HEA programs during that year.
    (iv) The institution would be subject to a loss of eligibility under 
34 CFR 668.188 if it adds that location.

[[Page 210]]

    (v) The Secretary notifies, or has notified, the institution that it 
must apply for approval of an additional educational program or a 
location under Sec. 600.10(c).
    (2) Increase its level of program offering (e.g., adding graduate 
degree programs when it previously offered only baccalaureate degree 
programs);
    (3) Add an educational program if the institution is required to 
apply to the Secretary for approval under Sec. 600.10(c);
    (4) Add a branch campus at a location that is not currently included 
in the institution's eligibility and certification designation;
    (5) For a freestanding foreign graduate medical school, or a foreign 
institution that includes a foreign graduate medical school, add a 
location that offers all or a portion of the foreign graduate medical 
school's core clinical training or required clinical rotations, except 
for those locations that are included in the accreditation of a medical 
program accredited by the Liaison Committee on Medical Education (LCME) 
or the American Osteopathic Association (AOA); or
    (6) Convert an eligible location to a branch campus.
    (d) Notice and application. (1) Notice and application procedures. 
(i) To satisfy the requirements of paragraphs (a), (b), and (c) of this 
section, an institution must notify the Secretary of its intent to offer 
an additional educational program, or provide an application to expand 
its eligibility, in a format prescribed by the Secretary and provide all 
the information and documentation requested by the Secretary to make a 
determination of its eligibility and certification.
    (ii)(A) An institution that notifies the Secretary of its intent to 
offer an educational program under paragraph (c)(3) of this section must 
ensure that the Secretary receives the notice described in paragraph 
(d)(2) of this section at least 90 days before the first day of class of 
the educational program.
    (B) An institution that submits a notice in accordance with 
paragraph (d)(1)(ii)(A) of this section is not required to obtain 
approval to offer the additional educational program unless the 
Secretary alerts the institution at least 30 days before the first day 
of class that the program must be approved for title IV, HEA program 
purposes. If the Secretary alerts the institution that the additional 
educational program must be approved, the Secretary will treat the 
notice provided about the additional educational program as an 
application for that program.
    (C) If an institution does not provide timely notice in accordance 
with paragraph (d)(1)(ii)(A) of this section, the institution must 
obtain approval of the additional educational program from the Secretary 
for title IV, HEA program purposes.
    (D) If an additional educational program is required to be approved 
by the Secretary for title IV, HEA program purposes under paragraph 
(d)(1)(ii)(B) or (C) of this section, the Secretary may grant approval, 
or request further information prior to making a determination of 
whether to approve or deny the additional educational program.
    (E) When reviewing an application under paragraph (d)(1)(ii)(B) of 
this section, the Secretary will take into consideration the following:
    (1) The institution's demonstrated financial responsibility and 
administrative capability in operating its existing programs.
    (2) Whether the additional educational program is one of several new 
programs that will replace similar programs currently provided by the 
institution, as opposed to supplementing or expanding the current 
programs provided by the institution.
    (3) Whether the number of additional educational programs being 
added is inconsistent with the institution's historic program offerings, 
growth, and operations.
    (4) Whether the process and determination by the institution to 
offer an additional educational program that leads to gainful employment 
in a recognized occupation is sufficient.
    (F)(1) If the Secretary denies an application from an institution to 
offer an additional educational program, the denial will be based on the 
factors described in paragraphs (d)(1)(ii)(E)(2), (3), and (4) of this 
section, and the Secretary will explain in the denial how

[[Page 211]]

the institution failed to demonstrate that the program is likely to lead 
to gainful employment in a recognized occupation.
    (2) If the Secretary denies the institution's application to add an 
additional educational program, the Secretary will permit the 
institution to respond to the reasons for the denial and request 
reconsideration of the denial.
    (2) Notice format. An institution that notifies the Secretary of its 
intent to offer an additional educational program under paragraph (c)(3) 
of this section must at a minimum--
    (i) Describe in the notice how the institution determined the need 
for the program and how the program was designed to meet local market 
needs, or for an online program, regional or national market needs. This 
description must contain any wage analysis the institution may have 
performed, including any consideration of Bureau of Labor Statistics 
data related to the program;
    (ii) Describe in the notice how the program was reviewed or approved 
by, or developed in conjunction with, business advisory committees, 
program integrity boards, public or private oversight or regulatory 
agencies, and businesses that would likely employ graduates of the 
program;
    (iii) Submit documentation that the program has been approved by its 
accrediting agency or is otherwise included in the institution's 
accreditation by its accrediting agency, or comparable documentation if 
the institution is a public postsecondary vocational institution 
approved by a recognized State agency for the approval of public 
postsecondary vocational education in lieu of accreditation; and
    (iv) Provide the date of the first day of class of the new program.
    (e) Secretary's response to applications. (1) If the Secretary 
receives an application under paragraph (a) or (b)(1) of this section, 
the Secretary notifies the institution--
    (i) Whether the applicant institution qualifies in whole or in part 
as an eligible institution under the appropriate provisions in 
Secs. 600.4 through 600.7; and
    (ii) Of the locations and educational programs that qualify as the 
eligible institution if only a portion of the applicant qualifies as an 
eligible institution;
    (2) If the Secretary receives an application under paragraphs (a) or 
(b) of this section and that institution applies to participate in the 
title IV, HEA programs, the Secretary notifies the institution--
    (i) Whether the institution is certified to participate in those 
programs;
    (ii) Of the title IV, HEA programs in which it is eligible to 
participate;
    (iii) Of the title IV, HEA programs in which it is eligible to apply 
for funds;
    (iv) Of the effective date of its eligibility to participate in 
those programs; and
    (v) Of the conditions under which it may participate in those 
programs;
    (3) If the Secretary receives an application under paragraph (b)(2) 
of this section, the Secretary notifies the institution whether it 
continues to be certified, or whether it reestablished its eligibility 
and certification to participate in the title IV, HEA programs and the 
scope of such approval.
    (4) If the Secretary receives an application under paragraph (c)(1) 
of this section for an additional location, the Secretary notifies the 
institution whether the location is eligible or ineligible to 
participate in the title IV, HEA programs, and the date of eligibility 
if the location is determined eligible;
    (5) If the Secretary receives an application under paragraph (c)(2) 
of this section for an increase in the level of program offering, or for 
an additional educational program under paragraph (c)(3) of this 
section, the Secretary notifies the institution whether the program 
qualifies as an eligible program, and if the program qualifies, the date 
of eligibility; and
    (6) If the Secretary receives an application under paragraphs (c)(4) 
or (c)(5) of this section to have a branch campus certified to 
participate in the title IV, HEA programs as a branch campus, the 
Secretary notifies the institution whether that branch campus is 
certified to participate and the date that the branch campus is eligible 
to begin participation.
    (f) Disbursement rules related to applications. (1)(i) Except as 
provided under

[[Page 212]]

paragraph (f)(1)(ii) of this section and 34 CFR 668.26, if an 
institution submits an application under paragraph (b)(2)(i) of this 
section because its participation period is scheduled to expire, after 
that expiration date the institution may not disburse title IV, HEA 
program funds to students attending that institution until the 
institution receives the Secretary's notification that the institution 
is again eligible to participate in those programs.
    (ii) An institution described in paragraph (f)(1)(i) of this section 
may disburse title IV, HEA program funds to its students if the 
institution submits to the Secretary a materially complete renewal 
application in accordance with the provisions of 34 CFR 668.13(b)(2), 
and has not received a final decision from the Department on that 
application.
    (2)(i) Except as provided under paragraph (f)(2)(ii) of this section 
and 34 CFR 668.26, if a private nonprofit, private for-profit, or public 
institution submits an application under paragraph (b)(2)(ii) or 
(b)(2)(iii) of this section because it has undergone or will undergo a 
change in ownership that results in a change of control or a change in 
status, the institution may not disburse title IV, HEA program funds to 
students attending that institution after the change of ownership or 
status until the institution receives the Secretary's notification that 
the institution is eligible to participate in those programs.
    (ii) An institution described in paragraph (f)(2)(i) of this section 
may disburse title IV, HEA program funds to its students if the 
Secretary issues a provisional extension of certification under 
paragraph (g) of this section.
    (3) If an institution must apply to the Secretary under paragraphs 
(c)(1) through (c)(4) of this section, the institution may not disburse 
title IV, HEA program funds to students attending the subject location, 
program, or branch until the institution receives the Secretary's 
notification that the location, program, or branch is eligible to 
participate in the title IV, HEA programs.
    (4) If an institution applies to the Secretary under paragraph 
(c)(5) of this section to convert an eligible location to a branch 
campus, the institution may continue to disburse title IV, HEA program 
funds to students attending that eligible location.
    (5) If an institution does not apply to the Secretary to obtain the 
Secretary's approval of a new location, program, increased level of 
program offering, or branch, and the location, program, or branch does 
not qualify as an eligible location, program, or branch of that 
institution under this part and 34 CFR part 668, the institution is 
liable for all title IV, HEA program funds it disburses to students 
enrolled at that location or branch or in that program.
    (g) Application for provisional extension of certification. (1) If a 
private nonprofit institution, a private for-profit institution, or a 
public institution participating in the title IV, HEA programs undergoes 
a change in ownership that results in a change of control as described 
in 34 CFR 600.31, the Secretary may continue the institution's 
participation in those programs on a provisional basis, if the 
institution under the new ownership submits a ``materially complete 
application'' that is received by the Secretary no later than 10 
business days after the day the change occurs.
    (2) For purposes of this section, a private nonprofit institution, a 
private for-profit institution, or a public institution submits a 
materially complete application if it submits a fully completed 
application form designated by the Secretary supported by--
    (i) A copy of the institution's State license or equivalent document 
that--as of the day before the change in ownership--authorized or will 
authorize the institution to provide a program of postsecondary 
education in the State in which it is physically located;
    (ii) A copy of the document from the institution's accrediting 
association that--as of the day before the change in ownership--granted 
or will grant the institution accreditation status, including approval 
of any non-degree programs it offers;
    (iii) Audited financial statements of the institution's two most 
recently completed fiscal years that are prepared and audited in 
accordance with the requirements of 34 CFR 668.23; and

[[Page 213]]

    (iv) Audited financial statements of the institution's new owner's 
two most recently completed fiscal years that are prepared and audited 
in accordance with the requirements of 34 CFR 668.23, or equivalent 
information for that owner that is acceptable to the Secretary.
    (h) Terms of the extension. (1) If the Secretary approves the 
institution's materially complete application, the Secretary provides 
the institution with a provisional Program Participation Agreement 
(PPA). The provisional PPA extends the terms and conditions of the 
program participation agreement that were in effect for the institution 
before its change of ownership.
    (2) The provisional PPA expires on the earlier of--
    (i) The date on which the Secretary signs a new program 
participation agreement;
    (ii) The date on which the Secretary notifies the institution that 
its application is denied; or
    (iii) The last day of the month following the month in which the 
change of ownership occurred, unless the provisions of paragraph (h)(3) 
of this section apply.
    (3) If the provisional PPA will expire under the provisions of 
paragraph (h)(2)(iii) of this section, the Secretary extends the 
provisional PPA on a month-to-month basis after the expiration date 
described in paragraph (h)(2)(iii) of this section if, prior to that 
expiration date, the institution provides the Secretary with--
    (i) A ``same day'' balance sheet showing the financial position of 
the institution, as of the date of the ownership change, that is 
prepared in accordance with Generally Accepted Accounting Principles 
(GAAP) published by the Financial Accounting Standards Board and audited 
in accordance with Generally Accepted Government Auditing Standards 
(GAGAS) published by the U.S. General Accounting Office;
    (ii) If not already provided, approval of the change of ownership 
from the State in which the institution is located by the agency that 
authorizes the institution to legally provide postsecondary education in 
that State;
    (iii) If not already provided, approval of the change of ownership 
from the institution's accrediting agency; and
    (iv) A default management plan unless the institution is exempt from 
providing that plan under 34 CFR 668.14(b)(15).

(Approved by the Office of Management and Budget under control number 
1845-0012)

(Authority: 20 U.S.C. 1001, 1002, 1088, 1094, and 1099c)

[65 FR 65671, Nov. 1, 2000, as amended at 75 FR 66677, Oct. 29, 2010; 75 
FR 67192, Nov. 1, 2010; 79 FR 65006, Oct. 31, 2014]



Sec. 600.21  Updating application information.

    (a) Reporting requirements. Except as provided in paragraph (b) of 
this section, an eligible institution must report to the Secretary in a 
manner prescribed by the Secretary no later than 10 days after the 
change occurs, of any change in the following:
    (1) Its name, the name of a branch, or the name of a previously 
reported location.
    (2) Its address, the address of a branch, or the address of a 
previously reported location.
    (3) Its establishment of an accredited and licensed additional 
location at which it offers or will offer 50 percent or more of an 
educational program if the institution wants to disburse title IV, HEA 
program funds to students enrolled at that location, under the 
provisions in paragraph (d) of this section.
    (4) Except as provided in 34 CFR 668.10, the way it measures program 
length (e.g., from clock hours to credit hours, or from semester hours 
to quarter hours).
    (5) A decrease in the level of program offering (e.g. the 
institution drops its graduate programs).
    (6) A person's ability to affect substantially the actions of the 
institution if that person did not previously have this ability. The 
Secretary considers a person to have this ability if the person--
    (i) Holds alone or together with another member or members of his or 
her family, at least a 25 percent ``ownership interest'' in the 
institution as defined in Sec. 600.31(b);
    (ii) Represents or holds, either alone or together with other 
persons, under a

[[Page 214]]

voting trust, power of attorney, proxy, or similar agreement at least a 
25 percent ``ownership interest'' in the institution, as defined in 
Sec. 600.31(b); or
    (iii) Is a general partner, the chief executive officer, or chief 
financial officer of the institution.
    (7) The individual the institution designates under 34 CFR 
668.16(b)(1) as its title IV, HEA Program administrator.
    (8) The closure of a branch campus or additional location that the 
institution was required to report to the Secretary.
    (9) The governance of a public institution.
    (10) For a freestanding foreign graduate medical school, or a 
foreign institution that includes a foreign graduate medical school, the 
school adds a location that offers all or a portion of the school's 
clinical rotations that are not required, except for those that are 
included in the accreditation of a medical program accredited by the 
Liaison Committee on Medical Education (LCME) or the American 
Osteopathic Association (AOA), or that are not used regularly, but 
instead are chosen by individual students who take no more than two 
electives at the location for no more than a total of eight weeks.
    (11) For any gainful employment program under 34 CFR part 668, 
subpart Q--
    (i) Establishing the eligibility or reestablishing the eligibility 
of the program;
    (ii) Discontinuing the program's eligibility under 34 CFR 668.410;
    (iii) Ceasing to provide the program for at least 12 consecutive 
months;
    (iv) Losing program eligibility under Sec. 600.40;
    (v) Changing the program's name, CIP code, as defined in 34 CFR 
668.402, or credential level; or
    (vi) Updating the certification pursuant to Sec. 668.414(b).
    (b) Additional reporting from institutions owned by publicly-traded 
corporations. An institution that is owned by a publicly-traded 
corporation must report to the Secretary any change in the information 
described in paragraph (a)(6) of this section when it notifies its 
accrediting agency, but no later than 10 days after the institution 
learns of the change.
    (c) Secretary's response to reporting. The Secretary notifies an 
institution if any reported changes affects the institution's 
eligibility, and the effective date of that change.
    (d) Disbursement rules related to additional locations. When an 
institution must report to the Secretary about an additional location 
under paragraph (a)(3) of this section, the institution may not disburse 
title IV, HEA funds to students at that location before it reports to 
the Secretary about that location. Unless it is an institution that must 
apply to the Secretary under Sec. 600.20(c)(1), once it reports to the 
Secretary about that location, the institution may disburse those funds 
to those students if that location is licensed and accredited.
    (e) Consequence of failure to report. An institution's failure to 
inform the Secretary of a change described in paragraph (a) of this 
section within the time period stated in that paragraph may result in 
adverse action against the institution.
    (f) Definition. A family member includes a person's--
    (1) Parent or stepparent, sibling or step-sibling, spouse, child or 
stepchild, or grandchild or step-grandchild;
    (2) Spouse's parent or stepparent, sibling or step-sibling, child or 
stepchild, or grandchild or step-grandchild;
    (3) Child's spouse; and
    (4) Sibling's spouse.

(Approved by the Office of Management and Budget under control number 
1845-0012)

(Authority: 20 U.S.C. 1094, 1099b)

[65 FR 65673, Nov. 1, 2000, as amended at 67 FR 67070, Nov. 1, 2002; 71 
FR 45692, Aug. 9, 2006; 75 FR 67193, Nov. 1, 2010; 79 FR 65006, Oct. 31, 
2014]



                    Subpart C_Maintaining Eligibility

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.30  [Reserved]



Sec. 600.31  Change in ownership resulting in a change in control 
for private nonprofit, private for-profit and public institutions.

    (a)(1) Except as provided in paragraph (a)(2) of this section, a 
private nonprofit, private for-profit, or public

[[Page 215]]

institution that undergoes a change in ownership that results in a 
change in control ceases to qualify as an eligible institution upon the 
change in ownership and control. A change in ownership that results in a 
change in control includes any change by which a person who has or 
thereby acquires an ownership interest in the entity that owns the 
institution or the parent corporation of that entity, acquires or loses 
the ability to control the institution.
    (2) If a private nonprofit, private for-profit, or public 
institution has undergone a change in ownership that results in a change 
in control, the Secretary may, under the provisions of Sec. 600.20(g) 
and (h), continue the institution's participation in the title IV, HEA 
programs on a provisional basis, provided that the institution submits, 
under the provisions of Sec. 600.20(g), a materially complete 
application--
    (i) No later than 10 business days after the change occurs; or
    (ii) For an institution owned by a publicly-traded corporation, no 
later than 10 business days after the institution knew, or should have 
known of the change based upon SEC filings, that the change occurred.
    (3) In order to reestablish eligibility and to resume participation 
in the title IV, HEA programs, the institution must demonstrate to the 
Secretary that after the change in ownership and control--
    (i) The institution satisfies all the applicable requirements 
contained in Secs. 600.4, 600.5, and 600.6, except that if the 
institution is a proprietary institution of higher education or 
postsecondary vocational institution, it need not have been in existence 
for two years before seeking eligibility; and
    (ii) The institution qualifies to be certified to participate under 
34 CFR part 668, subpart B.
    (b) Definitions. The following definitions apply to terms used in 
this section:
    Closely-held corporation. Closely-held corporation (including the 
term close corporation) means--
    (1) A corporation that qualifies under the law of the State of its 
incorporation as a closely-held corporation; or
    (2) If the State of incorporation has no definition of closely-held 
corporation, a corporation the stock of which--
    (i) Is held by no more than 30 persons; and
    (ii) Has not been and is not planned to be publicly offered.
    Control. Control (including the terms controlling, controlled by and 
under common control with) means the possession, direct or indirect, of 
the power to direct or cause the direction of the management and 
policies of a person, whether through the ownership of voting 
securities, by contract, or otherwise.
    Ownership or ownership interest. (1) Ownership or ownership interest 
means a legal or beneficial interest in an institution or its corporate 
parent, or a right to share in the profits derived from the operation of 
an institution or its corporate parent.
    (2) Ownership or ownership interest does not include an ownership 
interest held by--
    (i) A mutual fund that is regularly and publicly traded;
    (ii) A U.S. institutional investor, as defined in 17 CFR 240.15a-
6(b)(7);
    (iii) A profit-sharing plan of the institution or its corporate 
parent, provided that all full-time permanent employees of the 
institution or corporate parent are included in the plan; or
    (iv) An Employee Stock Ownership Plan (ESOP).
    Parent. The parent or parent corporation of a specified corporation 
is the corporation or partnership that controls the specified 
corporation directly or indirectly through one or more intermediaries.
    Person. Person includes a legal person (corporation or partnership) 
or an individual.
    Wholly-owned subsidiary. A wholly-owned subsidiary is one 
substantially all of whose outstanding voting securities are owned by 
its parent together with the parent's other wholly-owned subsidiaries.
    (c) Standards for identifying changes of ownership and control--(1) 
Closely-held corporation. A change in ownership and control occurs 
when--
    (i) A person acquires more than 50 percent of the total outstanding 
voting stock of the corporation;

[[Page 216]]

    (ii) A person who holds an ownership interest in the corporation 
acquires control of more than 50 percent of the outstanding voting stock 
of the corporation; or
    (iii) A person who holds or controls 50 percent or more of the total 
outstanding stock of the corporation ceases to hold or control that 
proportion of the stock of the corporation.
    (2) Publicly traded corporations required to be registered with the 
Securities and Exchange Commission (SEC). A change in ownership and 
control occurs when--
    (i) A person acquires such ownership and control of the corporation 
so that the corporation is required to file a Form 8K with the SEC 
notifying that agency of the change in control; or
    (ii) (A) A person who is a controlling shareholder of the 
corporation ceases to be a controlling shareholder. A controlling 
shareholder is a shareholder who holds or controls through agreement 
both 25 percent or more of the total outstanding voting stock of the 
corporation and more shares of voting stock than any other shareholder. 
A controlling shareholder for this purpose does not include a 
shareholder whose sole stock ownership is held as a U.S. institutional 
investor, as defined in 17 CFR 240.15a-6(b)(7), held in mutual funds, 
held through a profit-sharing plan, or held in an Employee Stock 
Ownership Plan (ESOP).
    (B) When a change of ownership occurs as a result of paragraph 
(c)(2)(ii)(A) of this section, the institution may submit its most 
recent quarterly financial statement as filed with the SEC, along with 
copies of all other SEC filings made after the close of the fiscal year 
for which a compliance audit has been submitted to the Department of 
Education, instead of the ``same day'' balance sheet.
    (C) If a publicly-traded institution is provisionally certified due 
to a change in ownership under paragraph (c)(2)(ii) of this section, and 
that institution experiences another change of ownership under paragraph 
(c)(2)(ii) of this section, an approval of the subsequent change in 
ownership does not extend the original expiration date for the 
provisional certification provided that any current controlling 
shareholder was listed on the change of ownership application for which 
the original provisional approval was granted.
    (3) Other corporations. A change in ownership and control of a 
corporation that is neither closely-held nor required to be registered 
with the SEC occurs when--
    (i) A person who has or acquires an ownership interest acquires both 
control of at least 25 percent of the total outstanding voting stock of 
the corporation and control of the corporation;
    (ii) A person who holds both ownership or control of at least 25 
percent of the total outstanding voting stock of the corporation and 
control of the corporation, ceases to own or control that proportion of 
the stock of the corporation, or to control the corporation; or
    (iii) For a membership corporation, a person who is or becomes a 
member acquires or loses control of 25 percent of the voting interests 
of the corporation and control of the corporation.
    (4) Partnership or sole proprietorship. A change in ownership and 
control occurs when a person who has or acquires an ownership interest 
acquires or loses control as described in this section.
    (5) Parent corporation. An institution that is a wholly-owned 
subsidiary changes ownership and control when the parent corporation 
changes ownership and control as described in this section.
    (6) Nonprofit institution. A nonprofit institution changes ownership 
and control when a change takes place that is described in paragraph (d) 
of this section.
    (7) Public institution. The Secretary does not consider that a 
public institution undergoes a change in ownership that results in a 
change of control if there is a change in governance and the institution 
after the change remains a public institution, provided--
    (i) The new governing authority is in the same State as included in 
the institution's program participation agreement; and
    (ii) The new governing authority has acknowledged the public 
institution's continued responsibilities under its program participation 
agreement.

[[Page 217]]

    (d) Covered transactions. For the purposes of this section, a change 
in ownership of an institution that results in a change of control may 
include, but is not limited to--
    (1) The sale of the institution;
    (2) The transfer of the controlling interest of stock of the 
institution or its parent corporation;
    (3) The merger of two or more eligible institutions;
    (4) The division of one institution into two or more institutions;
    (5) The transfer of the liabilities of an institution to its parent 
corporation;
    (6) A transfer of assets that comprise a substantial portion of the 
educational business of the institution, except where the transfer 
consists exclusively in the granting of a security interest in those 
assets; or
    (7) A change in status as a for-profit, nonprofit, or public 
institution.
    (e) Excluded transactions. A change in ownership and control 
reported under Sec. 600.21 and otherwise subject to this section does 
not include a transfer of ownership and control of all or part of an 
owner's equity or partnership interest in an institution, the 
institution's parent corporation, or other legal entity that has signed 
the institution's Program Participation Agreement--
    (1) From an owner to a ``family member'' of that owner as defined in 
Sec. 600.21(f); or
    (2) Upon the retirement or death of the owner, to a person with an 
ownership interest in the institution who has been involved in 
management of the institution for at least two years preceding the 
transfer and who has established and retained the ownership interest for 
at least two years prior to the transfer.

(Approved by the Office of Management and Budget under control number 
1845-0012)

(Authority: 20 U.S.C. 1099c)

[59 FR 22336, Apr. 29, 1994, as amended at 59 FR 47801, Sept. 19, 1994; 
60 FR 33430, June 30, 1995; 64 FR 58616, Oct. 29, 1999; 65 FR 65673, 
Nov. 1, 2000; 67 FR 67070, Nov. 1, 2002]



Sec. 600.32  Eligibility of additional locations.

    (a) Except as provided in paragraphs (b), (c), and (d) of this 
section, to qualify as an eligible location, an additional location of 
an eligible institution must satisfy the applicable requirements of this 
section and Secs. 600.4, 600.5, 600.6, 600.8, and 600.10.
    (b) To qualify as an eligible location, an additional location is 
not required to satisfy the two-year requirement of Secs. 600.5(a)(7) or 
600.6(a)(6), unless--
    (1) The location was a facility of another institution that has 
closed or ceased to provide educational programs for a reason other than 
a normal vacation period or a natural disaster that directly affects the 
institution or the institution's students;
    (2) The applicant institution acquired, either directly from the 
institution that closed or ceased to provide educational programs, or 
through an intermediary, the assets at the location; and
    (3) The institution from which the applicant institution acquired 
the assets of the location--
    (i) Owes a liability for a violation of an HEA program requirement; 
and
    (ii) Is not making payments in accordance with an agreement to repay 
that liability.
    (c) Notwithstanding paragraph (b) of this section, an additional 
location is not required to satisfy the two-year requirement of 
Sec. 600.5(a)(7) or Sec. 600.6(a)(6) if the applicant institution 
agrees--
    (1) To be liable for all improperly expended or unspent title IV, 
HEA program funds received by the institution that has closed or ceased 
to provide educational programs;
    (2) To be liable for all unpaid refunds owed to students who 
received title IV, HEA program funds; and
    (3) To abide by the policy of the institution that has closed or 
ceased to provide educational programs regarding refunds of 
institutional charges to students in effect before the date of the 
acquisition of the assets of the additional location for the students 
who were enrolled before that date.
    (d)(1) An institution that conducts a teach-out at a site of a 
closed institution may apply to have that site approved as an additional 
location if--
    (i) The closed institution ceased operations and the Secretary has 
taken an action to limit, suspend, or terminate the institution's 
participation under Sec. 600.41 or subpart G of this part,

[[Page 218]]

or has taken an emergency action under 34 CFR 668.83; and
    (ii) The teach-out plan required under 34 CFR 668.14(b)(31) is 
approved by the closed institution's accrediting agency.
    (2)(i) An institution that conducts a teach-out and is approved to 
add an additional location described in paragraph (d)(1) of this 
section--
    (A) Does not have to meet the two-year in existence requirement of 
Sec. 600.5(a)(7) or Sec. 600.6(a)(6) for the additional location 
described in paragraph (d)(1) of this section;
    (B) Is not responsible for any liabilities of the closed institution 
as provided under paragraph (c)(1) and (c)(2) of this section if the 
institutions are not related parties and there is no commonality of 
ownership or management between the institutions, as described in 34 CFR 
668.188(b) and 34 CFR 668.207(b); and
    (C) Will not have the default rate of the closed institution 
included in the calculation of its default rate, as would otherwise be 
required under 34 CFR 668.184 and 34 CFR 668.203, if the institutions 
are not related parties and there is no commonality of ownership or 
management between the institutions, as described in 34 CFR 668.188(b) 
and 34 CFR 668.207(b).
    (ii) As a condition for approving an additional location under 
paragraph (d)(1) of this section, the Secretary may require that 
payments from the institution conducting the teach-out to the owners or 
related parties of the closed institution, are used to satisfy any 
liabilities owed by the closed institution.
    (e) For purposes of this section, an ``additional location'' is a 
location of an institution that was not designated as an eligible 
location in the eligibility notification provided to an institution 
under Sec. 600.21.

(Authority: 20 U.S.C. 1088, 1099c, 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 74 FR 55933, Oct. 29, 2009]



                      Subpart D_Loss of Eligibility

    Source: 59 FR 22336, Apr. 29, 1994, unless otherwise noted.



Sec. 600.40  Loss of eligibility.

    (a)(1) Except as provided in paragraphs (a) (2) and (3) of this 
section, an institution, or a location or educational program of an 
institution, loses its eligibility on the date that--
    (i) The institution, location, or educational program fails to meet 
any of the eligibility requirements of this part;
    (ii) The institution or location permanently closes;
    (iii) The institution or location ceases to provide educational 
programs for a reason other than a normal vacation period or a natural 
disaster that directly affects the institution, particular location, or 
the students of the institution or location; or
    (iv) For purposes of the title IV, HEA programs--
    (A) The institution's period of participation as specified under 34 
CFR 668.13 expires; or
    (B) The institution's provisional certification is revoked under 34 
CFR 668.13.
    (2) If an institution loses its eligibility because it violated the 
requirements of Sec. 600.5(a)(8), as evidenced by the determination 
under provisions contained in Sec. 600.5(d), it loses its eligibility on 
the last day of the fiscal year used in Sec. 600.5(d), except that if an 
institution's latest fiscal year was described in Sec. 600.7(h)(1), it 
loses its eligibility as of June 30, 1994.
    (3) If an institution loses its eligibility under the provisions of 
Sec. 600.7(a)(1), it loses its eligibility on the last day of the award 
year being evaluated under that provision.
    (b) If the Secretary undertakes to terminate the eligibility of an 
institution because it violated the provisions of Sec. 600.5(a)(8) or 
Sec. 600.7(a), and the institution requests a hearing, the presiding 
official must terminate the institution's eligibility if it violated 
those provisions, notwithstanding its status at the time of the hearing.
    (c)(1) If the Secretary designates an institution or any of its 
educational programs or locations as eligible on the basis of inaccurate 
information or documentation, the Secretary's designation is void from 
the date the Secretary made the designation, and the

[[Page 219]]

institution or program or location, as applicable, never qualified as 
eligible.
    (2) If an institution closes its main campus or stops providing any 
educational programs on its main campus, it loses its eligibility as an 
institution, and that loss of eligibility includes all its locations and 
all its programs. Its loss of eligibility is effective on the date it 
closes that campus or stops providing any educational program at that 
campus.
    (d) Except as otherwise provided in this part, if an institution 
ceases to satisfy any of the requirements for eligibility under this 
part--
    (1) It must notify the Secretary within 30 days of the date that it 
ceases to satisfy that requirement; and
    (2) It becomes ineligible to continue to participate in any HEA 
program as of the date it ceases to satisfy any of the requirements.

(Authority: 20 U.S.C. 1088, 1099a-3, and 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40622, July 29, 1998]



Sec. 600.41  Termination and emergency action proceedings.

    (a) If the Secretary believes that a previously designated eligible 
institution as a whole, or at one or more of its locations, does not 
satisfy the statutory or regulatory requirements that define that 
institution as an eligible institution, the Secretary may--
    (1) Terminate the institution's eligibility designation in whole or 
as to a particular location--
    (i) Under the procedural provisions applicable to terminations 
contained in 34 CFR 668.81, 668.83, 668.86, 668.87, 668.88, 668.89, 
668.90 (a)(1), (a)(4), and (c) through (f), and 668.91; or
    (ii) Under a show-cause hearing, if the institution's loss of 
eligibility results from--
    (A) Its previously qualifying as an eligible vocational school;
    (B) Its previously qualifying as an eligible institution, 
notwithstanding its unaccredited status, under the transfer-of-credit 
alternative to accreditation (as that alternative existed in 20 U.S.C. 
1085, 1088, and 1141(a)(5)(B) and Sec. 600.8 until July 23, 1992);
    (C) Its loss of accreditation or preaccreditation;
    (D) Its loss of legal authority to provide postsecondary education 
in the State in which it is physically located;
    (E) Its violations of the provisions contained in Sec. 600.5(a)(8) 
or Sec. 600.7(a);
    (F) Its permanently closing; or
    (G) Its ceasing to provide educational programs for a reason other 
than a normal vacation period or a natural disaster that directly 
affects the institution, a particular location, or the students of the 
institution or location;
    (2) Limit, under the provisions of 34 CFR 668.86, the authority of 
the institution to disburse, deliver, or cause the disbursement or 
delivery of funds under one or more title IV, HEA programs as otherwise 
provided under 34 CFR 668.26 for the benefit of students enrolled at the 
ineligible institution or location prior to the loss of eligibility of 
that institution or location; and
    (3) Initiate an emergency action under the provisions contained in 
34 CFR 668.83 with regard to the institution's participation in one or 
more title IV, HEA programs.
    (b) If the Secretary believes that an educational program offered by 
an institution that was previously designated by the Secretary as an 
eligible institution under the HEA does not satisfy relevant statutory 
or regulatory requirements that define that educational program as part 
of an eligible institution, the Secretary may in accordance with the 
procedural provisions described in paragraph (a) of this section--
    (1) Undertake to terminate that educational program's eligibility 
under one or more of the title IV, HEA programs under the procedural 
provisions applicable to terminations described in paragraph (a) of this 
section;
    (2) Limit the institution's authority to deliver, disburse, or cause 
the delivery or disbursement of funds provided under that title IV, HEA 
program to students enrolled in that educational program, as otherwise 
provided in 34 CFR 668.26; and
    (3) Initiate an emergency action under the provisions contained in 
34 CFR 668.83 with regard to the institution's participation in one or 
more title IV, HEA programs with respect to students enrolled in that 
educational program.

[[Page 220]]

    (c)(1) An action to terminate and limit the eligibility of an 
institution as a whole or as to any of its locations or educational 
programs is initiated in accordance with 34 CFR 668.86(b) and becomes 
final 20 days after the Secretary notifies the institution of the 
proposed action, unless the designated department official receives by 
that date a request for a hearing or written material that demonstrates 
that the termination and limitation should not take place.
    (2) Once a termination under this section becomes final, the 
termination is effective with respect to any commitment, delivery, or 
disbursement of funds provided under an applicable title IV, HEA program 
by the institution--
    (i) Made to students enrolled in the ineligible institution, 
location, or educational program; and
    (ii) Made on or after the date of the act or omission that caused 
the loss of eligibility as to the institution, location, or educational 
program.
    (3) Once a limitation under this section becomes final, the 
limitation is effective with regard to any commitment, delivery, or 
disbursement of funds under the applicable title IV, HEA program by the 
institution--
    (i) Made after the date on which the limitation became final; and
    (ii) Made to students enrolled in the ineligible institution, 
location, or educational program.
    (d) After a termination under this section of the eligibility of an 
institution as a whole or as to a location or educational program 
becomes final, the institution may not certify applications for, make 
awards of or commitments for, deliver, or disburse funds under the 
applicable title IV, HEA program, except--
    (1) In accordance with the requirements of 34 CFR 668.26(c) with 
respect to students enrolled in the ineligible institution, location, or 
educational program; and
    (2) After satisfaction of any additional requirements, imposed 
pursuant to a limitation under paragraph (a)(2) of this section, which 
may include the following:
    (i) Completion of the actions required by 34 CFR 668.26(a) and (b).
    (ii) Demonstration that the institution has made satisfactory 
arrangements for the completion of actions required by 34 CFR 668.26(a) 
and (b).
    (iii) Securing the confirmation of a third party selected by the 
Secretary that the proposed disbursements or delivery of title IV, HEA 
program funds meet the requirements of the applicable program.
    (iv) Using institutional funds to make disbursements permitted under 
this paragraph and seeking reimbursement from the Secretary for those 
disbursements.
    (e) If the Secretary undertakes to terminate the eligibility of an 
institution, location, or program under paragraphs (a) and (b) of this 
section:
    (1) If the basis for the loss of eligibility is the loss of 
accreditation or preaccreditation, the sole issue is whether the 
institution, location, or program has the requisite accreditation or 
preaccreditation. The presiding official has no authority to consider 
challenges to the action of the accrediting agency.
    (2) If the basis for the loss of eligibility is the loss of legal 
authorization, the sole issue is whether the institution, location, or 
program has the requisite legal authorization. The presiding official 
has no authority to consider challenges to the action of a State agency 
in removing the legal authorization.
    (3) If the basis for the loss of eligibility of a foreign graduate 
medical school is one or more annual pass rates on the U.S. Medical 
Licensing Examination below the threshold required in 
Sec. 600.55(f)(1)(ii), the sole issue is whether one or more of the 
foreign medical school's pass rate or rates for the preceding calendar 
year fell below that threshold. For a foreign graduate medical school 
that opted to have the Educational Commission for Foreign Medical 
Graduates (ECFMG) calculate and provide the pass rates directly to the 
Secretary for the preceding calendar year as permitted under 
Sec. 600.55(d)(2) in lieu of the foreign graduate medical school 
providing pass rate data to the Secretary under Sec. 600.55(d)(1)(iii), 
the ECFMG's calculations of the school's rates are conclusive; and the 
presiding official has no authority to consider

[[Page 221]]

challenges to the computation of the rate or rates by the ECFMG.

(Authority: 20 U.S.C. 1088, 1091, 1094, 1099a-3, and 1141)

[59 FR 22336, Apr. 29, 1994, as amended at 63 FR 40623, July 29, 1998; 
75 FR 67193, Nov. 1, 2010]



Subpart E_Eligibility of Foreign Institutions To Apply To Participate in 
            the Federal Family Education Loan (FFEL) Programs

    Source: 59 FR 22063, Apr. 28, 1994, unless otherwise noted.



Sec. 600.51  Purpose and scope.

    (a) A foreign institution is eligible to apply to participate in the 
Federal Family Education Loan (FFEL) programs if it is comparable to an 
eligible institution of higher education located in the United States 
and has been approved by the Secretary in accordance with the provisions 
of this subpart.
    (b) This subpart E contains the procedures and criteria under which 
a foreign institution may be deemed eligible to apply to participate in 
the FFEL programs.
    (c) Applicability of other title IV, HEA program regulations.
    (1) A foreign institution must comply with all requirements for 
eligible and participating institutions except when made inapplicable by 
the HEA or when the Secretary, through publication in the Federal 
Register, identifies specific provisions as inapplicable to foreign 
institutions.
    (2)(i) A public or nonprofit foreign institution that meets the 
requirements of this subpart, and that also meets the requirements of 
this part except as provided in Secs. 600.51(c)(1) and 600.54(a), is 
considered an ``institution of higher education'' for purposes of the 
title IV, HEA program regulations; and
    (ii) A for-profit foreign institution that meets the requirements of 
this subpart, and that also meets the requirements of this Part, except 
as provided in Secs. 600.51(c)(1) and 600.54(a), is considered a 
``proprietary institution'' for purposes of title IV, HEA program 
regulations.
    (d)(1) A program offered by a foreign school through any use of a 
telecommunications course, correspondence course, or direct assessment 
program is not an eligible program;
    (2) Correspondence course has the meaning given in Sec. 600.2;
    (3) Direct assessment program has the meaning given in 
Sec. 668.10(a)(1) of this chapter;
    (4) Telecommunications course is a course offered through any one or 
a combination of the technologies listed in the definition of 
telecommunications course in Sec. 600.2, except that telecommunications 
technologies may be used to supplement and support instruction that is 
offered in a classroom located in the foreign country where the students 
and instructor are physically present.

(Authority: 20 U.S.C. 1082, 1088)

[59 FR 22063, Apr. 28, 1994, as amended at 71 FR 45692, Aug. 9, 2006; 75 
FR 67193, Nov. 1, 2010]



Sec. 600.52  Definitions.

    The following definitions apply to this subpart E:
    Associate degree school of nursing: A school that provides primarily 
or exclusively a two-year program of postsecondary education in 
professional nursing leading to a degree equivalent to an associate 
degree in the United States.
    Clinical training: The portion of a graduate medical education 
program that counts as a clinical clerkship for purposes of medical 
licensure comprising core, required clinical rotation, and not required 
clinical rotation.
    Collegiate school of nursing: A school that provides primarily or 
exclusively a minimum of a two-year program of postsecondary education 
in professional nursing leading to a degree equivalent to a bachelor of 
arts, bachelor of science, or bachelor of nursing in the United States, 
or to a degree equivalent to a graduate degree in nursing in the United 
States, and including advanced training related to the program of 
education provided by the school.
    Diploma school of nursing: A school affiliated with a hospital or 
university, or an independent school, which provides primarily or 
exclusively a two-

[[Page 222]]

year program of postsecondary education in professional nursing leading 
to the equivalent of a diploma in the United States or to equivalent 
indicia that the program has been satisfactorily completed.
    Foreign graduate medical school: A foreign institution (or, for a 
foreign institution that is a university, a component of that foreign 
institution) having as its sole mission providing an educational program 
that leads to a degree of medical doctor, doctor of osteopathic 
medicine, or the equivalent. A reference in these regulations to a 
foreign graduate medical school as ``freestanding'' pertains solely to 
those schools that qualify by themselves as foreign institutions and not 
to schools that are components of universities that qualify as foreign 
institutions.
    Foreign institution:
    (1) For the purposes of students who receive title IV aid, an 
institution that--
    (i) Is not located in a State;
    (ii) Except as provided with respect to clinical training offered 
under Sec. 600.55(h)(1), Sec. 600.56(b), or Sec. 600.57(a)(2)--
    (A) Has no U.S. location;
    (B) Has no written arrangements, within the meaning of Sec. 668.5, 
with institutions or organizations located in the United States for 
students enrolling at the foreign institution to take courses from 
institutions located in the United States;
    (C) Does not permit students to enroll in any course offered by the 
foreign institution in the United States, including research, work, 
internship, externship, or special studies within the United States, 
except that independent research done by an individual student in the 
United States for not more than one academic year is permitted, if it is 
conducted during the dissertation phase of a doctoral program under the 
guidance of faculty, and the research can only be performed in a 
facility in the United States;
    (iii) Is legally authorized by the education ministry, council, or 
equivalent agency of the country in which the institution is located to 
provide an educational program beyond the secondary education level; and
    (iv) Awards degrees, certificates, or other recognized educational 
credentials in accordance with Sec. 600.54(e) that are officially 
recognized by the country in which the institution is located; or
    (2) If the educational enterprise enrolls students both within a 
State and outside a State, and the number of students who would be 
eligible to receive title IV, HEA program funds attending locations 
outside a State is at least twice the number of students enrolled within 
a State, the locations outside a State must apply to participate as one 
or more foreign institutions and must meet all requirements of paragraph 
(1) of this definition, and the other requirements of this part. For the 
purposes of this paragraph, an educational enterprise consists of two or 
more locations offering all or part of an educational program that are 
directly or indirectly under common ownership.
    Foreign nursing school: A foreign institution (or, for a foreign 
institution that is a university, a component of that foreign 
institution) that is an associate degree school of nursing, a collegiate 
school of nursing, or a diploma school of nursing. A reference in these 
regulations to a foreign nursing school as ``freestanding'' pertains 
solely to those schools that qualify by themselves as foreign 
institutions and not to schools that are components of universities that 
qualify as foreign institutions.
    Foreign veterinary school: A foreign institution (or, for a foreign 
institution that is a university, a component of that foreign 
institution) having as its sole mission providing an educational program 
that leads to the degree of doctor of veterinary medicine, or the 
equivalent. A reference in these regulations to a foreign veterinary 
school as ``freestanding'' pertains solely to those schools that qualify 
by themselves as foreign institutions and not to schools that are 
components of universities that qualify as foreign institutions.
    National Committee on Foreign Medical Education and Accreditation 
(NCFMEA): The operational committee of medical experts established by 
the Secretary to determine whether the medical school accrediting 
standards used in other countries are comparable to those applied to 
medical schools in the United States, for purposes of evaluating the

[[Page 223]]

eligibility of accredited foreign graduate medical schools to 
participate in the title IV, HEA programs.
    Passing score: The minimum passing score as defined by the 
Educational Commission for Foreign Medical Graduates (ECFMG), or on the 
National Council Licensure Examination for Registered Nurses (NCLEX-RN), 
as applicable.
    Post-baccalaureate/equivalent medical program: A program offered by 
a foreign graduate medical school that requires, as a condition of 
admission, that its students have already completed their non-medical 
undergraduate studies and that consists solely of courses and training 
leading to employment as a doctor of medicine or doctor of osteopathic 
medicine.
    Secondary school: A school that provides secondary education as 
determined under the laws of the country in which the school is located.

(Authority: 20 U.S.C. 1082, 1088)

[59 FR 22063, Apr. 28, 1994, as amended at 75 FR 67193, Nov. 1, 2010]



Sec. 600.53  Requesting an eligibility determination.

    (a) To be designated as eligible to apply to participate in the FFEL 
programs or to continue to be eligible beyond the scheduled expiration 
of the institution's current period of eligibility, a foreign 
institution must--
    (1) Apply on the form prescribed by the Secretary; and
    (2) Provide all the information and documentation requested by the 
Secretary to make a determination of that eligibility.
    (b) If a foreign institution fails to provide, release, or authorize 
release to the Secretary of information that is required in this subpart 
E, the institution is ineligible to apply to participate in the FFEL 
programs.

(Approved by the Office of Management and Budget under control number 
1840-0673)

(Authority: 20 U.S.C. 1082, 1088)



Sec. 600.54  Criteria for determining whether a foreign institution is eligible to apply to participate in the Direct Loan Program.

    The Secretary considers a foreign institution to be comparable to an 
eligible institution of higher education in the United States and 
eligible to apply to participate in the Direct Loan Program if the 
foreign institution meets the following requirements:
    (a)(1) Except for a freestanding foreign graduate medical school, 
foreign veterinary school, or foreign nursing school, the foreign 
institution is a public or private nonprofit educational institution.
    (2) For a public or private nonprofit foreign institution, the 
institution meets the requirements of Sec. 600.4, except 
Sec. 600.4(a)(1), (a)(2), (a)(3), (a)(4)(ii), (a)(5), (b), (c), and any 
requirements the HEA or the Secretary has designated as inapplicable in 
accordance with Sec. 600.51(c)(1).
    (3) For a for-profit foreign medical, veterinary, or nursing school, 
the school meets the requirements of Sec. 600.5, except 
Sec. 600.5(a)(2), (a)(3), (a)(4), (a)(5)(i)(B), (a)(5)(ii), (a)(6), (c), 
(d), (e) and any requirements the HEA or the Secretary has designated as 
inapplicable in accordance with Sec. 600.51(c)(1).
    (b) The foreign institution admits as regular students only persons 
who--
    (1) Have a secondary school completion credential; or
    (2) Have the recognized equivalent of a secondary school completion 
credential.
    (c) Notwithstanding Sec. 668.5, an eligible foreign institution may 
not enter into a written arrangement under which an ineligible 
institution or organization provides any portion of one or more of the 
eligible foreign institution's programs. For the purposes of this 
paragraph, written arrangements do not include affiliation agreements 
for the provision of clinical training for foreign medical, veterinary, 
and nursing schools.
    (d) An additional location of a foreign institution must separately 
meet the definition of a foreign institution in Sec. 600.52 if the 
additional location is--
    (1) Located outside of the country in which the main campus is 
located, except as provided in Sec. 600.55(h)(1), Sec. 600.56(b), 
Sec. 600.57(a)(2), Sec. 600.55(h)(3), and the definition of foreign 
institution found in Sec. 600.52; or
    (2) Located within the same country as the main campus, but is not 
covered

[[Page 224]]

by the legal authorization of the main campus.
    (e) The foreign institution provides an eligible education program--
    (1) For which the institution is legally authorized to award a 
degree that is equivalent to an associate, baccalaureate, graduate, or 
professional degree awarded in the United States;
    (2) That is at least a two-academic-year program acceptable for full 
credit toward the equivalent of a baccalaureate degree awarded in the 
United States; or
    (3)(i) That is equivalent to at least a one-academic-year training 
program in the United States that leads to a certificate, degree, or 
other recognized educational credential and prepares students for 
gainful employment in a recognized occupation within the meaning of the 
gainful employment provisions.
    (ii) An institution must demonstrate to the satisfaction of the 
Secretary that the amount of academic work required by a program in 
paragraph (e)(3)(i) of this section is equivalent to at least the 
definition of an academic year in Sec. 668.3.
    (f) For a for-profit foreign medical, veterinary, or nursing 
school--
    (1) No portion of an eligible medical or veterinary program offered 
may be at what would be an undergraduate level in the United States; and
    (2) The title IV, HEA program eligibility does not extend to any 
joint degree program.
    (g) Proof that a foreign institution meets the requirements of 
paragraph (1)(iii) of the definition of a foreign institution in 
Sec. 600.52 may be provided to the Secretary by a legal authorization 
from the appropriate education ministry, council, or equivalent agency--
    (1) For all eligible foreign institutions in the country;
    (2) For all eligible foreign institutions in a jurisdiction within 
the country; or
    (3) For each separate eligible foreign institution in the country.

(Authority: 20 U.S.C. 1082, 1088)


[75 FR 67194, Nov. 1, 2010]



Sec. 600.55  Additional criteria for determining whether a foreign
graduate medical school is eligible to apply to participate in the 
Direct Loan Program.

    (a) General. (1) The Secretary considers a foreign graduate medical 
school to be eligible to apply to participate in the title IV, HEA 
programs if, in addition to satisfying the criteria of this part (except 
the criterion in Sec. 600.54 that the institution be public or private 
nonprofit), the school satisfies the criteria of this section.
    (2) A foreign graduate medical school must provide, and in the 
normal course require its students to complete, a program of clinical 
training and classroom medical instruction of not less than 32 months in 
length, that is supervised closely by members of the school's faculty 
and that--
    (i) Is provided in facilities adequately equipped and staffed to 
afford students comprehensive clinical training and classroom medical 
instruction;
    (ii) Is approved by all medical licensing boards and evaluating 
bodies whose views are considered relevant by the Secretary; and
    (iii) As part of its clinical training, does not offer more than two 
electives consisting of no more than eight weeks per student at a site 
located in a foreign country other than the country in which the main 
campus is located or in the United States, unless that location is 
included in the accreditation of a medical program accredited by the 
Liaison Committee on Medical Education (LCME) or the American 
Osteopathic Association (AOA).
    (3) A foreign graduate medical school must appoint for the program 
described in paragraph (a)(2) of this section only those faculty members 
whose academic credentials are the equivalent of credentials required of 
faculty members teaching the same or similar courses at medical schools 
in the United States.
    (4) A foreign graduate medical school must have graduated classes 
during each of the two twelve-month periods immediately preceding the 
date the Secretary receives the school's request for an eligibility 
determination.
    (b) Accreditation. A foreign graduate medical school must--

[[Page 225]]

    (1) Be approved by an accrediting body--
    (i) That is legally authorized to evaluate the quality of graduate 
medical school educational programs and facilities in the country where 
the school is located; and
    (ii) Whose standards of accreditation of graduate medical schools 
have been evaluated by the NCFMEA or its successor committee of medical 
experts and have been determined to be comparable to standards of 
accreditation applied to medical schools in the United States; or
    (2) Be a public or private nonprofit educational institution that 
satisfies the requirements in Sec. 600.4(a)(5)(i).
    (c) Admission criteria. (1) A foreign graduate medical school having 
a post-baccalaureate/equivalent medical program must require students 
accepted for admission who are U.S. citizens, nationals, or permanent 
residents to have taken the Medical College Admission Test (MCAT) and to 
have reported their scores to the foreign graduate medical school; and
    (2) A foreign graduate medical school must determine the consent 
requirements for, and require the necessary consents of, all students 
accepted for admission for whom the school must report to enable the 
school to comply with the collection and submission requirements of 
paragraph (d) of this section.
    (d) Collection and submission of data. (1) A foreign graduate 
medical school must obtain, at its own expense, and submit, by the date 
required by paragraph (d)(3) of this section--
    (i) To its accrediting authority and, on request, to the Secretary, 
the scores on the MCAT or successor examination, of all students 
admitted during the preceding calendar year who are U.S. citizens, 
nationals, or eligible permanent residents, together with a statement of 
the number of times each student took the examination;
    (ii) To its accrediting authority and, on request, to the Secretary, 
the percentage of students graduating during the preceding calendar year 
(including at least all graduates who are U.S. citizens, nationals, or 
eligible permanent residents) who obtain placement in an accredited U.S. 
medical residency program;
    (iii) To the Secretary, except as provided for in paragraph (d)(2) 
of this section, all scores, disaggregated by step/test--i.e., Step 1, 
Step 2--Clinical Skills (Step 2-CS), and Step 2--Clinical Knowledge 
(Step 2-CK), or the successor examinations--and attempt, earned during 
the preceding calendar year by each student and graduate, on Step 1, 
Step 2-CS, and Step 2-CK, or the successor examinations, of the U.S. 
Medical Licensing Examination (USMLE), together with the dates the 
student has taken each test, including any failed tests;
    (iv) To the Secretary, a statement of its citizenship rate for the 
preceding calendar year for a school that is subject to paragraph 
(f)(1)(i)(A) of this section, together with a description of the 
methodology used in deriving the rate that is acceptable to the 
Secretary.
    (2) In lieu of submitting the information required in paragraph 
(d)(1)(iii) of this section to the Secretary, a foreign graduate medical 
school that is not subject to paragraph (f)(4) of this section may agree 
to allow the Educational Commission for Foreign Medical Graduates 
(ECFMG) or other responsible third party to calculate the rate described 
in paragraph (f)(1)(ii) and (f)(3) of this section for the preceding 
calendar year and provide the rate directly to the Secretary on the 
school's behalf with a copy to the foreign graduate medical school, 
provided--
    (i) The foreign graduate medical school has provided by April 30 to 
the Secretary written consent acceptable to the Secretary to reliance by 
the Secretary on the pass rate as calculated by the ECFMG or other 
responsible third party for purposes of determining compliance with 
paragraph (f)(1)(ii) and (f)(3) of this section for the preceding 
calendar year; and
    (ii) The foreign graduate medical school agrees in its written 
consent that for the preceding calendar year the rate as calculated by 
the ECFMG or other designated third party will be conclusive for 
purposes of determining compliance with paragraph (f)(1)(ii) and (f)(3) 
of this section.

[[Page 226]]

    (3) A foreign graduate medical school must submit the data it 
collects in accordance with paragraph (d)(1) of this section no later 
than April 30 of each year, unless the Secretary specifies a different 
date through a notice in the Federal Register.
    (e) Requirements for clinical training. (1)(i) A foreign graduate 
medical school must have--
    (A) A formal affiliation agreement with any hospital or clinic at 
which all or a portion of the school's core clinical training or 
required clinical rotations are provided; and
    (B) Either a formal affiliation agreement or other written 
arrangements with any hospital or clinic at which all or a portion of 
its clinical rotations that are not required are provided, except for 
those locations that are not used regularly, but instead are chosen by 
individual students who take no more than two electives at the location 
for no more than a total of eight weeks.
    (ii) The agreements described in paragraph (e)(1)(i) of this section 
must state how the following will be addressed at each site--
    (A) Maintenance of the school's standards;
    (B) Appointment of faculty to the medical school staff;
    (C) Design of the curriculum;
    (D) Supervision of students;
    (E) Evaluation of student performance; and
    (F) Provision of liability insurance.
    (2) A foreign graduate medical school must notify its accrediting 
body within one year of any material changes in--
    (i) The educational programs, including changes in clinical training 
programs; and
    (ii) The overseeing bodies and in the formal affiliation agreements 
with hospitals and clinics described in paragraph (e)(1)(i) of this 
section.
    (f) Citizenship and USMLE pass rate percentages. (1)(i)(A) During 
the calendar year preceding the year for which any of the school's 
students seeks an title IV, HEA program loan, at least 60 percent of 
those enrolled as full-time regular students in the school and at least 
60 percent of the school's most recent graduating class must have been 
persons who did not meet the citizenship and residency criteria 
contained in section 484(a)(5) of the HEA, 20 U.S.C. 1091(a)(5); or
    (B) The school must have had a clinical training program approved by 
a State prior to January 1, 2008, and must continue to operate a 
clinical training program in at least one State that approves the 
program; and
    (ii) Except as provided in paragraph (f)(4) of this section, for a 
foreign graduate medical school outside of Canada, for Step 1, Step 2-
CS, and Step 2-CK, or the successor examinations, of the USMLE 
administered by the ECFMG, at least 75 percent of the school's students 
and graduates who took that step/test of the examination in the year 
preceding the year for which any of the school's students seeks a title 
IV, HEA program loan must have received a passing score on that step/
test and are taking the step/test for the first time; or
    (2)(i) The school must have had a clinical training program approved 
by a State as of January 1, 1992; and
    (ii) The school must continue to operate a clinical training program 
in at least one State that approves the program.
    (3) In performing the calculation required in paragraph (f)(1)(ii) 
of this section, a foreign graduate medical school shall--
    (i) Include as a graduate each student who graduated from the school 
during the three years preceding the year for which the calculation is 
performed and who took that step/test for the first time in that year; 
and
    (ii) Include students and graduates who take more than one step/test 
of the USMLE examination for the first time in the same year in the 
denominator for each of those steps/tests;
    (4)(i) If the calculation described in paragraph (f)(1)(ii) of this 
section would result in any step/test pass rate based on fewer than 
eight students, a single pass rate for the school is determined instead 
based on the performance of the school's students and graduates on Step 
1, Step 2-CS, and Step 2-CK combined;
    (ii) If combining the results on all three step/tests as permitted 
in paragraph (f)(4)(i) of this section would result in a pass rate based 
on fewer than

[[Page 227]]

eight step/test results, the school is deemed to have no pass rate for 
that year and the results for the year are combined with each subsequent 
year until a pass rate based on at least eight step/test results is 
derived.
    (g) Other criteria. (1) As part of establishing, publishing, and 
applying reasonable satisfactory academic progress standards, a foreign 
graduate medical school must include as a quantitative component a 
maximum timeframe in which a student must complete his or her 
educational program that must--
    (i) Be no longer than 150 percent of the published length of the 
educational program measured in academic years, terms, credit hours 
attempted, clock hours completed, etc., as appropriate; and
    (ii) Meet the requirements of Sec. 668.16(e)(2)(ii)(B), (C) and (D).
    (2) A foreign graduate medical school must document the educational 
remediation it provides to assist students in making satisfactory 
academic progress.
    (3) A foreign graduate medical school must publish all the languages 
in which instruction is offered.
    (h) Location of a program. (1) Except as provided in paragraph 
(h)(3)(ii) of this section, all portions of a graduate medical education 
program offered to U.S. students must be located in a country whose 
medical school accrediting standards are comparable to standards used in 
the United States, as determined by the NCFMEA, except for clinical 
training sites located in the United States.
    (2) No portion of the graduate medical educational program offered 
to U.S. students, other than the clinical training portion of the 
program, may be located outside of the country in which the main campus 
of the foreign graduate medical school is located.
    (3)(i) Except as provided in paragraph (h)(3)(ii) of this section, 
for any part of the clinical training portion of the educational program 
located in a foreign country other than the country in which the main 
campus is located or in the United States, in order for students 
attending the site to be eligible to borrow title IV, HEA program 
funds--
    (A) The site must be located in an NCFMEA approved comparable 
foreign country;
    (B) The institution's medical accrediting agency must have conducted 
an on-site evaluation and specifically approved the clinical training 
site; and
    (C) Clinical instruction must be offered in conjunction with medical 
educational programs offered to students enrolled in accredited medical 
schools located in that approved foreign country.
    (ii) A clinical training site located in a foreign country other 
than the country in which the main campus is located or in the United 
States is not required to meet the requirements of paragraph (h)(3)(i) 
of this section in order for students attending that site to be eligible 
to borrow title IV, HEA program funds if--
    (A) The location is included in the accreditation of a medical 
program accredited by the Liaison Committee on Medical Education (LCME) 
or the American Osteopathic Association (AOA); or
    (B) No individual student takes more than two electives at the 
location and the combined length of the electives does not exceed eight 
weeks.

[75 FR 67195, Nov. 1, 2010]



Sec. 600.56  Additional criteria for determining whether a foreign
veterinary school is eligible to apply to participate in the Direct
Loan Program.

    (a) The Secretary considers a foreign veterinary school to be 
eligible to apply to participate in the Direct Loan Program if, in 
addition to satisfying the criteria in this part (except the criterion 
in Sec. 600.54 that the institution be public or private nonprofit), the 
school satisfies all of the following criteria:
    (1) The school provides, and in the normal course requires its 
students to complete, a program of clinical and classroom veterinary 
instruction that is supervised closely by members of the school's 
faculty, and that is provided in facilities adequately equipped and 
staffed to afford students comprehensive clinical and classroom 
veterinary instruction through a training program for foreign veterinary 
students that

[[Page 228]]

has been approved by all veterinary licensing boards and evaluating 
bodies whose views are considered relevant by the Secretary.
    (2) The school has graduated classes during each of the two twelve-
month periods immediately preceding the date the Secretary receives the 
school's request for an eligibility determination.
    (3) The school employs for the program described in paragraph (a)(1) 
of this section only those faculty members whose academic credentials 
are the equivalent of credentials required of faculty members teaching 
the same or similar courses at veterinary schools in the United States.
    (4) Effective July 1, 2015, the school is accredited or 
provisionally accredited by an organization acceptable to the Secretary 
for the purpose of evaluating veterinary programs.
    (b)(1) No portion of the foreign veterinary educational program 
offered to U.S. students, other than the clinical training portion of 
the program as provided for in paragraph (b)(2) of this section, may be 
located outside of the country in which the main campus of the foreign 
veterinary school is located;
    (2)(i) For a veterinary school that is neither public nor private 
nonprofit, the school's students must complete their clinical training 
at an approved veterinary school located in the United States;
    (ii) For a veterinary school that is public or private nonprofit, 
the school's students may complete their clinical training at an 
approved veterinary school located--
    (A) In the United States;
    (B) In the home country; or
    (C) Outside of the United States or the home country, if--
    (1) The location is included in the accreditation of a veterinary 
program accredited by the American Veterinary Medical Association 
(AVMA); or
    (2) No individual student takes more than two electives at the 
location and the combined length of the elective does not exceed eight 
weeks.

(Authority: 20 U.S.C. 1002 and 1092.)

[75 FR 67197, Nov. 1, 2010]



Sec. 600.57  Additional criteria for determining whether a foreign
nursing school is eligible to apply to participate in the Direct
Loan Program.

    (a) Effective July 1, 2012 for a foreign nursing school that was 
participating in any title IV, HEA program on August 13, 2008, and 
effective July 1, 2011 for all other foreign nursing schools, the 
Secretary considers the foreign nursing school to be eligible to apply 
to participate in the Direct Loan Program if, in addition to satisfying 
the criteria in this part (except the criterion in Sec. 600.54 that the 
institution be public or private nonprofit), the nursing school 
satisfies all of the following criteria:
    (1) The nursing school is an associate degree school of nursing, a 
collegiate school of nursing, or a diploma school of nursing.
    (2) The nursing school has an agreement with a hospital located in 
the United States or an accredited school of nursing located in the 
United States that requires students of the nursing school to complete 
the student's clinical training at the hospital or accredited school of 
nursing.
    (3) The nursing school has an agreement with an accredited school of 
nursing located in the United States providing that students graduating 
from the nursing school located outside of the United States also 
receive a degree from the accredited school of nursing located in the 
United States.
    (4) The nursing school certifies only Federal Stafford Loan program 
loans or Federal PLUS program loans, as those terms are defined in 
Sec. 668.2, for students attending the nursing school.
    (5) The nursing school reimburses the Secretary for the cost of any 
loan defaults for current and former students included in the 
calculation of the institution's cohort default rate during the previous 
fiscal year.
    (6)(i) The nursing school determines the consent requirements for 
and requires the necessary consents of all students accepted for 
admission who are U.S. citizens, nationals, or eligible permanent 
residents to enable the school to comply with the collection and 
submission requirements of paragraph (a)(6)(ii) of this section.

[[Page 229]]

    (ii) The nursing school annually either--
    (A) Obtains, at its own expense, all results achieved by students 
and graduates who are U.S. citizens, nationals, or eligible permanent 
residents on the National Council Licensure Examination for Registered 
Nurses (NCLEX-RN), together with the dates the student has taken the 
examination, including any failed examinations, and provides such 
results to the Secretary; or
    (B) Obtains a report or reports from the National Council of State 
Boards of Nursing (NCSB), or an NCSB affiliate or NCSB contractor, 
reflecting the percentage of the school's students and graduates taking 
the NCLEX-RN in the preceding year who passed the examination, or the 
data from which the percentage could be derived, and provides the report 
to the Secretary.
    (7) Not less than 75 percent of the school's students and graduates 
who are U.S. citizens, nationals, or eligible permanent residents who 
took the NCLEX-RN in the year preceding the year for which the 
institution is certifying a Federal Stafford Loan or a Federal Plus 
Loan, passed the examination.
    (8) The school provides, including under the agreements described in 
paragraphs (a)(2) and (a)(3) of this section, and in the normal course 
requires its students to complete, a program of clinical and classroom 
nursing instruction that is supervised closely by members of the 
school's faculty that is provided in facilities adequately equipped and 
staffed to afford students comprehensive clinical and classroom nursing 
instruction, through a training program for foreign nursing students 
that has been approved by all nurse licensing boards and evaluating 
bodies whose views are considered relevant by the Secretary.
    (9) The school has graduated classes during each of the two twelve-
month periods immediately preceding the date the Secretary receives the 
school's request for an eligibility determination.
    (10) The school employs only those faculty members whose academic 
credentials are the equivalent of credentials required of faculty 
members teaching the same or similar courses at nursing schools in the 
United States.
    (b) For purposes of paragraph (a)(5) of this section, the cost of a 
loan default is the estimated future cost of collections on the 
defaulted loan.
    (c) The Department continues to collect on the Direct Loan after a 
school reimburses the Secretary for the amount specified in paragraph 
(b) of this section until the loan is paid in full or otherwise 
satisfied, or the loan account is closed out.
    (d) No portion of the foreign nursing program offered to U.S. 
students may be located outside of the country in which the main campus 
of the foreign nursing school is located, except for clinical sites 
located in the United States.

[75 FR 67197, Nov. 1, 2010]



Sec. 600.58  Duration of eligibility determination.

    (a) The eligibility of a foreign institution under this subpart 
expires six years after the date of the Secretary's determination that 
the institution is eligible to apply for participation, except that the 
Secretary may specify a shorter period of eligibility. In the case of a 
foreign graduate medical school, continued eligibility is dependent upon 
annual submission of the data and information required under 
Sec. 600.55(a)(5)(i), subject to the terms described in Sec. 600.53(b).
    (b) A foreign institution that has been determined eligible loses 
its eligibility on the date that the institution no longer meets any of 
the criteria in this subpart E.
    (c) Notwithstanding the provisions of 34 CFR 668.26, if a foreign 
institution loses its eligibility under this subpart E, an otherwise 
eligible student, continuously enrolled at the institution before the 
loss of eligibility, may receive an FFEL program loan for attendance at 
that institution for the academic year succeeding the academic year in 
which that institution lost its eligibility, if the student actually 
received an FFEL program loan for attendance at the institution for a 
period

[[Page 230]]

during which the institution was eligible under this subpart E.

(Authority: 20 U.S.C. 1082, 1088, 1099c)

[59 FR 22063, Apr. 28, 1994. Redesignated at 64 FR 58616, Oct. 29, 1999, 
as amended at 69 FR 12275, Mar. 16, 2004. Redesignated at 75 FR 67197, 
Nov. 1, 2010]



PART 601_INSTITUTION AND LENDER REQUIREMENTS RELATING TO EDUCATION LOANS
--Table of Contents



                            Subpart A_General

Sec.
601.1  Scope.
601.2  Definitions.

 Subpart B_Loan Information To Be Disclosed by Covered Institutions and 
                  Institution-Affiliated Organizations

601.10  Preferred lender arrangement disclosures.
601.11  Private education loan disclosures and self-certification form.
601.12  Use of institution and lender name.

   Subpart C_Responsibilities of Covered Institutions and Institution-
                        Affiliated Organizations

601.20  Annual report.
601.21  Code of conduct.

Subpart D_Loan Information To Be Disclosed by Institutions Participating 
               in the William D. Ford Direct Loan Program

601.30  Duties of institutions.

                    Subpart E_Lender Responsibilities

601.40  Disclosure and reporting requirements for lenders.

    Authority: 20 U.S.C. 1019-1019d, 1021, 1094(a) and (h).

    Source: 74 FR 55643, Oct. 28, 2009, unless otherwise noted.



                            Subpart A_General



Sec. 601.1  Scope.

    This part establishes disclosure and reporting requirements for 
covered institutions, institution-affiliated organizations, and lenders 
that provide, issue, recommend, promote, endorse, or provide information 
relating to education loans. Education loans include loans authorized by 
the Higher Education Act of 1965, as amended (HEA) and private education 
loans.

(Authority:20 U.S.C. 1019-1019d, 1021, 1094(a)(25) and (e)).



Sec. 601.2  Definitions.

    (a) The definitions of the following terms used in this part are set 
forth in the regulations for Institutional Eligibility under the Higher 
Education Act of 1965, as amended, 34 CFR part 600:
    Federal Family Education Loan (FFEL) Program
    Secretary
    Title IV, HEA program
    (b) The following definitions also apply to this part:
    Agent: An officer or employee of a covered institution or an 
institution-affiliated organization.
    Covered institution: Any institution of higher education, 
proprietary institution of higher education, postsecondary vocational 
institution, or institution outside the United States, as these terms 
are defined in 34 CFR part 600, that receives any Federal funding or 
assistance.
    Education loan: Except when used as part of the term ``private 
education loan'',
    (1) Any loan made, insured, or guaranteed under the Federal Family 
Education Loan (FFEL) Program;
    (2) Any loan made under the William D. Ford Federal Direct Loan 
Program; or
    (3) A private education loan.
    Institution-affiliated organization: (1) Any organization that--
    (i) Is directly or indirectly related to a covered institution; and
    (ii) Is engaged in the practice of recommending, promoting, or 
endorsing education loans for students attending such covered 
institution or the families of such students.
    (2) An institution-affiliated organization--
    (i) May include an alumni organization, athletic organization, 
foundation, or social, academic, or professional organization, of a 
covered institution; and
    (ii) Does not include any lender with respect to any education loan 
secured, made, or extended by such lender.
    Lender: (1) An eligible lender in the Federal Family Education Loan

[[Page 231]]

(FFEL) Program, as defined in 34 CFR 682.200(b);
    (2) The Department in the Direct Loan program;
    (3) In the case of a private educational loan, a private education 
lender as defined in section 140 of the Truth in Lending Act; and
    (4) Any other person engaged in the business of securing, making, or 
extending education loans on behalf of the lender.
    Officer: A director or trustee of a covered institution or 
institution-affiliated organization, if such individual is treated as an 
employee of such covered institution or institution-affiliated 
organization, respectively.
    Preferred lender arrangement: (1) An arrangement or agreement 
between a lender and a covered institution or an institution-affiliated 
organization of such covered institution--
    (i) Under which a lender provides or otherwise issues education 
loans to the students attending such covered institution or the families 
of such students; and
    (ii) That relates to such covered institution or such institution-
affiliated organization recommending, promoting, or endorsing the 
education loan products of the lender.
    (2) A preferred lender arrangement does not include--
    (i) Arrangements or agreements with respect to loans made under the 
William D. Ford Federal Direct Loan Program; or
    (ii) Arrangements or agreements with respect to loans that originate 
through the PLUS Loan auction pilot program under section 499(b) of the 
HEA.
    (3) For purpose of this definition, an arrangement or agreement does 
not exist if the private education loan provided or issued to a student 
attending a covered institution is made by the covered institution or by 
an institution-affiliated organization of the covered institution, and 
the private education loan is--
    (i) Funded by the covered institution's or institution-affiliated 
organization's own funds;
    (ii) Funded by donor-directed contributions;
    (iii) Made under title VII or title VIII of the Public Service 
Health Act; or
    (iv) Made under a State-funded financial aid program, if the terms 
and conditions of the loan include a loan forgiveness option for public 
service.
    Private education loan: As the term is defined in 12 CFR 
226.46(b)(5), a loan provided by a private educational lender that is 
not a title IV loan and that is issued expressly for postsecondary 
education expenses to a borrower, regardless of whether the loan is 
provided through the educational institution that the student attends or 
directly to the borrower from the private educational lender. A private 
education loan does not include--
    (1) An extension of credit under an open end consumer credit plan, a 
reverse mortgage transaction, a residential mortgage transaction, or any 
other loan that is secured by real property or a dwelling; or
    (2) An extension of credit in which the educational institution is 
the lender if--
    (i) The term of the extension of credit is 90 days or less; or
    (ii) An interest rate will not be applied to the credit balance and 
the term of the extension of credit is one year or less, even if the 
credit is payable in more than four installments.

(Authority:20 U.S.C. 1019)



 Subpart B_Loan Information To Be Disclosed by Covered Institutions and 
                  Institution-Affiliated Organizations



Sec. 601.10  Preferred lender arrangement disclosures.

    (a) A covered institution, or an institution-affiliated organization 
of such covered institution, that participates in a preferred lender 
arrangement must disclose--
    (1) On such covered institution's or institution-affiliated 
organization's Web site and in all informational materials described in 
paragraph (b) of this section that describe or discuss education loans--
    (i) The maximum amount of Federal grant and loan aid under title IV 
of the HEA available to students, in an easy to understand format;

[[Page 232]]

    (ii) The information identified on a model disclosure form developed 
by the Secretary pursuant to section 153(a)(2)(B) of the HEA, for each 
type of education loan that is offered pursuant to a preferred lender 
arrangement of the institution or institution-affiliated organization to 
students of the institution or the families of such students; and
    (iii) A statement that such institution is required to process the 
documents required to obtain a loan under the Federal Family Education 
Loan (FFEL) Program from any eligible lender the student selects; and
    (2) On such covered institution's or institution-affiliated 
organization's Web site and in all informational materials described in 
paragraph (b) of this section that describe or discuss private education 
loans--
    (i) In the case of a covered institution, the information that the 
Board of Governors of the Federal Reserve System requires to be 
disclosed under section 128(e)(11) of the Truth in Lending Act (15 
U.S.C. 1638(e)(11)), for each type of private education loan offered 
pursuant to a preferred lender arrangement of the institution to 
students of the institution or the families of such students; and
    (ii) In the case of an institution-affiliated organization of a 
covered institution, the information the Board of Governors of the 
Federal Reserve System requires to be disclosed under section 128(e)(1) 
of the Truth in Lending Act (15 U.S.C. 1638(e)(1)), for each type of 
private education loan offered pursuant to a preferred lender 
arrangement of the organization to students of such institution or the 
families of such students.
    (b) The informational materials described in paragraphs (a)(1) and 
(a)(2) of this section are publications, mailings, or electronic 
messages or materials that--
    (1) Are distributed to prospective or current students of a covered 
institution and families of such students; and
    (2) Describe or discuss the financial aid opportunities available to 
students at an institution of higher education.
    (c)(1) Each covered institution and each institution-affiliated 
organization that participates in a preferred lender arrangement must 
provide the information described in paragraph (a)(1)(ii) of this 
section, and the information described in paragraphs (a)(2)(i) and 
(a)(2)(ii) of this section, respectively, for each type of education 
loan offered pursuant to the preferred lender arrangement.
    (2) The information identified in paragraph (c)(1) of this section 
must be provided to students attending the covered institution, or the 
families of such students, as applicable, annually and must be provided 
in a manner that allows for the students or their families to take such 
information into account before selecting a lender or applying for an 
education loan.
    (d) If a covered institution compiles, maintains, and makes 
available a preferred lender list as required under Sec. 668.14(b)(28), 
the institution must--
    (1) Clearly and fully disclose on such preferred lender list--
    (i) Not less than the information required to be disclosed under 
section 153(a)(2)(A) of the HEA;
    (ii) Why the institution participates in a preferred lender 
arrangement with each lender on the preferred lender list, particularly 
with respect to terms and conditions or provisions favorable to the 
borrower; and
    (iii) That the students attending the institution, or the families 
of such students, do not have to borrow from a lender on the preferred 
lender list;
    (2) Ensure, through the use of the list of lender affiliates 
provided by the Secretary under section 487(h)(2) of the HEA, that--
    (i) There are not less than three FFEL lenders that are not 
affiliates of each other included on the preferred lender list and, if 
the institution recommends, promotes, or endorses private education 
loans, there are not less than two lenders of private education loans 
that are not affiliates of each other included on the preferred lender 
list; and
    (ii) The preferred lender list under paragraph (d) of this section--
    (A) Specifically indicates, for each listed lender, whether the 
lender is or is not an affiliate of each other lender on the preferred 
lender list; and
    (B) If a lender is an affiliate of another lender on the preferred 
lender

[[Page 233]]

list, describes the details of such affiliation;
    (3) Prominently disclose the method and criteria used by the 
institution in selecting lenders with which to participate in preferred 
lender arrangements to ensure that such lenders are selected on the 
basis of the best interests of the borrowers, including--
    (i) Payment of origination or other fees on behalf of the borrower;
    (ii) Highly competitive interest rates, or other terms and 
conditions or provisions of Title IV, HEA program loans or private 
education loans;
    (iii) High-quality servicing for such loans; or
    (iv) Additional benefits beyond the standard terms and conditions or 
provisions for such loans;
    (4) Exercise a duty of care and a duty of loyalty to compile the 
preferred lender list under paragraph (d) of this section without 
prejudice and for the sole benefit of the students attending the 
institution, or the families of such students; and
    (5) Not deny or otherwise impede the borrower's choice of a lender 
or cause unnecessary delay in loan certification under title IV of the 
HEA for those borrowers who choose a lender that is not included on the 
preferred lender list.

(Approved by the Office of Management and Budget under control number 
1845-XXXA)

(Authority:20 U.S.C. 1019a(a)(1)(A) and 1019b(c))



Sec. 601.11  Private education loan disclosures and self-certification
form.

    (a) A covered institution, or an institution-affiliated organization 
of such covered institution, that provides information regarding a 
private education loan from a lender to a prospective borrower must 
provide private education loan disclosures to the prospective borrower, 
regardless of whether the covered institution or institution-affiliated 
organization participates in a preferred lender arrangement.
    (b) The private education loan disclosures must--
    (1) Provide the prospective borrower with the information the Board 
of Governors of the Federal Reserve System requires to be disclosed 
under section 128(e)(1) of the Truth in Lending Act (15 U.S.C. 
1638(e)(1)) for such loan;
    (2) Inform the prospective borrower that--
    (i) The prospective borrower may qualify for loans or other 
assistance under title IV of the HEA; and
    (ii) The terms and conditions of Title IV, HEA program loans may be 
more favorable than the provisions of private education loans.
    (c) The covered institution or institution-affiliated organization 
must ensure that information regarding private education loans is 
presented in such a manner as to be distinct from information regarding 
Title IV, HEA program loans.
    (d) Upon an enrolled or admitted student applicant's request for a 
private education loan self-certification form, an institution must 
provide to the applicant, in written or electronic form--
    (1) The self-certification form for private education loans 
developed by the Secretary in consultation with the Board of Governors 
of the Federal Reserve System, to satisfy the requirements of section 
128(e)(3) of the Truth in Lending Act (15 U.S.C. 1638(e)(3)); and
    (2) The information required to complete the form, to the extent the 
institution possesses such information as specified in 34 CFR 
668.14(b)(29).

(Approved by the Office of Management and Budget under control number 
1845-XXXA)

(Authority:20 U.S.C. 1019a(a)(1)(B) and 1019d)



Sec. 601.12  Use of institution and lender name.

    A covered institution, or an institution-affiliated organization of 
such covered institution, that participates in a preferred lender 
arrangement with a lender regarding private education loans must--
    (a) Not agree to the lender's use of the name, emblem, mascot, or 
logo of such institution or organization, or other words, pictures, or 
symbols readily identified with such institution or organization, in the 
marketing of private education loans to students attending such 
institution in any way that implies that the loan is offered or made by 
such institution or organization instead of the lender; and

[[Page 234]]

    (b) Ensure that the name of the lender is displayed in all 
information and documentation related to the private education loans 
described in this section.

(Authority:20 U.S.C. 1019a(a)(2)-(a)(3))



   Subpart C_Responsibilities of Covered Institutions and Institution-
                        Affiliated Organizations



Sec. 601.20  Annual report.

    Each covered institution, and each institution-affiliated 
organization of such covered institution, that participates in a 
preferred lender arrangement, must--
    (a) Prepare and submit to the Secretary an annual report, by a date 
determined by the Secretary, that includes, for each lender that 
participates in a preferred lender arrangement with such covered 
institution or organization--
    (1) The information described in Sec. 601.10(c); and
    (2) A detailed explanation of why such covered institution or 
institution-affiliated organization participates in a preferred lender 
arrangement with the lender, including why the terms, conditions, and 
provisions of each type of education loan provided pursuant to the 
preferred lender arrangement are beneficial for students attending such 
institution, or the families of such students, as applicable; and
    (b) Ensure that the report required under this section is made 
available to the public and provided to students attending or planning 
to attend such covered institution and the families of such students.

(Approved by the Office of Management and Budget under control number 
1845-XXXA)

(Authority:20 U.S.C. 1019b(c)(2))



Sec. 601.21  Code of conduct.

    (a)(1) A covered institution that participates in a preferred lender 
arrangement must comply with the code of conduct requirements described 
in this section.
    (2) The covered institution must--
    (i) Develop a code of conduct with respect to FFEL Program loans and 
private education loans with which the institution's agents must comply. 
The code of conduct must--
    (A) Prohibit a conflict of interest with the responsibilities of an 
agent of an institution with respect to FFEL Program loans and private 
education loans; and
    (B) At a minimum, include the provisions specified in paragraph (c) 
of this section;
    (ii) Publish such code of conduct prominently on the institution's 
Web site; and
    (iii) Administer and enforce such code by, at a minimum, requiring 
that all of the institution's agents with responsibilities with respect 
to FFEL Program loans or private education loans be annually informed of 
the provisions of the code of conduct.
    (b) Any institution-affiliated organization of a covered institution 
that participates in a preferred lender arrangement must--
    (1) Comply with the code of conduct developed and published by such 
covered institution under paragraph (a)(1) of this section;
    (2) If such institution-affiliated organization has a Web site, 
publish such code of conduct prominently on the Web site; and
    (3) Administer and enforce such code of conduct by, at a minimum, 
requiring that all of such institution-affiliated organization's agents 
with responsibilities with respect to FFEL Program loans or private 
education loans be annually informed of the provisions of such code of 
conduct.
    (c) A covered institution's code of conduct must prohibit--
    (1) Revenue-sharing arrangements with any lender.The institution 
must not enter into any revenue-sharing arrangement with any lender. For 
purposes of this paragraph, the term revenue-sharing arrangement means 
an arrangement between a covered institution and a lender under which--
    (i) A lender provides or issues a FFEL Program loan or private 
education loan to students attending the institution or to the families 
of such students; and
    (ii) The institution recommends the lender or the loan products of 
the lender and in exchange, the lender pays a fee or provides other 
material benefits,

[[Page 235]]

including revenue or profit sharing, to the institution, an agent;
    (2)(i) Employees of the financial aid office receiving gifts from a 
lender, a guarantor, or a loan servicer. Agents who are employed in the 
financial aid office of the institution or who otherwise have 
responsibilities with respect to FFEL Program loans or private education 
loans, must not solicit or accept any gift from a lender, guarantor, or 
servicer of FFEL Program loans or private education loans;
    (ii) For purposes of paragraph (c) of this section, the term gift 
means any gratuity, favor, discount, entertainment, hospitality, loan, 
or other item having a monetary value of more than a de minimus amount. 
The term includes a gift of services, transportation, lodging, or meals, 
whether provided in kind, by purchase of a ticket, payment in advance, 
or reimbursement after the expense has been incurred;
    (iii) The term gift does not include any of the following:
    (A) Standard material, activities, or programs on issues related to 
a loan, default aversion, default prevention, or financial literacy, 
such as a brochure, a workshop, or training.
    (B) Food, refreshments, training, or informational material 
furnished to an agent as an integral part of a training session that is 
designed to improve the service of a lender, guarantor, or servicer of 
FFEL Program loans or private education loans to the institution, if 
such training contributes to the professional development of the agent.
    (C) Favorable terms, conditions, and borrower benefits on a FFEL 
Program loan or private education loan provided to a student employed by 
the institution if such terms, conditions, or benefits are comparable to 
those provided to all students of the institution.
    (D) Entrance and exit counseling services provided to borrowers to 
meet the institution's responsibilities for entrance and exit counseling 
as required by Secs. 682.604(f) and 682.604(g), as long as the 
institution's staff are in control of the counseling (whether in person 
or via electronic capabilities) and such counseling does not promote the 
products or services of any specific lender.
    (E) Philanthropic contributions to an institution from a lender, 
servicer, or guarantor of FFEL Program loans or private education loans 
that are unrelated to FFEL Program loans or private education loans or 
any contribution from any lender, servicer, or guarantor, that is not 
made in exchange for any advantage related to FFEL Program loans or 
private education loans.
    (F) State education grants, scholarships, or financial aid funds 
administered by or on behalf of a State; and
    (iv) For purposes of paragraph (c) of this section, a gift to a 
family member of an agent, or to any other individual based on that 
individual's relationship with the agent, is considered a gift to the 
agent if--
    (A) The gift is given with the knowledge and acquiescence of the 
agent; and
    (B) The agent has reason to believe the gift was given because of 
the official position of the agent;
    (3) Consulting or other contracting arrangements. An agent who is 
employed in the financial aid office of the institution or who otherwise 
has responsibilities with respect to FFEL Program loans or private 
education loans must not accept from any lender or affiliate of any 
lender any fee, payment, or other financial benefit (including the 
opportunity to purchase stock) as compensation for any type of 
consulting arrangement or other contract to provide services to a lender 
or on behalf of a lender relating to FFEL Program loans or private 
education loans. Nothing in paragraph (c)(3) of this section will be 
construed as prohibiting--
    (i) An agent who is not employed in the institution's financial aid 
office and who does not otherwise have responsibilities with respect to 
FFEL Program loans or private education loans from performing paid or 
unpaid service on a board of directors of a lender, guarantor, or 
servicer of education loans;
    (ii) An agent who is not employed in the institution's financial aid 
office but who has responsibility with respect to FFEL Program loans or 
private education loans from performing paid or unpaid service on a 
board of directors of a lender, guarantor, or servicer of FFEL Program 
loans or private education loans, if the institution has a written 
conflict of interest policy that clearly sets forth that agents must

[[Page 236]]

recuse themselves from participating in any decision of the board 
regarding FFEL Program loans or private education loans at the 
institution; or
    (iii) An officer, employee, or contractor of a lender, guarantor, or 
servicer of FFEL Program loans or private education loans from serving 
on a board of directors, or serving as a trustee, of an institution, if 
the institution has a written conflict of interest policy that the board 
member or trustee must recuse themselves from any decision regarding 
FFEL Program loans or private education loans at the institution;
    (4) Directing borrowers to particular lenders or delaying loan 
certifications. The institution must not--
    (i) For any first-time borrower, assign, through award packaging or 
other methods, the borrower's loan to a particular lender; or
    (ii) Refuse to certify, or delay certification of, any loan based on 
the borrower's selection of a particular lender or guaranty agency;
    (5)(i) Offers of funds for private loans. The institution must not 
request or accept from any lender any offer of funds to be used for 
private education loans, including funds for an opportunity pool loan, 
to students in exchange for the institution providing concessions or 
promises regarding providing the lender with--
    (A) A specified number of FFEL Program loans or private education 
loans;
    (B) A specified loan volume of such loans; or
    (C) A preferred lender arrangement for such loans.
    (ii) For purposes of paragraph (c) of this section, the term 
opportunity pool loan means a private education loan made by a lender to 
a student attending the institution or the family member of such a 
student that involves a payment, directly or indirectly, by such 
institution of points, premiums, additional interest, or financial 
support to such lender for the purpose of such lender extending credit 
to the student or the family;
    (6) Staffing assistance. The institution must not request or accept 
from any lender any assistance with call center staffing or financial 
aid office staffing, except that nothing in this paragraph will be 
construed to prohibit the institution from requesting or accepting 
assistance from a lender related to--
    (i) Professional development training for financial aid 
administrators;
    (ii) Providing educational counseling materials, financial literacy 
materials, or debt management materials to borrowers, provided that such 
materials disclose to borrowers the identification of any lender that 
assisted in preparing or providing such materials; or
    (iii) Staffing services on a short-term, nonrecurring basis to 
assist the institution with financial aid-related functions during 
emergencies, including State-declared or Federally declared natural 
disasters, Federally declared national disasters, and other localized 
disasters and emergencies identified by the Secretary; and
    (7) Advisory board compensation. Any employee who is employed in the 
financial aid office of the institution, or who otherwise has 
responsibilities with respect to FFEL Program loans or private education 
loans or other student financial aid of the institution, and who serves 
on an advisory board, commission, or group established by a lender, 
guarantor, or group of lenders or guarantors, must not receive anything 
of value from the lender, guarantor, or group of lenders or guarantors, 
except that the employee may be reimbursed for reasonable expenses, as 
that term is defined in Sec. 668.16(d)(2)(ii), incurred in serving on 
such advisory board, commission, or group.

(Approved by the Office of Management and Budget under control number 
1845-XXXA)

(Authority:20 U.S.C. 1019b(c)(2)), 1094(a)(25) and (e)



Subpart D_Loan Information To Be Disclosed by Institutions Participating 
               in the William D. Ford Direct Loan Program



Sec. 601.30  Duties of institutions.

    (a) Each covered institution participating in the William D. Ford 
Direct Loan Program under part D of title IV of the HEA must--
    (1) Make the information identified in a model disclosure form 
developed by the Secretary pursuant to section

[[Page 237]]

154(a) of the HEA available to students attending or planning to attend 
the institution, or the families of such students, as applicable; and
    (2) If the institution provides information regarding a private 
education loan to a prospective borrower, concurrently provide such 
borrower with the information identified on the model disclosure form 
that the Secretary provides to the institution under section 154(a) of 
the HEA.
    (b) In providing the information required under paragraph (a) of 
this section, a covered institution may use a comparable form designed 
by the institution instead of the model disclosure form.

(Approved by the Office of Management and Budget under control number 
1845-XXXB)

(Authority:20 U.S.C. 1019c(b))



                    Subpart E_Lender Responsibilities



Sec. 601.40  Disclosure and reporting requirements for lenders.

    (a) Disclosures to borrowers. (1) A lender must, at or prior to 
disbursement of a FFEL loan, provide the borrower, in writing (including 
through electronic means), in clear and understandable terms, the 
disclosures required in Sec. 682.205(a) and (b).
    (2) A lender must, for each of its private education loans, comply 
with the disclosure requirements under section 128(e) of the Truth in 
Lending Act (15 U.S.C. 1638(e)).
    (b) Reports to the Secretary. Each FFEL lender must report annually 
to the Secretary--
    (1) Any reasonable expenses paid or provided to any agent of a 
covered institution who is employed in the financial aid office or has 
other responsibilities with respect to education loans or other student 
financial aid of the institution for service on a lender advisory board, 
commission or group established by a lender or group of lenders; or
    (2) Any similar expenses paid or provided to any agent of an 
institution-affiliated organization who is involved in recommending, 
promoting, or endorsing education loans.
    (3) The report required by this paragraph must include--
    (i) The amount of expenses paid or provided for each specific 
instance in which the lender provided expenses;
    (ii) The name of any agent described in paragraph (b)(1) of this 
section to whom the expenses were paid or provided;
    (iii) The dates of the activity for which the expenses were paid or 
provided; and
    (iv) A brief description of the activity for which the expenses were 
paid or provided.
    (c) Lender certification of compliance. (1) Any FFEL lender 
participating in one or more preferred lender arrangements must annually 
certify to the Secretary its compliance with the Higher Education Act of 
1965, as amended; and
    (2) If the lender is required to submit an audit under 34 CFR 
682.305(c), the lender's compliance with the requirements under this 
section must be reported on and attested to annually by the lender's 
auditor.
    (3) A lender may comply with the certification requirements of this 
section if the certifications are provided as part of the annual audit 
required by 34 CFR 682.305(c).
    (4) A lender who is not required to submit an audit must submit the 
required certification at such time and in such manner as directed by 
the Secretary.
    (d) Annual lender report to covered institutions. A FFEL lender with 
a preferred lender arrangement with a covered institution or an 
institution-affiliated organization relating to FFEL loans must 
annually, on a date prescribed by the Secretary, provide to the covered 
institution or the institution-affiliated organization and to the 
Secretary, such information required by the Secretary in relation to the 
FFEL loans the lender plans to offer pursuant to that preferred lender 
arrangement for the next award year.

(Approved by the Office of Management and Budget under control number 
1845-XXXA)

(Authority:20 U.S.C. 1019a(b) and 1019b(b))

[[Page 238]]



PART 602_THE SECRETARY'S RECOGNITION OF ACCREDITING AGENCIES--
Table of Contents



                            Subpart A_General

Sec.
602.1  Why does the Secretary recognize accrediting agencies?
602.2  How do I know which agencies the Secretary recognizes?
602.3  What definitions apply to this part?

                 Subpart B_The Criteria for Recognition

                     Basic Eligibility Requirements

602.10  Link to Federal programs.
602.11  Geographic scope of accrediting activities.
602.12  Accrediting experience.
602.13  Acceptance of the agency by others.

             Organizational and Administrative Requirements

602.14  Purpose and organization.
602.15  Administrative and fiscal responsibilities.

                Required Standards and Their Application

602.16  Accreditation and preaccreditation standards.
602.17  Application of standards in reaching an accrediting decision.
602.18  Ensuring consistency in decision-making.
602.19  Monitoring and reevaluation of accredited institutions and 
          programs.
602.20  Enforcement of standards.
602.21  Review of standards.

               Required Operating Policies and Procedures

602.22  Substantive change.
602.23  Operating procedures all agencies must have.
602.24  Additional procedures certain institutional accreditors must 
          have.
602.25  Due process.
602.26  Notification of accrediting decisions.
602.27  Other information an agency must provide the Department.
602.28  Regard for decisions of States and other accrediting agencies.

                    Subpart C_The Recognition Process

               Application and Review by Department Staff

602.30  Activities covered by recognition procedures.
602.31  Agency submissions to the Department.
602.32  Procedures for Department review of applications for recognition 
          or for change in scope, compliance reports, and increases in 
          enrollment.
602.33  Procedures for review of agencies during the period of 
          recognition.

 Review by the National Advisory Committee on Institutional Quality and 
                                Integrity

602.34  Advisory Committee meetings.
602.35  Responding to the Advisory Committee's recommendation.

          Review and Decision by the Senior Department Official

602.36  Senior Department official's decision.

                      Appeal Rights and Procedures

602.37  Appealing the senior Department official's decision to the 
          Secretary.
602.38  Contesting the Secretary's final decision to deny, limit, 
          suspend, or terminate an agency's recognition.

                  Subpart D_Department Responsibilities

602.50  What information does the Department share with a recognized 
          agency about its accredited institutions and programs?

    Authority: 20 U.S.C. 1099b, unless otherwise noted.

    Source: 64 FR 56617, Oct. 20, 1999, unless otherwise noted.



                            Subpart A_General



Sec. 602.1  Why does the Secretary recognize accrediting agencies?

    (a) The Secretary recognizes accrediting agencies to ensure that 
these agencies are, for the purposes of the Higher Education Act of 
1965, as amended (HEA), or for other Federal purposes, reliable 
authorities regarding the quality of education or training offered by 
the institutions or programs they accredit.
    (b) The Secretary lists an agency as a nationally recognized 
accrediting agency if the agency meets the criteria for recognition 
listed in subpart B of this part.

(Authority: 20 U.S.C. 1099b)



Sec. 602.2  How do I know which agencies the Secretary recognizes?

    (a) Periodically, the Secretary publishes a list of recognized 
agencies in the Federal Register, together with each agency's scope of 
recognition. You may obtain a copy of the list from the

[[Page 239]]

Department at any time. The list is also available on the Department's 
web site.
    (b) If the Secretary denies continued recognition to a previously 
recognized agency, or if the Secretary limits, suspends, or terminates 
the agency's recognition before the end of its recognition period, the 
Secretary publishes a notice of that action in the Federal Register. The 
Secretary also makes the reasons for the action available to the public, 
on request.

(Authority: 20 U.S.C. 1099b)



Sec. 602.3  What definitions apply to this part?

    The following definitions apply to this part:
    Accreditation means the status of public recognition that an 
accrediting agency grants to an educational institution or program that 
meets the agency's standards and requirements.
    Accrediting agency or agency means a legal entity, or that part of a 
legal entity, that conducts accrediting activities through voluntary, 
non-Federal peer review and makes decisions concerning the accreditation 
or preaccreditation status of institutions, programs, or both.
    Act means the Higher Education Act of 1965, as amended.
    Adverse accrediting action or adverse action means the denial, 
withdrawal, suspension, revocation, or termination of accreditation or 
preaccreditation, or any comparable accrediting action an agency may 
take against an institution or program.
    Advisory Committee means the National Advisory Committee on 
Institutional Quality and Integrity.
    Branch campus means a location of an institution that meets the 
definition of branch campus in 34 CFR 600.2.
    Compliance report means a written report that the Department 
requires an agency to file to demonstrate that the agency has addressed 
deficiencies specified in a decision letter from the senior Department 
official or the Secretary.
    Correspondence education means:
    (1) Education provided through one or more courses by an institution 
under which the institution provides instructional materials, by mail or 
electronic transmission, including examinations on the materials, to 
students who are separated from the instructor.
    (2) Interaction between the instructor and the student is limited, 
is not regular and substantive, and is primarily initiated by the 
student.
    (3) Correspondence courses are typically self-paced.
    (4) Correspondence education is not distance education.
    Designated Federal Official means the Federal officer designated 
under section 10(f) of the Federal Advisory Committee Act, 5 U.S.C. 
Appdx. 1.
    Direct assessment program means an instructional program that, in 
lieu of credit hours or clock hours as a measure of student learning, 
utilizes direct assessment of student learning, or recognizes the direct 
assessment of student learning by others, and meets the conditions of 34 
CFR 668.10. For title IV, HEA purposes, the institution must obtain 
approval for the direct assessment program from the Secretary under 34 
CFR 668.10(g) or (h) as applicable. As part of that approval, the 
accrediting agency must--
    (1) Evaluate the program(s) and include them in the institution's 
grant of accreditation or preaccreditation; and
    (2) Review and approve the institution's claim of each direct 
assessment program's equivalence in terms of credit or clock hours.
    Distance education means education that uses one or more of the 
technologies listed in paragraphs (1) through (4) of this definition to 
deliver instruction to students who are separated from the instructor 
and to support regular and substantive interaction between the students 
and the instructor, either synchronously or asynchronously. The 
technologies may include--
    (1) The internet;
    (2) One-way and two-way transmissions through open broadcast, closed 
circuit, cable, microwave, broadband lines, fiber optics, satellite, or 
wireless communications devices;
    (3) Audio conferencing; or
    (4) Video cassettes, DVDs, and CD-ROMs, if the cassettes, DVDs, or 
CD-ROMs are used in a course in conjunction with any of the technologies 
listed

[[Page 240]]

in paragraphs (1) through (3) of this definition.
    Final accrediting action means a final determination by an 
accrediting agency regarding the accreditation or preaccreditation 
status of an institution or program. A final accrediting action is not 
appealable within the agency.
    Institution of higher education or institution means an educational 
institution that qualifies, or may qualify, as an eligible institution 
under 34 CFR part 600.
    Institutional accrediting agency means an agency that accredits 
institutions of higher education.
    Nationally recognized accrediting agency, nationally recognized 
agency, or recognized agency means an accrediting agency that the 
Secretary recognizes under this part.
    Preaccreditation means the status of public recognition that an 
accrediting agency grants to an institution or program for a limited 
period of time that signifies the agency has determined that the 
institution or program is progressing towards accreditation and is 
likely to attain accreditation before the expiration of that limited 
period of time.
    Program means a postsecondary educational program offered by an 
institution of higher education that leads to an academic or 
professional degree, certificate, or other recognized educational 
credential.
    Programmatic accrediting agency means an agency that accredits 
specific educational programs that prepare students for entry into a 
profession, occupation, or vocation.
    Recognition means an unappealed determination by the senior 
Department official under Sec. 602.36, or a determination by the 
Secretary on appeal under Sec. 602.37, that an accrediting agency 
complies with the criteria for recognition listed in subpart B of this 
part and that the agency is effective in its application of those 
criteria. A grant of recognition to an agency as a reliable authority 
regarding the quality of education or training offered by institutions 
or programs it accredits remains in effect for the term granted except 
upon a determination made in accordance with subpart C of this part that 
the agency no longer complies with the subpart B criteria or that it has 
become ineffective in its application of those criteria.
    Representative of the public means a person who is not--
    (1) An employee, member of the governing board, owner, or 
shareholder of, or consultant to, an institution or program that either 
is accredited or preaccredited by the agency or has applied for 
accreditation or preaccreditation;
    (2) A member of any trade association or membership organization 
related to, affiliated with, or associated with the agency; or
    (3) A spouse, parent, child, or sibling of an individual identified 
in paragraph (1) or (2) of this definition.
    Scope of recognition or scope means the range of accrediting 
activities for which the Secretary recognizes an agency. The Secretary 
may place a limitation on the scope of an agency's recognition for Title 
IV, HEA purposes. The Secretary's designation of scope defines the 
recognition granted according to--
    (1) Geographic area of accrediting activities;
    (2) Types of degrees and certificates covered;
    (3) Types of institutions and programs covered;
    (4) Types of preaccreditation status covered, if any; and
    (5) Coverage of accrediting activities related to distance education 
or correspondence education.
    Secretary means the Secretary of the U.S. Department of Education or 
any official or employee of the Department acting for the Secretary 
under a delegation of authority.
    Senior Department official means the senior official in the U.S. 
Department of Education who reports directly to the Secretary regarding 
accrediting agency recognition.
    State means a State of the Union, American Samoa, the Commonwealth 
of Puerto Rico, the District of Columbia, Guam, the United States Virgin 
Islands, the Commonwealth of the Northern Mariana Islands, the Republic 
of the Marshall Islands, the Federated States of Micronesia, and the 
Republic

[[Page 241]]

of Palau. The latter three are also known as the Freely Associated 
States.
    Teach-out agreement means a written agreement between institutions 
that provides for the equitable treatment of students and a reasonable 
opportunity for students to complete their program of study if an 
institution, or an institutional location that provides one hundred 
percent of at least one program offered, ceases to operate before all 
enrolled students have completed their program of study.
    Teach-out plan means a written plan developed by an institution that 
provides for the equitable treatment of students if an institution, or 
an institutional location that provides one hundred percent of at least 
one program, ceases to operate before all students have completed their 
program of study, and may include, if required by the institution's 
accrediting agency, a teach-out agreement between institutions.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55426, Oct. 27, 2009]



                 Subpart B_The Criteria for Recognition

                     Basic Eligibility Requirements



Sec. 602.10  Link to Federal programs.

    The agency must demonstrate that--
    (a) If the agency accredits institutions of higher education, its 
accreditation is a required element in enabling at least one of those 
institutions to establish eligibility to participate in HEA programs; or
    (b) If the agency accredits institutions of higher education or 
higher education programs, or both, its accreditation is a required 
element in enabling at least one of those entities to establish 
eligibility to participate in non-HEA Federal programs.

(Authority: 20 U.S.C. 1099b)



Sec. 602.11  Geographic scope of accrediting activities.

    The agency must demonstrate that its accrediting activities cover--
    (a) A State, if the agency is part of a State government;
    (b) A region of the United States that includes at least three 
States that are reasonably close to one another; or
    (c) The United States.

(Authority: 20 U.S.C. 1099b)



Sec. 602.12  Accrediting experience.

    (a) An agency seeking initial recognition must demonstrate that it 
has--
    (1) Granted accreditation or preaccreditation--
    (i) To one or more institutions if it is requesting recognition as 
an institutional accrediting agency and to one or more programs if it is 
requesting recognition as a programmatic accrediting agency;
    (ii) That covers the range of the specific degrees, certificates, 
institutions, and programs for which it seeks recognition; and
    (iii) In the geographic area for which it seeks recognition; and
    (2) Conducted accrediting activities, including deciding whether to 
grant or deny accreditation or preaccreditation, for at least two years 
prior to seeking recognition.
    (b) A recognized agency seeking an expansion of its scope of 
recognition must demonstrate that it has granted accreditation or 
preaccreditation covering the range of the specific degrees, 
certificates, institutions, and programs for which it seeks the 
expansion of scope.

(Authority: 20 U.S.C. 1099b)



Sec. 602.13  Acceptance of the agency by others.

    The agency must demonstrate that its standards, policies, 
procedures, and decisions to grant or deny accreditation are widely 
accepted in the United States by--
    (a) Educators and educational institutions; and
    (b) Licensing bodies, practitioners, and employers in the 
professional or vocational fields for which the educational institutions 
or programs within the agency's jurisdiction prepare their students.

(Authority: 20 U.S.C. 1099b)

[[Page 242]]

             Organizational and Administrative Requirements



Sec. 602.14  Purpose and organization.

    (a) The Secretary recognizes only the following four categories of 
agencies:

------------------------------------------------------------------------
 The Secretary recognizes . .
              .                                that . . .
------------------------------------------------------------------------
(1) An accrediting agency....  (i) Has a voluntary membership of
                                institutions of higher education;
                               (ii) Has as a principal purpose the
                                accrediting of institutions of higher
                                education and that accreditation is a
                                required element in enabling those
                                institutions to participate in HEA
                                programs; and
                               (iii) Satisfies the ``separate and
                                independent'' requirements in paragraph
                                (b) of this section.
(2) An accrediting agency....  (i) Has a voluntary membership; and
                               (ii) Has as its principal purpose the
                                accrediting of higher education
                                programs, or higher education programs
                                and institutions of higher education,
                                and that accreditation is a required
                                element in enabling those entities to
                                participate in non-HEA Federal programs.
(3) An accrediting agency....  for purposes of determining eligibility
                                for Title IV, HEA programs--
                               (i) Either has a voluntary membership of
                                individuals participating in a
                                profession or has as its principal
                                purpose the accrediting of programs
                                within institutions that are accredited
                                by a nationally recognized accrediting
                                agency; and
                               (ii) Either satisfies the ``separate and
                                independent'' requirements in paragraph
                                (b) of this section or obtains a waiver
                                of those requirements under paragraphs
                                (d) and (e) of this section.
(4) A State agency...........  (i) Has as a principal purpose the
                                accrediting of institutions of higher
                                education, higher education programs, or
                                both; and
                               (ii) The Secretary listed as a nationally
                                recognized accrediting agency on or
                                before October 1, 1991 and has
                                recognized continuously since that date.
------------------------------------------------------------------------

    (b) For purposes of this section, the term separate and independent 
means that--
    (1) The members of the agency's decision-making body--who decide the 
accreditation or preaccreditation status of institutions or programs, 
establish the agency's accreditation policies, or both--are not elected 
or selected by the board or chief executive officer of any related, 
associated, or affiliated trade association or membership organization;
    (2) At least one member of the agency's decision-making body is a 
representative of the public, and at least one-seventh of that body 
consists of representatives of the public;
    (3) The agency has established and implemented guide lines for each 
member of the decision-making body to avoid conflicts of interest in 
making decisions;
    (4) The agency's dues are paid separately from any dues paid to any 
related, associated, or affiliated trade association or membership 
organization; and
    (5) The agency develops and determines its own budget, with no 
review by or consultation with any other entity or organization.
    (c) The Secretary considers that any joint use of personnel, 
services, equipment, or facilities by an agency and a related, 
associated, or affiliated trade association or membership organization 
does not violate the ``separate and independent'' requirements in 
paragraph (b) of this section if--
    (1) The agency pays the fair market value for its proportionate 
share of the joint use; and
    (2) The joint use does not compromise the independence and 
confidentiality of the accreditation process.
    (d) For purposes of paragraph (a)(3) of this section, the Secretary 
may waive the ``separate and independent'' requirements in paragraph (b) 
of this section if the agency demonstrates that--
    (1) The Secretary listed the agency as a nationally recognized 
agency on or before October 1, 1991 and has recognized it continuously 
since that date;
    (2) The related, associated, or affiliated trade association or 
membership organization plays no role in making or ratifying either the 
accrediting or policy decisions of the agency;

[[Page 243]]

    (3) The agency has sufficient budgetary and administrative autonomy 
to carry out its accrediting functions independently; and
    (4) The agency provides to the related, associated, or affiliated 
trade association or membership organization only information it makes 
available to the public.
    (e) An agency seeking a waiver of the ``separate and independent'' 
requirements under paragraph (d) of this section must apply for the 
waiver each time the agency seeks recognition or continued recognition.

(Authority: 20 U.S.C. 1099b)



Sec. 602.15  Administrative and fiscal responsibilities.

    The agency must have the administrative and fiscal capability to 
carry out its accreditation activities in light of its requested scope 
of recognition. The agency meets this requirement if the agency 
demonstrates that--
    (a) The agency has--
    (1) Adequate administrative staff and financial resources to carry 
out its accrediting responsibilities;
    (2) Competent and knowledgeable individuals, qualified by education 
and experience in their own right and trained by the agency on their 
responsibilities, as appropriate for their roles, regarding the agency's 
standards, policies, and procedures, to conduct its on-site evaluations, 
apply or establish its policies, and make its accrediting and 
preaccrediting decisions, including, if applicable to the agency's 
scope, their responsibilities regarding distance education and 
correspondence education;
    (3) Academic and administrative personnel on its evaluation, policy, 
and decision-making bodies, if the agency accredits institutions;
    (4) Educators and practitioners on its evaluation, policy, and 
decision-making bodies, if the agency accredits programs or single-
purpose institutions that prepare students for a specific profession;
    (5) Representatives of the public on all decision-making bodies; and
    (6) Clear and effective controls against conflicts of interest, or 
the appearance of conflicts of interest, by the agency's--
    (i) Board members;
    (ii) Commissioners;
    (iii) Evaluation team members;
    (iv) Consultants;
    (v) Administrative staff; and
    (vi) Other agency representatives; and
    (b) The agency maintains complete and accurate records of--
    (1) Its last full accreditation or preaccreditation review of each 
institution or program, including on-site evaluation team reports, the 
institution's or program's responses to on-site reports, periodic review 
reports, any reports of special reviews conducted by the agency between 
regular reviews, and a copy of the institution's or program's most 
recent self-study; and
    (2) All decisions made throughout an institution's or program's 
affiliation with the agency regarding the accreditation and 
preaccreditation of any institution or program and substantive changes, 
including all correspondence that is significantly related to those 
decisions.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55426, Oct. 27, 2009]

                Required Standards and Their Application



Sec. 602.16  Accreditation and preaccreditation standards.

    (a) The agency must demonstrate that it has standards for 
accreditation, and preaccreditation, if offered, that are sufficiently 
rigorous to ensure that the agency is a reliable authority regarding the 
quality of the education or training provided by the institutions or 
programs it accredits. The agency meets this requirement if--
    (1) The agency's accreditation standards effectively address the 
quality of the institution or program in the following areas:
    (i) Success with respect to student achievement in relation to the 
institution's mission, which may include different standards for 
different institutions or programs, as established by the institution, 
including, as appropriate, consideration of State licensing 
examinations, course completion, and job placement rates.

[[Page 244]]

    (ii) Curricula.
    (iii) Faculty.
    (iv) Facilities, equipment, and supplies.
    (v) Fiscal and administrative capacity as appropriate to the 
specified scale of operations.
    (vi) Student support services.
    (vii) Recruiting and admissions practices, academic calendars, 
catalogs, publications, grading, and advertising.
    (viii) Measures of program length and the objectives of the degrees 
or credentials offered.
    (ix) Record of student complaints received by, or available to, the 
agency.
    (x) Record of compliance with the institution's program 
responsibilities under Title IV of the Act, based on the most recent 
student loan default rate data provided by the Secretary, the results of 
financial or compliance audits, program reviews, and any other 
information that the Secretary may provide to the agency; and
    (2) The agency's preaccreditation standards, if offered, are 
appropriately related to the agency's accreditation standards and do not 
permit the institution or program to hold preaccreditation status for 
more than five years.
    (b) If the agency only accredits programs and does not serve as an 
institutional accrediting agency for any of those programs, its 
accreditation standards must address the areas in paragraph (a)(1) of 
this section in terms of the type and level of the program rather than 
in terms of the institution.
    (c) If the agency has or seeks to include within its scope of 
recognition the evaluation of the quality of institutions or programs 
offering distance education or correspondence education, the agency's 
standards must effectively address the quality of an institution's 
distance education or correspondence education in the areas identified 
in paragraph (a)(1) of this section. The agency is not required to have 
separate standards, procedures, or policies for the evaluation of 
distance education or correspondence education.
    (d) If none of the institutions an agency accredits participates in 
any Title IV, HEA program, or if the agency only accredits programs 
within institutions that are accredited by a nationally recognized 
institutional accrediting agency, the agency is not required to have the 
accreditation standards described in paragraphs (a)(1)(viii) and 
(a)(1)(x) of this section.
    (e) An agency that has established and applies the standards in 
paragraph (a) of this section may establish any additional accreditation 
standards it deems appropriate.
    (f) Nothing in paragraph (a) of this section restricts--
    (1) An accrediting agency from setting, with the involvement of its 
members, and applying accreditation standards for or to institutions or 
programs that seek review by the agency; or
    (2) An institution from developing and using institutional standards 
to show its success with respect to student achievement, which 
achievement may be considered as part of any accreditation review.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.17  Application of standards in reaching an accrediting 
decision.

    The agency must have effective mechanisms for evaluating an 
institution's or program's compliance with the agency's standards before 
reaching a decision to accredit or preaccredit the institution or 
program. The agency meets this requirement if the agency demonstrates 
that it--
    (a) Evaluates whether an institution or program--
    (1) Maintains clearly specified educational objectives that are 
consistent with its mission and appropriate in light of the degrees or 
certificates awarded;
    (2) Is successful in achieving its stated objectives; and
    (3) Maintains degree and certificate requirements that at least 
conform to commonly accepted standards;
    (b) Requires the institution or program to prepare, following 
guidance provided by the agency, an in-depth self-study that includes 
the assessment

[[Page 245]]

of educational quality and the institution's or program's continuing 
efforts to improve educational quality;
    (c) Conducts at least one on-site review of the institution or 
program during which it obtains sufficient information to determine if 
the institution or program complies with the agency's standards;
    (d) Allows the institution or program the opportunity to respond in 
writing to the report of the on-site review;
    (e) Conducts its own analysis of the self-study and supporting 
documentation furnished by the institution or program, the report of the 
on-site review, the institution's or program's response to the report, 
and any other appropriate information from other sources to determine 
whether the institution or program complies with the agency's standards;
    (f) Provides the institution or program with a detailed written 
report that assesses--
    (1) The institution's or program's compliance with the agency's 
standards, including areas needing improvement; and
    (2) The institution's or program's performance with respect to 
student achievement; and
    (g) Requires institutions that offer distance education or 
correspondence education to have processes in place through which the 
institution establishes that the student who registers in a distance 
education or correspondence education course or program is the same 
student who participates in and completes the course or program and 
receives the academic credit. The agency meets this requirement if it--
    (1) Requires institutions to verify the identity of a student who 
participates in class or coursework by using, at the option of the 
institution, methods such as--
    (i) A secure login and pass code;
    (ii) Proctored examinations; and
    (iii) New or other technologies and practices that are effective in 
verifying student identity; and
    (2) Makes clear in writing that institutions must use processes that 
protect student privacy and notify students of any projected additional 
student charges associated with the verification of student identity at 
the time of registration or enrollment.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.18  Ensuring consistency in decision-making.

    The agency must consistently apply and enforce standards that 
respect the stated mission of the institution, including religious 
mission, and that ensure that the education or training offered by an 
institution or program, including any offered through distance education 
or correspondence education, is of sufficient quality to achieve its 
stated objective for the duration of any accreditation or 
preaccreditation period granted by the agency. The agency meets this 
requirement if the agency--
    (a) Has written specification of the requirements for accreditation 
and preaccreditation that include clear standards for an institution or 
program to be accredited;
    (b) Has effective controls against the inconsistent application of 
the agency's standards;
    (c) Bases decisions regarding accreditation and preaccreditation on 
the agency's published standards;
    (d) Has a reasonable basis for determining that the information the 
agency relies on for making accrediting decisions is accurate; and
    (e) Provides the institution or program with a detailed written 
report that clearly identifies any deficiencies in the institution's or 
program's compliance with the agency's standards.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.19  Monitoring and reevaluation of accredited institutions
and programs.

    (a) The agency must reevaluate, at regularly established intervals, 
the institutions or programs it has accredited or preaccredited.
    (b) The agency must demonstrate it has, and effectively applies, a 
set of monitoring and evaluation approaches that enables the agency to 
identify problems with an institution's or program's continued 
compliance with

[[Page 246]]

agency standards and that takes into account institutional or program 
strengths and stability. These approaches must include periodic reports, 
and collection and analysis of key data and indicators, identified by 
the agency, including, but not limited to, fiscal information and 
measures of student achievement, consistent with the provisions of 
Sec. 602.16(f). This provision does not require institutions or programs 
to provide annual reports on each specific accreditation criterion.
    (c) Each agency must monitor overall growth of the institutions or 
programs it accredits and, at least annually, collect headcount 
enrollment data from those institutions or programs.
    (d) Institutional accrediting agencies must monitor the growth of 
programs at institutions experiencing significant enrollment growth, as 
reasonably defined by the agency.
    (e) Any agency that has notified the Secretary of a change in its 
scope in accordance with Sec. 602.27(a)(5) must monitor the headcount 
enrollment of each institution it has accredited that offers distance 
education or correspondence education. If any such institution has 
experienced an increase in headcount enrollment of 50 percent or more 
within one institutional fiscal year, the agency must report that 
information to the Secretary within 30 days of acquiring such data.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55427, Oct. 27, 2009]



Sec. 602.20  Enforcement of standards.

    (a) If the agency's review of an institution or program under any 
standard indicates that the institution or program is not in compliance 
with that standard, the agency must--
    (1) Immediately initiate adverse action against the institution or 
program; or
    (2) Require the institution or program to take appropriate action to 
bring itself into compliance with the agency's standards within a time 
period that must not exceed--
    (i) Twelve months, if the program, or the longest program offered by 
the institution, is less than one year in length;
    (ii) Eighteen months, if the program, or the longest program offered 
by the institution, is at least one year, but less than two years, in 
length; or
    (iii) Two years, if the program, or the longest program offered by 
the institution, is at least two years in length.
    (b) If the institution or program does not bring itself into 
compliance within the specified period, the agency must take immediate 
adverse action unless the agency, for good cause, extends the period for 
achieving compliance.

(Authority: 20 U.S.C. 1099b)



Sec. 602.21  Review of standards.

    (a) The agency must maintain a systematic program of review that 
demonstrates that its standards are adequate to evaluate the quality of 
the education or training provided by the institutions and programs it 
accredits and relevant to the educational or training needs of students.
    (b) The agency determines the specific procedures it follows in 
evaluating its standards, but the agency must ensure that its program of 
review--
    (1) Is comprehensive;
    (2) Occurs at regular, yet reasonable, intervals or on an ongoing 
basis;
    (3) Examines each of the agency's standards and the standards as a 
whole; and
    (4) Involves all of the agency's relevant constituencies in the 
review and affords them a meaningful opportunity to provide input into 
the review.
    (c) If the agency determines, at any point during its systematic 
program of review, that it needs to make changes to its standards, the 
agency must initiate action within 12 months to make the changes and 
must complete that action within a reasonable period of time. Before 
finalizing any changes to its standards, the agency must--
    (1) Provide notice to all of the agency's relevant constituencies, 
and other parties who have made their interest known to the agency, of 
the changes the agency proposes to make;
    (2) Give the constituencies and other interested parties adequate 
opportunity to comment on the proposed changes; and
    (3) Take into account any comments on the proposed changes submitted

[[Page 247]]

timely by the relevant constituencies and by other interested parties.

(Authority: 20 U.S.C. 1099b)

               Required Operating Policies and Procedures



Sec. 602.22  Substantive change.

    (a) If the agency accredits institutions, it must maintain adequate 
substantive change policies that ensure that any substantive change to 
the educational mission, program, or programs of an institution after 
the agency has accredited or preaccredited the institution does not 
adversely affect the capacity of the institution to continue to meet the 
agency's standards. The agency meets this requirement if--
    (1) The agency requires the institution to obtain the agency's 
approval of the substantive change before the agency includes the change 
in the scope of accreditation or preaccreditation it previously granted 
to the institution; and
    (2) The agency's definition of substantive change includes at least 
the following types of change:
    (i) Any change in the established mission or objectives of the 
institution.
    (ii) Any change in the legal status, form of control, or ownership 
of the institution.
    (iii) The addition of courses or programs that represent a 
significant departure from the existing offerings of educational 
programs, or method of delivery, from those that were offered when the 
agency last evaluated the institution.
    (iv) The addition of programs of study at a degree or credential 
level different from that which is included in the institution's current 
accreditation or preaccreditation.
    (v) A change from clock hours to credit hours.
    (vi) A substantial increase in the number of clock or credit hours 
awarded for successful completion of a program.
    (vii) If the agency's accreditation of an institution enables the 
institution to seek eligibility to participate in title IV, HEA 
programs, the entering into a contract under which an institution or 
organization not certified to participate in the title IV, HEA programs 
offers more than 25 percent of one or more of the accredited 
institution's educational programs.
    (viii)(A) If the agency's accreditation of an institution enables it 
to seek eligibility to participate in title IV, HEA programs, the 
establishment of an additional location at which the institution offers 
at least 50 percent of an educational program. The addition of such a 
location must be approved by the agency in accordance with paragraph (c) 
of this section unless the accrediting agency determines, and issues a 
written determination stating that the institution has--
    (1) Successfully completed at least one cycle of accreditation of 
maximum length offered by the agency and one renewal, or has been 
accredited for at least ten years;
    (2) At least three additional locations that the agency has 
approved; and
    (3) Met criteria established by the agency indicating sufficient 
capacity to add additional locations without individual prior approvals, 
including at a minimum satisfactory evidence of a system to ensure 
quality across a distributed enterprise that includes--
    (i) Clearly identified academic control;
    (ii) Regular evaluation of the locations;
    (iii) Adequate faculty, facilities, resources, and academic and 
student support systems;
    (iv) Financial stability; and
    (v) Long-range planning for expansion.
    (B) The agency's procedures for approval of an additional location, 
pursuant to paragraph (a)(2)(viii)(A) of this section, must require 
timely reporting to the agency of every additional location established 
under this approval.
    (C) Each agency determination or redetermination to preapprove an 
institution's addition of locations under paragraph (a)(2)(viii)(A) of 
this section may not exceed five years.
    (D) The agency may not preapprove an institution's addition of 
locations under paragraph (a)(2)(viii)(A) of this section after the 
institution undergoes a change in ownership resulting in a change in 
control as defined in 34 CFR

[[Page 248]]

600.31 until the institution demonstrates that it meets the conditions 
for the agency to preapprove additional locations described in this 
paragraph.
    (E) The agency must have an effective mechanism for conducting, at 
reasonable intervals, visits to a representative sample of additional 
locations approved under paragraph (a)(2)(viii)(A) of this section.
    (ix) The acquisition of any other institution or any program or 
location of another institution.
    (x) The addition of a permanent location at a site at which the 
institution is conducting a teach-out for students of another 
institution that has ceased operating before all students have completed 
their program of study.
    (3) The agency's substantive change policy must define when the 
changes made or proposed by an institution are or would be sufficiently 
extensive to require the agency to conduct a new comprehensive 
evaluation of that institution.
    (b) The agency may determine the procedures it uses to grant prior 
approval of the substantive change. However, these procedures must 
specify an effective date, which is not retroactive, on which the change 
is included in the program's or institution's accreditation. An agency 
may designate the date of a change in ownership as the effective date of 
its approval of that substantive change if the accreditation decision is 
made within 30 days of the change in ownership. Except as provided in 
paragraph (c) of this section, these procedures may, but need not, 
require a visit by the agency.
    (c) Except as provided in paragraph (a)(2)(viii)(A) of this section, 
if the agency's accreditation of an institution enables the institution 
to seek eligibility to participate in title IV, HEA programs, the 
agency's procedures for the approval of an additional location where at 
least 50 percent of an educational program is offered must provide for a 
determination of the institution's fiscal and administrative capacity to 
operate the additional location. In addition, the agency's procedures 
must include--
    (1) A visit, within six months, to each additional location the 
institution establishes, if the institution--
    (i) Has a total of three or fewer additional locations;
    (ii) Has not demonstrated, to the agency's satisfaction, that it has 
a proven record of effective educational oversight of additional 
locations; or
    (iii) Has been placed on warning, probation, or show cause by the 
agency or is subject to some limitation by the agency on its 
accreditation or preaccreditation status;
    (2) An effective mechanism for conducting, at reasonable intervals, 
visits to a representative sample of additional locations of 
institutions that operate more than three additional locations; and
    (3) An effective mechanism, which may, at the agency's discretion, 
include visits to additional locations, for ensuring that accredited and 
preaccredited institutions that experience rapid growth in the number of 
additional locations maintain educational quality.
    (d) The purpose of the visits described in paragraph (c) of this 
section is to verify that the additional location has the personnel, 
facilities, and resources it claimed to have in its application to the 
agency for approval of the additional location.

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55428, Oct. 27, 2009]



Sec. 602.23  Operating procedures all agencies must have.

    (a) The agency must maintain and make available to the public 
written materials describing--
    (1) Each type of accreditation and preaccreditation it grants;
    (2) The procedures that institutions or programs must follow in 
applying for accreditation or preaccreditation;
    (3) The standards and procedures it uses to determine whether to 
grant, reaffirm, reinstate, restrict, deny, revoke, terminate, or take 
any other action related to each type of accreditation and 
preaccreditation that the agency grants;
    (4) The institutions and programs that the agency currently 
accredits or preaccredits and, for each institution and program, the 
year the agency will next review or reconsider it for accreditation or 
preaccreditation; and

[[Page 249]]

    (5) The names, academic and professional qualifications, and 
relevant employment and organizational affiliations of--
    (i) The members of the agency's policy and decision-making bodies; 
and
    (ii) The agency's principal administrative staff.
    (b) In providing public notice that an institution or program 
subject to its jurisdiction is being considered for accreditation or 
preaccreditation, the agency must provide an opportunity for third-party 
comment concerning the institution's or program's qualifications for 
accreditation or preaccreditation. At the agency's discretion, third-
party comment may be received either in writing or at a public hearing, 
or both.
    (c) The accrediting agency must--
    (1) Review in a timely, fair, and equitable manner any complaint it 
receives against an accredited institution or program that is related to 
the agency's standards or procedures. The agency may not complete its 
review and make a decision regarding a complaint unless, in accordance 
with published procedures, it ensures that the institution or program 
has sufficient opportunity to provide a response to the complaint;
    (2) Take follow-up action, as necessary, including enforcement 
action, if necessary, based on the results of its review; and
    (3) Review in a timely, fair, and equitable manner, and apply 
unbiased judgment to, any complaints against itself and take follow-up 
action, as appropriate, based on the results of its review.
    (d) If an institution or program elects to make a public disclosure 
of its accreditation or preaccreditation status, the agency must ensure 
that the institution or program discloses that status accurately, 
including the specific academic or instructional programs covered by 
that status and the name, address, and telephone number of the agency.
    (e) The accrediting agency must provide for the public correction of 
incorrect or misleading information an accredited or preaccredited 
institution or program releases about--
    (1) The accreditation or preaccreditation status of the institution 
or program;
    (2) The contents of reports of on-site reviews; and
    (3) The agency's accrediting or preaccrediting actions with respect 
to the institution or program.
    (f) The agency may establish any additional operating procedures it 
deems appropriate. At the agency's discretion, these may include 
unannounced inspections.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55428, Oct. 27, 2009]



Sec. 602.24  Additional procedures certain institutional accreditors
must have.

    If the agency is an institutional accrediting agency and its 
accreditation or preaccreditation enables those institutions to obtain 
eligibility to participate in Title IV, HEA programs, the agency must 
demonstrate that it has established and uses all of the following 
procedures:
    (a) Branch campus. (1) The agency must require the institution to 
notify the agency if it plans to establish a branch campus and to submit 
a business plan for the branch campus that describes--
    (i) The educational program to be offered at the branch campus;
    (ii) The projected revenues and expenditures and cash flow at the 
branch campus; and
    (iii) The operation, management, and physical resources at the 
branch campus.
    (2) The agency may extend accreditation to the branch campus only 
after it evaluates the business plan and takes whatever other actions it 
deems necessary to determine that the branch campus has sufficient 
educational, financial, operational, management, and physical resources 
to meet the agency's standards.
    (3) The agency must undertake a site visit to the branch campus as 
soon as practicable, but no later than six months after the 
establishment of that campus.

[[Page 250]]

    (b) Change in ownership. The agency must undertake a site visit to 
an institution that has undergone a change of ownership that resulted in 
a change of control as soon as practicable, but no later than six months 
after the change of ownership.
    (c) Teach-out plans and agreements. (1) The agency must require an 
institution it accredits or preaccredits to submit a teach-out plan to 
the agency for approval upon the occurrence of any of the following 
events:
    (i) The Secretary notifies the agency that the Secretary has 
initiated an emergency action against an institution, in accordance with 
section 487(c)(1)(G) of the HEA, or an action to limit, suspend, or 
terminate an institution participating in any title IV, HEA program, in 
accordance with section 487(c)(1)(F) of the HEA, and that a teach-out 
plan is required.
    (ii) The agency acts to withdraw, terminate, or suspend the 
accreditation or preaccreditation of the institution.
    (iii) The institution notifies the agency that it intends to cease 
operations entirely or close a location that provides one hundred 
percent of at least one program.
    (iv) A State licensing or authorizing agency notifies the agency 
that an institution's license or legal authorization to provide an 
educational program has been or will be revoked.
    (2) The agency must evaluate the teach-out plan to ensure it 
provides for the equitable treatment of students under criteria 
established by the agency, specifies additional charges, if any, and 
provides for notification to the students of any additional charges.
    (3) If the agency approves a teach-out plan that includes a program 
that is accredited by another recognized accrediting agency, it must 
notify that accrediting agency of its approval.
    (4) The agency may require an institution it accredits or 
preaccredits to enter into a teach-out agreement as part of its teach-
out plan.
    (5) The agency must require an institution it accredits or 
preaccredits that enters into a teach-out agreement, either on its own 
or at the request of the agency, to submit that teach-out agreement for 
approval. The agency may approve the teach-out agreement only if the 
agreement is between institutions that are accredited or preaccredited 
by a nationally recognized accrediting agency, is consistent with 
applicable standards and regulations, and provides for the equitable 
treatment of students by ensuring that--
    (i) The teach-out institution has the necessary experience, 
resources, and support services to--
    (A) Provide an educational program that is of acceptable quality and 
reasonably similar in content, structure, and scheduling to that 
provided by the institution that is ceasing operations either entirely 
or at one of its locations; and
    (B) Remain stable, carry out its mission, and meet all obligations 
to existing students; and
    (ii) The teach-out institution demonstrates that it can provide 
students access to the program and services without requiring them to 
move or travel substantial distances and that it will provide students 
with information about additional charges, if any.
    (d) Closed institution. If an institution the agency accredits or 
preaccredits closes without a teach-out plan or agreement, the agency 
must work with the Department and the appropriate State agency, to the 
extent feasible, to assist students in finding reasonable opportunities 
to complete their education without additional charges.
    (e) Transfer of credit policies. The accrediting agency must 
confirm, as part of its review for initial accreditation or 
preaccreditation, or renewal of accreditation, that the institution has 
transfer of credit policies that--
    (1) Are publicly disclosed in accordance with Sec. 668.43(a)(11); 
and
    (2) Include a statement of the criteria established by the 
institution regarding the transfer of credit earned at another 
institution of higher education.
    (f) Credit-hour policies. The accrediting agency, as part of its 
review of an institution for initial accreditation or preaccreditation 
or renewal of accreditation, must conduct an effective review and 
evaluation of the reliability and accuracy of the institution's 
assignment of credit hours.
    (1) The accrediting agency meets this requirement if--

[[Page 251]]

    (i) It reviews the institution's--
    (A) Policies and procedures for determining the credit hours, as 
defined in 34 CFR 600.2, that the institution awards for courses and 
programs; and
    (B) The application of the institution's policies and procedures to 
its programs and coursework; and
    (ii) Makes a reasonable determination of whether the institution's 
assignment of credit hours conforms to commonly accepted practice in 
higher education.
    (2) In reviewing and evaluating an institution's policies and 
procedures for determining credit hour assignments, an accrediting 
agency may use sampling or other methods in the evaluation, sufficient 
to comply with paragraph (f)(1)(i)(B) of this section.
    (3) The accrediting agency must take such actions that it deems 
appropriate to address any deficiencies that it identifies at an 
institution as part of its reviews and evaluations under paragraph 
(f)(1)(i) and (ii) of this section, as it does in relation to other 
deficiencies it may identify, subject to the requirements of this part.
    (4) If, following the institutional review process under this 
paragraph (f), the agency finds systemic noncompliance with the agency's 
policies or significant noncompliance regarding one or more programs at 
the institution, the agency must promptly notify the Secretary.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55428, Oct. 27, 2009; 
75 FR 66947, Oct. 29, 2010]



Sec. 602.25  Due process.

    The agency must demonstrate that the procedures it uses throughout 
the accrediting process satisfy due process. The agency meets this 
requirement if the agency does the following:
    (a) Provides adequate written specification of its requirements, 
including clear standards, for an institution or program to be 
accredited or preaccredited.
    (b) Uses procedures that afford an institution or program a 
reasonable period of time to comply with the agency's requests for 
information and documents.
    (c) Provides written specification of any deficiencies identified at 
the institution or program examined.
    (d) Provides sufficient opportunity for a written response by an 
institution or program regarding any deficiencies identified by the 
agency, to be considered by the agency within a timeframe determined by 
the agency, and before any adverse action is taken.
    (e) Notifies the institution or program in writing of any adverse 
accrediting action or an action to place the institution or program on 
probation or show cause. The notice describes the basis for the action.
    (f) Provides an opportunity, upon written request of an institution 
or program, for the institution or program to appeal any adverse action 
prior to the action becoming final.
    (1) The appeal must take place at a hearing before an appeals panel 
that--
    (i) May not include current members of the agency's decision-making 
body that took the initial adverse action;
    (ii) Is subject to a conflict of interest policy;
    (iii) Does not serve only an advisory or procedural role, and has 
and uses the authority to make the following decisions: to affirm, 
amend, or reverse adverse actions of the original decision-making body; 
and
    (iv) Affirms, amends, reverses, or remands the adverse action. A 
decision to affirm, amend, or reverse the adverse action is implemented 
by the appeals panel or by the original decision-making body, at the 
agency's option. In a decision to remand the adverse action to the 
original decision-making body for further consideration, the appeals 
panel must identify specific issues that the original decision-making 
body must address. In a decision that is implemented by or remanded to 
the original decision-making body, that body must act in a manner 
consistent with the appeals panel's decisions or instructions.
    (2) The agency must recognize the right of the institution or 
program to employ counsel to represent the institution or program during 
its appeal, including to make any presentation that the agency permits 
the institution or

[[Page 252]]

program to make on its own during the appeal.
    (g) The agency notifies the institution or program in writing of the 
result of its appeal and the basis for that result.
    (h)(1) The agency must provide for a process, in accordance with 
written procedures, through which an institution or program may, before 
the agency reaches a final adverse action decision, seek review of new 
financial information if all of the following conditions are met:
    (i) The financial information was unavailable to the institution or 
program until after the decision subject to appeal was made.
    (ii) The financial information is significant and bears materially 
on the financial deficiencies identified by the agency. The criteria of 
significance and materiality are determined by the agency.
    (iii) The only remaining deficiency cited by the agency in support 
of a final adverse action decision is the institution's or program's 
failure to meet an agency standard pertaining to finances.
    (2) An institution or program may seek the review of new financial 
information described in paragraph (h)(1) of this section only once and 
any determination by the agency made with respect to that review does 
not provide a basis for an appeal.

(Authority: 20 U.S.C. 1099b)

[74 FR 55429, Oct. 27, 2009]



Sec. 602.26  Notification of accrediting decisions.

    The agency must demonstrate that it has established and follows 
written procedures requiring it to provide written notice of its 
accrediting decisions to the Secretary, the appropriate State licensing 
or authorizing agency, the appropriate accrediting agencies, and the 
public. The agency meets this requirement if the agency, following its 
written procedures--
    (a) Provides written notice of the following types of decisions to 
the Secretary, the appropriate State licensing or authorizing agency, 
the appropriate accrediting agencies, and the public no later than 30 
days after it makes the decision:
    (1) A decision to award initial accreditation or preaccreditation to 
an institution or program.
    (2) A decision to renew an institution's or program's accreditation 
or preaccreditation;
    (b) Provides written notice of the following types of decisions to 
the Secretary, the appropriate State licensing or authorizing agency, 
and the appropriate accrediting agencies at the same time it notifies 
the institution or program of the decision, but no later than 30 days 
after it reaches the decision:
    (1) A final decision to place an institution or program on probation 
or an equivalent status.
    (2) A final decision to deny, withdraw, suspend, revoke, or 
terminate the accreditation or preaccreditation of an institution or 
program.
    (3) A final decision to take any other adverse action, as defined by 
the agency, not listed in paragraph (b)(2) of this section;
    (c) Provides written notice to the public of the decisions listed in 
paragraphs (b)(1), (b)(2), and (b)(3) of this section within 24 hours of 
its notice to the institution or program;
    (d) For any decision listed in paragraph (b)(2) of this section, 
makes available to the Secretary, the appropriate State licensing or 
authorizing agency, and the public, no later than 60 days after the 
decision, a brief statement summarizing the reasons for the agency's 
decision and the official comments that the affected institution or 
program may wish to make with regard to that decision, or evidence that 
the affected institution has been offered the opportunity to provide 
official comment;
    (e) Notifies the Secretary, the appropriate State licensing or 
authorizing agency, the appropriate accrediting agencies, and, upon 
request, the public if an accredited or preaccredited institution or 
program--
    (1) Decides to withdraw voluntarily from accreditation or 
preaccreditation, within 30 days of receiving notification from the 
institution or program that it is withdrawing voluntarily from 
accreditation or preaccreditation; or

[[Page 253]]

    (2) Lets its accreditation or preaccreditation lapse, within 30 days 
of the date on which accreditation or preaccreditation lapses.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)

[64 FR 56617, Oct. 20, 1999, as amended at 74 FR 55429, Oct. 27, 2009]



Sec. 602.27  Other information an agency must provide the Department.

    (a) The agency must submit to the Department--
    (1) A copy of any annual report it prepares;
    (2) A copy, updated annually, of its directory of accredited and 
preaccredited institutions and programs;
    (3) A summary of the agency's major accrediting activities during 
the previous year (an annual data summary), if requested by the 
Secretary to carry out the Secretary's responsibilities related to this 
part;
    (4) Any proposed change in the agency's policies, procedures, or 
accreditation or preaccreditation standards that might alter its--
    (i) Scope of recognition, except as provided in paragraph (a)(5) of 
this section; or
    (ii) Compliance with the criteria for recognition;
    (5) Notification that the agency has expanded its scope of 
recognition to include distance education or correspondence education as 
provided in section 496(a)(4)(B)(i)(I) of the HEA. Such an expansion of 
scope is effective on the date the Department receives the notification;
    (6) The name of any institution or program it accredits that the 
agency has reason to believe is failing to meet its title IV, HEA 
program responsibilities or is engaged in fraud or abuse, along with the 
agency's reasons for concern about the institution or program; and
    (7) If the Secretary requests, information that may bear upon an 
accredited or preaccredited institution's compliance with its title IV, 
HEA program responsibilities, including the eligibility of the 
institution or program to participate in title IV, HEA programs.
    (b) If an agency has a policy regarding notification to an 
institution or program of contact with the Department in accordance with 
paragraph (a)(6) or (a)(7) of this section, it must provide for a case-
by-case review of the circumstances surrounding the contact, and the 
need for the confidentiality of that contact. Upon a specific request by 
the Department, the agency must consider that contact confidential.

(Authority: 20 U.S.C. 1099b)

[74 FR 55430, Oct. 27, 2009]



Sec. 602.28  Regard for decisions of States and other accrediting agencies.

    (a) If the agency is an institutional accrediting agency, it may not 
accredit or preaccredit institutions that lack legal authorization under 
applicable State law to provide a program of education beyond the 
secondary level.
    (b) Except as provided in paragraph (c) of this section, the agency 
may not grant initial or renewed accreditation or preaccreditation to an 
institution, or a program offered by an institution, if the agency 
knows, or has reasonable cause to know, that the institution is the 
subject of--
    (1) A pending or final action brought by a State agency to suspend, 
revoke, withdraw, or terminate the institution's legal authority to 
provide postsecondary education in the State;
    (2) A decision by a recognized agency to deny accreditation or 
preaccreditation;
    (3) A pending or final action brought by a recognized accrediting 
agency to suspend, revoke, withdraw, or terminate the institution's 
accreditation or preaccreditation; or
    (4) Probation or an equivalent status imposed by a recognized 
agency.
    (c) The agency may grant accreditation or preaccreditation to an 
institution or program described in paragraph (b) of this section only 
if it provides to the Secretary, within 30 days of its action, a 
thorough and reasonable explanation, consistent with its standards, why 
the action of the other body does not preclude the agency's grant of 
accreditation or preaccreditation.
    (d) If the agency learns that an institution it accredits or 
preaccredits, or

[[Page 254]]

an institution that offers a program it accredits or preaccredits, is 
the subject of an adverse action by another recognized accrediting 
agency or has been placed on probation or an equivalent status by 
another recognized agency, the agency must promptly review its 
accreditation or preaccreditation of the institution or program to 
determine if it should also take adverse action or place the institution 
or program on probation or show cause.
    (e) The agency must, upon request, share with other appropriate 
recognized accrediting agencies and recognized State approval agencies 
information about the accreditation or preaccreditation status of an 
institution or program and any adverse actions it has taken against an 
accredited or preaccredited institution or program.

(Approved by the Office of Management and Budget under control number 
1845-0003)

(Authority: 20 U.S.C. 1099b)



                    Subpart C_The Recognition Process

    Source: 74 FR 55430, Oct. 27, 2009, unless otherwise noted.

               Application and Review by Department Staff



Sec. 602.30  Activities covered by recognition procedures.

    Recognition proceedings are administrative actions taken on any of 
the following matters:
    (a) Applications for initial or continued recognition submitted 
under Sec. 602.31(a).
    (b) Applications for an expansion of scope submitted under 
Sec. 602.31(b).
    (c) Compliance reports submitted under Sec. 602.31(c).
    (d) Reviews of agencies that have expanded their scope of 
recognition by notice, following receipt by the Department of 
information of an increase in headcount enrollment described in 
Sec. 602.19(e).
    (e) Staff analyses identifying areas of non-compliance based on a 
review conducted under Sec. 602.33.

(Authority: 20 U.S.C. 1099b)



Sec. 602.31  Agency submissions to the Department.

    (a) Applications for recognition or renewal of recognition. An 
accrediting agency seeking initial or continued recognition must submit 
a written application to the Secretary. Each accrediting agency must 
submit an application for continued recognition at least once every five 
years, or within a shorter time period specified in the final 
recognition decision. The application must consist of--
    (1) A statement of the agency's requested scope of recognition;
    (2) Evidence, including documentation, that the agency complies with 
the criteria for recognition listed in subpart B of this part and 
effectively applies those criteria; and
    (3) Evidence, including documentation, of how an agency that 
includes or seeks to include distance education or correspondence 
education in its scope of recognition applies its standards in 
evaluating programs and institutions it accredits that offer distance 
education or correspondence education.
    (b) Applications for expansions of scope. An agency seeking an 
expansion of scope by application must submit a written application to 
the Secretary. The application must--
    (1) Specify the scope requested;
    (2) Include documentation of experience in accordance with 
Sec. 602.12(b); and
    (3) Provide copies of any relevant standards, policies, or 
procedures developed and applied by the agency and documentation of the 
application of these standards, policies, or procedures.
    (c) Compliance reports. If an agency is required to submit a 
compliance report, it must do so within 30 days following the end of the 
period for achieving compliance as specified in the decision of the 
senior Department official or Secretary, as applicable.
    (d) Review following an increase in headcount enrollment. If an 
agency that has notified the Secretary in writing of its change in scope 
to include distance education or correspondence education in accordance 
with Sec. 602.27(a)(5) reports an increase in headcount enrollment in

[[Page 255]]

accordance with Sec. 602.19(e) for an institution it accredits, or if 
the Department notifies the agency of such an increase at one of the 
agency's accredited institutions, the agency must, within 45 days of 
reporting the increase or receiving notice of the increase from the 
Department, as applicable, submit a report explaining--
    (1) How the agency evaluates the capacity of the institutions or 
programs it accredits to accommodate significant growth in enrollment 
and to maintain educational quality;
    (2) The specific circumstances regarding the growth at the 
institution(s) or programs(s) that triggered the review and the results 
of any evaluation conducted by the agency; and
    (3) Any other information that the agency deems appropriate to 
demonstrate the effective application of the criteria for recognition or 
that the Department may require.
    (e) Consent to sharing of information. By submitting an application 
for recognition, the agency authorizes Department staff throughout the 
application process and during any period of recognition--
    (1) To observe its site visits to one or more of the institutions or 
programs it accredits or preaccredits, on an announced or unannounced 
basis;
    (2) To visit locations where agency activities such as training, 
review and evaluation panel meetings, and decision meetings take place, 
on an announced or unannounced basis;
    (3) To obtain copies of all documents the staff deems necessary to 
complete its review of the agency; and
    (4) To gain access to agency records, personnel, and facilities.
    (f) Public availability of agency records obtained by the 
Department. (1) The Secretary's processing and decision making on 
requests for public disclosure of agency materials reviewed under this 
part are governed by the Freedom of Information Act, 5 U.S.C. 552; the 
Trade Secrets Act, 18 U.S.C. 1905; the Privacy Act of 1974, as amended, 
5 U.S.C 552a; the Federal Advisory Committee Act, 5 U.S.C. Appdx. 1; and 
all other applicable laws. In recognition proceedings, agencies may--
    (i) Redact information that would identify individuals or 
institutions that is not essential to the Department's review of the 
agency;
    (ii) Make a good faith effort to designate all business information 
within agency submissions that the agency believes would be exempt from 
disclosure under exemption 4 of the Freedom of Information Act (FOIA), 5 
U.S.C. 552(b)(4). A blanket designation of all information contained 
within a submission, or of a category of documents, as meeting this 
exemption will not be considered a good faith effort and will be 
disregarded;
    (iii) Identify any other material the agency believes would be 
exempt from public disclosure under FOIA, the factual basis for the 
request, and any legal basis the agency has identified for withholding 
the document from disclosure; and
    (iv) Ensure documents submitted are only those required for 
Department review or as requested by Department officials.
    (2) The Secretary processes FOIA requests in accordance with 34 CFR 
part 5 and makes all documents provided to the Advisory Committee 
available to the public.

(Authority: 20 U.S.C. 1099b)



Sec. 602.32  Procedures for Department review of applications for
recognition or for change in scope, compliance reports, and 
increases in enrollment.

    (a) After receipt of an agency's application for initial or 
continued recognition, or change in scope, or an agency's compliance 
report, or an agency's report submitted under Sec. 602.31(d), Department 
staff publishes a notice of the agency's application or report in the 
Federal Register inviting the public to comment on the agency's 
compliance with the criteria for recognition and establishing a deadline 
for receipt of public comment.
    (b) The Department staff analyzes the agency's application for 
initial or renewal of recognition, compliance report, or report 
submitted under Sec. 602.31(d) to determine whether the agency satisfies 
the criteria for recognition, taking into account all available relevant 
information concerning the compliance of the agency with

[[Page 256]]

those criteria and in the agency's effectiveness in applying the 
criteria. The analysis of an application for recognition and, as 
appropriate, of a compliance report, or of a report required under 
Sec. 602.31(d), includes--
    (1) Observations from site visit(s), on an announced or unannounced 
basis, to the agency or to a location where agency activities such as 
training, review and evaluation panel meetings, and decision meetings 
take place and to one or more of the institutions or programs it 
accredits or preaccredits;
    (2) Review of the public comments and other third-party information 
the Department staff receives by the established deadline, and the 
agency's responses to the third-party comments, as appropriate, as well 
as any other information Department staff assembles for purposes of 
evaluating the agency under this part; and
    (3) Review of complaints or legal actions involving the agency.
    (c) The Department staff analyzes the materials submitted in support 
of an application for expansion of scope to ensure that the agency has 
the requisite experience, policies that comply with subpart B of this 
part, capacity, and performance record to support the request.
    (d) Department staff's evaluation of an agency may also include a 
review of information directly related to institutions or programs 
accredited or preaccredited by the agency relative to their compliance 
with the agency's standards, the effectiveness of the standards, and the 
agency's application of those standards.
    (e) If, at any point in its evaluation of an agency seeking initial 
recognition, Department staff determines that the agency fails to 
demonstrate compliance with the basic eligibility requirements in 
Secs. 602.10 through 602.13, the staff--
    (1) Returns the agency's application and provides the agency with an 
explanation of the deficiencies that caused staff to take that action; 
and
    (2) Recommends that the agency withdraw its application and reapply 
when the agency can demonstrate compliance.
    (f) Except with respect to an application that has been returned or 
is withdrawn under paragraph (e) of this section, when Department staff 
completes its evaluation of the agency, the staff--
    (1) Prepares a written draft analysis of the agency;
    (2) Sends the draft analysis including any identified areas of non-
compliance and a proposed recognition recommendation, and all supporting 
documentation, including all third-party comments the Department 
received by the established deadline, to the agency;
    (3) Invites the agency to provide a written response to the draft 
analysis and proposed recognition recommendation and third-party 
comments, specifying a deadline that provides at least 30 days for the 
agency's response;
    (4) Reviews the response to the draft analysis the agency submits, 
if any, and prepares the written final analysis. The final analysis 
includes a recognition recommendation to the senior Department official, 
as the Department staff deems appropriate, including, but not limited 
to, a recommendation to approve, deny, limit, suspend, or terminate 
recognition, require the submission of a compliance report and continue 
recognition pending a final decision on compliance, approve or deny a 
request for expansion of scope, or revise or affirm the scope of the 
agency; and
    (5) Provides to the agency, no later than seven days before the 
Advisory Committee meeting, the final staff analysis and any other 
available information provided to the Advisory Committee under 
Sec. 602.34(c).
    (g) The agency may request that the Advisory Committee defer acting 
on an application at that Advisory Committee meeting if Department staff 
fails to provide the agency with the materials described, and within the 
timeframes provided, in paragraphs (f)(3) and (f)(5) of this section. If 
the Department staff's failure to send the materials in accordance with 
the timeframe described in paragraph (f)(3) or (f)(5) of this section is 
due to the failure of the agency to submit reports to the Department, 
other information the Secretary requested, or its response to the draft 
analysis, by the deadline established by the Secretary, the agency

[[Page 257]]

forfeits its right to request a deferral of its application.

(Authority: 20 U.S.C. 1099b)



Sec. 602.33  Procedures for review of agencies during the period 
of recognition.

    (a) Department staff may review the compliance of a recognized 
agency with the criteria for recognition at any time--
    (1) At the request of the Advisory Committee; or
    (2) Based on any information that, as determined by Department 
staff, appears credible and raises issues relevant to recognition.
    (b) The review may include, but need not be limited to, any of the 
activities described in Sec. 602.32(b) and (d).
    (c) If, in the course of the review, and after provision to the 
agency of the documentation concerning the inquiry and consultation with 
the agency, Department staff notes that one or more deficiencies may 
exist in the agency's compliance with the criteria for recognition or in 
the agency's effective application of those criteria, it--
    (1) Prepares a written draft analysis of the agency's compliance 
with the criteria of concern. The draft analysis reflects the results of 
the review, and includes a recommendation regarding what action to take 
with respect to recognition. Possible recommendations include, but are 
not limited to, a recommendation to limit, suspend, or terminate 
recognition, or require the submission of a compliance report and to 
continue recognition pending a final decision on compliance;
    (2) Sends the draft analysis including any identified areas of non-
compliance, and a proposed recognition recommendation, and all 
supporting documentation to the agency; and
    (3) Invites the agency to provide a written response to the draft 
analysis and proposed recognition recommendation, specifying a deadline 
that provides at least 30 days for the agency's response.
    (d) If, after review of the agency's response to the draft analysis, 
Department staff concludes that the agency has demonstrated compliance 
with the criteria for recognition, the staff notifies the agency in 
writing of the results of the review. If the review was requested by the 
Advisory Committee, staff also provides the Advisory Committee with the 
results of the review.
    (e) If, after review of the agency's response to the draft analysis, 
Department staff concludes that the agency has not demonstrated 
compliance, the staff--
    (1) Notifies the agency that the draft analysis will be finalized 
for presentation to the Advisory Committee;
    (2) Publishes a notice in the Federal Register including, if 
practicable, an invitation to the public to comment on the agency's 
compliance with the criteria in question and establishing a deadline for 
receipt of public comment;
    (3) Provides the agency with a copy of all public comments received 
and, if practicable, invites a written response from the agency;
    (4) Finalizes the staff analysis as necessary to reflect its review 
of any agency response and any public comment received; and
    (5) Provides to the agency, no later than seven days before the 
Advisory Committee meeting, the final staff analysis and a recognition 
recommendation and any other information provided to the Advisory 
Committee under Sec. 602.34(c).
    (f) The Advisory Committee reviews the matter in accordance with 
Sec. 602.34.

(Authority: 20 U.S.C. 1099b)

 Review by the National Advisory Committee on Institutional Quality and 
                                Integrity



Sec. 602.34  Advisory Committee meetings.

    (a) Department staff submits a proposed schedule to the Chairperson 
of the Advisory Committee based on anticipated completion of staff 
analyses.
    (b) The Chairperson of the Advisory Committee establishes an agenda 
for the next meeting and, in accordance with the Federal Advisory 
Committee Act, presents it to the Designated Federal Official for 
approval.
    (c) Before the Advisory Committee meeting, Department staff provides 
the Advisory Committee with--
    (1) The agency's application for recognition or for expansion of 
scope, the agency's compliance report, or the agency's report submitted 
under

[[Page 258]]

Sec. 602.31(d), and supporting documentation;
    (2) The final Department staff analysis of the agency developed in 
accordance with Sec. 602.32 or Sec. 602.33, and any supporting 
documentation;
    (3) At the request of the agency, the agency's response to the draft 
analysis;
    (4) Any written third-party comments the Department received about 
the agency on or before the established deadline;
    (5) Any agency response to third-party comments; and
    (6) Any other information Department staff relied upon in developing 
its analysis.
    (d) At least 30 days before the Advisory Committee meeting, the 
Department publishes a notice of the meeting in the Federal Register 
inviting interested parties, including those who submitted third-party 
comments concerning the agency's compliance with the criteria for 
recognition, to make oral presentations before the Advisory Committee.
    (e) The Advisory Committee considers the materials provided under 
paragraph (c) of this section in a public meeting and invites Department 
staff, the agency, and other interested parties to make oral 
presentations during the meeting. A transcript is made of all Advisory 
Committee meetings.
    (f) The written motion adopted by the Advisory Committee regarding 
each agency's recognition will be made available during the Advisory 
Committee meeting. The Department will provide each agency, upon 
request, with a copy of the motion on recognition at the meeting. Each 
agency that was reviewed will be sent an electronic copy of the motion 
relative to that agency as soon as practicable after the meeting.
    (g) After each meeting of the Advisory Committee at which a review 
of agencies occurs, the Advisory Committee forwards to the senior 
Department official its recommendation with respect to each agency, 
which may include, but is not limited to, a recommendation to approve, 
deny, limit, suspend, or terminate recognition, to grant or deny a 
request for expansion of scope, to revise or affirm the scope of the 
agency, or to require the agency to submit a compliance report and to 
continue recognition pending a final decision on compliance.

(Authority: 20 U.S.C. 1099b)



Sec. 602.35  Responding to the Advisory Committee's recommendation.

    (a) Within ten days following the Advisory Committee meeting, the 
agency and Department staff may submit written comments to the senior 
Department official on the Advisory Committee's recommendation. The 
agency must simultaneously submit a copy of its written comments, if 
any, to Department staff. Department staff must simultaneously submit a 
copy of its written comments, if any, to the agency.
    (b) Comments must be limited to--
    (1) Any Advisory Committee recommendation that the agency or 
Department staff believes is not supported by the record;
    (2) Any incomplete Advisory Committee recommendation based on the 
agency's application; and
    (3) The inclusion of any recommendation or draft proposed decision 
for the senior Department official's consideration.
    (c)(1) Neither the Department staff nor the agency may submit 
additional documentary evidence with its comments unless the Advisory 
Committee's recognition recommendation proposes finding the agency 
noncompliant with, or ineffective in its application of, a criterion or 
criteria for recognition not identified in the final Department staff 
analysis provided to the Advisory Committee.
    (2) Within ten days of receipt by the Department staff of an 
agency's comments or new evidence, if applicable, or of receipt by the 
agency of the Department staff's comments, Department staff, the agency, 
or both, as applicable, may submit a response to the senior Department 
official. Simultaneously with submission, the agency must provide a copy 
of any response to the Department staff. Simultaneously with submission, 
Department staff must provide a copy of any response to the agency.

(Authority: 20 U.S.C. 1099b)

[[Page 259]]

          Review and Decision by the Senior Department Official



Sec. 602.36  Senior Department official's decision.

    (a) The senior Department official makes a decision regarding 
recognition of an agency based on the record compiled under 
Secs. 602.32, 602.33, 602.34, and 602.35 including, as applicable, the 
following:
    (1) The materials provided to the Advisory Committee under 
Sec. 602.34(c).
    (2) The transcript of the Advisory Committee meeting.
    (3) The recommendation of the Advisory Committee.
    (4) Written comments and responses submitted under Sec. 602.35.
    (5) New evidence submitted in accordance with Sec. 602.35(c)(1).
    (6) A communication from the Secretary referring an issue to the 
senior Department official's consideration under Sec. 602.37(e).
    (b) In the event that statutory authority or appropriations for the 
Advisory Committee ends, or there are fewer duly appointed Advisory 
Committee members than needed to constitute a quorum, and under 
extraordinary circumstances when there are serious concerns about an 
agency's compliance with subpart B of this part that require prompt 
attention, the senior Department official may make a decision in a 
recognition proceeding based on the record compiled under Sec. 602.32 or 
Sec. 602.33 after providing the agency with an opportunity to respond to 
the final staff analysis. Any decision made by the senior Department 
official absent a recommendation from the Advisory Committee may be 
appealed to the Secretary as provided in Sec. 602.37.
    (c) Following consideration of an agency's recognition under this 
section, the senior Department official issues a recognition decision.
    (d) Except with respect to decisions made under paragraph (f) or (g) 
of this section and matters referred to the senior Department official 
under Sec. 602.37(e) or (f), the senior Department official notifies the 
agency in writing of the senior Department official's decision regarding 
the agency's recognition within 90 days of the Advisory Committee 
meeting or conclusion of the review under paragraph (b) of this section.
    (e) The senior Department official's decision may include, but is 
not limited to, approving, denying, limiting, suspending, or terminating 
recognition, granting or denying an application for an expansion of 
scope, revising or affirming the scope of the agency, or continuing 
recognition pending submission and review of a compliance report under 
Secs. 602.32 and 602.34 and review of the report by the senior 
Department official under this section.
    (1)(i) The senior Department official approves recognition if the 
agency complies with the criteria for recognition listed in subpart B of 
this part and if the agency effectively applies those criteria.
    (ii) If the senior Department official approves recognition, the 
recognition decision defines the scope of recognition and the 
recognition period. The recognition period does not exceed five years, 
including any time during which recognition was continued to permit 
submission and review of a compliance report.
    (iii) If the scope or period of recognition is less than that 
requested by the agency, the senior Department official explains the 
reasons for approving a lesser scope or recognition period.
    (2)(i) Except as provided in paragraph (e)(3) of this section, if 
the agency either fails to comply with the criteria for recognition 
listed in subpart B of this part, or to apply those criteria 
effectively, the senior Department official denies, limits, suspends, or 
terminates recognition.
    (ii) If the senior Department official denies, limits, suspends, or 
terminates recognition, the senior Department official specifies the 
reasons for this decision, including all criteria the agency fails to 
meet and all criteria the agency has failed to apply effectively.
    (3)(i) Except as provided in paragraph (e)(3)(ii) of this section, 
if a recognized agency fails to demonstrate compliance with or effective 
application of a criterion or criteria, but the senior Department 
official concludes that the agency will demonstrate or achieve 
compliance with the criteria for recognition and effective application 
of those criteria within 12 months or less,

[[Page 260]]

the senior Department official may continue the agency's recognition, 
pending submission by the agency of a compliance report, review of the 
report under Secs. 602.32 and 602.34, and review of the report by the 
senior Department official under this section. In such a case, the 
senior Department official specifies the criteria the compliance report 
must address, and a time period, not longer than 12 months, during which 
the agency must achieve compliance and effectively apply the criteria. 
The compliance report documenting compliance and effective application 
of criteria is due not later than 30 days after the end of the period 
specified in the senior Department official's decision.
    (ii) If the record includes a compliance report, and the senior 
Department official determines that an agency has not complied with the 
criteria for recognition, or has not effectively applied those criteria, 
during the time period specified by the senior Department official in 
accordance with paragraph (e)(3)(i) of this section, the senior 
Department official denies, limits, suspends, or terminates recognition, 
except, in extraordinary circumstances, upon a showing of good cause for 
an extension of time as determined by the senior Department official and 
detailed in the senior Department official's decision. If the senior 
Department official determines good cause for an extension has been 
shown, the senior Department official specifies the length of the 
extension and what the agency must do during it to merit a renewal of 
recognition.
    (f) If the senior Department official determines, based on the 
record, that a decision to deny, limit, suspend, or terminate an 
agency's recognition may be warranted based on a finding that the agency 
is noncompliant with, or ineffective in its application of, a criterion 
or criteria of recognition not identified earlier in the proceedings as 
an area of noncompliance, the senior Department official provides--
    (1) The agency with an opportunity to submit a written response and 
documentary evidence addressing the finding; and
    (2) The staff with an opportunity to present its analysis in 
writing.
    (g) If relevant and material information pertaining to an agency's 
compliance with recognition criteria, but not contained in the record, 
comes to the senior Department official's attention while a decision 
regarding the agency's recognition is pending before the senior 
Department official, and if the senior Department official concludes the 
recognition decision should not be made without consideration of the 
information, the senior Department official either--
    (1)(i) Does not make a decision regarding recognition of the agency; 
and
    (ii) Refers the matter to Department staff for review and analysis 
under Sec. 602.32 or Sec. 602.33, as appropriate, and consideration by 
the Advisory Committee under Sec. 602.34; or
    (2)(i) Provides the information to the agency and Department staff;
    (ii) Permits the agency to respond to the senior Department official 
and the Department staff in writing, and to include additional evidence 
relevant to the issue, and specifies a deadline;
    (iii) Provides Department staff with an opportunity to respond in 
writing to the agency's submission under paragraph (g)(2)(ii) of this 
section, specifying a deadline; and
    (iv) Issues a recognition decision based on the record described in 
paragraph (a) of this section, as supplemented by the information 
provided under this paragraph.
    (h) No agency may submit information to the senior Department 
official, or ask others to submit information on its behalf, for 
purposes of invoking paragraph (g) of this section. Before invoking 
paragraph (g) of this section, the senior Department official will take 
into account whether the information, if submitted by a third party, 
could have been submitted in accordance with Sec. 602.32(a) or 
Sec. 602.33(e)(2).
    (i) If the senior Department official does not reach a final 
decision to approve, deny, limit, suspend, or terminate an agency's 
recognition before the expiration of its recognition period, the senior 
Department official automatically extends the recognition period until a 
final decision is reached.

[[Page 261]]

    (j) Unless appealed in accordance with Sec. 602.37, the senior 
Department official's decision is the final decision of the Secretary.

(Authority: 20 U.S.C. 1099b)

                      Appeal Rights and Procedures



Sec. 602.37  Appealing the senior Department official's decision to 
the Secretary.

    (a) The agency may appeal the senior Department official's decision 
to the Secretary. Such appeal stays the decision of the senior 
Department official until final disposition of the appeal. If an agency 
wishes to appeal, the agency must--
    (1) Notify the Secretary and the senior Department official in 
writing of its intent to appeal the decision of the senior Department 
official, no later than ten days after receipt of the decision;
    (2) Submit its appeal to the Secretary in writing no later than 30 
days after receipt of the decision; and
    (3) Provide the senior Department official with a copy of the appeal 
at the same time it submits the appeal to the Secretary.
    (b) The senior Department official may file a written response to 
the appeal. To do so, the senior Department official must--
    (1) Submit a response to the Secretary no later than 30 days after 
receipt of a copy of the appeal; and
    (2) Provide the agency with a copy of the senior Department 
official's response at the same time it is submitted to the Secretary.
    (c) Neither the agency nor the senior Department official may 
include in its submission any new evidence it did not submit previously 
in the proceeding.
    (d) On appeal, the Secretary makes a recognition decision, as 
described in Sec. 602.36(e). If the decision requires a compliance 
report, the report is due within 30 days after the end of the period 
specified in the Secretary's decision. The Secretary renders a final 
decision after taking into account the senior Department official's 
decision, the agency's written submissions on appeal, the senior 
Department official's response to the appeal, if any, and the entire 
record before the senior Department official. The Secretary notifies the 
agency in writing of the Secretary's decision regarding the agency's 
recognition.
    (e) The Secretary may determine, based on the record, that a 
decision to deny, limit, suspend, or terminate an agency's recognition 
may be warranted based on a finding that the agency is noncompliant 
with, or ineffective in its application with respect to, a criterion or 
criteria for recognition not identified as an area of noncompliance 
earlier in the proceedings. In that case, the Secretary, without further 
consideration of the appeal, refers the matter to the senior Department 
official for consideration of the issue under Sec. 602.36(f). After the 
senior Department official makes a decision, the agency may, if desired, 
appeal that decision to the Secretary.
    (f) If relevant and material information pertaining to an agency's 
compliance with recognition criteria, but not contained in the record, 
comes to the Secretary's attention while a decision regarding the 
agency's recognition is pending before the Secretary, and if the 
Secretary concludes the recognition decision should not be made without 
consideration of the information, the Secretary either--
    (1)(i) Does not make a decision regarding recognition of the agency; 
and
    (ii) Refers the matter to Department staff for review and analysis 
under Sec. 602.32 or Sec. 602.33, as appropriate, and review by the 
Advisory Committee under Sec. 602.34; and consideration by the senior 
Department official under Sec. 602.36; or
    (2)(i) Provides the information to the agency and the senior 
Department official;
    (ii) Permits the agency to respond to the Secretary and the senior 
Department official in writing, and to include additional evidence 
relevant to the issue, and specifies a deadline;
    (iii) Provides the senior Department official with an opportunity to 
respond in writing to the agency's submission under paragraph (f)(2)(ii) 
of this section, specifying a deadline; and
    (iv) Issues a recognition decision based on all the materials 
described in paragraphs (d) and (f) of this section.

[[Page 262]]

    (g) No agency may submit information to the Secretary, or ask others 
to submit information on its behalf, for purposes of invoking paragraph 
(f) of this section. Before invoking paragraph (f) of this section, the 
Secretary will take into account whether the information, if submitted 
by a third party, could have been submitted in accordance with 
Sec. 602.32(a) or Sec. 602.33(e)(2).
    (h) If the Secretary does not reach a final decision on appeal to 
approve, deny, limit, suspend, or terminate an agency's recognition 
before the expiration of its recognition period, the Secretary 
automatically extends the recognition period until a final decision is 
reached.

(Authority: 20 U.S.C. 1099b)



Sec. 602.38  Contesting the Secretary's final decision to deny, limit,
suspend, or terminate an agency's recognition.

    An agency may contest the Secretary's decision under this part in 
the Federal courts as a final decision in accordance with applicable 
Federal law. Unless otherwise directed by the court, a decision of the 
Secretary to deny, limit, suspend, or terminate the agency's recognition 
is not stayed during an appeal in the Federal courts.

(Authority: 20 U.S.C. 1099b)



                  Subpart D_Department Responsibilities

    Source: 64 FR 56617, Oct. 20, 1999. Redesignated at 74 FR 55435, 
Oct. 27, 2009, unless otherwise noted.



Sec. 602.50  What information does the Department share with 
a recognized agency about its accredited institutions and programs?

    (a) If the Department takes an action against an institution or 
program accredited by the agency, it notifies the agency no later than 
10 days after taking that action.
    (b) If another Federal agency or a State agency notifies the 
Department that it has taken an action against an institution or program 
accredited by the agency, the Department notifies the agency as soon as 
possible but no later than 10 days after receiving the written notice 
from the other Government agency.

(Authority: 20 U.S.C. 1099b)



PART 603_SECRETARY'S RECOGNITION PROCEDURES FOR STATE AGENCIES--
Table of Contents



Subpart A [Reserved]

                  Subpart B_Criteria for State Agencies

Sec.
603.20  Scope.
603.21  Publication of list.
603.22  Inclusion on list.
603.23  Initial recognition, and reevaluation.
603.24  Criteria for State agencies.

    Authority: 20 U.S.C. 1001, 1002, 1094(c)(4); 38 U.S.C. 3675, unless 
otherwise noted.

Subpart A [Reserved]



                  Subpart B_Criteria for State Agencies

    Authority: Sec. 438 (b) of the Higher Education Act of 1965 Pub. L. 
89-329 as amended by Pub. L. 92-318, 86 Stat. 235, 264 (20 U.S.C. 1087-
1(b)), unless otherwise noted.

    Source: 39 FR 30042, Aug. 20, 1974, unless otherwise noted. 
Redesignated at 45 FR 77369, Nov. 21, 1980.



Sec. 603.20  Scope.

    (a) Pursuant to section 438(b) of the Higher Education Act of 1965 
as amended by Pub. L. 92-318, the Secretary is required to publish a 
list of State agencies which he determines to be reliable authorities as 
to the quality of public postsecondary vocational education in their 
respective States for the purpose of determining eligibility for Federal 
student assistance programs administered by the Department.
    (b) Approval by a State agency included on the list will provide an 
alternative means of satisfying statutory standards as to the quality of 
public postsecondary vocational education to be undertaken by students 
receiving assistance under such programs.

(Authority: 20 U.S.C. 1087-1(b))



Sec. 603.21  Publication of list.

    Periodically the Secretary will publish a list in the Federal 
Register of

[[Page 263]]

the State agencies which he determines to be reliable authorities as to 
the quality of public postsecondary vocational education in their 
respective States.

(Authority: 20 U.S.C. 1087-1(b))



Sec. 603.22  Inclusion on list.

    Any State agency which desires to be listed by the Secretary as 
meeting the criteria set forth in Sec. 603.24 should apply in writing to 
the Director, Division of Eligibility and Agency Evaluation, Office of 
Postsecondary Education, Department of Education, Washington, DC 20202.

(Authority: 20 U.S.C. 1087-1(b))

[45 FR 86300, Dec. 30, 1980]



Sec. 603.23  Initial recognition, and reevaluation.

    For initial recognition and for renewal of recognition, the State 
agency will furnish information establishing its compliance with the 
criteria set forth in Sec. 603.24. This information may be supplemented 
by personal interviews or by review of the agency's facilities, records, 
personnel qualifications, and administrative management. Each agency 
listed will be reevaluated by the Secretary at his discretion, but at 
least once every four years. No adverse decision will become final 
without affording an opportunity for a hearing.

(Authority: 20 U.S.C. 1087-1(b))



Sec. 603.24  Criteria for State agencies.

    The following are the criteria which the Secretary will utilize in 
designating a State agency as a reliable authority to assess the quality 
of public postsecondary vocational education in its respective State.
    (a) Functional aspects. The functional aspects of the State agency 
must be shown by:
    (1) Its scope of operations. The agency:
    (i) Is statewide in the scope of its operations and is legally 
authorized to approve public postsecondary vocational institutions or 
programs;
    (ii) Clearly sets forth the scope of its objectives and activities, 
both as to kinds and levels of public postsecondary vocational 
institutions or programs covered, and the kinds of operations performed;
    (iii) Delineates the process by which it differentiates among and 
approves programs of varying levels.
    (2) Its organization. The State agency:
    (i) Employs qualified personnel and uses sound procedures to carry 
out its operations in a timely and effective manner;
    (ii) Receives adequate and timely financial support, as shown by its 
appropriations, to carry out its operations;
    (iii) Selects competent and knowledgeable persons, qualified by 
experience and training, and selects such persons in accordance with 
nondiscriminatory practices, (A) to participate on visiting teams, (B) 
to engage in consultative services for the evaluation and approval 
process, and (C) to serve on decision-making bodies.
    (3) Its procedures. The State agency:
    (i) Maintains clear definitions of approval status and has developed 
written procedures for granting, reaffirming, revoking, denying, and 
reinstating approval status;
    (ii) Requires, as an integral part of the approval and reapproval 
process, institutional or program self-analysis and onsite reviews by 
visiting teams, and provides written and consultative guidance to 
institutions or programs and visiting teams.
    (A) Self-analysis shall be a qualitative assessment of the strengths 
and limitations of the instructional program, including the achievement 
of institutional or program objectives, and should involve a 
representative portion of the institution's administrative staff, 
teaching faculty, students, governing body, and other appropriate 
constituencies.
    (B) The visiting team, which includes qualified examiners other than 
agency staff, reviews instructional content, methods and resources, 
administrative management, student services, and facilities. It prepares 
written reports and recommendations for use by the State agency.
    (iii) Reevaluates at reasonable and regularly scheduled intervals 
institutions or programs which it has approved.

[[Page 264]]

    (b) Responsibility and reliability. The responsibility and 
reliability of the State agency will be demonstrated by:
    (1) Its responsiveness to the public interest. The State agency:
    (i) Has an advisory body which provides for representation from 
public employment services and employers, employees, postsecondary 
vocational educators, students, and the general public, including 
minority groups. Among its functions, this structure provides counsel to 
the State agency relating to the development of standards, operating 
procedures and policy, and interprets the educational needs and manpower 
projections of the State's public postsecondary vocational education 
system;
    (ii) Demonstrates that the advisory body makes a real and meaningful 
contribution to the approval process;
    (iii) Provides advance public notice of proposed or revised 
standards or regulations through its regular channels of communications, 
supplemented, if necessary, with direct communication to inform 
interested members of the affected community. In addition, it provides 
such persons the opportunity to comment on the standards or regulations 
prior to their adoption;
    (iv) Secures sufficient qualitative information regarding the 
applicant institution or program to enable the institution or program to 
demonstrate that it has an ongoing program of evaluation of outputs 
consistent with its educational goals;
    (v) Encourages experimental and innovative programs to the extent 
that these are conceived and implemented in a manner which ensures the 
quality and integrity of the institution or program;
    (vi) Demonstrates that it approves only those institutions or 
programs which meet its published standards; that its standards, 
policies, and procedures are fairly applied; and that its evaluations 
are conducted and decisions are rendered under conditions that assure an 
impartial and objective judgment;
    (vii) Regularly reviews its standards, policies and procedures in 
order that the evaluative process shall support constructive analysis, 
emphasize factors of critical importance, and reflect the educational 
and training needs of the student;
    (viii) Performs no function that would be inconsistent with the 
formation of an independent judgment of the quality of an educational 
institution or program;
    (ix) Has written procedures for the review of complaints pertaining 
to institutional or program quality as these relate to the agency's 
standards, and demonstrates that such procedures are adequate to provide 
timely treatment of such complaints in a manner fair and equitable to 
the complainant and to the institution or program;
    (x) Annually makes available to the public (A) its policies for 
approval, (B) reports of its operations, and (C) list of institutions or 
programs which it has approved;
    (xi) Requires each approved school or program to report on changes 
instituted to determine continued compliance with standards or 
regulations;
    (xii) Confers regularly with counterpart agencies that have similar 
responsibilities in other and neighboring States about methods and 
techniques that may be used to meet those responsibilities.
    (2) Its assurances that due process is accorded to institutions or 
programs seeking approval. The State agency:
    (i) Provides for adequate discussion during the on-site visit 
between the visiting team and the faculty, administrative staff, 
students, and other appropriate persons;
    (ii) Furnishes as a result of the evaluation visit, a written report 
to the institution or program commenting on areas of strength, areas 
needing improvement, and, when appropriate, suggesting means of 
improvement and including specific areas, if any, where the institution 
or program may not be in compliance with the agency's standards;
    (iii) Provides the chief executive officer of the institution or 
program with opportunity to comment upon the written report and to file 
supplemental materials pertinent to the facts and conclusions in the 
written report of the visiting team before the agency takes action on 
the report;
    (iv) Provides the chief executive officer of the institution with a 
specific

[[Page 265]]

statement of reasons for any adverse action, and notice of the right to 
appeal such action before an appeal body designated for that purpose;
    (v) Publishes rules of procedure regarding appeals;
    (vi) Continues the approval status of the institution or program 
pending disposition of an appeal;
    (vii) Furnishes the chief executive officer of the institution or 
program with a written decision of the appeal body, including a 
statement of its reasons therefor.
    (c) Credit-hour policies. The State agency, as part of its review of 
an institution for initial approval or renewal of approval, must conduct 
an effective review and evaluation of the reliability and accuracy of 
the institution's assignment of credit hours.
    (1) The State agency meets this requirement if--
    (i) It reviews the institution's--
    (A) Policies and procedures for determining the credit hours, as 
defined in 34 CFR 600.2, that the institution awards for courses and 
programs; and
    (B) The application of the institution's policies and procedures to 
its programs and coursework; and
    (ii) Makes a reasonable determination of whether the institution's 
assignment of credit hours conforms to commonly accepted practice in 
higher education.
    (2) In reviewing and evaluating an institution's policies and 
procedures for determining credit hour assignments, a State agency may 
use sampling or other methods in the evaluation, sufficient to comply 
with paragraph (c)(1)(i)(B) of this section.
    (3) The State agency must take such actions that it deems 
appropriate to address any deficiencies that it identifies at an 
institution as part of its reviews and evaluations under paragraph 
(c)(1)(i) and (ii) of this section, as it does in relation to other 
deficiencies it may identify, subject to the requirements of this part.
    (4) If, following the institutional review process under this 
paragraph (c), the agency finds systemic noncompliance with the agency's 
policies or significant noncompliance regarding one or more programs at 
the institution, the agency must promptly notify the Secretary.
    (d) Capacity to foster ethical practices. The State agency must 
demonstrate its capability and willingness to foster ethical practices 
by showing that it:
    (i) Promotes a well-defined set of ethical standards governing 
institutional or programmatic practices, including recruitment, 
advertising, transcripts, fair and equitable student tuition refunds, 
and student placement services;
    (ii) Maintains appropriate review in relation to the ethical 
practices of each approved institution or program.

(Authority: 20 U.S.C. 1094(c)(4))

[39 FR 30042, Aug. 20, 1974, as amended at 75 FR 66947, Oct. 29, 2010]



PART 604_FEDERAL-STATE RELATIONSHIP AGREEMENTS--Table of Contents



                            Subpart A_General

Sec.
604.1  Federal-State relationship agreements.
604.2  Regulations that apply to Federal-State relationship agreements.
604.3  Definitions that apply to Federal-State relationship agreements.

             Subpart B_Federal-State Relationship Agreements

604.10  Administrative requirements.
604.11  Planning requirements.
604.12  Changes in the agreement.
604.13  Denial of eligibility.

    Authority: Sec. 1203 of the Higher Education Act of 1965, as amended 
by Pub. L. 96-374 (20 U.S.C. 1143), unless otherwise noted.

    Source: 45 FR 83221, Dec. 18, 1980, unless otherwise noted.



                            Subpart A_General



Sec. 604.1  Federal-State relationship agreements.

    (a) A State shall enter int