(c) not reduce the unobligated portion of the State's allotment under section 624 of the Public Health Service Act.

SEC. 504. The Administrator shall approve any plan which he believes to be feasible and which fulfills the conditions specified in the foregoing section, except that he shall not approve any plan which he finds contains such restrictions with respect to the expenditure of funds under such plan that would (1) substantially increase the costs of carrying out the purposes of this title in the State, or (2) seriously impair the effectiveness of the State plan in carrying out the purposes of this title.

SEC. 505. (a) From sums made available pursuant to section 501, the Secretary of the Treasury shall pay to each State which has an approved plan under this title (as well as an approved plan under the Vocational Rehabilitation Act, as amended), for each quarter or shorter period prescribed by the Secretary, the sum of amounts he determines to be-

(1) one-half the necessary cost to such State, under such plan, of the establishment of public or nonprofit centers in accordance with the provisions of this title; and

(2) one-half the expenditure in such period necessary for the proper and efficient administration of the State plan, including necessary administrative costs in connection with the establishment of rehabilitation centers and justifying the need therefor.

(b) The method of computing and paying amounts pursuant to subsection (a) shall be as follows:

(1) The Administrator shall, from time to time, estimate the amounts to be paid to each State under the provisions of this Act, such estimate to be based on (A) a report filed by the State agency containing its estimate of the total sums to be expended for the purposes of paragraph (1) of subsection (a) during the period for which such estimate is made, and stating the amount appropriated or made available by the State; (B) a report filed by the State agency containing its estimate for such period, of the administrative expenses to be incurred in carrying out the State plan; (C) records and progress reports pertaining to each center being established pursuant to this title; and (D) such other investigation as the Administrator may find necessary.

(2) The Administrator shall then certify to the Secretary of the Treasury the amount so estimated by the Administrator for any period, reduced or increased, as the case may be, by any sum by which he finds that his estimate for any prior period was greater or less than the amount which should have been paid to the State for such prior period, except that such increases or reductions shall not be made to the extent that such sums have been applied to make the amount certified for any prior period greater or less than the amount estimated by the Administrator for such prior period.

(3) The Secretary of the Treasury shall, upon receiving such certification, pay, through the Division of Disbursements of the Treasury Department and prior to audit or settlement by the General Accounting Office, to the State at the time or times fixed by the Administrator, the amounts so certified. The money so received by the State shall be paid out in accordance with the provisions of the State plan.

SEC. 506. (a) Whenever the Administrator, after reasonable notice and opportunity for hearing to the State agency, finds that in the administration of the plan under this title there is

(1) a failure to comply substantially with any provision of the plan approved by the Administrator under section 504; or

(2) a failure to afford reasonable cooperation with other Federal or State agencies providing vocational rehabilitation or related services, the Administrator shall notify such State agency that future payments will not be made with respect to the plan approved pursuant to this title until he is satisfied that there will no longer be any such failure or that further payments will not be made with respect to any center or centers designated by the Secretary as being affected by the default, as he may determine to be appropriate under the circumstances. Until the Administrator is so satisfied, he shall make no further certification to the Secretary of the Treasury with respect to such State plan or with respect to any center thereunder.

(b) If any rehabilitation center for which funds have been paid under this title shall, at any time within twenty years after the establishment thereof, (A) be sold or transferred to, or come into the hands of any person, agency,

or organization, (1) which is not a public or private nonprofit agency, or (2) which is not approved as a transferee by the State agency, or its successors, or (B) ceases to be a public or other nonprofit rehabilitation center as defined in the Vocational Rehabilitation Act, as amended, the United States shall be entitled to recover from either the transferee or the transferor, or in the case of a center which has ceased to be a nonprofit rehabilitation center, from the owner thereof, one-half of the then value of such center as determined by agreement of the parties, or by action brought in the district court of the United States in the district in which such center is situated: Provided, That the recovery thereunder shall not exceed the total amount paid to the State under this title with respect to such center.

SEC. 507. Until such time as a plan is submitted to the Board of Vocational Rehabilitation (or other agency designated by law) of the District of Columbia and approved by the Administrator under this title, the Administrator, out of funds made available for this purpose, is authorized to carry out the purposes of this title in the District of Columbia. In carrying out his functions under this section, the Administrator is authorized to utilize and enlarge appropriate units of the Federal Departments and agencies and to enter into agreements and cooperating working arrangements with public agencies and private persons, and institutions within the United States, its Territories and possessions, for services and use of facilities of such persons, agencies, and institutions, and to compensate them and such units for such services and use.

SEC. 508. As used in this title

(a) The term "rehabilitation center" is a facility operated for the primary purpose of assisting in the rehabilitation of physically and mentally handicapped persons

(1) which provides one or more of the following types of services:
(A) testing, fitting, or training in the use of prosthetic or othorpedic
appliances and devices;

(B) prevocational or conditioning therapy;

(C) physical, corrective, or occupational therapy;

(D) adjustment training; or

(E) evaluation or control of special disabilities; or

(2) in which a coordinated approach is made to the physical, mental, and vocational evaluation of physically and mentally handicapped persons, and an integrated program of physical restoration and prevocational or vocational training is provided under competent professional supervision and direction;

(b) The term "establishment" means construction of new buildings, acquisition, expansion, remodeling, and alteration of existing buildings and initial equipment of such buildings; and the cost of establishment includes fees of architects and other technical consultants, but excludes (1) the cost of off-site improvements and (2) except in the case of publicly owned and operated rehabilitation, the cost of acquisition of land.

TITLE VI-SPECIAL PROGRAMS FOR THE SEVERELY HANDICAPPED SEC. 601. There are authorized to be appropriated such sums as may be necessary for making payments under the provisions of this title to States which, in addition to submitting and having approved plans for vocational rehabilitation in accordance with the Vocational Rehabilitation Act, as amended, have submitted and had approved by the Administrator plans for services to severely handicapped persons.

SEC. 602. To be approvable under this title, a State plan for services to severely handicapped persons shall

(1) fulfill the conditions specified germane, under the Vocational Rehabilitation Act, as amended;

(2) provide the following programs:

(A) services to sheltered workshops employing severely handicapped

persons;

(B) assistance to homebound severely handicapped persons in establishing themselves and continuing in remunerative employment; (C) establishment and supervision of individual business enterprise programs for severely handicapped persons;

(3) provide such regulations as the Administrator may find appropriate to assure in the operation of services in sheltered workshops and assistance to the homebound

(A) the observance of all applicable regulations, laws, or standards governing health, safety, wages, hours, and working conditions in industrial or commercial establishments and the observance of such other requirements not in conflict therewith as the Administrator may prescribe to maintain adequate labor standards;

(B) the payment of wages in cash;

(C) the maintenance of accepted business standards, including adequate financial accounting and personnel records and such financial safeguards (including workmen's compensation and other insurance) as may be necessary to provide stability and protection for program assets;

(4) the provision of such management and supervisory services, including adequate marketing arrangements, instruction, and assistance in the design and production of marketable articles, and insurance protection as may be necessary for the successful operation of enterprises receiving assistance pursuant to this title;

(5) provide for such auxiliary medical and health services as are necessary and practicable to assist in the employment of severely handicapped persons receiving services under any program pursuant to this title;

(6) provide such regulations and standards as the Administrator may find reasonable and necessary with respect to the maximum fees which may be paid for the costs of services which are provided other than by the State agency responsible for the administration of the program;

(7) provide that no portion of any money paid to the State with respect to programs pursuant to this title shall be applied to the direct cost of selling articles produced;

(8) provide that all persons selected as operators of individual business enterprises which they elect to operate;

(9) provide that any funds set aside from the proceeds of the operation of the program shall be used only for program purposes;

(10) provide that, if the services of a public agency or private nonprofit corporation or limited dividend association are to be utilized in the provision of services in the program, the terms of the agreement between the State agency having jurisdiction, and such public agency or private corporation such provisions as the Administrator may determine to be necessary to insure the retention by the State agency of the responsibility for the management, control, and operation of all phases of the program, and beneficial operation of all program assets;

(11) provide that no funds paid to the State pursuant to this title shall be applied to the cost of any sheltered workshop unless

(A) the State agency has theretofore submitted such information as the Administrator may find necessary to justify the need for such workshop;

(B) the Administrator has determined that need exists for such workshops and that the plans and specifications for the establishment and operation of such workshops are practicable; and

(C) The Administrator shall approve any plan which he believes to be feasible and which fulfills the applicable conditions specified in this section, except that he shall not approve any plan which he finds contains such restrictions with respect to the expenditure of funds thereunder as would (1) substantially increase the costs of the program in the State or (2) seriously impair the effectiveness of such plan in carrying out the purpose of this Act.

SEC. 603. From the sums made available pursuant to this title, the Secretary of the Treasury shall pay, with respect to each State which has an approved plan for vocational rehabilitation and an approved plan in conformity with this title, for each quarter of a fiscal year or other period prescribed by the Administrator, the sum of amounts the Administrator determines to be comprised as follows:

(a) One-half of the necessary expenditures in such period under a program relating to sheltered workshops, for auxiliary services in such workshops, for the acquisition of equipment and supplies necessary for the provision of such auxiliary services, and for management and supervisory services in such workshops.

(b) One-half of the necessary expenditures in such period under a program relating to homebound severely handicapped persons for—

(1) instruction of, and assistance to, the homebound in the design and production of marketable products; and

(2) acquisition of production equipment stocks and supplies necessary to enable a severely handicapped person to enter upon the production or processing of products in his home, and arrangements for the purchase and regular delivery of stocks and supplies to such person, where the individual is found to require financial assistance with respect thereto, after full consideration of the eligibility of such individual for any similar benefit by way of pension, compensation, insurance, or other consequential source.

(c) One-half of the necessary expenditures in such period under a program relating to the establishment and supervision of business enterprise programs for severely handicapped persons in such period for (1) establishing and equipping such business enterprises; (2) stock and supplies necessary for undertaking the particular type of business enterprise determined to be suitable for such person; and (3) the management and supervision of such business enterprise programs for a period of five years from the effective date of this Act, and the Administrator shall prescribe, by appropriate regulation, procedures to govern operation of such business enterprise, after the first five-year period is complete.

(d) One-half the expenditures in such period necessary for the proper and efficient administration of each program, including necessary administrative costs in connection with providing the foregoing services to severely handicapped individuals.

SEC. 604. The method of computing and paying amounts pursuant to section 603 shall be as follows:

(a) The Administrator shall, from time to time, estimate the amounts to be paid to each State under the provisions of this title with respect to each program, such estimate to be based on (1) a report filed by the State agency containing its estimate of the total sums to be expended for the provisions of services under each program part for the purposes of clauses (a) through (c), respectively, of section 603, during the period for which such estimate is made, and stating the amount appropriated or made available by the State and the political subdivisions thereof for such expenditures in such period; (2) a report filed by the State agency, containing its estimate for such period of the administrative expenses to be incurred in carrying out such a program; (3) progress reports and records pertaining to clause (a) of section 603 with respect to each workshop; and (4) such other information as the Administrator may find necessary.

(b) The Administrator shall then certify to the Secretary of the Treasury the amount so estimated by the Administrator for any period, reduced or increased, as the case may be, by any sum which he finds that his estimate for any prior period was greater or less than the amount which should have been paid to the State for such prior period, except that such increases or reductions shall not be made to the extent that such sums have been applied to make the amount certified for any prior period greater or less than the amount estimated by the Administrator for such prior period.

(c) The Secretary of the Treasury shall, upon receiving such certification, pay, through the Division of Disbursement of the Treasury Department and prior to audit or settlement by the General Accounting Office, to the State, at the time or times fixed by the Administrator, the amounts so certified. The money so received by the State shall be paid out in accordance with the provisions of the State plan.

SEC. 605. Whenever the Administrator, after reasonable notice and opportunity for hearing to the State agency, finds that in the administration of a State plan there is

(a) a failure to comply substantially with any provision of such plan approved by the Administrator under this title; or

(b) a failure to afford reasonable cooperation with other Federal and State agencies providing similar services, the Administrator shall notify such State agency that further payments will not be made with respect to such plan, until he is satisfied that there will no longer be any such failure. Until he is so satisfied, the Administrator will make no further certification to the Secretary of the Treasury with respect to such plan under this title. SEC. 606. Until such time as a plan is submitted hereunder by the agency responsible for carrying out the provisions of the Vocational Rehabilitation Act in the District of Columbia or by whatever agency may be charged with responsibility for this program, and such plan is approved by the Administrator under

section 602, the Administrator, out of funds made available for the purpose, is authorized to establish and provide the services provided for in this title to and for severely handicapped persons actually residing in the District of Columbia. In carrying out his functions under this section, the Administrator is authorized to enter into agreements and cooperative working arrangements with public agencies and private persons, agencies, and institutions within the United States, its Territories, and possessions, for services and use of facilities of such persons, agencies, and institutions, and to compensate them and such units for such services and use.

SEC. 607. If any State cannot fully comply with the conditions of this title on the date of enactment of this title, such State may secure the benefits of this title until sixty days after the legislature of such State first meets in due course, after such date of enactment, or until the earliest effective date after sixty days, which could be given in such State to legislation passed within sixty days, to secure the benefits of such title, whichever is the later, if it complies therewith to the fullest extent.

SEC. 60S. As used in this title

(a) The term "auxiliary services" means such services of a medical character as are necessary, or such services as are medically determined to be required by reason of the severity of the individual's disability, to protect his health while at work in a workshop.

(b) The term "sheltered workshop" means a place where any manufacture of handiwork is carried on and which is operated by a public agency or by a private corporation or association, no part of the net earnings of which inures or may lawfully inure to the benefit of any private stockholder or individual, or by a cooperative, for the primary purpose of providing remunerative employment to severely handicapped persons who cannot be absorbed in the competitive labor market.

TITLE VII-FEDERAL SERVICES TO HANDICAPPED REVOLVING LOAN FUND

SEC. 701. (a) There is hereby established in the Agency, the Federal services to handicapped revolving loan fund. The Administrator is authorized to make loans from this fund to States making application therefor, pursuant to regulations prescribed by the Administrator, in order to replenish funds used to carry out approved State plans for vocational rehabilitation, pursuant to the provisions of the Vocational Rehabilitation Act, as amended, at such time as such funds are or are about to become exhausted.

(b) A State obtaining such a loan must use not less than 25 per centum of the amount thereof for vocational rehabilitation in rural areas as defined by the Administrator.

(c) The sum of $10,000,000 is hereby authorized to be appropriated out of the Treasury, from funds not otherwise appropriated, to establish said fund.

(d) Such revolving fund shall consist of all moneys appropriated or gifts made thereto or repayments of loans to the States; interest paid on such loans; and income from the investment of moneys in such fund.

(e) Loans made pursuant to this section shall be made for a period expiring not less than two years from the date thereof, and shall bear interest at the rate of 2 per centum per annum.

(f) The Secretary of the Treasury is hereby authorized to invest and reinvest the moneys in such fund, not required to meet current withdrawals, in interestbearing obligations of the United States, or in obligations guaranteed both as to principal and interest by the United States.

(g) The Administrator is hereby authorized and directed to appoint a Director and such staff and assistants as may be required to operate the fund, and to report in detail upon the fund to the President and to the Congress at the beginning of each regular session of Congress.

TITLE VIII-UNITED STATES CIVIL SERVICE COMMISSION SEC. 801. There is hereby established in the United States Civil Service Commission a Divison for the Handicapped, with a Chief and such staff as may be required, to be appointed by the Chairman of such Commission. It shall be the duty of the Division to deal with problems attendant upon the recruitment, examination, and appointment of handicapped applicants for employment in the Federal civil service. It is declared to be the policy of the Congress that