Rehabilitation Act of 1973: 109th Congress Legislation and FY2006 Budget Request

Rehabilitation Act of 1973: 109th Congress Legislation and FY2006 Budget Request

Order Code RS22068
February 25, 2005
CRS Report for Congress
Received through the CRS Web
Rehabilitation Act of 1973: 109th Congress
Legislation and FY2006 Budget Request
Sidath V. Panangala and Carol O’Shaughnessy
Domestic Social Policy Division
Summary
The Rehabilitation Act of 1973 is the nation’s major program to provide
comprehensive vocational rehabilitation (VR) services to help persons with physical and
mental disabilities achieve employment goals and full integration into society.
Authorization of appropriations for the Rehabilitation Act expired in FY2003. Although
the 108th Congress considered legislation to reauthorize the Act, no final action was
taken. In the 109th Congress, H.R. 27, to reauthorize the Act through FY2011, was
ordered reported by the Committee on Education and the Workforce on February 17,
2005. S. 9, to reauthorize the Act through FY2011, was introduced by Senator Enzi,
Chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP)
on January 24, 2005.
The President has requested $3 billion for the Act for FY2006, a 0.1% increase
over FY2005. The budget request would eliminate four programs authorized under the
Act (programs for migrant and seasonal farmworkers, recreational activities, supported
employment state grants, and projects with industry (PWI)). The budget also proposes
to allow states to move Title I of the Rehabilitation Act into a Consolidated Workforce
Investment state grant for employment services. This report will be updated.
Background
The Rehabilitation Act was originally enacted in 1920 as a means of returning
injured workers to their jobs. The program was expanded in 1943 to help meet the
manpower shortage after the entry of the United States into World War II. The
Rehabilitation Act of 1973 provides comprehensive vocational rehabilitation (VR)
services designed to help individuals with physical and mental disabilities become
employable and achieve independence and integration into society. The Act has been
Congressional Research Service { The Library of Congress

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amended six times since 1973.1 Title I, the federal-state VR program, is the primary
federal program assisting individuals with disabilities prepare for, obtain, and retain
employment. Funding for this program represents 87% of total FY2005 federal funding
for the Act. Funds are administered by VR agencies designated by each state and are
allocated to states according to a formula that is based on state population and per capita
income. States with lower per capita income receive a comparatively higher allotment.
States are required to match federal funds, and the matching ratio is 78.7% federal to
21.3% state.2
Persons are eligible for Title I VR services if they have a physical or mental
impairment that substantially impedes employment. Under the law, all individuals with
disabilities are presumed to have the potential to engage in employment and to benefit
from VR services. The program is required to give priority to people with the most
significant disabilities. There are about 1.2 million individuals with disabilities in various
phases of the vocational rehabilitation process within the VR system. In FY2003, VR
agencies assisted 217,557 persons achieve an employment outcome.3
Other programs authorized under the Act include client assistance (Title I); research
and training activities administered by the National Institute on Disability and
Rehabilitation Research (NIDRR) (Title II); training and demonstration programs (Title
III); the National Council on Disability, an independent federal agency whose purpose is
to promote policies, programs, and practices to provide equal opportunity for all people
with disabilities (Title IV); programs to promote the rights of persons with disabilities
(Title V); Projects with Industry and Supported Employment State Grants (Title VI); and
Independent Living Services and Centers for Independent Living (Title VII).4
109th Congress Legislation
Authorization of appropriations for the Rehabilitation Act of 1973 expired at the end
of FY2003. However, under provisions of the Rehabilitation Act, Title I of the Act was
automatically extended for one additional year through FY2004. Other programs under
the Act were extended for one year through FY2004 under provisions of the General
Education Provisions Act (GEPA) (20 U.S.C.§ 1226a). For FY2005, Congress has
continued funding for the Act through appropriations legislation for the Departments of
Labor, Education, Health and Human Services, and Related Agencies (P.L. 108-447).
During the 108th Congress, both the House and the Senate approved legislation to
reauthorize the Act through FY2009, but no final action was taken. Bills have been
introduced in the 109th Congress to reauthorize the Act. On February 17, 2005, the
Committee on Education and Workforce Committee ordered reported H.R. 27, to extend
authorization of appropriations for the Rehabilitation Act through FY2011. S. 9 was
1 The Rehabilitation Act was amended in 1974 (P.L. 93-651), 1978 (P.L. 95-602), 1984 (P.L. 98-
221), 1986 (P.L. 99-506), 1992 (P.L. 102-569), and 1998 (P.L. 105-220).
2 P.L. 105-220, Title IV, Aug. 7, 1998, 112 Stat, 1102.
3 Rehabilitation Services Administration (911 data base).
4 For a description of all programs authorized under the Act, see CRS Report RL31378,
Rehabilitation Act: Programs and Funding, by Sidath Panangala.

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introduced in the Senate on January 24, 2005. (The 109th Congress bills are similar to
bills approved by the Senate and House in the 108th Congress.) Following are selected
provisions of the 109th Congress’s bills.
VR Program Funds Used to Support the Workforce Investment Act
(WIA) System. The Workforce Investment Act (WIA), enacted in 1998 (P.L. 105-
220), is intended to consolidate, coordinate, and improve a variety of employment,
training, literacy and VR programs for adults under the oversight of local workforce
investment boards. Each board is responsible for developing a one-stop system intended
to provide a coordinated and “seamless” system of employment and training opportunities
for individuals. The law requires partnerships among programs that provide employment
services; the federal-state VR program is a required partner in the one-stop system, along
with other programs such as vocational education and welfare-to-work programs. Under
current law, each of the required partners are to enter into agreements stipulating what
responsibilities they have to fund operating costs of one-stop systems.5 Although persons
with disabilities may receive services under the one-stop system, the federal-state VR
program is the primary source of employment and VR services for this group.
Under current provisions of WIA and the Rehabilitation Act, there is no requirement
that VR funds must be used to provide support to WIA one-stop systems; however, each
required partner must develop a memorandum of understanding with a local workforce
board to determine how operating costs will be funded. H.R. 27 would require that each
state’s governor determine how much of the funds of required one-stop partners,
including state VR agencies, could be used to pay part of the infrastructure (i.e.,
nonpersonnel) costs of one-stop centers’ operations. This would mean that funds
allocated to states for VR services could, at the option of the governor, be used to
contribute toward the state’s one-stop infrastructure system.
S. 9, as introduced, would require local WIA boards and one-stop partners to
determine how much local partners must contribute toward the one-stop system. If local
areas fail to reach agreement, the governor would determine an amount to be contributed
by one-stop partners, subject to a federally prescribed cap. The cap would apply to
federal funds allotted to a partner program. For the federal state VR program, the cap
would increase from 0.75 to 1.5% over a five-year period. (Other caps would apply to
other partner programs; for example, for WIA programs and the employment service, the
cap would be 3%, and for other programs, 1.5%.)
Transition of Students with Disabilities to Vocational Rehabilitation
Services. Under current law, state VR plans are required to coordinate with state
education officials to facilitate the transition of students with disabilities from school to
receipt of VR services. State VR and education agencies must develop interagency
agreements that, at a minimum, provide for consultation and technical assistance to assist
education agencies to plan for transition of students from school to post-school activities,
5 For background on WIA, see CRS Report 97-536, Job Training Under the Workforce
Investment Act (WIA): An Overview, by Ann Lordeman. For a description of WIA changes
proposed in H.R. 27 and S. 9, see CRS Report RL32778, Workforce Investment Act of 1998:
Reauthorization of Job Training Programs, by Ann Lordeman.

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describe the financial responsibilities of each agency, determine which agency will be the
lead agency, and provide for student outreach, among other things.
Both H.R. 27 and S. 9 include provisions to improve and expand student transition
services for students with disabilities. (In both bills, students are defined as those eligible
for VR services; eligible and receiving services under the Individuals with Disabilities
Education Act (IDEA); or eligible under Section 504 of the Rehabilitation Act6; however,
H.R. 27 refers to students age 16-21 and S. 9, to students age 14-21). H.R. 27 would
reserve from Title I allotments, $50 million for expanded transition services in years when
funds appropriated for Title I exceed the FY2004 level by at least $100 million. State
agencies would be required to use these funds to facilitate student transition from school
to VR services; improve student achievement of post-school goals; provide them career
guidance and exploration and job search assistance; and conduct outreach activities. S.
9 includes a number of provisions to improve transition, such as a requirement that a
student’s individualized plan for employment (IPE) include specific transition services
needed to achieve an employment outcome. However, S. 9 does not reserve a portion of
Title I allotments for student transition services.7
Appointment of the Commissioner of the Rehabilitation Services
Administration (RSA). Under current law, the Commissioner of the Rehabilitation
Services Administration (RSA) is appointed by the President and approved by the Senate.
H.R. 27 would change this provision to require that the Secretary of Education, rather than
the President, appoint a Director of RSA. The Director would not have to be approved
by the Senate. S. 9, as introduced, would not make this proposed change.
Coordination of the VR Program with Ticket to Work. Both Title I of the
Rehabilitation Act and the Ticket to Work and Work Incentives Improvement Act of 1999
(P.L. 106-70) (Ticket Program) provide rehabilitation services to persons with disabilities.
State VR agencies provide services directly as well as through other providers approved
by the state; the Ticket Program offers vouchers so that individuals may choose providers
of rehabilitation services from an approved employment network (EN). S. 9 includes a
number of provisions to coordinate VR services with services provided through the Ticket
Program, including a requirement that VR agencies inform clients about the Ticket
Program and how to contact ENs established under the program.
S. 9 would require the Government Accountability Office (GAO) to conduct a study
on the interaction of the Title I VR program with the Ticket Program, including the
impact of the interaction on beneficiaries, rehabilitation programs and state VR agencies.
The report of the Committee on Health, Education, Labor and Pensions (HELP) on S.
1627,8 the 108th Congress’s Senate bill to reauthorize the Rehabilitation Act, indicated
6 Section 504 prohibits discrimination against individuals with disabilities by any program or
activity that received federal funding.
7 During the 108th Congress, provisions to improve student transition services under the
Rehabilitation Act, including a new authorizations of appropriations, were incorporated into the
Senate bill to reauthorize IDEA (S. 1248). However, the provisions were not included in the final
bill (P.L. 108-446, signed Dec. 3, 2004).
8 Workforce Investment Act of 1998, S.Rept. 108-187, 108th Congress, 1st sess., Nov. 5, 2003.

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that the GAO report would be intended to assist Congress to resolve the challenges that
the two programs face as they attempt to serve a similar population of individuals.
These provisions are not included in H.R. 27.
Title I Allotment Formula. Title I VR funds are allocated to states according to
a formula that takes into account state population and per capita income. Data used to
calculate a state’s allotment are updated annually. In addition, the law requires that Title
I appropriations be increased by the annual percentage increase in the CPI. Some states
have been concerned that because data used to calculate each state’s annual allotment
percentage is adjusted to account for population changes from year to year, they may not
receive full benefit of the annual CPI adjustment. That is, even though a state’s caseload
may increase or even remain the same, if it loses population compared to other states
whose population is growing, it may not receive the full CPI increase. S. 9 would require
that GAO study the relationship between the Title I state allotment formula and the ability
of states to provide VR services in accordance with state plan requirements. The report
of the HELP Committee on S. 1627,9 the 108th Congress’s Senate bill to reauthorize the
Rehabilitation Act, indicated that the GAO study would assist Congress in determining
what appropriate steps can be taken to help resolve funding inequities among state VR
agencies.
H. 27 does not contain this provision.
FY2006 Budget Request
The Administration has requested $3 billion for Rehabilitation Act programs for
FY2006, an increase of 0.1% over the FY2005 amount (Table 1). The request for the
Title I VR program is $2.7 billion, an increase of 3.1%, which meets the statutory
requirement that the program be increased in accordance with the CPI adjustment.
In addition, as part of its overall job training proposals, the Administration is
proposing to consolidate certain job training programs under a Workforce Incentive Plus
Consolidation Grant program. Certain programs would form a base of the consolidated
program and would include adult training, the dislocated worker program, youth training
and the Employment Service. In addition, states would be given an option to consolidate
the VR program, along with other programs, under the Consolidated Grant program.
States choosing to consolidate programs would submit a single state integration plan, but
would not be allowed to reduce levels for target populations, including people with
disabilities.
The Administration is also proposing to eliminate four programs authorized under
the Rehabilitation Act — programs for migrant and seasonal farmworkers, recreational
activities, supported employment state grants, and projects with industry (PWI). The
Administration maintains that these programs are now an integral part of the VR program,
and therefore no longer need separate funding streams to ensure provision of services.
9 Ibid., S.Rept. 108-187.

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Table 1. Vocational Rehabilitation and Related Programs,
FY2003-2005 Funding and FY2006 Budget Request
($ in thousands)
FY2003
FY2004
FY2006
Programs
FY2005 enacted
actual
actual
request
Title I — Vocational Rehabilitation(VR) Services
Federal-state VR program
$2,533,492
$2,584,162
$2,635,845
$2,720,192
Client assistance program
12,068
11,997
11,901
11,901
Total
2,545,560
2,596,159
2,647,746
2,732,093
Title II — Research and Training
National institute on disability and
109,285
106,652
107,783
107,783
rehabilitation research (NIDRR)
Total 109,285
106,652
107,783
107,783
Title III — Training and Demonstration Projects
Training
39,371
39,139
38,826
38,826
Demonstration and training programs
20,895
24,286
25,607
6,577
Migrant and seasonal farmworkers
2,335
2,321
2,302
not requested
Recreational programs
2,579
2,564
2,543
not requested
Total 65,180
68,310
69,278
45,403
Title IV — National Council on Disability
National Council on Disability
2,840
3,021
3,371
2,800
Total
2,840
3,021
3,371
2,800
Title V — Rights and Advocacy
Architectural and transportation
5,194
5,401
5,686
5,941
barriers compliance board
Protection and advocacy of
16,890
16,790
16,656
16,656
individual rights (PAIR)
Total
22,084
22,191
22,342
22,597
Title VI — Employment Opportunities
Projects with industry
21,928
21,799
21,625
not requested
Supported employment state grants
37,904
37,680
37,379
not requested
Total
59,832
59,479
59,004
0
Title VII — Independent Living Services and Centers for Independent Living
State allotments for independent
22,151
22,020
22,816
22,816
living services
Centers for independent living
69,545
73,563
75,392
75,392
Independent living services for the
27,818
31,811
33,227
33,227
older blind
Total
119,514
127,394
131,435
131,435
Evaluation
994
988
1,488
1,488
Program improvement activities
894
889
843
843
Total: Programs under the
$2,926,183
$2,985,083
$3,043,290
$3,044,442
Rehabilitation Act
Related Programs
Helen Keller Center
8,660
8,666
10,581
8,597
Assistive technology
26,824
25,943
25,737
not requested
Alternative financing program
4,023
15,000
Total: Rehabilitation service and
$2,953,633
$3,011,270
$3,074,574
$3,059,298
disability research
Source: Department of Education, FY2006 Justification of Appropriation Estimates to the Congress.