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"(2) in the administration of the plan there is a failure to comply substantially with any such provision;

the Secretary shall notify such State agency that no further payments will be made to the State under section 2 or (or, in his discretion, that further payments will not be made to the State for projects under or parts of the State plan affected by such failure), until he is satisfied that there is no longer any such failure. Until he is so satisfied the Secretary shall make no further payments to such State under section 2 or 3 (or shall limit payments to projects under or parts of the State plan in which there is no such failure).

"METHOD OF COMPUTING AND MAKING PAYMENTS

"SEC. 6. The method of computing and paying amounts pursuant to section 2 or 3 shall be as follows:

"(a) The Secretary shall, prior to the beginning of each calendar quarter or other period prescribed by him, estimate the amount to be paid to each State under the provisions of such section for such period, such estimate to be based on such record of the State and information furnished by it, and such other investigation, as the Secretary may find necessary.

"(b) The Secretary shall pay, from the allotment available therefor, the amount so estimated by him for such period, reduced or increased, as the case may be, by any sum (not previously adjusted under this subsection) by which he finds that his estimate of the amount to be paid the State for any prior period under such section was greater or less than the amount which should have been paid to the State for such prior period under such section. Such payments shall be made prior to audit or settlement by the General Accounting Office, shall be made through the disbursing facilities of the Treasury Department, and shall be made in such installments as the Secretary may determine.

"ADMINISTRATION

"SEC. 7. (a) In carrying out his duties under this Act, the Secretary shall— "(1) make studies, investigations, demonstrations, and reports with respect to abilities, aptitudes, and capacities of handicapped individuals, development of their potentialities, and their utilization in gainful and suitable employment;

"(2) cooperate with and render technical assistance to States in matters relating to the vocational rehabilitation of disabled individuals;

"(3) provide short-term training and instruction in technical matters relating to vocational rehabilitation services, including the establishment and maintenance of such research fellowships and traineeships, with such stipends and allowances (including travel and subsistence expenses), as he may deem necessary; and

"(4) disseminate information as to the studies, investigations, demonstrations, and reports referred to in paragraph (1) and other matters relating to vocational rehabilitation services, and otherwise promote the cause of rehabilitation of disabled individuals and their greater utilization in gainful and suitable employment.

"(b) The Secretary is authorized to make rules and regulations governing the administration of this Act, and to delegate to any officer or employee of the United States such of his powers and duties, except the making of rules and regulations, as he finds necessary in carrying out the purposes of this Act.

"REPORTS

"SEC. 8. Annual reports shall be made to the Congress by the Secretary as to the administration of this Act.

"AUTHORIZATION OF APPROPRIATION FOR ADMINISTRATION

"SEC. 9. There are hereby authorized to be included for each fiscal year in the appropriations for the Department of Health, Education, and Welfare such sums as are necessary to administer the provisions of this Act.

"DEFINITIONS

"SEC. 10. For purposes of this Act—

"(a) The term 'vocational rehabilitation services' means diagnostic and related services (including transportation) incidental to the determination of

eligibility for and the nature and scope of services to be provided; training, guidance and placement services for disabled individuals; and, in the case of any such individual found to require financial assistance with respect thereto, after full consideration of his eligibility for any similar benefit by way of pension, compensation, and insurance, any other goods and services necessary to render such individual fit to engage in a remunerative occupation, including the following physical restoration and other goods and services

"(1) corrective surgery or therapeutic treatment necessary to correct or substantially modify a physical or mental condition which is stable or slowly progressive and constitutes a substantial handicap to employment, but is of such a nature that such correction or modification may reasonably be expected to eliminate or substantially reduce such handicap within a reasonable length of time;

"(2) necessary hospitalization in connection with surgery or treatment specified in subparagraph (1);

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(3) such prosthetic devices as are essential to obtaining or retaining employment;

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"(4) maintenance, not exceeding the estimated cost of subsistence, during rehabilitation;

"(5) tools, equipment, initial stocks and supplies, books, and training materials, to any or all of which the State may retain legal title; and

"(6) transportation (except where necessary in connection with determination of eligibility or nature and scope of services) and occupational licenses.

Such term also includes

"(7) the acquisition of vending stands or other equipment and initial stocks and supplies for use by severely disabled persons in any type of small business the operation of which will be improved through management and supervision by the State agency; and

"(8) the establishment of public and other nonprofit rehabilitation fa cilities to provide services for disabled individuals and the establishment of public and other nonprofit workshops for the severely disabled. "(b) The term 'disabled individual' means any individual who is under a physical or mental disability which constitutes a substantial handicap to employment, but which is of such a nature that vocational rehabilitation services may reasonably be expected to render him fit to engage in a remunerative occupation.

"(c) The term 'rehabilitation facility' means a facility operated for the primary purpose of assisting in the rehabilitation of disabled persons

"(1) which provides one or more of the following types of services:
“(A) testing, fitting, or training in the use of prosthetic 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) through which is provided an integrated program of medical, psychological, social, and vocational evaluation and services under competent professional supervision: Provided, That the major portion of such evaluation and services are furnished within the facility and that all medical and related health services are prescribed by, or are under the formal supervision of, persons licensed to practice medicine in the State.

"(d) The term 'workshop' means a place where any manufacture or handiwork is carried on and which is operated for the primary purpose of providing remunerative employment to severely disabled individuals who cannot be readily absorbed in the competitive labor market.

"(e) The term 'nonprofit', when used with respect to a rehabilitation facility or a workshop, means a rehabilitation facility and a workshop, respectively, owned and operated by a corporation or association, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.

"(f) Establishment of a workshop or rehabilitation facility means

"(1) in the case of a workshop, the expansion remodeling, or alteration of existing buildings, necessary to adapt such buildings to workshop purposes or to increase the employment opportunities in workshops, and the acquisition of initial equipment necessary for new workshops or to increase the employment opportunities in workshops; and

"(2) in the case of a rehabilitation facility, the expansion, remodeling, or alteration of existing buildings, and initial equipment of such buildings,

necessary to adapt such buildings to rehabilitation facility purposes or to increase their effectiveness for such purpose (subject, however, to such limitations as the Secretary may by regulations prescribe in order to prevent impairment of the objectives of, or duplication of, other Federal laws providing Federal assistance to States in the construction of such facilities) and initial staffing thereof (for a period not exceeding one year), "(g) The term 'State' includes Alaska, Hawaii, the Virgin Islands, and Puerto Rico, and for purposes of section 4, includes also Guam.

"(h) (1) The 'allotment percentage' for any State shall be 100 per centum less that percentage which bears the same ratio to 50 per centum as the per capita income of such State bears to the per capita income of the continental United States (excluding Alaska), except that (A) the allotment percentage shall in no case be more than 75 per centum or less than 33% per centum, and (B) the allotment percentage for Hawaii shall be 50 per centum, and the allotment percentage for Alaska, Puerto Rico, and the Virgin Islands shall be 75 per centum.

"(2) The allotment percentages shall be promulgated by the Secretary between July 1 and August 31 of each even-numbered year, on the basis of the average of the per capita incomes of the States and of the continental United States for the three most recent consecutive years for which satisfactory data are available from the Department of Commerce. Such promulgation shall be conclusive for each of the two fiscal years in the period beginning July 1 next succeeding such promulgation: Provided, That the Secretary shall promulgate such percentages as soon as possible after the enactment of the Vocational Rehabilitation Amendments of 1954, which promulgation shall be conclusive for the three fiscal years in the period ending June 30, 1957.

"(i) The Federal share' for any State shall be equal to the State's allotment percentage, except that the Federal share for States with allotment percentages of more than 66% per centum shall be 66% per centum, and the Federal share for Alaska shall be 50 per centum.

"(j) The population of the several States shall be determined on the basis of the latest figures furnished by the Department of Commerce.

"(k) The term 'Secretary', except when the context otherwise requires, means the Secretary of Health, Education, and Welfare.

"TRANSITION PROVISIONS

"SEC. 11. In order to afford the States which, immediately prior to July 1, 1954, were carrying on vocational rehabilitation programs under State plans approved under this act, reasonable opportunity to adjust the financing and content of their programs to the new allotment, matching, and other provisions of this act, such provisions as applied to such States are hereby modified as follows:

"(a) if the total of the allotments of any State as computed under sections 2 and 3 of this Act for the fiscal year ending June 30, 1955, would be less than 90 per centum (or in case the aggregate appropriations available for allotment under sections 2 and 3 for such year are reduced below the aggregate appropriations which were available for allotments to the States for payments with respect to the cost of approved State plans during the preceding year, less than 90 per centum minus the percentage by which such appropriations are reduced) of the amount allotted to such State for payments with respect to the cost of its approved State plan during the fiscal year ending June 30, 1954, such State's allotment under section 2 shall be increased to the extent such total is less than 90 per centum (or 90 per centum minus such percentage reduction in appropriations) of such amount. The Secretary shall in accordance with regulations (1) provide for reductions in the allotments of the remaining States under sections 2 and 3 to the extent required to effect the increases provided in the preceding sentence, such reductions to be based on the extent to which the allotments of such remaining States are greater than 90 per centum (or 90 per centum minus any percentage reduction in appropriations) of their allotments for the preceding year, and (2) provide for equivalent adjustments in the allotments of States under sections 2 and 3 for the fiscal year ending June 30, 1956, and any successive fiscal year in which any State's combined allot

ments under such sections would otherwise be less than 90 per centum (or 90 per centum minus any percentage reduction in appropriations) of its allotments for the preceding year;

"(b) if the Federal share of any State as computed under section 10 (i) for the fiscal year ending June 30, 1957, is greater or less than its Federal share for the fiscal year ending June 30, 1954 (which shall be the percentage which (1) the amount allotted to such State for expenditures under its approved State plan for the fiscal year ending June 30, 1954, is of (2) the sum of such allotment and the amount of State and local funds available for expenditures under such plan for such fiscal year as estimated by the Secretary for purposes of determining the State's allotment for such year), the Federal share of such State for the fiscal year ending June 30, 1955, shall be equal to its 1954 Federal share, increased (if its 1957 Federal is greater) or decreased (if it is less) by 10 per centum of the difference between its 1954Federal share and its 1957 Federal share, and for the fiscal year ending June 30, 1956, shall be equal to its 1954 Federal share, increased or decreased by 55 per centum of such difference. If in any such State there is, during the fiscal year ending June 30, 1954, and during the first or both of the fiscal years ending June 30, 1955, and June 30, 1956, a separate State agency administering or supervising the administration of that part of the State plan under which vocational rehabilitation services are provided for the blind, separate Federal shares shall be established for such agency and for the State agency administering or supervising the administration of the remainder of the State plan, for one or both of such two fiscal years, as the case may be, and for purposes of the preceding sentence the 1954 Federal share for each shall be the percentage which (1) the portion of the State's allotment for the fiscal year ending June 30, 1954, which was made available to each, is of (2) the portion of the sum referred to in clause (2) of the preceding sentence available to each for expenditure under the approved plan during such year; and "(c) the State plan of any such State under which it was carrying on its vocational rehabilitation program immediately prior to July 1, 1954, shall be deemed to be a State plan approved under section 5 of this Act until (1) the Secretary finds, after reasonable notice and opportunity for a hearing to the State agency, that such plan has been so changed that it no longer complies with any provision required to be included in such plan under this Act as in effect prior to the enactment of the Vocational Rehabilitation Amendments of 1954, or in the administration of such plan there is a failure to comply substantially with any such provision, or (2) the plan is superseded by a plan approved under section 5 of this Act, or (3) July 1, 1955, whichever occurs first.

"DISTRICT OF COLUMBIA

"SEC. 12. Out of funds made available for the purpose, the Secretary is authorized to provide vocational rehabilitation services to disabled persons actually residing in the District of Columbia and to formulate and carry out a plan of cooperation with the Secretary of Labor with respect to the vocational rehabilitation of any such disabled residents as are civil employees of the United States disabled while in the performance of duty. In carrying out his functions under this section, the Secretary of Health, Education, and Welfare is authorized to utilize and enlarge facilities of appropriate units of the Department of Health, Education, and Welfare, and 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 compenate them and such units for such services and use.

"SHORT TITLE

"SEC. 13. This Act may be cited as the 'Vocational Rehabilitation Act'."

EFFECTIVE DATE

SEC. 3. The amendments made by section 2 shall become effective July 1, 1954.

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,
Washington, March 30, 1954.

Hon. H. ALEXANDER SMITH,

Chairman, Committee on Labor and Public Welfare,

United States Senate, Washington 25, D. C.

DEAR MR. CHAIRMAN: The purpose of this letter is to request that your committee consider favorably three amendments which we propose be made to S. 2759, a bill "To amend the Vocational Rehabilitation Act so as to promote and assist in the extension and improvement of vocational-rehabilitation services, provide for a more effective use of available Federal funds, and otherwise improve the provisions of that act, and for other purposes." This bill, as you know, incorporates the President's recommendations for amendments to the Vocational Rehabilitation Act as set forth in his message on the health of the American people on January 18, 1954.

The first amendment provides for judicial review. We recommend that a State be afforded an opportunity for judicial review of action by the Secretary of Health, Education, and Welfare, pursuant to section 5 (c) of the Vocational Rehabilitation Act, as amended by the bill, withholding payments to such State because its State plan has been so changed that it no longer complies with Federal requirements or because, in the administration of the plan, there is a failure to comply substantially with such requirements.

This amendment appears in enclosure No. 1. It is patterned after the judicial review provisions now contained in title VI of the Public Health Service Act (relating to hospital survey and construction), and repeated in S. 2758 and H. R. 8149, bills amending that title, which are now pending before your committee.

The second amendment would provide for the transfer, from this Department to the District of Columbia, of the function of providing vocational rehabilitation services to disabled individuals in the District of Columbia, and for the transfer of personnel, property, records, and unexpended balances of appropriations and other funds related thereto. It would include the District of Columbia as a "State" for all purposes of the act and would authorize the Commissioners of the District of Columbia to take such action as may be necessary to secure for the District of Columbia the benefits of the Vocational Rehabilitation Act. The language for this amendment appears in enclosure No. 2. The Commissioners of the District of Columbia have concurred in this amendment.

The third amendment relates to the Randolph-Sheppard Act and would amend that act so as to increase employment opportunities for the blind under the vending stand program. The amendment would make the act applicable to all Federal property (not just buildings, as at present). It would also provide that licensed blind persons shall be given preference in the operation of vending stands on Federal property. Federal custodial agencies would be required to establish, in consultation with this Department and subject to approval by the President, regulations to effectuate this preference. This proposed amendment appears in enclosure No. 3.

The Bureau of the Budget has advised that it perceives no objection to the submission of these amendments to your committee. That Bureau advises, however, that time limitations have prevented the full coordination of the proposed language pertaining to amendments to the Randolph-Sheppard Act with interested departments and agencies and that it may therefore be necessary to offer further amendments on this subject when review has been completed. Sincerely yours,

OVETA CULP HOBBY, Secretary.

ENCLOSURE No. 1. AMENDMENT TO S. 2759
(Judicial review)

Page 12. between lines 4 and 5, insert the following:

"(d) (1) If any State is dissatisfied with the Secretary's action under subsection (c) of this section, such State may appeal to the United States court of appeals for the circuit in which such State is located. The summons and notice of appeal may be served at any place in the United States. The Secretary shall forthwith certify and file in the court the transcript of the proceedings and the record on which he based his action.

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